But FCC Ownership Caps Could Be a Real Killer, Executives Worry During TV 2020 Conference at NAB Show New York

Live programming, including news but potentially new types of local, informational shows as well, will continue to drive viewership as broadcast television station groups look to become ever-larger, according to station group CEOs speaking at NAB Show New York this week.

“Live viewing is still the best opportunity for advertisers,” said Jack Abernethy, CEO of Fox Television Stations, during a panel discussion.

Speaking as part of the TV2020 Conference organized by TVNewsCheck, Abernethy told a standing-room-only crowd that, even as OTT media providers have siphoned some viewers away from traditional broadcast, news and sports programming has resisted the trend. He recalled a Thursday two weeks ago that featured a pivotal hearing in the Brett Kavanaugh Supreme Court confirmation saga as well as a key New York Giants vs. Philadelphia Eagles NFL football game. “With those two channels, we got a 70% share of live viewing,” Abernethy said. “Who knows what we got online?”

In other words, the fundamentals still apply — even as the industry plans its transition to the next generation of TV technology, ATSC 3.0, with the potential new revenue it may offer. But where that new revenue may come from is still an open question.

TV Ads: Even Better in 4K?

“We’ve got to be in 4K if cable is in 4K, because we need to offer that elevated picture quality to viewers and to advertisers,” said Nexstar Media Group President and CEO Perry Sook, suggesting that higher quality could lift core advertising revenue. He also pointed to continuing growth in political advertising, even in off years, a trend that shows no signs of abating. But he’s less sure what else may end up driving future revenue, suggesting stations could lease spectrum space to Netflix for local delivery, or deliver mobile content for viewing by automobile passengers.

“The highest and best use of our spectrum may not be something we’re thinking about today,” Sook said.

So experimentation is the order of the day. Sook’s group has created a direct-to-consumer mobile app to deliver an exclusive, always-on stream of local news. The idea is to get some small fraction of Nexstar’s viewership to pay a couple of bucks a month for the app, making it a sizable new business.

And Graham Media President and CEO Emily Barr suggested creating new opportunities by adding news programs at unconventional time period to “connect with an audience that’s hungry for real-time information.”

What, Me Worry?

The panel seemed confident that there are no imminent threats to the core business of broadcast stations. Nobody admitted to worrying that a major sports league like the NFL might cut out broadcasters by making exclusive deals with streaming providers like Amazon Prime Video. “The NFL knows that 15% of the audience is over-the-air viewers,” said Sook. “Of all the things I worry about at night, it’s not the networks renewing the NFL.”

And the consensus seems to be that retransmission fees — the increasingly lucrative payments made by cable companies in exchange for offering local stations’ feeds to their customers — will continue to grow in the foreseeable future, as larger and larger station groups flex their muscles.

The Politics of Broadcasting

That subject did seem to touch a nerve, as conversation turned to the FCC’s ongoing review of the current ownership cap that prevents television station groups from growing to reach more than 39 percent of U.S. television households. Unsurprisingly, these television station group CEOs are not fans.

Sook complained that the FCC will be besieged by objections from “special interest groups” if it raises the cap by even half a percentage group. “The only defensible position is probably no cap,” he said.

And then Sook really cut to the chase, calling out the so-called FAANG companies — Facebook, Amazon, Apple, Netflix and Google — that enjoy relatively unfettered access to a national audience. “These national companies have, in my opinion, become too powerful,” he said, to a burst of spontaneous applause from conference attendees.

Abernethy agreed. “If you want this business to thrive and be a success 10, 20 years from now, you can’t defend a cap.”

Gray Television President and CEO Hilton Howell suggested attendees watch their local news to get an idea of the climate the FCC will soon be operating in. “A lot is going to depend on the midterms,” Howell said. “If Democrats take the House, the chances of the liberalization of anything are delayed substantially.

“We are competing with the FAANG companies, but the Department of Justice does not agree with that point of view,” he continued. “For localization to prosper and continue to grow, liberalization of the ownership cap needs to happen.”

A Threat to Democracy

The idea of eliminating the cap altogether got some pushback from Barr, who warned against creating a media world where a very few corporations control the delivery of news from coast to coast. “It’s very easy to get to a place where you homogenize the way you deliver news,” she said, “and our democracy would be threatened by a homogenous approach to newsgathering.”

But her response evinced frustration, too, with how tough it is for the broadcast industry to thrive versus new competition under the special restrictions it has always faced. “We are generating the content and [cable companies] are just redistributing it,” she said. “If they want us to keep generating content, they damn well better stop trying to kill us.”