WASHINGTON—As expected, pay TV groups have filed objections with the Federal Communications Commission arguing that the agency should not eliminate ownership caps on broadcast station groups because it would harm the pay TV industry and raise prices for consumers.
In filings, the NCTA–The Internet and Television Association and the American Television Alliance (ATVA) also questioned whether the FCC had the authority to lift the ownership rules, arguing that only Congress has that authority.
The ATVA also cited research showing that further consolidation would not improve or expand local news and the NCTA downplayed the impact of the rules on broadcasters saying that “a broadcaster that takes full advantage of the UHF discount can reach 78% of the nation without running afoul of the cap.”
“Raising or eliminating the cap is beyond the Commission’s authority and would harm consumers by granting broadcast station groups additional leverage to demand even higher retransmission consent fees,” the NCTA said.
In a separate filing, the ATVA took a similar position concluding that the “ATVA believes that the FCC’s national television multiple ownership cap remains critical to competition in the market for retransmission consent. Consolidation poses a significant threat to consumers’ wallets. It would lead to higher retransmission consent fees and, in turn, increase the cost of service for MVPD subscribers. Accordingly, we urge the Commission to reject the broadcasters’ proposals to modify or eliminate these rules.”
More specifically, the ATVA argued that lifting the rules and allowing further consolidation would send the pay TV industry into a death spiral that would also severely harm broadcasters by reducing the money they get from subscriber fees.
“Modifying or eliminating this rule would lead to even more broadcaster consolidation, which would result in consumers paying even more for signals that are otherwise free over the air,” said the ATVA, which is backed by telcos like Verizon, major pay TV operators like Charter, the NTCA Rural Broadband Association, satellite providers Dish and DirecTV and others. “As broadcasters increase their national reach, particularly the larger ones with the highest retransmission consent fees (e.g., Nexstar), they obtain additional leverage in retransmission consent negotiations. This enables them to obtain higher rates for popular programming, carriage and payments for unpopular programming, and onerous non-price terms. MVPDs, in turn, pass at least some, if not most, of these increases along to consumers. The record evidence for this is overwhelming and broadcasters do not seriously dispute it….In the end, ownership deregulation will harm broadcasters by contributing to the vicious cycle of price increases and subscriber defections that is already underway. When higher retransmission consent rates oblige MVPDs to raise prices, subscribers defect—often to streaming services that do not carry broadcasters. This leaves broadcasters with revenue shortfalls, which they seek to remedy through even higher prices—causing more MVPD subscribers to leave for streaming services. Thus, in the long term, national ownership deregulation will not help broadcasters fix their `existential’ crisis.”
In its filing, the NCTA noted that “Commission data already shows that retransmission consent costs continue to rise substantially year over year under the current 39% cap. Retransmission consent revenue increased by 31% from 2019 to 2023 ($11.5 billion to $15.1 billion) and more than 135% when compared to 2015 levels ($6.4 billion)—despite MVPDs’ decline in subscribership. The Commission should not take action that would grant broadcast station groups even more leverage and compound these costs and resulting consumer price increases.”
The ATVA also to aim at the broadcasters claim that consolidation would strengthen their ability to expand local news coverage, a critical issue at a time when cuts in public media and the ongoing collapse of the newspaper industry are likely to further reduce sources of local news.
"Broadcasters argue that they need to consolidate in order to save local news," the ATVA noted. "They claim that, if they are permitted to consolidate, they will in turn “subsidize” expensive news operations. This claim is unfounded, and the Commission cannot reasonably rely on it. In 2021, we engaged Thomas Hubbard, a Professor of Economics at Northwestern University, to examine such claims, which he found could not withstand scrutiny. Professor Hubbard first explained that the evidence did not show that local news was in any sort of `crisis.' He found that the total number of hours of local news had increased between 2014 and 2019, even in smaller markets, regardless of consolidation. He also found that local consolidation did not lead to increased local news. No broadcaster has presented evidence showing that national consolidation inevitably (or even generally) leads to more local news."
"Any such evidence would, moreover, have to account for the fact that national consolidation can lead to duplication of purportedly `local' news across a station group’s stations," the group also contended. "Newsmax, for example, cited a study showing that the largest station groups are the most likely to rely on `outside' sources of content in their local newscasts. Other studies suggest a more mixed relationship between size and investment in local news. Newsmax points to debt-financed consolidation in the radio industry as having led to much less local news on those stations, and predicts that the same would happen here in the wake of further consolidation."
The full NCTA filing is here; the ATVA filing is here.
The Newsmax filing opposing lifting the ownership caps is here.
