Sook Urges Action on Ownership Cap, Citing Cross-Media Competitive Realities

WASHINGTON—Flourishing a "78%" cap, Nexstar Media Group Chairman/President/CEO Perry Sook escalated his call for the FCC move on raising the 39% cap (78% counting the 50% discount for UHFs) on a broadcast group's national ownership reach, and preferably doffing it altogether "as soon as possible."

Perry Sook

Perry Sook

The emblazoned black baseball cap simply marked "78%" rested on the rostrum throughout Sook's wide-ranging speech at the monthly Media Institute luncheon in Washington Tuesday (April 23) in which he also aggressively advocated for adoption of ATSC 3.0 services and discussed the Justice Department's recent escalation of antitrust examinations of the broadcast industry.

The National Association of Broadcasters has settled on an across-the-board 78% cap on UHF and VHF stations as the compromise position, but Sook suggested that the FCC should do at least that to preserve the status quo, and suggested broadcasters could use more in an era when online and other sources abound.

The Justice Department next week is holding a forum to look into what the relevant market for broadcast advertising is and whether online should be included in the mix.

Justice has been considering the issue in relation to a couple of recent merger reviews, specifically the aborted Sinclair-Tribune merger, and the follow-up Nexstar-Tribune merger.

It also struck settlements with a number of broadcasters—including Nexstar—stemming ad-related info exchanges, an investigation that grew out of those reviews. The issue of online competition was raised in those investigations leading to Justice's deeper dive into just how much online platforms compete with broadcasters for local ads.

Sook made it clear where he stands.

"[M]ost of our regulatory agencies treat television as if it is its own market, while in reality we compete against all of these other entities locally for share of eyeballs as well as share of the local market revenues," he said.

He pointed to Nexstar internal surveys that showed that 47% of local advertisers are buying ads on Facebook live today.

"We compete against all of these other entities locally for share of eyeballs as well as share of the local market revenues," he said, noting that the FCC plan "does not go far enough to protect the existence of local television and local journalism."

"It is in the national interest to foster and promote the local television industry and our local journalism and allow us to effectively compete against the unregulated behemoths that have unfettered access to 100% of the households in the U.S., not just 39% or even 78%," said Sook, who sits on the boards of CBS Affiliates and the National Association of Broadcasters.

Hammering edge providers has become a popular pastime in Washington these days and Sook was no exception given the regulatory pass that those edge providers get while broadcasters are expected to invest in providing important local news in service of the public interest, he suggested.

"When a woman committed suicide in a live stream on Facebook two years ago, the excuse was 'it was the weekend and we didn’t have staff,'" he said "We as local television broadcasters don’t get that pass, and neither should they."

Nexstar, which is nearing a $6.4 billion "transformative acquisition" of Tribune Media stations (as Sook described it), will become the largest U.S. group owner, even after spinning off some properties to meet federal regulations. Sook said that overall "consolidation has been a dirty word," and urged regulators to examine the deal flow "on a case-by-case basis."

Later, responding to a question about why the Justice Department is currently scrutinizing media mergers so closely, Sook first joked that his lawyers (several of whom were in the room) would advise him not to say anything.

Nonetheless, he surmised that the increasing number of transactions has caught regulators' attention, adding that media companies are cooperating in the "participatory" process to explain the shifting media landscape in which broadcasters represent a different role than they did in earlier days. He also noted that with the last four companies that Nexstar acquired, it sold ten television stations to minority buyers, "becoming the largest source of deal flow to minority TV owners" in the past decade.

Sook renewed his vow that, "if our industry is deregulated and our company can continue to grow, I again publicly commit to you that I will continue to create more opportunities for minority buyers as part of our future processes."

Big 3.0 Expectations

Sook extolled the virtues of ATSC 3.0, the next-gen broadcast transmission standard, citing the Internet Protocol technology as way for broadcasters to offer a hybrid "modernized viewing experience" embracing live over-the-air TV and streaming content.

"The advanced advertising features of 3.0 will enable broadcasters to offer advertisers new opportunities that we think will grow our ad revenues," he contended. Sook also envisioned "tremendous opportunity" in the long term for broadcasters to participate in connected and autonomous vehicles via traditional video content, navigational aids and other datacasting services.

He emphasized that Nexstar is one of the only groups that is participating in both the Pearl TV and Spectrum Consortium projects, noting that will enable his company to take part in upcoming tests in markets such as Phoenix, where its stations are allied with both those Next Gen TV groups. Sook acknowledged the challenges of an unsubsidized migration to 3.0, but cited that many stations are using their spectrum repack funding to upgrade to Next Gen technology.

Although he admitted that efforts to put a 3.0 receiver chipset into mobile handsets poses a near-term challenge, he expects that as soon as one handset maker ads that feature, other phones will follow.

Most enthusiastically, Sook concluded that the ATSC 3.0 represents a great unknown opportunity for broadcasters. "The highest use of that spectrum is something we haven't thought of yet," he said.

John Eggerton contributed this report

Gary Arlen, a contributor to Broadcasting & Cable, NextTV and TV Tech, is known for his visionary insights into the convergence of media + telecom + content + technology. His perspectives on public/tech policy, marketing and audience measurement have added to the value of his research and analyses of emerging interactive and broadband services. Gary was founder/editor/publisher of Interactivity Report, TeleServices Report and other influential newsletters; he was the long-time “curmudgeon” columnist for Multichannel News as well as a regular contributor to AdMap, Washington Technology and Telecommunications Reports; Gary writes regularly about trends and media/marketing for the Consumer Technology Association's i3 magazine plus several blogs.