Pai makes the case for broadcast TV


Ajit Pai
According to FCC Commissioner Ajit Pai, broadcasters continue to provide vital news and emergency information to the American public, despite facing increasing competition on all fronts. He urges that the service not be put under additional shackles, in particular by making SSAs and JSAs attributable.

Pai made his remarks at the Federal Communications Commission Media Institute Luncheon 2/7/13.

Pai also made the case for eliminating restrictions on local broadcast/print combinations.

Here are his remarks on broadcast television.

“Speaking of unforced errors, it looks like the FCC could make another one as part of the media ownership proceeding. Given the realities of the modern marketplace, I have come to believe that we should relax or eliminate many of our ownership rules. Here, too, the Internet transformation is having a dramatic impact on television broadcasters. The competition that they face for viewers and advertisers is stronger than it has even been. This demands fundamental changes in their business models. The days when Americans’ home video options were limited to a few broadcast television channels are long gone. Our regulations have to reflect that reality.

“Yet, instead of discussing how best to relax the local television ownership rule, I find it amazing that we are debating whether to tighten it by making Joint Sales Agreements (JSAs) and Shared Services Agreements (SSAs) attributable. I have no doubt that those advancing this proposal have the best of intentions. But if their efforts succeed, I fear that the effects will be quite negative, especially in smaller markets.

“As broadcasters’ share of the advertising market has shrunk in the digital age, television stations must be able to enter into innovative arrangements in order to operate efficiently. JSAs and SSAs, for example, allow stations to save costs and to provide the services that we should want television broadcasters to offer.

“In my home state, for example, a JSA between two Wichita stations enabled the Entravision station, a Univision affiliate, to introduce the only Spanish-language local news in Kansas. Across the border in Joplin, Missouri, a JSA between Nexstar and Mission Broadcasting not only led to expanded news programming in that market but also nearly $3.5 million in capital investment. Some of that money was spent upgrading the stations’ Doppler Radar system, which probably saved lives when a devastating tornado destroyed much of Joplin in 2011.

“Capturing these efficiencies is particularly important outside of the nation’s largest markets. For instance, in Fort Smith, Arkansas, the nation’s 100th largest market, the average revenue per television station is less than one-tenth that of the average in New York City. In the nation’s 200th largest market, Ottumwa, Iowa, the average revenue per station isn’t even one-thirtieth as large as the average in New York City.

“For stations in markets like these, the choice isn’t between JSAs or having both television stations operate independent news departments. Rather, the real choice is between JSAs and having at most one television station continue to provide news programming while the other does not. If the FCC effectively prohibits these agreements, fewer stations in small-town America will offer news programming, and they will invest less in newsgathering. And the economics suggest that there likely will be fewer television stations, period.

“Losing these stations would be terrible for American media consumers. For unlike some, I don’t see broadcasting as a faded relic of the past. Broadcast television remains a critical part of the media landscape. For example, just two days ago, at our field hearings in New York and New Jersey, I learned about the vital service that local broadcasters provided during Superstorm Sandy. When other methods of communications failed, broadcasters transmitted lifesaving information and alerts to the public. As we head into the future, we can’t expect to substitute broadband for broadcast. Instead, we should view them as complements.

“Finally, as we complete our quadrennial review (or should I say quadrennial-ish review) of our media ownership rules, we need to be mindful of the fact that our antiquated rules are actually making it more difficult for some industries to cope with the Internet transformation. If I might digress from the video market for a minute, I think it’s clear that the Internet has revolutionized the print marketplace and I believe it’s long past time that we eliminated the newspaper-broadcast cross-ownership rule.

“Americans can access an ever-widening range of news and information online at any time, day or night, so fewer and fewer of us choose to subscribe to a daily newspaper. And as online advertising becomes ever more local and mobile, the advertising niche once served by newspapers is fading.

“The numbers say it all. Since the newspaper-broadcast cross-ownership rule was enacted in 1975, over one in five newspapers in the United States has gone out of business. During that same time period, while the number of households in our country has increased by over 55%, newspaper circulation has declined by more than 25%. In the last few years, we’ve seen daily newspapers close in major markets like Denver, Cincinnati, Tucson, Honolulu, and Albuquerque. And in New Orleans, my former local newspaper, the Times-Picayune, is printed only three times a week.

“By reciting this litany, I don’t mean to suggest that newspaper-broadcast combinations are a panacea. But had we eliminated this prohibition a decade ago, the industry’s prospects might look brighter today. It might be too late for us to make a meaningful difference at this point. But that doesn’t mean we shouldn’t try.

“Investments in newsgathering are more likely to be profitable when a company can distribute news over multiple platforms. And cross-owned television stations on average provide their viewers with more news than do other stations. Given these facts and the substantial challenges facing the newspaper business, it doesn’t make sense to prevent a class of disfavored companies from operating newspapers. If you are willing to invest in a newspaper in this day and age, we should be thanking you, not standing in your way.”