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DEREGULATING THE PRIMARY TV BROADCASTERS
CAN NEXTGEN LPTV COMPETE IN A CONSOLIDATED
AND RIGGED TV INDUSTRY?
JUST MAYBE YES, IF THE PRIMARY BROADCASTERS ARE SUCCESSFUL IN DEREGULATING FROM THE OWNERSHIP CAP, THE MAIN STUDIO RULE, GET 3.0 TEMP CHANNELS, AND THE EXPANSION OF THE NEXTGEN 26 dBu CONTOURS
This is a counter-intuitive conversation, so try to follow the twisting logic, it all becomes clear at the end of the rant. With a successful deregulating of the primary TV broadcast regime, one which eliminates all requirements of children's programming, public interest programming, main studio rules, cross media ownership rules, and one which maintains must carry and retrans, and an EAS obligato, well this is where we are headed quickly, albeit with rulemaking and Congressional actions still to unfold.
But why stop there? Why still force MVPD must carry and retrans?
What is the bargain and deal the primary broadcasters will have to a local community of license if not for operating in the public interest through these obligations? There is no programming requirement for local news, no national network entertainment and news programming, no nothing. And neither should there be considering the 1st amendment. It should all be based on a highest and best use, which is not local news, or is it? While the licensee is operating in the public interest, if the FCC and Congress eliminate these obligations which are constitutionally protected, so why then the corporate welfare of must carry and retrans?
ILLUSTRATION BY TONY HEALEY - PUBLISHED IN D CEO MAGAZINE - 2013
Maybe this all changes in NextGen TV, and when the major station groups think the revenues from NextGen equal to or surpass the retrans revenues. The evidence for this line of thinking comes from no other than Mr Nexstar himself, (
Nexstar Media Group (NXST) Q2 2017 Results - Earnings Call Transcript on Aug. 8, 2017)
"...provided we achieve the appropriate economics, we are agnostic as to whether Nexstar's unique local content and leading news programming, as well as our network programming is viewed by consumers over traditional MSOs or OTTs, and our new agreements are consistent with that view."
And he goes on to say...
"The Nexstar platform currently produces over 508 hours of local content per day which equals 3,550 hours per week of local news or over 185,000 hours a year. The bottom line is that we're creating unique local great content and information for our viewers and our advertisers, which we want them to consume anywhere, anytime and on any device. With our success in this front, we will continue to create new revenue streams for Nexstar just as we have with our recently announced OTT agreements."
And speaking specifically of Q2 2017, Tom Carter of Nexstar said on the call...
"Retrans revenue was up almost 158% to $253 million, and digital revenues were $64 million, which was up 158% also. Broadcast cash flow was a record of almost $227 million."
So we can see that Retrans revenues are already the largest revenue category, and when combined with digital (non-TV) it comes in $317 million vs $227 million for broadcast ads. Analyzing a little more we can see that Retrans is already 53% of broadcast revenue vs 47% for broadcast ads. So, Retrans is already #1, but what about NextGen TV using ATSC 3.0? What about that?
Well,
Barry Lucas - Gabelli & Company, asked this question...
"...as we get closer to adoption of ATSC 3.0, you could provide a little bit of color. The initiative with Sinclair and the consortium, how important is that? How many more people do you need? What's the pace of the rollout then, and when do you think revenues from both ATSC 3.0 sources become visible and then material."
And then Perry Sook responds...(emphasis ours)
"I continue to believe that material revenue is probably five years away. I want to manage that expectation so that people don't get too far out over their skis but I think that's realistic to think that a transition takes place, we have a nationwide footprint of spectrum that we can offer for sale or lease, whether it's to General Motors or to Google, or to anybody else that has particular design. I think it's a real opportunity that I've said in other speeches that I made that I think over time, spectrum revenue could equal retrans revenue over time."
Hmmm, "spectrum revenue could equal retrans revenue over time", like 5 years until it is "material". So the primary broadcasters are now asking for almost total deregulation, but want their corporate must carry welfare until when, 5 years? 10 years? Forever?
Never mind the relo funds which will be used towards NextGen 3.0 equipment...as Perry goes on to say...(emphasis ours)
"...the transition to ATSC 3.0 needs to happen before spectrum monetization can become a reality in a big way. We think that the spectrum repack post-auction will be a catalyst to jumpstart people's investment in ATSC 3.0 technology. We, as a company, have made the commitment that if we have to replace a piece of equipment, if it costs incrementally 20% to make sure it's 3.0 compatible and also ATSC 1.0 compatible, we'll spend that extra money because the initial investment in the ATSC 1.0 is going to be reimbursed by the government. And if we have to put a new antenna up, we're going to make sure it's ATSC 3.0 compatible even if the antenna cost more than the government will reimburse because the FCC is reimbursing us for the tower climb."
But what about all of those stations not getting any relo funds? Is not this unfair that they do not get a huge percentage of their NextGen 3.0 transition paid for by the government?
Same could be said of LPTV and translators if we get relo funding, as in now being proposed in the Dem's House bill,
Viewer Protection Act of 2017.
This little AI brain ingesting LPTV data points is now leaning more towards not wanting relo funding, but asking for NextGen Build Out Infrastructure Funds for ALL licensees and permittees. Why should only moving stations get money and get a head start on building out 3.0?
And as I asked in the opening, can LPTV compete in NextGen? Yes we can, if we are ALL given the same corporate welfare the primaries are getting. Otherwise, an already rigged system will be even more rigged against us.
How could Avis emerge, if Hertz had controlled all of the car leases with the big three auto manufacturers?
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