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Lougee to DOJ: Local Digital Ads Are Game, and Market, Changer

Broadcasters face an uphill climb to reach the size and scope its competition, thanks to a government applying yesterday's rules to today's media landscape.

That was the message of TEGNA CEO Dave Lougee on day two of the Department of Justice's forum on the impact of online advertising on traditional broadcast and cable players. Lougee's message was that the impact was hefty and game-changing.

"Simply put, high speed broadband to the home….and high speed broadband to the phone…has changed everything in the video marketplace," he says, and regulators need to adjust their sites to that new reality.

"An overly restrictive antitrust view continues to impede broadcast transactions, even as broadcast’s competitors—for viewers and advertisers—are rapidly increasing their already massive scale, unimpeded by regulation," said Lougee, who is also former joint board chair of the National Association of Broadcasters.

DOJ antitrust chief Makan Delrahim has said that while DOJ was confident in how the department defined the competitive broadcast ad market in the past -- including the recent past of last year's Sinclair-Tribune merger deal, when DOJ concluded the ad market was confined to broadcast spot -- "we recognize that industries change. In order to ensure that we continue to update our analysis of media markets, we need to take into account the latest industry trends, the latest technological evidence and the latest economic," he said on day one of the forum.

Lougee pointed out that Delrahim had also said that, under his watch, the department "will avoid substituting central decision making for the preferred free market while ensuring that transactions don’t harm competition." Lougee said that a key to that was an "an accurate, updated and forward-looking understanding of the actual marketplace—in this case the marketplace for local video advertising."

Lougee said that his firm and other broadcasters are convinced that understanding the marketplace means realizing it is larger than just broadcast spot advertising, and should have long before this included cable interconnects for local ad buys. But he said there is no point in re-litigating that past because the growth of digital media has changed the ad landscape so dramatically that fighting the last war is even more beside the point.

The hydra-headed giant that is social media -- YouTube, Facebook, Twitter -- or the long tail of mobile apps and services are not what matters in terms of the marketplace, he said. What does matter is that all that valuable content is now a vehicle for targeted local advertising, the same ads broadcasters competing for.

"Today they are available, and local advertisers are buying them en masse. As a result, there’s no longer a question that these digital options aren’t just complements, but substitutes for local advertisers," he said.

Advertisers can buy from "a local broadcaster, the cable interconnect, and now a plethora of targeted digital options." That is the game changer. "[I]f broadcasters raise their prices, advertisers can, will, and do, take their dollars elsewhere."

If broadcasters can convince DOJ that is, indeed ,the case, DOJ would have to rethink that "broadcast spot only" view of the relevant competitive market.