Comcast-NBCU Is bad For broadcasting

TVNewsCheck:

Within hours of the announcement last week that Comcast had agreed to acquire a controlling interest in NBCU and its vast array of broadcast and cable properties, Andy Schwartzman of the Media Access Project sent out an e-mail to reporters raising concerns and calling on the government to scrutinize it carefully.

No one in Washington policymaking circles was surprised.

For more than three decades, Schwartzman has been working for open and diverse media -- that is, policies that limit media concentration, insure access to media by citizens and encourage diversity in media ownership.

Those goals have regularly brought him into conflict with media companies and their seemingly irresistible urge to merge. The battles have been fought mostly at the FCC and in the courts.

In this interview with TVNewsCheck Editor Harry A. Jessell, Schwartzman spells out some of his concerns about the Comcast-NBC combination, which includes his belief that it will put all TV broadcasters outside of the NBC family at risk. He also explains why the FCC's cash-for-spectrum proposal is a bad idea.

An edited transcript:

So what's the problem with the Comcast-NBC deal?

We're unhappy about vertical integration in the media market to begin with. This one is especially troublesome because the cable programming market has been too difficult to crack. This combination gives Comcast all the more reason to make it difficult for new and interesting programmers to get carriage. It will also make it much harder for competitors like the phone companies and the satellite companies to get programming under similar terms and conditions. So it will adversely affect viewer choice. I would add it's also likely to raise cable rates.

What about the broadcasting side? Any thoughts on whether it would be good or bad for TV stations?

Yes. In those cities where Comcast is the dominant cable company as well as the owner of an NBC station, there will be a lot of problems for the other network affiliates. The ability to sell advertising across platforms will give a distinct edge to the Comcast stations. While [Comcast CEO] Brian Roberts talks about paying for retransmission consent, the fact that he can get the NBC content for free is going to give him more leverage in retransmission consent negotiations with other affiliates.

Is that such a serious concern that the government should put conditions on the deal?

I think conditions on that and a number of other adverse aspects of the deal should be a bare minimum to attain approval from the FCC and antitrust authorities.

Well, what's the particular fix for cable-broadcast crossownership in the local markets?

This is early in the game and we haven't thought this through completely, but you might have to have some sort of protection that assures that NBC stations are not advantaged in retransmission consent negotiations fees with other competing affiliates.

What about the deal's impact on the distribution of NBC programming on the Web?

If Comcast pulls the plug on Hulu or withholds NBC programming from Hulu and other online competitors, this important new platform, which may be very important for broadcasters, will be jeopardized and broadcasters will be at the mercy of the cable companies with their TV Everywhere-type schemes.

Could you elaborate on that a little bit? Why should that bother broadcasters?

The delivery of programming over the Internet is important not just for viewers, but for broadcasters because they can develop additional advertising revenue streams with advertising on Hulu. Comcast has an interest in making sure that the competing video- over-Internet offerings don't get off the ground and, instead, wants to migrate everything to its TV Everywhere-approach where it seeks to grab revenue that otherwise would go to a competitive source. It's not good for broadcasters and it's certainly not good for the public.

What about the newspaper-broadcast crossownership rule. Isn't that an anachronism now?

No. I don't think it's an anachronism. I just attended a two-day conference [on the future of journalism] conducted by the Federal Trade Commission and one of the important takeaways from that is that newspapers continue to be profitable on an operating basis. The red ink is largely from debt and bad decisions that were made in paying too high a price to acquire property.

The studies presented at the conference also showed that daily newspapers continued to be the most powerful force shaping local public opinion and voting behavior, with local TV second. Combining those two forces is more influence than any one person or company should have in a community. That was true when the FCC adopted the rule and it's true today.

You make it sound like the debt isn't a real expense. It is a real expense and they're stuck with it and if they don't make their payments, they're going to go under.

If some of these companies have to go bankrupt, that's fine with me. Somebody else will buy it at a better price and do a better job.

In defending this and other ownership restrictions on legacy media, aren't you forgetting about the Internet? These local newspapers are up against a slew of local online media options. ESPN, for instance, is coming in with local sports sites that may siphon off sports readers and the revenue attached to them. It's very competitive out there.

Newspaper publishing is a mature business. It is not a dying business. I don't see any reason to take away important protections against the excessive concentration of control in order to help out newspapers. They have to figure out how to monetize audiences on the Internet just as everybody else does.

What about the duopoly rules? Because of the loopholes, we have duopolies everywhere now -- big markets and small markets. Isn't it time to just get rid of the rules?

I certainly agree that the FCC staff has allowed widespread noncompliance to the duopoly rules, but to us the solution is to enforce those rules more thoroughly rather than abandon them. My friend Angela Campbell [of Georgetown Law School's Institute for Public Representation] has taken on shared services agreements in Honolulu. We certainly intend to call on the FCC to make adjustments in how the duopoly rules are enforced as part of its ownership review next year.

Why would you want to enforce the rule and prevent consolidation of station in small markets in light of the very real decline in television station revenue? Some markets may not be able to support more than one or two full-service TV stations.

Well, first of all, we don't know how much of the current problems facing broadcasters is cyclical and how much is secular. Historically, the advertising markets are more adversely affected by recessions than other lines of business. We had downturns in the early 1990s and broadcasting came back. I have no doubt that because of the Internet, the advertising revenues that TV stations have will not return to their prerecession levels, but they may very well go back close to them.

Shouldn't you be sure about that before you advocate for rules that could drive some stations out of business?

I certainly don't feel like making the public suffer with lost diversity and broad services on the basis of a set of assumptions that the world is coming to an end when there's no evidence that the world is coming to an end.

At the FTC workshop, what was your remedy for fixing what ails journalism?

I discussed the fact that the First Amendment requires governments to create a platform for civic discourse and debate and public expression of artistic, social and political ideas. I said, given that context, the FTC -- and presumably other agencies as well -- should be taking steps to create opportunities for new journalistic ventures to take place. It's important to have government subsidies for the creation of new media models and new forms of journalism.

Do you mean direct subsidies from the government?

Direct subsidies from the government to incubate startups and to provide assistance where the marketplace is not providing adequate sources of news and information.

Do you mean literally in places where, for instance, you determine that there is inadequate local news?

For nonprofits, it could be either a corporation for public media rather than now a Corporation for Public Broadcasting or it could be a grant mechanism like the NEA or the NEH.

For for-profits, I support cooperative ventures to create new systems of journalism that might be made available on a sharing basis somewhat along the lines of what GlobalPost is trying to do. I'm convinced that coming out of the wreckage of the recession, we're going to see new innovative ways of creating journalism, and this will apply to broadcasting as well as to other platforms.

What do you make of the plan floated by FCC broadband czar Blair Levin to reallocate the broadcast spectrum to wireless broadband access?

We are very skeptical about Blair's proposals to reshape the broadcasters' spectrum.

Why is that?

I am alterably opposed. While I don't agree with people like [Association of Maximum Service Television President] David Donovan that broadcasters are providing so much public service that that's a reason to leave them where they are, I do believe that the existing spectrum allocation system provides opportunity for new uses of spectrum through unlicensed mechanisms like the TV white spaces plan, which the FCC has adopted. I favor unlicensed spectrum for new broadband platforms rather than auctioning off the spectrum to the existing wireless companies.

The broadcasters will say allowing unlicensed users into the band will degrade the band by causing interference and some in government will say it will devalue the band for later auctioning.

I don't think that auctioning it later is such a good thing. I do not think auctioning off spectrum is good public policy. The incumbents wind up with the spectrum and they just grow bigger and it makes it very difficult for new interests to get in and get to the spectrum. So it's not good public policy, whereas unlicensed spectrum offers opportunities for many new entrants and technologies that will make much more efficient use of the spectrum.

What about the broadcasters' concerns? They say unlicensed users will fill the band with interference.

Well, I'm going to have to respectfully disagree with the broadcasters about the white spaces. The technology is very promising and it is quite possible to devise methodologies that will not interfere with broadcasters' delivery of programming.

article originally published at TVNewsCheck.

The media's job is to interest the public in the public interest. -John Dewey