FCC rules that enable broadcast TV stations to enforce the right to air network and syndicated television programming on an exclusive basis provide significant ratings and economic benefits that boost broadcasters’ investment in localism, according to comments filed by the NAB.
The comments were submitted as part of the Commission’s examination of network non-duplication and syndicated exclusivity rules. Included in the comments is a Compass Lexecon analysis of the change in Nielsen viewership data for 10 TV stations in eight markets that did not have exclusive rights to air network affiliate and syndicated programming in their communities before the local TV stations petitioned for, and were granted by the FCC, a waiver to the rules in order to enforce their exclusivity rights.
The stations’ ratings increased significantly with the granting of exclusivity, according to the study. Indeed, the expected change of a local TV station’s daylong ratings from year to year was 16.3 percentage points higher than the ratings change would have been if exclusivity had not been granted. The study also concluded that the expected change in a station’s primetime ratings from year to year to be 24.4 percent higher than if exclusivity had not been granted.
The increase in ratings stemming from enforcement of exclusivity rules allows stations to collect higher advertising revenues, which are in turn reinvested in local news and other locally focused programming, the study concluded.
“Elimination or weakening of the Commissions’ exclusivity rules is likely to have an economically significant impact on local stations and their incentives to invest,” said the study. “As described in our initial declaration, the relevant investments include investments in local content, including local news, sports, weather, and emergency information.”
“Exclusivity rules are a lynchpin of the local broadcast business model and help sustain viewer access not only to high-quality network entertainment programming, but also to local news and lifeline information,” said NAB Executive Vice President of Communications Dennis Wharton. “The FCC should be mindful that changes to these rules would threaten the vibrancy of our uniquely free and local broadcast system.”
The exclusivity study from economic consulting firm Compass Lexecon’s Mark Israel and Allan Shampine was filed today with the FCC as part of NAB’s reply comments in the Commission’s proceeding on network non-duplication and syndicated exclusivity rules. NAB’s initial comments in the proceeding were filed in June.
In its reply comments, NAB stressed that the FCC should ignore the self-serving calls by cable and satellite TV providers to modify or eliminate network non-duplication and syndicated exclusivity rules. Pay-TV providers are using misinformation and erroneous arguments to conflate exclusivity rules with retransmission consent, and their attempts to eliminate these rules are designed to tilt retrans negotiations in pay-TV providers’ favor.
“Elimination of the Exclusivity Rules would destroy the closely intertwined statutory and regulatory ‘mosaic’ that governs the distribution of television programming, would seriously harm local television broadcasters and the important public interests they serve, and would usurp the only viable and efficient enforcement mechanism for contractual exclusivity,” said NAB in the filing.