Incentive Auction To Again Dominate NAB Show

The incentive auction and ensuing repacking are expected to dominate next week's NAB Show, but the auction's seeming-inevitability and strict anti-collusion rules will likely change the tone of those conversations, compared with past years, said industry representatives in recent interviews. Broadcasters who attend the convention with the incentive auction technically in progress are likely to be mostly those planning to continue broadcasting, a lawyer noted. That makes attendees more likely to be focused on post-auction strategizing and equipment and resources conducive to a smooth repacking, the attorney said.

The coming transition to ATSC 3.0, retransmission consent and affiliate fees are expected to be on the minds of attendees, industry officials told us. Recent shows have involved a lot of anger directed at the FCC over the incentive auction, but most of the industry is now resigned to the auction occurring and looking for the chances it could generate, broadcast attorneys and industry officials said. Since the repacking will put many stations in the market for new equipment, many will be visiting the NAB Show with those future shopping needs in mind, lawyers said. “If you make equipment for building TV stations, you'll be there with bells on,” one attorney told us.

Questions also remain about FCC plans for reserving vacant channels after the auction, said broadcast lawyers. “The repacking is a big issue we're hearing a lot about from broadcasters and wireless officials,” a spokesman for Commissioner Ajit Pai told us. Pai is moderating a panel on the repacking.

With the auction expected to clear out many full-power stations, industry watchers expect the LPTV stations that remain in those markets to increase in value, several broadcast attorneys told us. The holes left by the auction will create opportunities for channel sharing and other deals, said Fletcher Heald's Frank Jazzo. “There's a lot of opportunity out there,” said LPTV Spectrum Rights Coalition Director Mike Gravino. Though the low-power TV industry has been the source of the most recent legal attacks on the incentive auction, Gravino said an increasing number of LPTV owners are seeing the auction as a chance for profit. “Displacement is not revocation,” Gravino said. Since displaced LPTV stations will be allowed to relocate within 30 miles, the repacking could be an opportunity for many to upgrade to bigger markets, Gravino said.

The FCC proceeding on good-faith retrans negotiation and rising costs of affiliate fees will concern many show attendees, broadcast attorneys told us. Though affiliate fees concern only some broadcasters, the NAB Show is the site of many closed-to-the-public affiliate group meetings where the matter is likely to be raised, attorneys told us.

This show is seen as a big one for the effort to transition to ATSC 3.0, industry representatives said. The show has several demonstrations of technology using the new standard, and the standards-making body is seen as being close to adopting it, several broadcast attorneys said. “We're at a confluence,” OneMedia Executive Vice President Government Affairs Jerald Fritz told us. Many broadcasters are still somewhat unfamiliar with the new standard's capabilities, and the 2016 Show could be “a coming out party,” one attorney told us.

Radio broadcasters will likely discuss an ongoing low in transactions in that industry, said Pillsbury Winthrop radio lawyer Lew Paper. An FCC proceeding on proposals to remove some interference protections for Class A stations and ongoing pirate radio enforcement efforts also are likely to be on radio broadcasters' minds, Paper and Jazzo said.

The FCC quadrennial review of ownership rules, planned for this summer, is also expected to be a topic, industry and FCC officials told us. Oral argument in an NAB court challenge of the FCC handling of the review and its joint sales agreement attribution rules is scheduled for during the show. Broadcasters have low expectations for a change in ownership to flow out of either the FCC review or the court case, several attorneys told us. Changes to those rules have been discussed at the FCC but never implemented for many years, said Paper. Many of the larger broadcasters that had pursued changes to those rules, such as Gannett and Media General, no longer own both broadcast and newspapers under the same company, one attorney pointed out.