Harry Jessell

It’s 2024 … except at the FCC where it’s still 1964 and regulating broadcasting is all the rage.

Drawing on the prevailing belief of that time that broadcasting was too powerful and concentrated not to be constrained and managed by the federal government, the agency — by a vote of its three-person Democratic majority — last week bucked the decades-long trend of loosening TV regs by affirming and tightening its Top-Four TV duopoly rule.

The rule says that broadcasters can’t own and operate more than one ABC, CBS, Fox or NBC affiliate in a market. In recent years, with the tacit blessing of the FCC staff, broadcasters have been able to circumvent the rule, mostly in 100-plus markets, by airing one or more stations on an LPTV station or multicast channel.

No more. The rule stays and the “loophole” is closed, the FCC Chair Jessica Rosenworcel and other FCC Dems proclaimed. Existing so-called virtual duopolies will be grandfathered, but they can’t be sold to another broadcaster without official FCC dispensation, which will cause all kinds of M&A complications.

The FCC says it will continue to consider Top-Four duopolies on a case-by-case basis, but we learned that’s a tease earlier this year when the FCC killed a proposed combo of two affils in Fargo, N.D., through one of Rosenworcel’s favorite tactics, bureaucratic indifference. Like the parties involved, I could see nothing wrong with the deal when I plugged in the FCC’s own criteria for granting them.

The ruling is a blow to broadcasters who see ownership of multiple affiliates as an effective way of achieving news economies of scale and preserving, and sometimes expanding, local news in the market.

It’s also a loss for the NAB, which argued for relief. Cable and satellite operators, organized under the banner of the American TV Alliance, pushed long and hard for keeping the lid on Top-Four duopolies, contending they gave broadcasters undue leverage in retrans negotiations that would result in higher fees for cable subs.

“We applaud the FCC’s efforts to help consumers by closing loopholes in its broadcast ownership rules,” the ATVA said in a statement following the vote. “For too long, these loopholes have allowed broadcasters to control distribution of two, three, or even all four major networks in markets throughout the country…. Today’s action promises some long-awaited relief for consumers and their pocketbooks.”

The FCC order swallows the ATVA argument whole, saying the tougher duopoly rule advances its long-standing goal of ensuring robust competition not only in retrans negotiations, but also in the local advertising market.

“Promoting competition among local television stations prevents local broadcasters from demanding higher retransmission consent fees and charging higher rates for local businesses seeking to purchase advertising time on local stations, costs that may be passed on to consumers,” the order says.

I concede that the ATVA had the higher ground in the battle since rising retrans fees no doubt put upward pressure on what consumers (i.e., constituents) have to pay for cable and satellite service. However, NAB should be able to fight uphill and win. The scores of cable networks that also demand fees from operators also drive up consumer prices.

In addition to preserving competition, the FCC also cites its long-standing goals of ensuring local programming (localism) and diversity of viewpoints or voices (separately owned stations) in justifying the duopoly rule. On paper, these are laudable, but they no longer make sense in today’s media ecosystem where there are literally hundreds of TV channels vying for attention and dollars, not to mention traditional media like newspapers as well as other relative newcomers like social media.

The FCC’s misguided obsession with broadcasters’ competitive clout may be detrimental to localism. Broadcasters need retrans dollars, as many as they can get, if they are to maintain and expand their news and offer other local programming. As I have argued here many times before, the FCC needs to get out of the way and let the market set the retrans fees.

And, of course, broadcasters also need advertising dollars to fuel their newsrooms. Is it really the job of the FCC to structure markets so that auto dealers, PI lawyers and home improvement outfits don’t pay too much for spots and pass the cost on to their customers and clients?

For the record, TV stations’ share of the local ad market shouldn’t sound alarms. According to BIA Advisory Services’ forecast, stations will reap just 13% of the $175.6 billion in local advertising spending this year, a presidential election year in which stations’ share is greater than in other years.

Intense competition, by the way, is not necessarily the path to better journalism. In fact, less of it can enhance it, producing fat profits and extra resources for newsrooms. I would say the Golden Age of Newspapers stretched from 1970 to the early 2000s when single papers emerged to dominate markets and did great things. The Times in Los Angeles, the Tribune in Chicago, the Globe in Boston, the Post in Washington all come to mind.

Newspaper publishing offers another lesson. Hundreds have withered or died over the past two decades from the onslaught of digital media. TV stations have been suffering from the same heat. That they have been holding their own so far does not mean they will continue to do so. Think what would happen if political media buyers discover a better way to reach likely voters.

Yes, the FCC is right to be concerned about the loss of a voice in the market, which is the natural consequence of duopolies, but losing a voice is better than losing an entire news operation because of regulatory hobbles.

Some markets simply can’t sustain three or four independent news operations anymore. Last spring, Sinclair shut down its local news operations in five small markets. (Here in Pittsburgh, DMA 28, where I live, Sinclair doesn’t even bother with producing its own news, although it carries newscasts of Cox’s crosstown WPXI.)

Broadcasters may be able to overturn the FCC action in the courts, but that is a long, costly and laborious process with no guarantees. Their best hope now for relief is the return of a Republican chairperson, one with faith in the marketplace and a belief that regulation is not the default, but the last resort.

Both FCC Republicans, Brendan Carr and Nathan Simington, voted against the measure. “The FCC has every reason to update this outdated set of broadcast radio and television rules,” said Carr in his dissenting statement. “The law compels us to do so. The facts tell us to do so. And the public interest in promoting local news and information counsel in favor of doing so. Yet the rules will remain in place — impervious to those compelling forces.”

I should caution that a Republican FCC might come with a lot of baggage, namely Donald Trump. He is no friend of news media that criticize him, and the FCC is a perfect tool to punish any outlet under its jurisdiction that does.

Carr, a likely FCC chairman in a Trump second term, is just the guy to wield that tool on Trump’s behalf. In May 2020, after Twitter tagged one of his posts as possibly misleading, Trump urged the FCC to look into regulating social media just as it used to regulate broadcasting via the Fairness Doctrine. Carr enthusiastically embraced the idea, First Amendment be damned. As far as I know, he is still a member of the Trump politicult.

The FCC needs a major attitude adjustment. It has to stop thinking of TV as indestructible and dominating players that must be controlled by wise heads in Washington, lest the broadcasters turn their newsroom over to AI-driven avatars, crush local economies with incessant spot increases and spawn a cable-deprived underclass.

If the FCC is truly interested in broadcast localism, the FCC needs to get its head out of ’60s and into the ’20s. I can suggest a few ways: give stations the right to negotiate directly with vMVPDs rather than having to rely on the sticky-fingered networks; facilitate ATSC 3.0 where it can; and, most important, lighten up, don’t tighten up, on the duopoly rule and other anachronistic structural regulations.

Harry A. Jessell is editor at large of TVNewsCheck. He can be contacted here. You can read earlier columns here.

The post Hey FCC, It’s Not The 1960s Anymore appeared first on TV News Check.

In this Talking TV conversation, TVNewsCheck Editor Michael Depp and Editor at Large Harry Jessell take a wide-ranging look at the year just wrapping up and the one ahead, and what’s on the line for broadcasters as it comes.

Episode transcript below, edited for clarity.

Michael Depp: We’ve come to the end of a pretty volatile year for broadcasters, and it might fairly be said, an annus horribilis for us all. So, it’s probably a good time to take stock of some of the major events that have faced broadcasters in 2023 and look ahead to what is most likely to impact the industry in 2024.

I’m Michael Depp, editor of TVNewsCheck, and this is Talking TV, our weekly video podcast. This week, I’m joined by Harry Jessell, our beloved editor at large, and we’re going to talk about the health of the industry generally as it goes into the next year, the hope for regulatory relief, the prospects being ushered in by generative AI, 2024 election coverage and much, much more. We will be right back with that year-end conversation.

Harry Jessell: Good to see you, Michael. How are you?

It’s good to see you. I’m well, thanks. And it’s good to see you. You are the only person I’d want to wrap the year up with and look ahead to…

I think I’m the only person qualified to do that.

The only man standing on this planet who can do it. Exactly. Exactly. So, let’s play a little ghosts of Christmas past, and then ghost of Christmas future. And let’s start with the past, the year behind us. A lot of things going on. One of those things that might tell us something to sum up the year’s health of the industry, are stock prices.

Well, yeah, I thought, you know, there’s a lot of ways to measure an industry and we have some big public companies, so I thought I’d take a look at the stock prices and see how we did this year. First of all, the Dow is up 10%. The S&P was up 20%. So, it must have been a good year for the TV stocks. No, they were all down: 3%, 7%, 5%, 3%. Nexstar took a big hit, 32 points [Ed. note: Since this was recorded, Nexstar’s stock rebounded to 155 on Thursday]. But it was a high-flier. It started the year 174 and is down to 142, which is sort of a shame because Nexstar, the group, I think is really trying to do some things. And maybe we can talk about that a little bit later on with the CW and the NewsNation.

So, not a great year if you believe Wall Street. But I will say they’re doing better than radio. There’s a couple radio groups now that are selling for under a dollar.

Yeah, I don’t know, I mean, radio is a pretty low bar relatively speaking, but we have had a lot of headwinds this year. I mean, you know, just generally, advertising, the spot ad market was really challenged for a lot of this year. It wasn’t a political year. Of course, they’re looking at one next year and have a lot of hope with regards to a rebound there.

Well yeah, you know, that’s the nature of this business. And I think the number was that we got from Steve Passwaiter was $10 billion, of which broadcasters will get the lion’s share. So, that’s going to be a big hit for broadcasters and positive hit. They have that to look forward to as well as the challenge of covering those elections.

Yes, which we will come to. Let’s talk a little bit about the M&A year that wasn’t, in many ways, starting with Tegna.

Well, yeah. Well, this business is so heavily consolidated now that there’s not much room for mergers and acquisitions anymore. And the one big deal was cratered by the FCC and Jessica Rosenworcel, she torpedoed that deal crushing Soo Kim’s opportunity to make another big score in broadcasting and I think may have chased off some private equity money and hedge funds that might have been looking at broadcasting and their big cash flows that come, and she sort of sent a signal that you’re not wanted here in broadcasting. She’s a traditional Democrat, isn’t looking for more consolidation in this industry. So, that was sort of a negative for the industry, I think, overall.

Yeah, absolutely. But then we also have perhaps ABC on the sales block.

Well, yes, that was the story that never happened. In July, Bob Iger decides… I think the comment was like, his linear channels may not be core to the business, which a lot of people took as a sign that he was ready to divest ABC and ESPN maybe and his minor or smaller cable networks. And everybody got excited for a while. I saw numbers for ABC at $5 billion up. But you know, just a couple of weeks ago he sort of walks it back and says, you know, really, I was just really gassing, never mind, we believe in the future of linear TV. Maybe that means he does believe in linear TV. Maybe he just stirred up no interest in those networks.

Well, Byron Allen shot his hand up and Nexstar seemed to be sniffing around.

Nextstar, I think is definitely, and Byron is always sticking his hand up in the air. He’s an ambitious man. One of these days he’s going to make a big score, I think.

This would be a big one for him.

So, that never materialized. Maybe let’s put a positive spin on that. Let’s say this is Disney recognizing once again that linear TV is core, is important for maybe creating shows that they can sell downstream. So, let’s take it as a positive.

And of course, people at ABC are pretty nervous, though. I don’t think anybody feels like they’re standing on terra firma right now.

Well, probably not a good idea if you’re in the broadcasting business.

Harry, there was another big story this year with Disney and Charter.

Well, I was just going to say, the other sort of endorsement of the linear TV idea was that Disney and Charter, after coming to loggerheads in September or late August over a new carriage deal. It looked like that would go bad. It looked like Charter might walk away, but they didn’t. They were able to cut a deal for the ABC stations and more, and ESPN, and they got Monday Night Football up there.

And so, all was well, that was sort of a short-lived crisis. And had they not done that deal, that may have had repercussions for other broadcasters trying to cut new retrans deals. And so, I think for the time being, it’s secure, the idea the retrans will continue to come in. We have another year or two anyway of business as normal.

Sigh of relief.

Sigh of relief.

Another issue this year that was substantial, still unfolding really, is around the FCC and the virtual MVPDs, and that kind of fostered a bit of a schism inside of the broadcast world.

Well, yeah. Network versus affiliate the old, they’ve always been at odds, more prominently at some times than at others. But the real story there is, again, Rosenworcel has decided that she will not save broadcasters and allow them to deal directly with the virtual MVPDs, which are becoming a big part of the ecosystem now. That they will have to work through the networks, and when the networks make those deals with the virtual MVPDs, the affiliates always end up on the short end. So, that was a blow.

And it’s like Rosenworcel, like a lot of people, they say they love localism, but she doesn’t do a whole lot to help localism by supporting TV stations. I think she thinks she’s doing good by disallowing duopolies. I saw that was in the news again this week. NAB is making another run to persuade the FCC to allow network affiliates in the same market to own each other, you know, common ownership of two network affiliates. She’s not a fan of that. She’s turned down deals like that or rejected deals like that. That’s something she could do. You know, giving affiliates the right to negotiate directly with the MVPDs would have been nice…

Doesn’t roll off the tongue, does it, Harry?

Now we need another term. Can we come up with another term for that?

Yeah, I’ll work on that.

But what is clear, what is crystal clear, is she wants to help, maybe. But she doesn’t quite know how to. We’ll put it like that.

Well, one of the things I suppose you could say that that she did do to help, at least nominally, was a task force that was announced on ATSC 3.0, back in April, I believe it was, at the NAB Show, to kind of kick start that along, get that moving a little bit further. Doesn’t seem to have been a great year for NextGen TV, though, has it?

Well, it continues to bump along. Every so often you’ll see that they have announced another market, but I have yet to see a real plan for generating some revenue, creating a business either through enhanced television or through datacasting. I think the fact that LG, one of the big TV manufacturers, decided to take a pause in the marketing of NextGen sets was not good news.

Under litigation. So, it wasn’t maybe a voluntary pause, but nevertheless.

Yeah.

Just to say they were the biggest boosters in the OEM world for this technology. They were the ones kind of sticking their neck out the furthest. There was a lot of ambivalence with a lot of other set manufacturers.

Well, we’ll see what happens at the Consumer Electronics Show. But, you know, frankly, I don’t think that’s… I think it’s more of a datacasting business. I think that’s the way it’s going to go. And in even in that space, there’s another competitive transmission system out there. Got 5G, you know, uses the same transmission system they’re using for the phones, there’s a faction of the LPTV industry that’s sort of pushing this idea. So, then the ATSC proponents have to deal with that now, that somebody else is after that spectrum.

They’ve definitely thrown some cold water on that. But I do know that that some of the other the non-Sinclair broadcasters are trying some experiments with datacasting that they’ve kind of been keeping a lid on. I think some companies are just trying to manage expectations around this that it’s not going to be a panacea.

But you know, what’s interesting, when I talk to general managers, these are some of the people who are the most John the Baptist about the potential. They really do believe something is coming that will be transformative, mainly in terms of like addressable advertising in many ways. And it’s odd because that sort of dropped out of the national conversation. Certainly, it’s not leading the salient characteristics of ATSC 3.0 when we’re talking about it in a broader sense. So, they still believe, even if the faith has perhaps been challenged.

Well, as Mark Aitken is always telling me, keep the faith.

OK, well, there it is. So Nexstar, we touched on that before and they’ve had an interesting year with their national network endeavors. One of them being the CW, which underwent a pretty significant reboot this year.

Well, my Nexstar or my CW story is: I was at a New Jersey beach in September wondering how I was going to watch the West Virginia/Pitt football game, and I was surprised to find it on the CW. I guess they have an ACC package. I should have known that, but they do, and so I was able to watch that game sitting in a beach resort in New Jersey. I guess out of Philadelphia, it was. But I think that’s the right strategy, I mean they’re really heavy into sports. They did a wrestling thing also.

So, yeah, I think that’s a wise way to go. I hope they can make it. I know they’re investing heavily in it. At least Nexstar has sort of a growth strategy and maybe that’s why their stock is trading so much higher than their peers. Also, I listed this the year that Scripps came out and started talking about scooping up some local sports, and we’ve seen some of that.

Yeah, not only Scripps, Gray is on their heels, other groups are getting in there and definitely a lot of sports deals were announced. It wasn’t a plethora, but there was so much flux in that space, and it continues to be really, a lot of the teams in various leagues wanted to develop direct to consumer products for streaming so they can be sure to reach their fans. But they were convinced in many cases that broadcast is a value to them.

You know, it was years ago when I was growing up, you could watch baseball, hockey, basketball on broadcast TV or fairly frequently, boxing. All of that went away, by and large. And so, you know, those were fan recruitment devices. Those are tools for that, and I think they’re seeing the wisdom of that. And so, you get these 30-game packages that are popping up around the country with different teams and they seem to be good deals, or at least the teams are willing to try it out and see how it works.

Well, I hope we see more of them. You seem to have tracked it more closely than I. I’ve seen a few, but I’d like to see, you know, what do I know about sports marketing? But here in Pittsburgh, to do 25 or 30 games on broadcast TV and remind the people that have abandoned, the cord cutters, that we still have baseball here in Pittsburgh seems to me like a no brainer. I’d like to see it. I think it certainly would be a great thing for broadcasters if they could make that not as a loss leader, but as a real source of profit.

Yeah, well, Scripps is certainly the most bullish in that area, but Gray isn’t far behind them. And I think every group is taking this. Sinclair is trying to get back into that game a little bit and do some deals, and I think most groups are at least considering the possibility.

I think if Sinclair never saw another sports program again, they’d be happy.

Well, perhaps.

Their venture into sports has not been a good one so far.

No, but that story isn’t done being written yet.

OK, keep the faith, keep the faith.

That’s right. That’ll be the mantra.

That’s our theme.

Absolutely. And then just lastly, with Nexstar, NewsNation has another year behind it. Now they’ve got a presidential Republican debate that they have hosted. Are they, do you think, moving closer to viability, acceptability, with viewers?

I haven’t looked at the numbers, but I was sitting in a Chinese restaurant, and they could have had any TV station going on. Any TV station, there’s 10,000 of them and they had NewsNation. They must be doing something right. I think having that Republican debate on, which for some odd reason, I’ve been enjoying those debates. You know why? Because they’re talking policy. If they’re talking real policy, they’re talking about fixing things. There’s something normal about them. But I thought, I thought that was sort of a feather in their cap. It gave them a little status. If they were one of the big boys. I think it’s a very polished network.

It is.

No nonsense, very polished. They’ve done a nice job.

That’s Christmas past Let’s look to Christmas future 2024. There are a few things I want to bring up. Just the things that I’m watching and dynamics that will be kind of obviously important for the next year. One of them is the FAST channel phenomenon, which has become wildly, explosively popular with broadcasters. All of them, I think, at this point realize or already have FAST channels that they’re putting in various places, on the MVPDs, on the apps that are sponsored by the OEMs. Most of them have a strategy of ubiquity and putting them in as many places as possible. It’s a sort of easy-to-understand, intuitive business. It’s linear TV streaming, simply no VOD menu.

But it is an area that also, interestingly, where there’s a lot of change already happening. It used to be, you buy a smart television, you open up the app with all the FAST channels inside and you’d see a lot of library content stuff that was just kind of thrown at the wall to see what works. We are past that phase now.

We’re in the culling phase and the reorganization, redistribution of where FAST channels sit in those ecosystems. And it’s definitely turning out to be the case that they have to really think about, anybody putting one of these channels out, has to think about programing. It can’t just be some afterthought or just wheels that are running in endless circles that the OEMs and other more prized real estate wants to see original programing. They want to see dynamism, they want to see live. And so, it would seem that every broadcast group right now, needs –  

When you say, OEM, what are we talking about?

The set manufacturers, so the LGs, the Samsungs, anybody’s who’s got… and every TV basically now is a smart TV and it’s starting to come with loads of, you know, hundreds of FAST channels. But if you want to have a good place in that channel lineup, then you’ve got to have good stuff there. So, there can’t be any passivity about the programing. I think we’re going to go into this interesting year of prioritizing that platform and what it can do and just being much more active.

I have to tell you, when I turn on my TV, I look at, you know, I use Roku, when I look at those, you know, I can go down search channels and it’s just the clutter of stuff. And, you know, sometimes you see something that you might think is interesting. You go in there, it’s second-rate stuff. It looks like a lot of clutter.

It’s got a diginet-y kind of quality to it, sometimes in the worst sense of the diginet. But again, that’s you know, that stuff is getting stale. And it was sort of placeholder material in the FAST ecosystem. And now we’re moving into this more, I hate to use the word, but curated kind of sensibility about those channels.

Well, here’s what I want to know is what am I going to do with all these pay streams that I’m paying for I can’t keep paying them for. I think I’ve you know, they’re sort of like barnacles. You go through, I just collect them. I don’t think there’s, I’ve got them all and I got to do something. Can we cut to the consolidation phase?

Bundling. Well, the consolidation phase is happening for sure. But before that we’re going to see the bundling phase. And that word has already been thrown out by a few executives just in the last couple of weeks. It is coming. I think Apple TV and Paramount are talking about bundling and there are others that are under consideration right now. Bundling is going to happen, as people predicted years ago, the a la carte nature of streaming and buying streaming services has become onerously expensive, just on par with what people were paying for their cable bills. And so, what’s the value proposition really there? We’re going to see some culling of the herd. We’re going to see some bundling. There’s just going to be endless volatility in that space. So, you know, keep watching.

I guess the story is that none of these things are particularly profitable right now.

No.

No, they are not.

Well, many of them are. You know, Netflix tends to, by and large, to be pretty successful, but you have to have a massive, massive library. And that bundling is right. Even when you have a big library with lots of good titles, it’s got to be super enormous to really sustain. Of course, having all that programing costs a lot of money. The technology itself costs a ton of money and people don’t realize, they think it all just wafts in the cloud. There are server farms and massive infrastructure costs to running these things. And so, these were not small businesses that were quick to get off the ground and inexpensive. They were enormously expensive.

And then you add in the programing cost, to make the best programing that we’ve ever seen in some ways in the history of television. High cinematic production values, this cost a fortune. And this is all weighing on everybody’s balance sheets right now as we’re going into 2024.

You know, back in the day, it always irritated me that you had to get both HBO and Showtime. And I’m feeling the same way. If I want to get all the stuff that I want to get, I really have to do all those channels and they all have something on them.

You have to work three jobs to pay for it all too.

There’s a couple other things. Well, the major thing to watch, I think, for next year and maybe the most important thing since the advent of the internet — and I’m not even being hyperbolic here — is generative AI and its potential not only to change every part of our life, every industry, it’s going to affect broadcasters and it’s going to affect them imminently.

When I was at the IBC show in Amsterdam back in September, the word every single booth there was repeating like a mantra was the word
“efficiency,” because everyone realized they needed to get more efficiency out of their technologies than they have been getting. They need to lighten the load on people who are working in news, who are overworked. They need to get rid of redundant activities that go on routinely in newsrooms.

And AI, generative AI, has the opportunity to wend into so many facets of news production and lighten the workload, do incredible good potentially toward reducing the kind of redundancies that are out there helping, for instance, with versioning content from multiple platforms, which is a very onerous part of people’s jobs at TV stations as one example. It has so many appeals, and it’s becoming so much more precise, so sharp and so intelligent, it’s machine learning, so it’s always learning from what it’s doing. And its appeal to news producing companies is enormous on many levels. They are also extremely wary of the knock-on effects that it brings with it.

I’m sorry, what kind of effects?

The knock-on effects of, you know, just various things that will happen that as a result of adoption that you have to consider. You know, one of the things, for instance, being the major trust issues that consumers have with all sorts of televison, both local and national television, at this point.

When you’re employing AI at any level of the news process — and it can be applied at every level from news gathering to writing material, editing — all of this stuff can be automated. It can intermediate itself in very minute and very substantive ways that you might consider to be authorial in some ways.

The industry now has to reckon with how do you tell viewers about how you’re using it? If you are, what sort of disclosures do you offer there? And if you do disclose — I just read something today that the viewers want to know when it’s being employed, but they trust you less when you tell them. So, you know, you’ve got a real conundrum, there.

Yeah, really. Are you hip to what happened to Sports Illustrated?

Sports Illustrated, Gannett. I mean, those who have used it compositionally to write stories and yet, mind you, AP has been using it for years in that regard. They have these sort of templatized stories that they use to report earnings for a lot of small companies that allowed them to produce a lot more earnings coverage than they had been doing because they create a written template, and they plug in data points that are sort of scraped with the AI.

They did the same thing for minor league sports and baseball. And we’re talking like five or so years ago. It’s been out there, and they were fully transparent about its use there. Other groups are murkier in the way that they have used it.

Well, SI, which I consider a great journalistic brand. I don’t know what it is lately, I don’t read it. They were making up reporters. I mean, they were using stock photos and putting little blurbs at the end of the story. I mean…

And I still don’t think, as of this moment they have not come completely clean with what happened there. But it does enormous damage to the credibility of the brand. Of course, SI had some damage done, you know, going into this. And I think it’s often groups that are in dire straits, like Gannett, who are using it very liberally. But some TV station groups, look, many of the SVPs of news that I talked to in local station groups have a high, very elevated level of concern about it. They know they have to deal with it. They know it’s kind of fashioning into an arms race where someone is going to start using it and they’re going to get a competitive edge by doing so. So, they can’t just stick their head in the sand about it.

The stage that they are mostly at right now as groups is to form a sort of steering committee or some sort of internal apparatus that can start to assimilate all the information, the developments that are going on around this world — and they are coming daily, fast and thick — to try to get a handle on simply what is the narrative around this technology, how can it be used and what are the pitfalls we need to be aware of?

And there are also industry-wide consortia that are beginning to consolidate around this, around subsets of the AI issue, for instance, content authenticity, and we’ve had some podcasts and other material just this year about this subject.

How do you authenticate stuff because it’s so easy… AI can be weaponized as sort of tool of manipulation of content, and what do you do? How do you discern that? How do you prevent your own content from being in some way altered and misused once it’s out in the wild? And so, there are technologies being developed to watermark things once they’re disseminated, and there’s a sort of manifest that follows it. It’s extremely complicated, and it’s an arms race between the sort of bad actors using AI and the news organizations who want to use it to good effect.

Well, look, let me interrupt you. What would you advise the broadcasters? You say there’s sort of a downside to transparency, Right?

There is.

You can’t be too honest.

Well, so it seems. I mean, there was one report that found that viewers then have a wary eye that they raise around that. But there’s already a handful of news organizations who are wholly creating content with AI, that you can just get rid of reporters altogether.

This is one of the facets that’s going to have to be dealt with, and it does present, it should be really clear, that if companies broadly adopt generative AI into their newsrooms, it doesn’t seem possible that positions won’t be eliminated in the process. And those are positions that require a lot of critical intelligence.

And so, you know, I don’t want to say that producers all need to be worried about their job security per se. But the notion of a gen AI filling the many facets of the producer role is imminent and many other roles. You can have an AI-generated synthetic anchor or an avatar of one of your existing real human anchors, right now.

Well, TVNewsCheck has been sort of on the cutting edge of reporting that they can’t find producers. So, it sounds to me nobody’s going to lose their jobs, they’re just…

Probably not.

This may save stations.

Harry, I have a disclosure for you: You’ve been talking to an AI this whole time. I’m not actually, not actually me. It’s just my avatar. Just kidding. But it’s close. We’re close to that, and so the point is, broadcasters need to lean into this. They need to pay close attention, read everything they can. They should have a point person or group if they don’t have that now already. And these groups, these people are going to have to make some very consequential choices over the next months and year with regards to this technology.

Well, that’s great editorial fodder.

We’re all over it.

You should be.

I just want to bring up one last thing I think that we’re all going to obviously be looking at for next year and deeply concerned about, which is coverage of the 2024 election, because you have a very, very difficult needle to thread, even just looking through the lens of local television stations here where everything is politicized at every single level. You can’t just say, well, we’re local, we’re not national, we don’t have to worry about the same trust issues. They do. Mistrust has widened and it’s deeply impacted local news, and they cannot put their heads in the sand with regards to engaging the deeply polemicized viewerships that they have right now.

Trump is almost certain to be the Republican nominee and Biden the Democratic nominee. And with more and more utterances coming from Trump that are deeply, concerningly anti-democratic in nature, as in threatening the core tenants of the republic, stations have to wrestle with how they present that, that language, its consequences. What we know, in this particular candidacy, is issues that are raised that are very, very serious to the future of U.S. democracy as we have long known it.

They risk in engaging that to any degree utter alienation of Republican voters, for instance, and to abdicate in any way they risk alienating Democratic voters or just generally left-leaning voters who feel that that abdication is a failure of responsibility. And so, on that front, again, they’re going to have to make daily decisions about coverage. And they’ve struggled with this, and they continue to struggle with it about how to contextualize all of this. And how to get out of the horse race to talk about the larger issues that affect the state of the republic right now.

So, those are those are some serious, serious things that they’re going to have to grapple with, as well as the safety of their reporters. I mean, reporters are assaulted in small ways and large ways, much more than people realize in this country. It is a dangerous job. They’re in the crosshairs. People have been whipped up into a kind of frenzy and they feel very, very free about attacking verbally or otherwise or making threats on social media or in person reporters at every level.

And so, every single newsroom is going to have to develop protocols and keep iterating those protocols and have security with their reporters when they’re in situations that could become dangerous and so many more situations can become dangerous now.

OK, here’s a question for you, you want to pontificate, sir. Do broadcasters have a responsibility or are they liable? Because of the nature, I mean they’re going to take all this political advertising in next year, right? A lot of it is provocative, a lot of it is pretty nasty. It can get pretty nasty. Doesn’t that sort of fuel this conflict out there in the real world?

So, you’re sort of warning broadcasters that they’re going to have a tough time covering this election next year. At the same time, they’re sort of whipping up the electorate with just broadcasting those ads. I didn’t use the word responsible because they’re not, because of the way the law is written. They are not liable for a lot of what goes into those ads. Their obligation is they air them pretty much as they receive them. What do you think?

Well, like you said, their responsibilities are somewhat limited. They’re certainly not going to turn down that money. They need it badly. But, you know, it kind of also circles around to a broader media literacy problem that we have in this country where, you know, a lot of viewers conflate everything they see into one big kind of organism.

They don’t make these delineations. We’ve done a terrible job as a country, given how saturated we are with media. We have an electorate which is ill informed in many, many, many cases and conflates a lot of material. Of course, those problems are conflated by some news organizations themselves, particularly on cable, particularly in primetime, where this conflation of opinion and news is just wholly realized at this point.

So, we have that problem to untangle and no immediate solution presenting itself. If I could dictate something to the industry, I would advise trying to weave in media literacy efforts more often into their programing in small and large ways, if they could, to help viewers understand and unpack critically the things with which they are being presented.

And you can do that in all sorts of ways. But right now, this problem does face us immediately. And these are the dynamics that are already well in motion. And so, we’ve got to play the hand that we’ve been dealt.

I think that’s a good answer. Media literacy and broadcasters, I think, should do that. Again, this gets back to transparency. What they’re doing, what’s really happening out there, when the politicians say this, what do they really mean and not?

I don’t think they should stand in judgment just to know that, at the very least, know what the incentives that are driving media understand the economics of the business so viewers can sort of understand why they do some of the things that they do. I think that having a good industry-wide campaign for the industry, for broadcasters to undertake…

At the same moment, it should be clear that a lot of groups have made great leaps forward in just the last couple of years in the way that they’re covering stories, in realizing that they need to build transparency more into the process, what they’re showing viewers and showing them behind the curtain of news production a little bit more than they ever have, trying various creative ways to be more transparent.

And the product is everywhere that you can see of that nature, and there has been great improvement. They are meeting, trying to meet the moment in that sense. So, I’m optimistic that an effect of all of this has been that that most of the major groups have been introspective about their news product, iterating it much more dramatically than they have for decades.

Well, they are still considered the most trusted source of news, so they’ve got to be careful not to lose that.

Yes, exactly. And they know it. Well, I think a good note to leave it on is the prospect of trust and hope springs eternal. Harry, it’s been great talking with you once again and looking back and ahead to 2024. We’ll see you next year.

OK, yes, sir. See you then.

Thank you. And you can watch past episodes of Talking TV, at TVNewsCheck.com, as well as on our YouTube channel. We will be back in the new year with a whole slate of new Talking TV podcasts every Friday and look forward to seeing you then. Have a good new year.

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Harry Jessell

If there are any individuals who ought to be stripped of their ability to be in the news business, they are Rupert Murdoch and his son Lachlan.

As laid out in extreme detail in the Dominion Voting Systems defamation complaint and discovery, Fox News Channel knowingly embraced, amplified and promoted Trump’s Big Lie that he had been the victim of a giant conspiracy to deny him a second term in 2020.

And the Murdochs, the controlling owners of the channel, did nothing to stop it.

And they let it play out for the worst possible reason — the fear that they would lose Trump loyalists to other pseudo-news networks if they did not tow the Trump line.

In doing so, they undermined trust in American democracy among FNC’s millions of viewers and stoked the anger that fueled the violent storming of the Capitol on Jan. 6. That trust may never be fully repaired.

The Murdochs have suffered for their journalistic transgressions and cowardice. They were forced to settle the Dominion suit that stemmed from FNC producers and commentators allowing Trump surrogates to drag the good name of the voting machine company through the mud and into their deranged election rigging theories.

But, at $787.5 million, with no apology and no admission of its lying and irresponsibly, I’m among those who think the Murdochs and FNC got off light in the settlement and heap on more pain.

That said, I can’t go along with the campaign to punish the Murdochs by stripping away their broadcast licenses, starting with WTXF Philadelphia and presumably eventually the rest of the Fox O&Os.

Leading the charge is a startup media watchdog group called the Media and Democracy Project. It can’t go directly after WTXF for the simple reason that, like most station newsrooms, it steered clear of Trump’s election ravings. So, instead, MDP is relying on a quaint FCC policy that says it can revoke a license of anybody whose character it finds wanting.

MDP is charging that, in failing to responsibly manage FNC coverage of the election aftermath, the Murdochs demonstrated that they are unfit to be broadcasters.

Legally, the lawyers tell me, it’s a stretch. The FCC rarely goes after a license (even more rarely actually revokes one) on character grounds, and when it does it’s because a licensee is guilty of a narrow and long-standing set of wrongdoings.

Among them are lying to the FCC, “news distortion” and repeatedly violating agency rules by the stations themselves. The FCC will also nail you for non-broadcast malfeasance, like a media-related antitrust judgment or a felony conviction of any kind.

MDP hangs its case, in part, on language it dredged up from a 1986 policy statement on character that says the FCC might disqualify license applicants for engaging in “non-broadcast misconduct so egregious as to shock the conscience and evoke almost universal disapprobation.”

In its petition, MDP edited that language, adding a bit about misconduct that “sowed discord” and deleting the part about “universal disapprobation,” which doesn’t really work given that a big chunk of the electorate thinks Trump is a fine fellow and the election was stolen.

It all sounds a little thin.

The more fundamental problem with the MDP initiative is that it would, if taken up by the FCC, perpetuate the second-class First Amendment status of broadcasters that gives the FCC oversight of who can speak via broadcast stations and what they can or cannot say.

In the vast and turbulent media ecosystem of 2023, only broadcasting is subject to second guessing by federal bureaucrats.

Every newspaper, every cable channel, every streaming channel, every podcast, every website, every blog, every social medium enjoys the full extent of First Amendment protections. But, still, broadcasting must continue to labor under a meddlesome regulatory structure whose foundation was laid by Herbert Hoover 100 years ago.

There is a reason the MDP decided not to try to enlist the government in shutting down Murdochs’ Wall Street Journal or the offending FNC itself as penance for the latter’s post-election coverage. There is no office, bureau, agency or department that would have even the foggiest notion of what to do with such a petition.

For the past 40 years, mostly during Republican administrations, the FCC has been slowly extricating itself from content regulation. The big moment came in 1987, when the FCC eliminated the Fairness Doctrine, which empowered the FCC to decide what’s proper and improper to be seen or heard on the airwaves.

Soon after he was appointed FCC chairman by Trump in 2017, Ajit Pai schooled the president after Trump tweeted that, “With all of the Fake News coming out of NBC and the Networks, at what point is it appropriate to challenge their License? Bad for country!”

“The FCC under my leadership will stand for the First Amendment,” Pai said when prompted to respond to the tweet at a telecom law conference. “Under the law, the FCC does not have the authority to revoke a license of a broadcast station based on the content.”

If that is so (as I believe it is), I would offer this corollary: The FCC does not have the authority to revoke a license of a broadcast station based on the content of a non-broadcast media outlet simply because they have common ownership. At bottom, that is what this case is all about.

If FCC Chair Jessica Rosenworcel pursues an investigation into whether the Murdochs are worthy licensees it would stall the ample progress broadcasting has made toward being as free as all the other media with which it is forced to compete. It would also generate a heap of political trouble that may jeopardize the rest of her agenda.

My measure of the chairwoman is that she has way too much sense to go there.

Harry A. Jessell is editor at large of TVNewsCheck. He can be contacted here. You can read earlier columns here.

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Harry Jessell

As we learned from the FCC’s sabotage of the Standard-General-Tegna takeover, FCC Chairwoman Jessica Rosenworcel hates big broadcast TV deals.

We now learn she hates little ones, too.

Eighteen months ago, Forum Communications asked the FCC to OK its $24-million purchase of Fox affiliates KVRR Fargo, S.D., and KQDS Duluth, Minn., from Red River Broadcasting.

The deal posed a problem as Forum already owned Fargo’s ABC affiliate, WDAY, and FCC rules prohibit ownership of two top stations (two Big Four affiliates generally speaking) in the same market.

However, the rules also say the FCC will consider such duopolies if the buyer makes a showing that the combo will not unduly damage competition and that it will otherwise serve the “public interest.”

That’s what Forum did, and then it waited and waited and waited for the FCC to grant the waiver and approve the sale or explain why not.

The agency did neither. It just quietly let the parties know that it wasn’t going to act. When the sales contract expired in May, the seller, Red River, had enough. It threw up its hands and walked away.

“The request for a waiver, whether granted or denied, was just not heard, which is the part that really astonishes us,” disappointed Forum VP Joshua Rohrer told me. “Why that is? Your guess is as good as mine.”

It was a bureaucratic trick similar to the one the FCC used in Standard General-Tegna where it stretched out the approval process so long that Standard General’s elaborate financing package unraveled, and it was unable to close.

I see the appeal of the do-nothing, run-out-the-clock method to Rosenworcel. It doesn’t require any staff work or commission vote and it effectively cuts off avenues of appeal.

It also discourages others from applying for waivers, which I suppose is Rosenworcel’s real intent. Even a formal denial would have given some guidance to other buyers and sellers who might want to take a shot at getting a duopoly waiver.

The only guidance here is: Forget about it.

By the way, there was no public opposition to the Fargo deal — no petitions to deny or even informal objections. Of course, the FCC is a political body and so susceptible to political pressure. You never know if someone was sneaking around trying to scuttle the deal.

I asked the FCC for an explanation, and it declined to comment.

This is a good example of bad government. The FCC, albeit during a Republican administration, promised to consider Top-Four waivers, even going so far as to spell out the criteria for winning an approval.

But when a request with each of the criteria carefully addressed comes before it, the agency can’t be bothered with making a proper ruling. The time and expense the parties put into the deal counts for nothing.

This is also another good example of how the Rosenworcel FCC is willing to disrupt the normal course of business for abstract, outdated and questionable notions of diversity of “voices” (owners), competition and localism.

What is especially troubling about the FCC’s mindless adherence to the big-is-bad Democratic orthodoxy is that it has undermined precisely the kind of broadcaster it should be supporting in every which way it can.

Forum Communications is not some Wall Street investment firm like Standard General that is easy to vilify just because it is a Wall Street investment firm.

It is a family-owned company that traces its roots back nearly 150 years and five generations to the founding of The Forum of Fargo-Moorhead newspaper in 1878.

It now comprises several digital and print newspapers throughout the Dakotas and Minneapolis as well as WDAY and the ABC affiliates in the North Dakota communities of Grand Forks, Bismarck and Minot.

And the company is based in Fargo. Back in the day, when the FCC had to pick and choose among competing applicants for licenses, the first thing it looked for was “integration” of local ownership and local management.

The thinking was that if the owners live in the community, they are more likely to operate in the best interest of the community — the people who they are apt to see around town everyday — than some outsider. It makes perfect sense.

How that principle no longer matters at the FCC is baffling.

I can see why the FCC may be wary of granting Top-Four combos because of what happened in Sioux Fall, S.D., just 250 due south of Fargo.

In 2019, in its first and, I believe, only waiver of the rule, the FCC approved Gray Television’s $32.5 million purchase of NBC affiliate KDLT, even though it already owned the market’s ABC affiliate, KSFY. Gray subsequently acquired the Fox affiliation and airs it on a subchannel of KDLT. So, Gray ends up with three of the Big Four in the market.

But Forum isn’t Gray.

Unlike Gray in Sioux Falls, Rohrer said, Forum would have operated its two stations in Fargo independently — that is, with separate brands, news directors, reporters and anchors. “We made a commitment to actually increase the amount of news coming off KVRR over what they are doing today.”

Forum faces tough competition in Fargo. As it happens, Gray operates Fargo’s NBC and CBS affiliates. (The CBS outlet is a low-power station and so isn’t subject to the two-Top-Four ban.)

And, according to our just published Top 30 Station Groups, Gray is the fourth largest group in the nation with annual revenue of $3 billion. You would think the FCC might want to even things up in the market.

In its filing, Forum also argues that its ownership of the Fox outlet would make the market more competitive and local programming more innovative.

It would also result in an increase in local advertising spots in the market as Forum would replace much of the paid advertising and nationally syndicated programming on KRVV with local news. And more spots mean lower ad rates for local advertisers.

As a side note, it is hard to understand why the FCC would strictly enforce the Top-Four rule when it has been easily circumvented with the use of low-power stations and subchannels as Gray has demonstrated in Fargo and Sioux Falls. These dodges have been successfully employed in dozens of markets by others.

So, the Rosenworcel FCC, again in high-handed fashion, has decided what’s best for the good folks of Fargo based on an arbitrary rule that might make some sense in general, but certainly doesn’t in this particular case in Fargo.

In this case, the FCC should have sacrificed a weak third voice in the market to ensure vigorous competition between the two strong remaining voices, one with the resources of a multi-billion-dollar corporation, the other with local goodwill accumulated over a century and a half.

KRVV and KQDS are back on the market (see Kalil & Co.). My guess is that they will eventually go to a station consolidator or speculator with owners far from Fargo and Duluth.

When the FCC routinely approves that deal, perhaps we will get an explanation of why the out-of-market, out-of-touch buyer is superior to Forum. But I wouldn’t count on it.

Harry A. Jessell is editor at large of TVNewsCheck. He can be contacted here. You can read earlier columns here.

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Harry Jessell

Retrans has been quite a bonanza for TV broadcasters since 2005 when Nexstar CEO Perry Sook cracked the code and started making cable operators pay for carrying broadcast signals. The total take now runs into tens of billions of dollars.

But what about the dozen years or so prior to 2005? Congress empowered broadcasters to collect the fees in 1993. Why weren’t they scooping up billions in great gobs during the 1990s and into the oughts?

Jeff Smulyan provides his answers and a lot more in a lively and candid book about his half century in broadcasting, Never Ride a Rollercoaster Upside Down: The Ups, Downs and Reinvention of an Entrepreneur. (The book isn’t out until November, but Jeff shared an advance copy with me.)

I suspect that many of you know Jeff. He has been a fixture in broadcasting, mostly radio, since he got his hands on an AM daytimer in his hometown of Indianapolis. Over the years, he slowly built a major station group with top performers in New York and Los Angeles.

Emmis Communications went public in 1994 and, as the title of the book suggests, he rode radio to great heights (the stock that debuted at $15.50 hit $124 in 1999) and then down into its recent depths.

In 1996, Congress took the lid off radio station ownership, setting off frenzy of station consolidation led by Clear Channel Communications and fueled by a seemingly endless supply of easy Wall Street money.

Believing the frenzy had boosted valuations to “unsustainable heights,” Smulyan turned to TV broadcasting as the best way to grow, a “logical extension” of his company.

As he began accumulating stations in 1998, he writes, he saw that the big problem with TV was that it didn’t have a second revenue stream as its chief competitor did. Broadcasting had advertising; cable had advertising and subscriptions.

He says he made developing that second stream his mission.

When he came along, retrans was a bust. Led by Tele-Communications Inc. CEO John Malone, cable operators had steadily refused to pay fees. And Malone prevented concerted action by the broadcasters by making a separate peace with the broadcast networks. In lieu of retrans, he offered them channels (and fees) for new cable networks. That was great for the networks, but not for their affiliates.

But Malone wasn’t the problem in 1998. In fact, he unloaded TCI to AT&T for $48 billion in that same year.

Smulyan says he soon discovered what the real problem was: affiliates’ unwillingness to yank their signals from cable systems that refused to meet their retrans demand. Without that threat, their demands had no power behind them.

Smulyan was invited to join the Television Operators Caucus, a group of major affiliate groups that had banded together to counterbalance the power of the networks at the NAB and in other industry affairs.

In one of his first meetings, he says he asked why the group wasn’t demanding retrans fees. “Someone answered with a statement that almost knocked me out of my chair: ‘The cable guys aren’t gentlemen; they are impossible to deal with, and it’s not a fight any of us feel like having.’

“My response was, ‘They may not be gentlemen, and they may be impossible, but you’re in a gunfight, and if you don’t bring some guns, you’re going to die.’”

He says he soon realized that the TOC members were division managers within bigger companies and “none wanted to risk a stable corporate career fighting what might be a losing battle.

“One friend, Andy Fisher … [of Cox], said, ‘Jeff, my boss likes to play golf and hunt. Do you think I want to get him off the golf course and tell him that his multibillion-dollar television business is jeopardized by this issue? I don’t think I’m willing to do that!’

“This outlook became the basis for what I termed ‘the Boca problem.’ As in, ‘If there’s a good chance that by the time this thing is over, I’ll be retired and living in Boca, why should I start this fight in the first place?’”

Undeterred, Smulyan decided to take the lead. His “moon shot” idea was wireless cable, a multichannel pay TV service using the new channel capacity created by the industry’s shift to digital broadcasting.

The idea withered. “[T]he networks were not dying to work with each other, let alone their affiliates,” he writes. “Almost everyone agreed the idea had great merit, but getting them over the finish line proved impossible.”

Smulyan then pushed that the NAB try to persuade Congress to grant broadcasters an antitrust exemption that would allow them to jointly negotiate with cable for retrans. It was a no-go. Finally, he proposed that the networks use this combined might to strike a national retrans deal for themselves and their affiliates. Once again, distrust between the networks and affiliates derailed the approach, he says.

When these efforts were exhausted, Smulyan’s interest in TV waned and, when he was feeling the weight of corporate debt, he decided to exit TV. He sold his 16 stations for $1.25 billion, netting a $100 million profit. It was a decision he came to deeply regret for a couple of reasons.

First, the very same year sold his TV stations (2005), Sook, along with Sinclair’s David Smith, began demonstrating that broadcasters had all the leverage they needed to get retrans. The key was simply calling the cable operators’ bluff. You don’t pay, you don’t get the signals.

Second, he didn’t know it at the time, but radio was heading for disaster. The recession of 2008-09 hit radio hard, tanking revenue and cash flow and crushing the stock of the highly leveraged, publicly traded companies.

Emmis became a “zombie company, dead to the world,” he says. And because he had personally borrowed $25 million to buy back Emmis stock in the good times, the recession pushed him to the brink of personal bankruptcy.

As the book details, there would be no bounce back for radio this time. Overcommercialization and increasing competition from streaming services and podcasting gradually has eroded radio listenership and put the medium on what appears to be a permanent downward trajectory.

I covered these years in broadcasting closely and Smulyan has the retrans story just about right. I would add that it wasn’t just the Boca problem that held back the affiliates.

Three influential affiliate groups had serious cable conflicts that made them soft on retrans. Hearst Television’s parent had a big stake in ESPN and Cox and Post-Newsweek (now Graham) had highly profitable cable systems in the corporate family.

I would also note that Smulyan was only marginally gutsier than the Boca crowd. He believed that broadcasters could capture retrans dollars only by working together. Sook and Smith would prove otherwise.

There is a lot to more in Smulyan’s book than retrans. In his foreword, CNBC media reporter David Faber says the book is “as much textbook as memoir.” That it is. His adventures in radio, TV and sports ownership are filled with talk of cash flows, multiples, ratings, leverage ratios and loan covenants in easy-to-digest prose.

At the same time, Smulyan’s wild ride through media and sports is full of wonderful stories and people. The book confirms my belief that business — any business — is a rich and mostly untapped source of great drama and comedy.

And you’ve got to love a guy — and a book — that tells it all, the good and bad. “This isn’t a book about … scaling the mountaintops of commerce and emerging unscathed,” Smulyan promises at the outset. “Instead, it’s about what happens in some fascinating businesses when things go spectacularly right and just as often when they go painfully wrong.”

On the “painfully wrong” side of the ledger, in addition to sticking with radio instead of TV in 2005 and his personal stock buyback, are his short-lived and ill-fated ownership of the Seattle Mariners, his failure to sell when radio was commanding up to 20 times cash flow, missing a golden opportunity to acquire the Houston Rockets, and Victor Orban essentially nationalizing his lucrative ($12 million in cash flow!) national radio network in Hungary.

In addition to building profitable TV and radio groups, the things that went “spectacularly right” was his creation of all-sports radio at WFAN-AM in New York. After a rough start, the station came together with Don Imus, Chris Russo and Mike Francesca manning the mics and spawned copycat stations across the nation.

Smulyan says it pained him that that he had to sell the station to get over a financial hump during the 1991-92 recession. But he took some solace in that Mel Karmazin paid $75 million for the station — the most ever for an AM.

Smulyan is a nice guy, and he doesn’t have much bad to say about anybody — except Bob Pittman, who was named head of Clear Channel (now iHeart) in 2011 a few years after the Mays family cashed in by selling the mega-group to private equity firms for $26.7 billion.

Smulyan portrays Pittman as a somewhat petulant self-promoter with one great talent. “He may have been ‘Bob Pitchman,’ but he really was good at it,” he says. “Years later, I marvel at his ability to tell a story convincingly, even when I know it is a lot closer to fiction than fact.”

In a last-ditch effort to save radio, Smulyan rallied the radio industry to push the wireless companies to enable FM tuners in smartphones and to develop a feature-rich app called NextRadio that would enhance radio listening on the phones.

Smulyan believes that Pittman, committed to a wrong-headed audio streaming strategy, worked to undermine NextRadio. After a particularly frustrating meeting with Pittman mediated by then-NAB President Gordon Smith, Smulyan says he told Smith, “I feel like the rest of the industry is stuck in the back seat of a car and Pittman and [COO] John Hogan are Thelma and Louise and they’re about to drive the rest of us over a cliff with them.”

Like everything else the industry has tried since then, NextRadio failed to put radio back on a winning path and so Smulyan started backing out, selling off stations. “[M]edia, especially radio, is in a rut, and I’ve learned that once you’re in a rut, it’s almost impossible to climb out of it,” he writes.

In 2019, he and Soo Kim, a TV station asset player who is now in the process of absorbing Tegna, split Emmis into two public companies — a new iteration of Emmis that he controls and Mediaco, which Kim controls. Mediaco came away with two FMs in New York, while Emmis got $100 million in cash along with a 24% stake in Medico, radio stations in Indianapolis (that Smulyan subsequently sold), a couple of minor stations in New York and Digonex, a dynamic pricing company.

At 74, Smulyan says he has no regrets and is looking forward to acquiring new businesses outside of media, some through special-purpose acquisition companies (SPACs). “Going forward, I anticipate that Emmis will have some significant successes and probably a few screwups, too,” he writes. Why wouldn’t he? That’s been his history.

In talking of his future, he comes across as the kid who at the end of a terrifying and exhilarating rollercoaster ride hops out the car and immediately asks, “Can we go again?”

Harry A. Jessell is editor at large of TVNewsCheck. He can be contacted here. You can read earlier columns here.

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Gray may also be feeling a bit of peer group pressure. Sinclair (20 cents), Nexstar (70 cents), Scripps (five cents), Tegna (seven cents) have been cutting dividend checks for some time, providing shareholders with a 1% or 2% bonus return on their investments.

All those cents add up. Gray’s peers collectively paid out more than $250 million last year and that number will go higher this year now that Gray has joined the club.

TV broadcasting throws off a lot of cash and even after the groups make their mandatory payments to creditors, they still have a lot of cash left over to do with what they will.

That they want to set aside some for dividends is understandable. They, along with stock buybacks, are ways of boosting stock prices, which makes investors and, not incidentally, top managers who typically own big blocks of stock and stock options, happy. Of the five groups, three — Nexstar, Sinclair and Gray — repurchased around $700 million of their own stock last year.

(In the case of Tegna, the board may feel it has no choice but to appease shareholders. Hedge fund investor and former Media General head Soo Kim is still lurking around and angling to take control of the company.)

But while the dividends and buybacks may signal financial stability, they also signal a lack of management imagination and divert funds from where they would do the most long-term good — local news operations and ATSC 3.0.

Distributing cash to shareholders is what “mature” businesses do. The problem is broadcasters don’t compete in a mature industry. For the second time in my four decades of following television, the medium is going through a major upheaval. Streaming has given rise to great new players like Netflix and Amazon and it is replacing broadcasting as the dominant TV medium, something cable was never able to do. The whole idea of linear TV — broadcasting and cable — is under siege.

Broadcasters’ response cannot be to count their money and divvy it up. To me, it’s almost an admission of defeat. It’s one step away from selling out to private equity firms that milk the cash flow of stations into oblivion as they are now doing to newspapers.

Where should the money go?

The broadcasters have to get serious about ATSC 3.0. The FCC authorized the new standard three years ago, and broadcasters cannot allow the build-out to drag on for years and years. That is the pace we are now on.

I say that knowing that no one has come up with a real business plan. But there is great potential in the technology, enough to warrant great investment. The new standard could be used for expanded multicasting, targeted advertising, mobile broadcasting and datacasting. At the very least, 3.0 keeps broadcasters in the game. They will not find themselves competing with inferior picture and sound quality against the streamers.

But most of all, the groups have to spend more money on their news, both broadcast and digital. Way too much of the local news is still crime, accidents and fires — the low-hanging fruit. Yes, stations step up magnificently in times of crisis, but that doesn’t justify the shallowness and sameness of the day-to-day product.

Newspapers are failing. Raid them for their best reporters and columnists and put them to work, if not on air, then on the websites. Experiment with formats that might appeal to younger viewers. Create easy-to-navigate OTT platforms where viewers can watch news on demand if they choose.

Cover local politics and public affairs like they matter. It’s tough and costly to do, but, if they don’t, some digital disrupter just might come along and take a big hunk of their political dollars. Municipal office buildings are rife with intrigue, gossip and occasional scandal. You would never know it from watching TV.

If broadcasters think they cannot lose the lucrative political ad business virtually overnight, they need to speak to those publishers who never saw Craigslist coming.

How about business? Which employers are leaving town? Which are coming? I would venture to say that people are as interested in knowing when a building is going up in their neighborhood as they are in seeing one burning down.

And how about bringing back sports? In every one of the recent earnings calls, I heard that sports gambling was the hot new ad category. That should justify sports reporting that goes beyond the cliches and gets to what’s really going on in the front offices and locker rooms.

I realize that station groups cannot pour money into all of their stations, but they can invest more heavily in some of their stations. In any event, they should not be stripping stations of resources because they have to muddle through a non-political year. Sinclair said last week it is cutting payroll by 5%. Not all those cutbacks will be at stations, but any is unconscionable when the company is still figuring on paying out $63 million in dividends this year.

The big station consolidators want the Democrats now running the FCC to relax the ownership rule so that they can buy more stations or merge. But why should they?

If I were a commissioner, I would ask what’s in it for the public. If I allow you to own two network affiliates in a market, what are you going to do with the extra money you make from the economies of running two stations side-by-side and eliminating one of your competitors? How are you going to improve the quality of the service? Are you going to provide the depth and breadth of coverage that the newspapers used to?

How do I know the money is not going to be used only to fatten the wallets of management and shareholders?

Look, broadcasters can continue to behave like a mature business and buy out some shareholders and coddle others by sweetening their investments with dividends. But I should tell you, I looked it up. Do you know what comes after “mature” in the business life cycle? “Going” and then “gone.”

Harry A. Jessell is editor at large of TVNewsCheck. He can be contacted here. You can read earlier columns here.

The post Jessell | Dividends Send Wrong Message About Broadcasting appeared first on TV News Check.

If you read my column last week, you know I was rooting for Lougee, having been reassured of the company’s financial and operational soundness and believing that it is best for the company and its employees for Lougee and his team to have ample insulation from the demands of an unhappy and impatient shareholder.

After the vote, Kim issued a concession statement that fell short of concilatory. He said, in essence, he will be keeping a close eye on the company. (How could he not? That stake of his is worth nearly $300 million.)

Although he lost the vote, he said he feels he has succeeded in putting management on notice that it has to improve its performance and become more transparent and responsive.

He also did something that he should have done more of during the proxy campaigning — showed some empathy for Tegna’s employees.

He says he appreciates the reporters, producers and AEs that make it all happen. “The work Tegna’s people do on the front lines to provide reliable news to Tegna’s communities has never been more important,” he said.

Kim also took a shot at Tegna for furloughing staff in the face of pandemic-related advertising losses. “We have heard the anecdotes of trusted anchors off the air during May sweeps and a chief meteorologist missing on-air amidst tornado season,” he said.

I’m curious to see Kim’s next move.

In addition to the Tegna stake, Kim has an odd assortment of other radio and TV holdings. During the proxy fight, Tegna charged that they represented a conflict of interest.

Kim is backing Deb McDermott (one of his proposed alternate Tegna board members) as she builds a station group from the ground up. So far, she has bought two TV stations from Phil Lombardo’s Citadel Communications and, pending FCC approval, nine TV stations and 15 radio stations from Waypoint Media and Vision Communications.

And he has also set up a venture with Jeff Smulyan’s Emmis Communications to accumulate unspecified media properties. Emmis seeded Medico Holdings with two of its New York FMs, WBLS and WQHT. In exchange, Emmis got from Standard Media $91.5 million in cash, a $5 million note and 24% stake in the new company.

If there is strategy behind all that, I don’t see it.

Report Card Time

Starting with Sinclair this Tuesday, the publicly-traded station groups begin releasing their 1Q earnings and teleconferencing with analysts who cover them. This will be our first opportunity to assess the actual damage to advertising revenue from the pandemic not only in the first quarter, but also in the second.

Everybody is expecting the worst. In an interview we posted earlier this morning, Magid’s Bill Day said he believes that advertising may have fallen as much as 60% in March and April.

But there sometime else to look for in the reports and the analyst calls — the impact that cable and satellite cord-cutting is having on the group’s retransmission consent revenue. The retrans payments are based on the number of subs. Every lost sub is money out of the pocket for the broadcasters.

According to a survey by The Wall Street Journal in February, the larger cable and satellite companies lost about 5.5 million subs last year, an 8% decline in total subscribership and 70% more losses than the 3.2 million of 2018.

In in the 4Q calls earlier this year, I noticed that the station groups were talking more about cord cutting than they have before and were quantifying the losses resulting from it. Brian Lawlor at Scripps and Dave Lougee at Tegna pegged their losses at low to mid-single digits.

Those losses could get worse.

In an April 24 call that analysts Craig Moffett and Michael Nathanson hosted for their clients to discuss the impact the pandemic was having on big media and advertising holding companies, Moffett said cord cutting may not register big in 1Q, but it will in 2Q. He predicted a “sharp acceleration” due to the lack of sports and the “huge financial pressure” that many households will be under because of the pandemic.

The cord cutting is unlikely to become so bad as to flatten or significantly slow retrans revenue growth because the per-sub fees are still going up. But it should still be a cause for concern, especially if we fall into a long recession and ad revenue doesn’t bounce back.

Stock Market Check-In

I don’t anticipate stocks of the public stations group will suffer much more than they have following release of the 1Q earnings. Investors have already beaten down the broadcasting shares. All are way off their 52-week highs. As of the Friday closes, Sinclair is off 75.7%; Scripps, 67.2%; Gray, 52.2%; Nexstar, 50%; and Tegna, 42.4%.

Here are the footnotes to those percentages: 1) Gray and Nexstar were in fine shape until the markets caught up to the seriousness of COVID-19 and starting tanking in the third week of February; 2) Sinclair’s poor performance probably has less to do with broadcasting than with the string of regional sports networks it bought last year (is there a worse TV business to be in right now?); and 3) Tegna’s stock has been most resistant to the downturn, but that may be due to its having approached in early March by suitors who thought the company was worth around $20 million, a $2 premium on its 52-week high.

Nexstar’s AE Solution

The station employees that are getting hurt the worst in this econo-demic may the AEs — at least financially. Most work on straight commission. That means they are experiencing the same sharp drop in income as the stations are in their advertising revenue.

Station groups are looking for ways to get the AEs through the next few months as the pandemic continues to take a toll on business.

Here’s Nexstar’s voluntary plan: The company calculates each AE’s average monthly earnings over the past 12 months. For the three months (April, May, June), it pays the AE that monthly average. If over the three months, the AE’s actual commissions come up short of the monthly average (as they most certainly will), he or she will have to pay back the shortfall to the company at 0% interest over the next year.

It’s not a perfect solution. The AEs who accept the deal will be able to get through the worst of the pandemic without losing any income. On the other hand, they will likely be burdened with a fat debt after the three months — one I suspect they soon will resent having to pay off.

Access For All

Since the early days of radio, broadcasters have fought for access to press conferences, official proceedings and other newsworthy events — for the right to bring microphones and later cameras everywhere a reporter with his pen and pad may go. It’s been a long struggle. Cable networks like C-SPAN and CNN entered the fray 40 years ago, often leading the charge.

Today, the electronic media will achieve another milestone. For the first time in history, they will be able to air live audio of a Supreme Court argument. Up to now, they have been restricted to recorded audio that is not immediately available and video remains verboten.

The milestone is actually incidental to another extraordinary event. Because of the pandemic, the high court is hearing arguments via audio-only teleconference this month. The justices will all be in their homes as will the opposing attorneys.

C-SPAN made its first request to allow cameras in the court in 1988, but the court steadfastly refused, even as it began allowing use of recorded audio starting with the highly charged arguments in Bush v. Gore in 2000.

Writing in The Washington Post last week, C-SPAN General Counsel Bruce Collins said he believes there will be no going back on the live audio.

“Having been given live access to the court in the spring, the public and the news media would certainly expect to have it in the fall when a new term begins. The court’s move toward greater transparency should continue after the pandemic abates — and once the justices have become comfortable with live access, adding video coverage is the next logical step,” Collins said.

The first case gets underway today at 10 a.m. ET with C-SPAN 1 and C-SPAN Radio, if no one else, promising live coverage. The case pits the Patent and Trademark Office against Booking.com over a trademark dispute. The Washington Post had a nice piece on how the attorney for Booking.com is prepping for the occasion.

It’s not the kind of case likely to draw much interest. But on May 12, the court is set to hear arguments on President Trump’s efforts to block congressional committees and a New York district attorney from subpoenaing his banking and financial records, which could answer a lot of questions. Just how much is he worth, where did his money come from and who is backing all his loans?

You can bet it won’t just be C-SPAN covering that one live.

Harry A. Jessell is editor at large of TVNewsCheck. He can be contacted at 973-701-1067 or here. You can read earlier columns here.

The post Jessell | After Proxy Loss, Pondering Kim’s Next Move appeared first on TV News Check.

A key member of the editorial team at NewsCheckMedia since 2012, Depp assumes control of TVNewsCheck’s editorial direction and day-to-day operations. He succeeds Harry A. Jessell, who conceived and co-founded TVNewsCheck and led its editorial direction and operations for nearly 14 years.

Harry Jessell

Jessell remains involved with the publication, serving as editor at large, a role in which he continues to write occasional stories and columns (including one that will appear tomorrow) and provides advice and counsel to the editorial team.

Depp joined NewsCheckMedia in 2012 as editor of NetNewsCheck, a sister publication serving digital leaders in the newspaper, TV, radio and digital-only industries.

As special projects editor at TVNewsCheck since 2016, he has been writing and editing for TVNewsCheck and deeply involved in planning and producing events, including NewsTECHForum, TV2020: Monetizing the Future, the OTT News Summit and the Cybersecurity for Broadcasters Retreat.

Prior to joining TVNewsCheck, Depp served as a correspondent for Reuters, as well as a contributor to NPR’s All Things Considered, McSweeney’s Poets & Writers and numerous other publications and radio shows. He was graduated from Tulane University with a B.A. in English and then received an M.A. in English from the University of New Orleans.

“Michael brings a huge amount of energy, strong writing and editing skills and nearly a decade of experience covering the media industry to the job of leading TVNewsCheck editorially,” said Jessell. “He has a solid understanding of the TV broadcasting industry, where TVNewsCheck puts its focus, and of the emerging businesses — such as OTT, mobile and digital — into which broadcasters are diversifying.

“In my semi-retirement, I will continue to follow the broadcasting industry as I have for more than 40 years and I will also be involved in TVNewsCheck’s growing number of conferences. The story of television over the decades has been fascinating with many unexpected twists and turns. I look forward to the next chapter,” Jessell added.

Kathy Haley, who co-founded TVNewsCheck and continues to serve as its publisher, added: “Michael Depp has been working closely with Harry and with TVNewsCheck Managing Editor Mark Miller for years preparing for this day. We are pleased that, as Harry chooses to slow down and spend more time at the ball park, TVNewsCheck will be in excellent hands.”

“It’s a great privilege to take TVNewsCheck’s reins from Harry, and I’m grateful he’ll remain closely involved with our editorial team,” Depp said. “The pace at which the broadcast industry is evolving within the larger media ecosystem is unrelenting. Bringing our readers a comprehensive and continuously updated picture of what they need to know remains our essential mission and one I’m honored to help guide.”

The post Michael Depp Named Editor Of TVNewsCheck appeared first on TV News Check.

The Leadership Awards are given annually by the Broadcasters Foundation in recognition of career contributions to the broadcast industry and the community at large, and are named in honor of iconic broadcaster Ward L. Quaal.

The 2017 Ward L. Quaal Leadership Awards recipients are: 

• John David, EVP of radio, National Association of Broadcasters
• Harry A. Jessell, editor and co-publisher, TVNewsCheck
• Scott Knight and the Knight Family, president-CEO, Knight Media Group
• David Lougee, president, Tegna Media
• Larry Patrick, managing partner, Patrick Communications
• Diane Sutter, president-CEO, Shooting Star Broadcasting

In addition, William Duhamel, president, Duhamel Broadcasting Enterprises, will be honored with the 2017 Broadcasters Foundation of America Chairman’s Award for his numerous contributions to the broadcast industry and his community.

The awards will be presented at the Broadcasters Foundation annual breakfast at 7 a.m., Wednesday, April 26, in the Brahms Room of the Encore Hotel in Las Vegas, during the NAB Show.

The breakfast is complimentary to all, although pre-registration is required. To register, or to obtain information on reserving a page in the Program Guide, please contact the foundation at 212-373-8250 or info@thebfoa.org.

This year’s event is sponsored by Frank N. Magid Associates, Marketron the NAB, the National Association of Media Brokers, Nielsen, the Radio Advertising Bureau and the Television Bureau of Advertising. 

For more than 70 years, the Broadcasters Foundation has distributed millions of dollars to thousands of needy broadcasters and their families.  Individual donations can be made to the Guardian Fund, corporate contributions are accepted through the Angel Initiative, and bequests can be arranged through the Legacy Society. To learn more or to donate, contact the Broadcasters Foundation at 212-373-8250 orinfo@thebfoa.org or visit www.broadcastersfoundation.org.

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