What Wheeler Is Selling, Smith Isn’t Buying

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National Association of Broadcasters president Gordon Smith has a lot on his mind. Among the big-ticket items: The threat of Aereo (and the current legal battle); why sharing spectrum (which FCC chairman Tom Wheeler pitched at the recent Consumer Electronics Show) would be “separating” broadcasters from the digital future; even Wheeler himself, who Smith has yet to have a face-to-face with. In an exclusive interview with B&C Washington bureau chief John Eggerton, Smith covers these concerns and many more. An edited transcript follows.

How was CES?

It was great. It was important for us to be there and show the flag and participate in a whole range of events. I liked the emphasis on our stuff. 4K was king. It was also our first good listen to the [FCC] chairman and sort of illuminated the future, which I think is both promising and provides opportunity

What is your reaction to the chairman’s suggestion that giving up some spectrum is a great opportunity for broadcasters?

His idea of sharing six megahertz? Certainly we have always supported a voluntary auction that is truly voluntary, and we support the freedom of broadcasters to make these economic decisions. But we want broadcasters to know that sharing means separating themselves from the future of broadcast television, by which I mean mobile, 4K, 8K [new HD formats] and multicasting. You are going to need 6 MHz to do that.

That would be equivalent to Ford saying they were going to keep building cars, but only the Ford Mustang.

The 1964 Mustang was a pretty nice car.

I’d take that one.

But the chairman was pitching auction participation as though it were a great, once-in-a-lifetime digital age opportunity, to get the money and still have spectrum.

Surely he seemed to be selling an opportunity. I’m just not so sure it is a great opportunity if a broadcaster wants to be part of tomorrow: Take shortterm money but degrade your place in broadcasting.

At a town hall meeting in California, Wheeler took credit for scrapping the media ownership review item of his predecessor, Julius Genachowski, before it could allow for more crossownership; he also talked about the FCC looking differently at shared services agreements, which he called, at least by reference, “shell corporations.” Do you have a sense of what he meant?

Look, I haven’t even had my first meeting with him. We have had numerous meetings canceled prior to the Christmas break. I look forward to meeting with him to share another perspective.

He did meet with you and other association chiefs as a group early on, correct?

Yes, we did the group thing, but we never got into any specific issues. I look forward to sharing with him not just my perspective, but that of others, including Ajit Pai for one, and how Shurz Communications through [a shared services agreement] was able to introduce a Spanish channel to Kansas. The evidence is that SSAs and JSAs [joint sales agreements] allow weaker stations to become stronger.

You certainly can’t make the argument in the age of cable news that there is some lack of diversity of voices. As my mother used to say, the best way to ruin a good story is to hear the other side. I think he needs to hear the other side the way the other commissioners have and we look forward to sharing that with him.

We were hopeful of an earlier meeting. In defense of the chairman, he is new on the job and he has a lot of people clamoring for his attention. But, obviously, we are the most regulated industry and we look forward to having our say and telling the other side of the story. We look forward to a meeting when his schedule permits.

On retrans, the chairman seemed to have some good news. In his Q&A with Gary Shapiro at CES, he seemed to indicate that he was not eager to insert the FCC into those negotiations.

I think two things out of that interview were very heartening to me and should be to broadcasters. First was his standing by the traditional interpretation of the FCC on retransmission consent. The second was that he was emphatic in affirming the value of broadcasting to the American people. I don’t remember Julius Genachowski ever being so deliberate and so certain in support of the broadcasting sector.

The Supreme Court has agreed to take the Aereo case. How important is that?

It’s hugely important in terms of its precedential value in over-the-top and whether copyright means what it has historically meant. This is a very serious copyright issue that they need to decide. Our hope is that they will affirm that you can’t take over-the-air stuff and sell it to other people without triggering copyright protections.

It is not the business model or penetration of Aereo that is of concern to broadcasting, it’s the precedent that could be set for other [multichannel video programming distributors]. If a way is found to skirt copyright, then content in the future will go uncompensated and decline in quality.

The NFL has essentially said that if Aereo is upheld, football will move to pay platforms to insure the league can get paid.

Yes, and this is something I want to share widely, and certainly with the chairman. When he talks about support for growing networks, that seems only to reference those networks that charge you money. Equal support, at least, ought to be given to networks that are free and over the air.

I look forward to fleshing that out with chairman Wheeler. His Democratic base is our base, so why is there this rush that only those with the ability to pay have access to the best content?

What should the emphasis be in the new, House-led effort to revamp communications regulations?

In totality it is going to be as broad as telecommunications, but our focus and that of others will obviously be on retrans. It’s going to be a battle royal in Washington and engage all the telecommunications industry.

Given that the FCC has scrapped the quadrennial media ownership review item in favor of a fresh look, does that mean no regulatory certainty for broadcasters in the near term?

Yes, I think so.

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.