Broadcasting’s Future Shock

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We are halfway through the year, and one thing appears certain: The balance of 2011 will likely shape the future of the broadcasting business, including determining just how bright a future that is going to be.

“The next six months in Washington will be critical for TV broadcasters,” says one broadcast lobbyist speaking on background. “Our competitors are circling around like never before, proposing involuntary spectrum auctions on the Hill and undercutting retransmission consent negotiations at the FCC.”

With the 10th anniversary of 9/11 approaching, Sen. Jay Rockefeller (D-W. Va.) will be pushing hard to get incentive auctions approved, setting the stage for the reclamation of up to a third of remaining broadcast spectrum. That will help determine how robust an over-the-air business survives the spectrum push for broadband.

The Senate incentive auction bill that will pave the way for government payouts to broadcasters talks about trying to preserve stations’ coverage areas and signal quality, but makes no guarantees.

And while FCC Chairman Julius Genachowski has said the intention is to preserve over-the-air broadcasting, the FCC continues to make the case for universal broadband delivery as a national priority, including through status reports on wired and wireless broadband competition that talk about the spectrum crunch as an obstacle to the commission’s— and now the president’s—goal of a broadband nation.

Meanwhile, comments are in on the FCC’s rulemaking proposal on retransmission consent, which will determine how big broadcasters’ second revenue stream could be going forward, particularly if the FCC, in the case of impasses, waives the exclusivity rules that prevent cable operators from negotiating with other broadcasters for carriage. “That is a threat because it would take away the only tool we have to negotiate, which is our signal,” says another lobbyist.

The Copyright Office is currently mulling comments on whether to scrap cable’s compulsory license, which combined with scrapping exclusivity rules would create an open marketplace that some broadcasters would be OK with. But that is a long shot, while the FCC contemplation of scrapping or waiving the rules is a more present danger to the business model.

In a filing with the commission, Tribune Co. laid out ways that removing the rules would compromise the business model and viability of the industry. “Program duplication reduces the audience the local station can achieve, reduces its incentive to promote its programming, and lessens the advertising revenue it will derive. This, in turn, injures the broadcaster’s ability to compete for programming, and to produce local news and public affairs programming to serve its local audience.”

And with a federal appeals court’s decision last week to vacate the FCC’s loosening of the newspaper cross-ownership ban, even that bit of help on the ownership front is in limbo.

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John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.