Network affiliation agreements could make it difficult for some stations to participate in channel sharing deals with stations they aren’t commonly owned with, broadcast attorneys, industry officials and an engineer told us. FCC officials have stressed the complexity of channel sharing deals in recent public appearances (see 1506160057 and 1506250060). The commission is holding a July 22 webinar on channel sharing and network affiliation agreements. The pacts are expected to inject additional complexity into the process because they often include specific bandwidth requirements, which could leave little bandwidth for potential sharing partners, said industry officials.
Monty Tayloe
Monty Tayloe, Associate Editor, covers broadcasting and the Federal Communications Commission for Communications Daily. He joined Warren Communications News in 2013, after spending 10 years covering crime and local politics for Virginia regional newspapers and a turn in television as a communications assistant for the PBS NewsHour. He’s a Virginia native who graduated Fork Union Military Academy and the College of William and Mary. You can follow Tayloe on Twitter: @MontyTayloe .
The Downloadable Security Technology Advisory Committee remained divided over the characteristics of a possible downloadable security system, at their meeting Tuesday, despite a Congressional requirement that their work be complete by Sept. 4. Entities such as TiVo and Public Knowledge that recently formally banded together as the Consumer Video Choice Coalition (see 1507010064) want a solution that will allow third party retail set top boxes with their own proprietary user interfaces (UIs) to view multichannel video programming distributor content. MVPD representatives said their UIs and set-top box features are an integral part of the service their customers pay for, and are pushing for a solution that won't interfere with those offerings.
A change to the way the FCC counts the population served for one New York station could mean reduced prices for every broadcaster in the incentive auction, said the Expanding Opportunities for Broadcasters Coalition in filings in docket 12-268 posted online Monday. “The Commission must account for a market anomaly that, if left unchanged, will slash $8.3 billion from broadcaster opening prices nationwide,” said the EOBC filing. The price drop is a result of a change to how the FCC counts the population served by station WABC-TV in New York City. Pricing estimates in the FCC-issued Greenhill auction information book list WABC-TV as possessing the most valuable spectrum in the incentive auction at $900 million dollars, and WABC's price was used to calculate the value of all the other broadcast stations eligible for the auction, according to FCC officials. Since the price calculation is based in part on population served, altering that figure for WABC-TV trickles down to every station, resulting in a 2.3 percent drop for each station, EOBC said.
FCC anti-collusion rules for the incentive auction may create particular complications for noncommercial educational TV stations, said NCE officials in interviews last week. Collusion rules place restrictions on stations communicating with any other station about their auction plans. Lawyers representing broadcasters of all types are affected by the rules, with some attorneys saying the impact will be major (see 1505180056 and 1409290022) and the FCC preparing to respond to concerns (see 1506160060). Not much discussed yet has been the impact on NCEs.
The divisions between pay-TV companies and the other entities on the Downloadable Security Technical Advisory Committee were formalized Wednesday when many of the non-multichannel video programming distributor groups on DSTAC said they are forming the Consumer Video Choice Coalition. With membership that includes DSTAC members Public Knowledge, Google, Hauppauge and TiVo Inc., plus non-DSTAC members such as Computer and Communications Industry Association, Comptel and Writers Guild of America, West, the group “will demonstrate to policymakers at the FCC and on Capitol Hill that there is broad support to promote competition and innovation by making video networks more available to third-party devices,” said a news release.
Leaving dynamic reserve pricing out of the incentive auction is likely to lead to the FCC paying higher prices to some stations, Incentive Auction Task Force Vice Chairman Howard Symons said at a Hudson Institute event Monday. DRP, which would have allowed the FCC to freeze the prices of some stations or repack them in the wireless band, was included in earlier auction plans to allow the commission to offer higher opening bid prices. A draft order on circulation and also on the agenda for the July 16 commissioner meeting would do away with DRP (see 1506170052).
Though the approaching incentive auction is seen as quieting mergers and acquisitions among TV stations, a flurry of discussions on channel sharing and possibly M&A is expected behind the scenes, said panelists speaking about the 2015 financial landscape at a SNL Kagan conference in New York Thursday. There will be “a very, very active marketplace for channel sharing over the next three to six months,” Titan Broadcasting President Bert Ellis said. Deals are likely among some of the larger, publicly traded broadcasters over the next two years, said RBC Capital Markets Managing Director Marcus Torres, along with consolidation among smaller privately held broadcasters. Earlier Thursday, some broadcasters expressed interest in the incentive auction (see 1506250060).
Sinclair Broadcast is considering participating in the TV incentive auction, said CEO David Amy on a panel of broadcast executives at the SNL Kagan TV and Radio Finance Summit Thursday. “There are some markets where it could make sense,” such as designated market areas where Sinclair has duopolies and could sell spectrum while maintaining the same presence through channel sharing, Amy said. Amy's profession of interest in the auction was just 10 days after losing a court challenge along with NAB against the auction in the U.S. Court of Appeals for the D.C. Circuit. NAB General Counsel Rick Kaplan conceded Thursday that the decision's language means future court challenges against the FCC aren't likely to succeed. Litigation “is not a major threat” to the auction happening on time, Kaplan said. The auction and a transition to ATSC 3.0 aren't likely to synchronize, he said.
Noncommercial educational and low-power TV stations are among the most affected by last week's FCC incentive auction reconsideration order (see 1506190064), which rejected all requests to redo auction rules, said lawyers representing those licensees in interviews this week. They said the groups have limited resources and it's unclear whether they'll sue the commission. The public TV groups are considering their position in the wake of the recon order, said an APTS spokeswoman.
Satellite operators oppose an FCC proposal to charge them a 12-cent-per-subscriber regulatory fee (see 1505290033), and are concerned about what may come next, said DirecTV, Dish Network, EchoStar and Hughes Network in comments on the commission’s regulatory fee NPRM posted in docket 15-121 Tuesday. “There is no limiting principle that would stop the Commission from doubling or tripling the rate next year,” said Dish, saying such an outcome wouldn't be legal or in the public interest, and would negatively affect DBS subscribers.