The Obama Effect

 The most disruptive technological shift in the nation’s history will occur 29 days into Barack Obama’s presidency, when the country’s analog TV broadcast system will be permanently shut down.

Obama hasn’t weighed in on the transition, scheduled for Feb. 17, 2009 by lawmakers in late 2005, the President-elect’s first year in the Senate. Obama has said little about his perception of the broadcast industry, unlike his presidential opponent, Sen. John McCain (R-Ariz.), who vilified it often, once blaming broadcasters for the deaths of firefighters on 9/11.

Obama previously told the trades he would not support relaxed media ownership rules, but that was before the great economic meltdown of 2008. He also said he wouldn’t support reinstating the Fairness Doctrine, a relic of ’50s requiring broadcasters to provide equal time for opposing viewpoints on controversial issues. It was struck down in the 1980s, but Democrats, including Sens. Charles Schumer of New York and Jeff Bingaman of New Mexico, and Rep. Nancy Pelosi of California, have talked about bringing it back.

One observer noted that the doctrine was unnecessary with the proliferation of media forms today, and it would create a mess. Radio, for example, would have to program against Rush Limbaugh, Al Franken (in a tightly contested Senate race) and perceptually, even NPR.

“That’s a trap Republicans hope Democrats will fall into,” he said.

More likely, however, is that the specter of the Fairness Doctrine will be used to nail down increased public interest and localism requirements. Both are mantras for the two sitting Democrats on the FCC, Commissioners Jonathan Adelstein and Michael Copps. Both are possible appointees for the chairmanship of the FCC, which will comprise three Democrats and two Republicans under the new administration.

Copps and Adelstein also oppose relaxed ownership rules based on the perceived impact on diversity of opinion. The current financial reality, however, is that TV station groups are struggling like never before, and some simply will not survive without merging. LIN TV, with 29 stations is trading around $2. Sinclair, with nearly 60 stations, is just under $3. Even CBS, with market capitalization of nearly $5.6 billion, is trading at around $8.30.

TV stations are grappling with a confluence of circumstances, not the least of which is the economy. Auto ad sales, roughly one-fourth of TV station revenue, is falling precipitously. Stations valuations have also tanked, in part because of the steep cost of the digital transition coupled with the uncertainty of its outcome. The FCC also recently approved the operation of personal devices within TV spectrum that can potentially destroy the already tenuous receptivity of digital signals.

TV is unlikely to be top of mind for the President-elect, who has a couple of wars and a global economic crisis on his plate. The digital transition will end up being the legacy of the next FCC. Other names circulating in D.C. for the chairmanship include Blair Levin, former chief of staff for Reed Hundt, who led the FCC from 1993-97. Don Gips, a former chief of the FCC International Bureau, has also surfaced, as have several others; most notably Julius Genachowski, former chief counsel to Hundt. Both have been appointed to the administration’s transition team advisory board.

Genachowski, one of Obama’s Harvard chums and now a venture capitalist, is also considered a front-runner for the administration’s new cabinet position of chief technology officer.

Ted Hearn of Multichannel News has reported that Henry Rivera will head up Obama’s FCC transition team. Rivera is a former Democratic FCC commissioner and currently a partner with D.C. law firm Wiley Rein. He is married to Dr. Bernadette McGuire-Rivera, associate administrator of the National Telecommunications and Information Administration division of the Commerce Department. The NTIA is in charge of the digital-to-analog converter coupon program, aimed at making sure people’s analog TVs can decode digital signals after the Feb. 17 transition.