Monty Tayloe

Lower-than-expected political advertising revenue for Gray Television and Sinclair is more likely a one-time outlier than an indication of a permanent shift in TV ad spending, numerous analysts and broadcasters said in interviews Wednesday. “Of course, online [advertising] is increasingly relevant, but all politics is local, and local stations are still important” for disseminating political advertising, said BIA/Kelsey Chief Economist Mark Fratrik. Both broadcasters announced revisions to their projected political ad revenue for Q3 Tuesday, and both companies cited the unpredictable advertising strategy of the current presidential campaign as the cause, as analysts told us last week (see 1609160068).

FCC involvement in writing “the substantive terms of any license” under the set-top box proposal would exceed its authority, NAB CEO Gordon Smith said in a call Friday with Commissioner Jessica Rosenworcel. The licensing plan would “fatally undermine the Commission’s stated goal of protecting content and respecting copyright and contracts,” NAB said. Public Knowledge disagreed, in a letter citing legal precedent for the FCC's proposed licensing body. The agency has the authority to “counter factors it believes may 'impede' competition, and as an expert agency, its decision-making is entitled to deference,” Public Knowledge said. “The case that some oversight is necessary to ensure that [multichannel video programming distributors]/device agreements do not undermine competition does not seem particularly difficult to make,” Public Knowledge said. “There is no support for claims that the FCC’s authority somehow does not apply to the apps-based proposal -- which is, after all, based on proposals put forward by the MVPD and programming industry themselves.” The FCC set-top plan also was endorsed in a letter from numerous rural advocacy organizations, including the National Digital Inclusion Alliance and Access Humboldt. “We urge you and your fellow Commissioners to stay strong and to side instead with consumers -- especially rural consumers -- who pay Big Cable and Big Content hundreds of dollars extra every year because of this monopoly they want to protect,” the rural groups said. The FCC should make clear in its final set-top order that “all components of the pay-TV ecosystem, including the pay-TV apps and the devices on which they are viewed, must be directly and unquestionably subject to the Commission’s accessibility rules,” said Telecommunications for the Deaf and Hard of Hearing and others in a meeting with aides to Chairmen Tom Wheeler Monday, said an ex parte filing. The apps and third-party devices will all be subject to the 21st Century Video Accessibility Act, the filing said. “Ensuring that all apps and devices are directly subject to the Commission’s accessibility rules, regardless of whether apps are preinstalled or downloaded later, is essential to ensuring certainty and consistency in application and enforcement of the rules.” The FCC didn't provide enough notice for a final set-top rule to apply to direct broadcast satellite, Dish Network and EchoStar said in a joint filing on meetings last week with aides to Commissioners Jessica Rosenworcel and Ajit Pai and Media Bureau staff. DBS providers would require a “gateway” device to comply with the proposed set-top rules, but the NPRM “did not seek comment on the issues related to such a device, much less propose actual rules to govern its design and operation,” the companies said. Rosenworcel is seen as a holdout on FCC Chairman Tom Wheeler's set-top box order (see 1609150045).

A foreign ownership item circulating on the eighth floor will make it easier for broadcasters to be foreign owned and change the way the FCC assesses foreign ownership, agency and industry officials said in interviews. The item is seen as widely supported among all FCC commissioners and is expected to be unanimously approved, industry attorneys told us. "These process reforms will provide the broadcast sector with greater transparency and more predictability, while reducing regulatory burdens and costs for all sectors,” FCC Chairman Tom Wheeler said in a Sept. 8 blog post. In recent months, Frontier Media and Univision have asked the FCC to approve foreign-ownership situations above the 25 percent threshold (see 1609120072). The order is preliminarily set for commissioners' Sept. 29 meeting (see 1609080083).

Purchases of TV political spots are down from what was expected for 60 days before the general election, analysts said in interviews Friday. In 2012, $2.5 billion was spent on political ads between Labor Day and Election Day, said Kantar Media Campaign Media Analysis Group General Manager Steven Passwaiter: “This cycle, we're not even close.” Low spending on TV ads reduces revenue for TV stations and cable networks, and means there's less data for entities monitoring political ad spending to collect, said Robert Maguire, political nonprofits investigator for the Center for Responsive Politics (CRP).

Opponents and proponents of the app-based set-top order scheduled for the FCC's Sept. 29 meeting (see 1609080085) disagree on how intrusive the proposed rules will be for programmer contracts, according to recent ex parte filings, news releases and interviews with industry officials. The plan would create an “unworkable de facto compulsory licensing regime that requires creators to allow their work to be shared across multiple platforms without compensation and without regard to the creators’ rights to exclusively control their distribution,” said a large group of programmer associations, including MPAA, RIAA and the Copyright Alliance, in a statement Wednesday.

The stage is set for the Sept. 28 nationwide test of the emergency alert system to go smoothly, said broadcasters, the FCC, Federal Emergency Management Agency officials and EAS test industry officials in interviews this week. Designed to address the shortcomings revealed by the 2011 test (see 1607180062), the 2016 version is expected to be successful, broadcast industry officials and the government agencies that oversee EAS told us. Checking those expectations is why such tests are conducted, said Maine Association of Broadcasters CEO Suzanne Goucher, who chairs the Joint NAB-National Alliance of State Broadcasters Associations EAS Committee.

The apps-based set-top box plan outlined in an FCC draft order circulated Thursday (see 1609080085) is different enough from the plan proposed in the preceding rulemaking notice filed in docket 16-42 that it could be vulnerable to an Administrative Procedure Act challenge, some attorneys and industry officials told us Friday. By circulating an order instead of a further NPRM, the FCC is preventing anyone but large programmers, companies and trade associations with the means to lobby the agency from weighing in, said cable consultant Steve Effros, who has been backing a different set-top solution. “This totally lacks integrity, and it makes a mockery of the Administrative Procedure Act,” Effros said. “What about the rest of us?”

House Communications Subcommittee Chairman Greg Walden, R-Ore., will introduce legislation to repeal broadcast cross-ownership rules, he said at an NAB Broadcast Innovations event (see 1609070065) Wednesday. The FCC's view of media ownership is “outdated,” Walden said. The cross-ownership rules are unnecessary and the commission should have repealed them, Walden said. “If the FCC can't figure it out . . .we will help them do that,” Walden said. Such legislation would be moving forward “soon,” Walden said. He also noted coming legislation that would make FCC processes more transparent and “more public.” Congress will continue “to work to improve their process,” Walden said of the commission. Public policy is “best done” when stakeholders can comment on in-progress rules “in real time,” Walden said. Sen. Brian Schatz, D-Hawaii, speaking at the event, and Walden said legislators will monitor the incentive auction and ensuing repacking process.

A draft order that would require pay-TV carriers to provide content via apps to third-party devices was circulated to the FCC eighth floor Thursday, as expected (see 1609060080). It's intended for the agenda of the Sept. 29 FCC meeting, said Chairman Tom Wheeler in a Los Angeles Times op-ed, and said an FCC fact sheet. As expected, the draft item replaces the set-top box plan proposed in the NPRM with a plan based on free apps that don't require a specific platform or technology and uses a licensing regime overseen by the commission. Larger multichannel video programming distributors will have two years to comply with the new rules, while midsize MVPDs will have longer. The smallest MVPDs -- under 400,000 subscribers -- would be exempt, the fact sheet said.

Programmers are “strongly opposed” to any set-top licensing scheme that gives the FCC the power to alter the terms of content licenses, representatives of Time Warner, Scripps, Viacom, Disney, CBS and 21st Century Fox said in a Sept. 1 meeting with aides to Chairman Tom Wheeler, staff from the Office of General Counsel, and FCC Chief Technologist Scott Jordan, according to an ex parte filing in docket 16-42. Numerous programmer ex parte filings and industry officials have indicated the FCC is proposing a new apps-based set-top plan that includes commission oversight of a licensing program that would allow third parties to run multichannel video programming distributors' apps on their devices (see 1609060080). Though the ex parte letter indicated programmer support for the FCC’s apps-based direction and plans to enforce copyright rules, the content companies restated their concerns about the licensing aspect. “Any arrangement in which they are forced to allow their content to be distributed on terms or conditions to which programmers would not agree would be tantamount to a compulsory copyright license, which the Commission lacks authority to impose,” the filing said. The American Cable Association also met with FCC officials Sept. 1, to ask that any set-top rules exempt MVPDs with fewer than 400,000 subscribers, and allow those with up to a million subscribers more time to comply, according to an ex parte filing. In a separate letter, TiVo indicated support for the small carrier exemption, and asked that any new set-top rules contain provisions requiring MVPDs to continue supplying CableCARDs. The FCC’s new-set top plan is expected to contain a carve-out for smaller carriers, industry officials told us. In its recent letter, set-top maker Roku asked the FCC not to require that third-party box makers use HTML5, which MVPDs had sought in their own apps proposal. Industry officials and ex parte filings indicate the set-top plan currently pursued by the FCC doesn’t require the use of HTML5, though pay-TV interests are still pushing for it. In a Sept. 2 letter, Best Buy filed in support of the original NPRM, which it said could protect the interests of both MVPDs and consumers.