QR, 3.0, M&A Expected to Dominate NAB Show 2019

The FCC is expected to release a draft version of FM translator interference rules at or just before the show. Those rules were a major topic for radio broadcasters at previous NAB Shows, and FCC Chairman Ajit Pai said they would be coming in the spring (see 1902220047). Though the content of the draft isn’t known, radio broadcasters will scrutinize the contour outside which FM translator interference is allowed and the FCC’s plans for gauging the legitimacy of interference complaints, said Womble Bond radio attorney John Garziglia. The agency didn’t comment Thursday.

The review is seen as more important to radio broadcasters because the AM/FM subcaps are bigger issues for radio than any of the QR rules involving TV. Anticipating some sort of relaxing of subcap rules, some radio broadcasters may be delaying transactions until the QR is resolved, Proffitt said. Others may not need to wait, Garziglia said. “Seventy to 80 percent of radio transactions don’t involve the subcaps at all.”

Any rule changes from the QR aren’t likely to be implemented for a while. The FCC is seen unlikely to act until the 3rd U.S. Circuit Court of Appeals rules on the ongoing court case from the 2014 QR (see 1903220045). Any FCC order on the 2018 version is considered certain to be challenged in court, an executive said. That uncertainty may mean many broadcasters won’t wait for a QR order to pursue transactions, a broadcast analyst said. Broadcasting is expecting a flood of political ad revenue from the 2020 election, but since both buyers and sellers are aware of this, it’s not seen as having a positive or negative effect on deals, said BIA/Kelsey Chief Economist Mark Fratrik.

For TV broadcasters, the important aspect of the QR is the expectation it will clarify the FCC’s views on top-four combinations in the same market. A proposed Gray Television combination in Sioux Falls, South Dakota, has been idle at the FCC for 11 months, and the FCC hasn't approved any deal involving a new top-four combination. With no examples to draw from, broadcasters can’t be sure what the FCC wants to see in top-four duopolies, a broadcast executive said. The eventual fate of Nexstar buying Tribune, and a recent lawsuit against Nexstar by Marshal Broadcasting, are also likely to be important topics, broadcasters said(see 1904030071).

For ATSC 3.0, “this is the year you’ll actually start to see a rollout,” said Wilkinson Barker broadcast attorney David Oxenford. Broadcasters will focus on practical ways and equipment to monetize the new standard, he said. Broadcasters are going to see if ATSC 3.0 is a legitimate path forward, said Fletcher Heald broadcast attorney Peter Tannenwald. There’s concern over whether the tech will be included in phones and other devices as broadcasters want, he said. The FCC hasn’t released the forms necessary for broadcasters to apply to transition to the new standard, though this is also something Pai has said to expect “soon.”

The post-incentive auction repacking is almost at the end of Phase 3, which is the point industry officials have long predicted delays would begin to stack up, threatening the timing of the whole process. “This where the rubber on the repacking meets the road,” said Gray Vice President-Government Relations and Distribution Rob Folliard. Tower companies met several times with Media Bureau and Incentive Auction Task Force staff to express concerns.

Chairman Ajit Pai told the House Financial Services committee Wednesday the repacking was going according to plan (see 1904030082) Delays during the repacking are difficult, but it’s extremely unlikely that broadcasters who can’t adhere to the schedule will be forced off their frequencies, said Tannenwald. “What are they gonna do?” he said of the FCC.