Broadcast Biz: Still In Limbo?

With a high level of uncertainty in the broadcast regulatory area, the industry won't move forward. That's the view of industry expert Richard Horan, whose practice deals with the purchase, sale, and financing of major-market television broadcast stations.

According to Horan, until Congress and the courts deal with the issue of ownership caps, the direction of the U.S. broadcast business will remain unclear. While the ability of the large networks to deliver election coverage, the Super Bowl, and the Olympics won't change, the expense of converting to digital and lower network compensation will have to make it harder for smaller market stations to operate. For an economic revival in those markets, Horan believes that stations will increasingly share operations, either through duopolies or LMAs.

Just before the passing of the 1996 Telecommunications Act, there was considerable economic activity in the business environment. Today, however, due to uncertain station valuations resulting from the FCC's mixed messages regarding single market ownership of two stations or the potential ownership of a station and a newspaper in the same market, the business environment is stagnant. Regulatory uncertainty has also prevented many station owners from making major financial decisions, with Horan seeing relief a few years out.

"I don't see the networks buying up a bunch of more stations," he said in an interview. "What they want is the flexibility. We'll see mid-market regions developing a gradual systematic approach to creating efficiencies."

In the long term, Horan said, success will be judged on those monitizing their digital spectrum thoughtfully and carefully.