DOJ View of Broadcast Competition Not Seen Likely to Change
LAS VEGAS -- DOJ's view of broadcast competition as concerned only with spot TV advertising is narrowly defined and unlikely to change, broadcasters and broadcast attorneys told us Tuesday. Their remarks followed an NAB 2019 panel headlined by Owen Kendler, chief of the Antitrust Division's Media Entertainment and Professional Services Section.
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DOJ gauges deals on a designated market area-by-DMA basis, doesn't consider the public services broadcasters provide, and for the agency to see tech companies or streaming service as competition, the internal records of combining parties would have to show them losing ad dollars to such companies, Kendler said. “Is that common sense?” Neuhoff Communications CEO Beth Neuhoff asked Kendler onstage, triggering a wave of applause from the broadcast audience. It's “hard to understand” why DOJ doesn't consider the totality of a broadcaster's circumstances in judging a deal, Neuhoff told us.
Broadcasters looking ahead to a May DOJ workshop on broadcast markets to shift the agency's thinking may have a tough road based on Kendler's statements, said broadcasters and broadcast attorneys. “I'm not optimistic,” said Gray Vice President-Government Relations and Distribution Rob Folliard in an interview. Antitrust Division Chief Makan Delrahim touted the workshop as a chance to give DOJ new information, in a Q&A Monday (see 1904080066). Former FCC Commissioner Robert McDowell said Tuesday it was “clear as mud.”
Kendler said several times the department seeks to keep an open mind, and in some DMAs or in time broadcasters may be able to show competition for ad dollars from online companies or streaming services. Such cases would apply only within that DMA, Kendler said.
In deciding whether a broadcast deal violates antitrust laws, DOJ is narrowly focused on defining the deal's market and determining whether a given combination would reduce competition in that market, Kendler said. Justice gathers information for that review by interviewing the combining parties, their advertisers and the companies they identify as competition, Kendler said. The information from those interviews is then corroborated with records from all of the companies involved, he said.
Though broadcasters argue that digital ads siphon dollars from broadcast ad buys, Kendler indicated reviews of their documents don't always show this to be true, or at least don't definitively show that declines in broadcast advertising are due to increases in digital buying. Even if rates on commercials for all broadcasters in a market are declining, a deal that would reduce competition among those declining outlets would be considered harmful to consumers, Kendler said. DOJ is barred by law from considering the public interest benefits of broadcasting as a service in a deal review, said Holland & Knight antitrust attorney David Kully.
Under the quadrennial review, Commissioner Mike O'Rielly has been urging the FCC to adopt a broader view of broadcast competition. If DOJ doesn't adopt a broader view, it could lead to Justice having to defend its definition in court, O'Rielly said. “Ours is defensible,” O'Rielly said. DOJ would have to refute in court data showing that broadcasters face broad competition as well as the opinion of an expert agency, the FCC, O'Rielly said. O'Rielly and other commission officials told us DOJ hasn't contacted the agency to participate in the May workshop.