Broadcasting Will Survive, Say GMU Panelists

Broadcast TV is still a profitable business, with revenue that increased by 13.3 percent in 2013, said BIA Kelsey Vice President and Chief Economist Mark Fratrik, a former NAB official. He said live TV is particularly strong, accounting for 84 percent of TV viewing hours in Q1 2013. But Fratrick said that number is still a decrease -- in Q1 2010 the figure was 88 percent. He said general growth in advertising, especially local advertising in the automotive industry, is another positive sign for broadcasting. Fratrick pointed to a recent wave of mergers in broadcasting as a sign of the medium’s health, and said the “amazing” growth of groups that own local TV stations illustrates the strength of retransmission consent revenue, which he said is fueling their expansion. In Q1 2013, broadcast ownership groups went up by 113 percent, Fratrik said.

Despite Padden and Fratrik’s optimism, several speakers said the medium is threatened by increasing industry competition. However, as broadcasting’s situation gets worse, regulations constraining it are likely to go away, said communications lawyer Thomas Nachbar, a University of Virginia professor. “The FCC today is generally obsessed with market power. … When they find market power, they target that group,” said Nachbar. He argued that as broadcasting starts to lose its market power to competitors, arguments against the regulations constraining it will become stronger, and the FCC will relax those regulations to protect broadcasters. The commission has “shown its willingness to regulate the rest of us in order to preserve broadcasting in rural America,” said Nachbar. As evidence, he pointed to a letter of concern about rural translators and LPTV sent to the FCC last week by 23 senators. However, protecting broadcasting in the face of increased competition could have consequences for localism, he said. To let broadcasting compete, the FCC may have to eliminate regulations on preserving localism, ceding more discretion to networks, Nachbar said. FCC officials “will have to alter their approach to networks if they want to preserve [over-the air] TV,” said Nachbar.

Northwestern University Professor Matthew Spitzer proposed an alternative vision for broadcasting’s future, in which it would survive even if mandatory broadcasting rules were relaxed. Spitzer said broadcasting will continue to wane in importance, saying his young students “have as little use for broadcasting as they do for landline phones.” He said broadcasting networks would become multichannel video programming distributors and continue to produce and create the local content that comes from broadcast stations now, while their infrastructure would be used as flexible use spectrum. In Spitzer’s “thought experiment,” voluntary broadcasting would continue in rural areas where direct broadcast satellite and cable wouldn’t be an option, he said. “Let’s get this old regulatory system off the neck of economic growth in the United States and do way with mandatory broadcasting now,” said Spitzer.

Aereo’s business model is unlikely to survive a full court challenge on its merits, said Steve Effros, president of Effros Communications, saying none of the service’s court proceedings have progressed that far. Even if Aereo survives an extended court challenge, “Congress will stop it by changing the rules,” said Effros. However, University of Maryland copyright law professor James Grimmelmann said even if Aereo doesn’t survive, it may have a lasting effect on broadcasting. He said Aereo reflects the industry trend of giving consumers control over programming, preserving local content, and watching content divorced from the time it aired. “The consumer appetite for that isn’t going to vanish,” said Grimmelmann.