Saving Free TV?

Jun 9, 2003  •  Post A Comment

One week after the Federal Communications Commision rewrote the rules on station ownership, the question of the long-term viability of free over-the-air TV is no more easily answered than before the ruling, when FCC Chairman Michael Powell decreed that lifting the ownership cap is essential to the health of the broadcast television model.
For small-market players, the stakes are especially high. Phil Lombardo, the chairman and CEO of Citadel Communications, which owns four small-market network affiliates, said he spoke to Chairman Powell and Commissioners Kathleen Abernathy and Kevin Martin during the last week in May about “what the real world is like” for small broadcasters such as himself, who struggle to beef up and maintain their news operations in cash-strapped smaller markets.
Meanwhile, few expect to see a rapid increase in station sales and swaps. “I don’t think it will be immediate,” said Blair Levin, managing director at Legg Mason and former chief of staff to former FCC Chairman Reed Hundt. “But in three to five years I think you will [see] significant changes. You have to realize every time the rules have changed there have been deals that followed. Media companies hire lawyers and lobbyists to do things they want to do. They don’t get to push for things unless they’re meaningful. They spend money because they want to get a return on their money.”
BIA Financial Network, a Chantilly, Va.-based media consulting firm, has identified a host of markets it sees as ripe for the creation of duopolies, including Detroit, Pittsburgh, Baltimore, Raleigh-Durham, N.C., Cincinnati, Kansas City and Columbus, Ohio. “There is enough benefit and cost savings in duopolies, and since there are a number of markets that have opened up, it seems natural to see some activity there,” said Mark Fratrik, a VP at BIA.
One TV station consultant noted that a minor roadblock to a flood of deals will remain the mismatch between what sellers and buyers believe is a station’s value.
Chief NBC lobbyist Bob Okun said it is time for the various factions to stop weakening the industry as a whole with infighting. “This has been at least a two- if not three-year circular firing squad for broadcasters,” he said.
Mr. Okun said it is now time to focus on the real bogeymen confronting broadcasters of all sizes: the increasingly aggressive and sophisticated assault on local advertising revenue by cable operators.