As a seasoned observer of the ever-evolving media landscape, I find myself captivated by this intriguing tale of the broadcast industry’s imminent transformation. The forthcoming “Broadcast Land Grab” promises to reshape the TV terrain much like a giant satellite dish sweeping across the plains, leaving no station untouched.
In the mid-19th century, the era was marked by the Gold Rush, with financial resources flowing westward to mine the valuable metal. The early 20th century saw an Oil Boom, as the need for petroleum products soared and previously undiscovered reserves were found nationwide. While the Broadcast Spectrum may not hold the same value or versatility as gold or oil, indications are that starting from 2025, it will become the sought-after asset that has Wall Street eager with anticipation. Let’s call it the Broadcast Land Grab.
The upcoming Trump administration has expressed a strong focus on reducing regulations, leaving local TV station owners, such as Nexstar, Sinclair, Gray, E.W. Scripps, Tegna and numerous others, noticeably excited about the potential implications for their businesses.
After the election, earnings calls for broadcast station owners seemed to indicate a collective sense of relief within the industry. “We are extremely optimistic about the upcoming regulatory climate,” stated Chris Ripley, CEO of Sinclair, on Nov. 6. It seems as if a weight has been lifted from the industry.
On November 7th, Tegna CEO Mike Steib expressed his belief that the current regulatory system ought to be thoroughly reassessed.
In a conference call on November 7th, Nexstar CEO Perry Sook emphasized that their top legislative goal, shared with the National Association of Broadcasters (NAB), is to eliminate regulations governing both national and local ownership.
It is expected that CEOs will achieve their goals, particularly at the Federal Communications Commission (FCC). This is because the current chair, Jessica Rosenworcel, is set to leave next year and be replaced by a more business-oriented chairman. One possible candidate for this position is the current Republican commissioner, Brendan Carr.
Financial institutions like Wells Fargo are gearing up for future developments, with Steven Cahall adjusting Sinclair’s status from “underweight” to “equal-weight” in response to the election. In a memo dated November 7th, Cahall stated, “A Republican FCC from 2025 could potentially enhance broadcasters’ prospects by reducing regulations and permitting consolidation.
According to Cahall’s observations, there are several key developments yet to unfold. A lenient Department of Justice and Federal Trade Commission might benefit large corporations, but broadcasters are primarily concerned with the FCC, where antiquated regulations have impeded consolidation. The Republican-led FCC can take swift action on certain matters, such as easing duopoly rules that restrict a single owner from having too many stations in one market, or implementing the “UHF Discount,” which allows station owners to expand by purchasing UHF frequency stations. Alan Wolk, founder of TVREV industry research firm, states, “The regulations governing local broadcasts are incredibly outdated and no longer make sense in today’s streaming-centric era.
When you engage with senior broadcasting officials, it’s usually not too much time before they express frustration towards large technology corporations such as Google and Meta. These companies have been known to absorb a significant portion of advertising revenue previously held by local and regional businesses, which had traditionally been the most reliable buyers of television advertising for broadcast networks.
Google earns 50 times more advertising income from our markets compared to broadcasters, while TikTok has a larger share of news viewing among young viewers than any single broadcaster, and it is owned by an adversary from abroad. Despite this, we are prohibited from purchasing a Fox station in Waco, Texas.
Other alterations are planned, but these will necessitate approval from Congress as they aim to level the playing field between broadcasters and tech companies. The top priority on this agenda is the potential removal or complete abolition of the national ownership cap, which restricts a single entity from owning broadcast TV stations in up to 39% of U.S. households.
In a short while, if raised, it’s almost inevitable that the nation will have its initial national broadcaster operating in most (if not all) local markets.
As a gamer, I’m facing some serious competition from tech giants who have an unlimited reach, stretching from smartphones to the big screen in your living room. The rules that were set back in 2004 are holding us back from truly going toe-to-toe with these titans. To keep local journalism thriving, we need strong contenders who can battle it out fairly on every screen across America, not just a few of them.
The executive suggests the initiative could be accomplished through a bipartisan approach, considering the Republican stance on reducing regulations and the Democrats’ aim to support community news sources.
Definitely, within the realm of broadcasting, it’s widely anticipated that Nexstar Media Group might be the leading contender to expand their reach nationally, given the chance. This could happen if Congress were to revise the regulations, removing any limitations on scale.
Both Ripley and Steib have indicated to Wall Street that Sinclair and Tegna could potentially act as buyers or sellers, depending on what benefits their shareholders most (“We plan to take part in mergers and acquisitions,” says Ripley, with Steib making a similar statement). However, Nexstar, headquartered in Irving, Texas, is under the guidance of the ambitious Sook. This dynamic leader was instrumental in the creation of NewsNation cable channel and the acquisition of The CW – strategic moves by a local station owner on a national scale.
If the FCC loosens ownership restrictions and eliminates the station cap, we might witness an intense competition for stations, unprecedented in our country’s history. In many smaller markets, there could be a decrease in broadcasts, mergers, or even larger companies taking over. You have established players like Sinclair, Nexstar, and Tegna, but also family-owned stations that have been around for generations. The question is, how long can these businesses survive under such competition?
A network like Nexstar, with a presence in almost all television markets, might have a stronger chance of competing for advertising funds compared to a local family station in Grand Forks, North Dakota, or Zanesville, Ohio.
Meanwhile, a potential takeover of the airwaves is occurring concurrently with the ongoing tension between local television station proprietors and major national broadcasters, which has been gradually escalating.
As a fan, I’ve noticed an interesting dynamic: Back in the day, deals were struck that allow national networks like ABC, CBS, and NBC to negotiate streaming rights for their affiliates. This isn’t the case with traditional pay-TV platforms such as cable or satellite, where station owners handle negotiations themselves.
Some analysts predict that the underlying tension may escalate into a more prominent dispute within the next few years, as content providers reassess their investments and broadcasting stations aim for larger operational scope and independence.
One concern that station owners consistently ponder is: “What will become of us if networks cease providing content to us?” This scenario could very well occur within a few years, according to Wolk. The question then arises: When might NBC decide to produce original programming solely for Peacock, their streaming platform, and let affiliates receive it a day or two later?
At Paramount, the incoming president, Jeff Shell, has communicated to Wall Street that any changes for CBS will likely be handled with a more assertive approach for cash flow enhancement. This means making tougher decisions about scheduling in the future, particularly when dealing with a diminishing business. In his previous role at NBCU, Shell had suggested the idea of relinquishing the 10 p.m. hour and returning it to local affiliates.
In an evolving regulatory landscape and changing media landscape, with traditional TV facing challenges from technology, significant transformations might occur in the broadcast TV sector within the upcoming four years. However, the specific nature of these changes remains uncertain, much like a TV signal that’s slightly out of range from the nearest transmission tower.
Stay tuned.
This tale was initially published in the November 13th edition of The Hollywood Reporter’s magazine. If you’d like to get the magazine, click here to subscribe.
Read More
Sorry. No data so far.
2024-11-13 16:25