Washington Agenda Comes to Vegas

Tom WheelerTom Wheeler

While lawmakers and regulators in Washington are deciding the future of broadcasting, staffs at stations across the country continue to create more content to accommodate a proliferation of devices.

Radio is facing transformations with regard to AM stations and music rights, while television grapples with the proverbial elephant in the room.

“I think the most pressing regulatory issue is the incentive auction, given the uncertainty in terms of timing and the rules,” said Marci
Ryvicker, managing director for media and cable equity research at Wells Fargo.

David Oxenford, attorney with Wilkinson Barker Knauer LLP in Washington, concurred, but the two had dualistic views on the market impact: continued investment in technology despite
squeezed revenue streams:

“For TV, it has to be the incentive auction and all the uncertainties that it brings, both for the trading market in the short term, as well as programming and advertising,” he said. “How do you buy time if the station that you are buying on may no longer exist? And this may all happen in a presidential election year! In the long term,
there are issues of how the repacking will go, and what impact the loss of stations will have on over-the-air viewing.”

Ryvicker said she and her group “heard from a number of broadcast groups at an investor conference [March 9] that continue to move forward with ATSC 3.0 and other spectrum monetization options in addition to M&A.”

Dennis Wharton, executive vice president of Communications for NAB, said the organization is watching the incentive auction process closely to preserve broadcast localism.

“It’s a great idea to have faster broadband speeds and spectrum in urban areas where there are alleged shortages down the road,” said Wharton. “But let’s not forget that local television serves an important role in the fabric of society. If not broadcasters, who does what we do in the community?”

Wharton said the NAB “strongly supports the auction. We want those stations that participate in the auction to get fair value. We also think it’s equally important for the FCC to hold harmless those stations that choose not to participate.”

Regarding ATSC 3.0, the new broadcast transmission standard now being developed by the Advanced Television Systems Committee,
Wharton said most of NAB’s members were part of the process.

“We’re proud that broadcasters led the transition from analog to digital. Back in the mid-1990s, it was broadcasting that led the way in high-definition television,” he said. “Cable and satellite were late to the game. We’re hoping that will be the case with any new delivery scheme.”

ATSC 3.0 would pave the way for delivery of 4K, high-dynamic range content, immersive audio and two-way interactivity among other characteristics — across multiple devices. In terms of practicality, the best time to transition over-the-air TV to a new standard would be in the post-auction channel repack. This, however, would require FCC approval. The agency has given no formal indication it will do so.

“Netflix delivering in 4K is a wake-up call to everyone in the media world,” Wharton said. “We’re hoping broadcasters won’t be marginalized.”

On the radio side of broadcasting, Oxenford said music licensing is a hot potato, “not only whether there will be a performance royalty
for over-the-air broadcasting, but also whether the ASCAP and BMI consent decrees will be changed and whether other rights issues will impact their current businesses and their future operations,
including their digital services,” he said.

Michael O'Reilly

Michael O’Rielly

ASCAP, the American Society of Composers, Authors and Publishers; BMI, or Broadcast Music Inc.; and SESAC — Society of European Stage Authors and Composers — all manage music and performance rights for artists and authors. The consent decrees in place at BMI and ASCAP allow broadcasters to use a blanket license
that covers their libraries.

Without those in place, Wharton said: “The question is whether that consent decree should be lifted or modified. If they get rid of the
consent decrees, each individual TV and radio station may have to secure rights to each song played, with thousands of artists. It would be close to impossible to have a broadcast TV or radio show… without the consent decrees.”

Music licensing will be among the many topics discussed during the Broadcast Management Conference, which began Sunday, and runs
through Wednesday. FCC commissioners will present separate BMC sessions, with Michael O’Rielly opening “The FCC’s Incentive Auction: Makes Solving a Rubik’s Cube Seem Easy,” today, 2:30 p.m. Ajit Pai follows at 3:30 p.m. with “You Down With OTT? FCC’s Wheeler: “Yeah, You Know Me.”

Jessica Rosenworcel

Jessica Rosenworcel

On Tuesday, 2:30 p.m., Jessica Rosenworcel will headline “Emergency Journalism Today: Broadcasters Using New Technology to Cover Boston Blizzards, California Quakes, and Everything in Between,” followed at 3:30 p.m. by Mignon Clyburn opening “Untwisting Regulatory Pretzels With the FCC.”

FCC Chairman Tom Wheeler will deliver his remarks Wednesday, 9 a.m.