Broadcast Rules Changes Like 3.0 Could Heighten Retrans Talks Tensions, Cowen Analyst Says

The FCC likely will loosen its broadcast ownership rules for top-four TV stations, which could give broadcasters increased leverage and make retransmission consent negotiations with MVPDs tougher, Cowen analyst Paul Gallant emailed investors Wednesday. Broadcaster ability to own two must-have stations in a market "would clearly enhance prospects" in retrans talks, Cowen said, pointing to Time Warner Cable's subscriber losses in its 2013 dispute with CBS (see reports in the Aug. 26 and 30 issues of this publication). Cowen said since Chairman Ajit Pai said MVPD consolidation hurts broadcasters, it's unlikely the FCC would block that greater broadcaster negotiating leverage with limits on joint retrans. It also said broadcast ownership rules changes could lead to station swaps across multiple markets, with numerous broadcast groups ending up with top-four combinations, giving numerous broadcasters more retrans power without going through large-scale deals like Sinclair buying Tribune. The FCC is less likely to change the UHF discount than to address the ownership rules, and seems likely in coming months to OK simulcasting ATSC 3.0 signals, Cowen said: If the agency sticks to not preventing broadcasters from tying 3.0 carriage to 1.0 carriage, that could also make retrans talks -- including issues of buying equipment and devoting bandwidth to ATSC 3.0 channels -- with MVPDs more tense. Gallant said agency approval of Sinclair/Tribune without conditions limiting joint retrans seems likely, though that might not come this year.