Before the Federal Communications Commission

269^ STELA Reauthorization Act of 2014, Pub. L. No. 113-200, § 104, 128 Stat. 2059, 2063 (2014).

270^ Consolidated Appropriations Act, 2016, Pub. L. No. 114-113, § 628 (2015).

271^ Prometheus Radio Project v. FCC, Nos. 15-3863, et al. (3d Cir. docketed Dec. 10, 2015). At the time of this Report, the proceeding remains pending.

272^ See 16th Report, 30 FCC Rcd at 3327-28, para. 165.

273^ Expanding the Economic and Innovation Opportunities of Spectrum Through Incentive Auctions, GN Docket No. 12-268, Report and Order, 29 FCC Rcd 6567 (2014) (Incentive Auction R&O), aff’d, Nat’l Assoc. of Broadcasters, et al. v. FCC, 789 F.3d 165 (D.C. Cir. 2015).

274^ See, e.g., Broadcast Auction Scheduled to Begin March 29, 2016; Procedures for Competitive Bidding in Auction 1000, Including Initial Clearing Target Determination, Qualifying to Bid, and Bidding in Auctions 1001 (Reverse) and 1002 (Forward), AU Docket No. 14-252, GN Docket No. 12-268, WT Docket No. 12-269, Public Notice, 30 FCC Rcd 8975 (2015) (Bidding Procedures Public Notice); Application Procedures for Broadcast Incentive Auction Scheduled to Begin on March 29, 2016; Technical Formulas for Competitive Bidding, AU Docket No. 14-252, GN Docket No. 12-268, WT Docket No. 12-269, Public Notice, 30 FCC Rcd 11034 (2015).

275^ Incentive Auction Task Force Releases Revised Baseline Data and Prices for Reverse Auction; Announces Revised Filing Window Dates, AU Docket No. 14-252, GN Docket No. 12-268, WT Docket No. 12-269, Public Notice, 30 FCC Rcd 12559 (Nov. 12, 2015); Forward Auction Application Filing Window Opens Today at Noon After One-Day Weather Delay; FCC Form 175 Deadline Extended to February 10, 2016, AU Docket No. 14-252, GN Docket No. 12-268, WT Docket No. 12-269, Public Notice, DA 16-89 (Jan. 27, 2016).

276^ See Bidding Procedures Public Notice, 30 FCC Rcd 8975.

277^ Incentive Auction R&O, 29 FCC Rcd at 6580, para. 34.

278^ See id. at 6797-6802, 6820, paras. 563-73, 618.

279^ Lenders impose restrictions (covenants) on the ratio of debt to equity and earnings before interest and taxes (EBIT) to interest. Sinclair 2014 Form 10-K at 26; Nexstar 2014 Form 10-K at 16; Gray 2014 Form 10-K at 20-21. Some station groups have faced concerns about breaching such loan covenants. See, e.g., Taigh Khan, S&P Cuts Media General on Declining Revenue, Tightening Covenants, SNL Kagan (Oct. 28, 2012).

280^ Nexstar 2014 Form 10-K at 16; Gray 2014 Form 10-K at 21-22.

281^ Broadcasters differ in the value they place on programming with respect to a station’s purchase price. For example, Gray believes that the value of a television station is derived primarily from the attributes of its broadcast license, rather than its type of programming, i.e., whether or not it is an affiliate of one of the major four broadcast networks. Gray 2014 Form 10-K at 53.

282^ Stations compete against in-market broadcast stations for exclusive access to syndicated programming within their markets. In addition, cable networks occasionally acquire programs that might otherwise be offered to stations, and some programs are available via OVDs. Nexstar 2014 Form 10-K at 10-11. Stations usually purchase syndicated programming two to three years in advance, and sometimes must make multi-year commitments. Gray 2014 Form 10-K at 24; Sinclair 2014 Form 10-K at 33.

283^ See supra, Table III.B.1; Broadcast Stations Totals.

284^ See id.

285^ SNL Kagan, TV Station Deals Databook 2015 Edition, at 8 (May 18, 2015) (SNL Kagan TV Station Databook).

286^ Id.

287^ Id.

288^ Id.

289^ Press Release, Scripps, Scripps closes on deal to buy two stations from Granite in Buffalo, Detroit (Jun. 16, 2014), http://www.scripps.com/press-releases/22-scripps-closes-on-deal-to-buy-two-stations-from-granite-in-buffalo-detroit.

290^ Press Release, Graham Holdings, Graham Holdings and Berkshire Hathaway complete deal for Berkshire Hathaway to acquire WPLG-TV (Jul. 1, 2014), http://www.berkshirehathaway.com/news/JUL0114.pdf.

291^ Press Release, Media General, Media General completes merger with Lin Media (Dec. 19, 2014), http://www.mediageneral.com/press/2014/dec19_14_merger.html.

292^ Press Release, 21st Century Fox, FOX Television Stations and Cox Media Group announce agreement to exchange stations in San Francisco, Boston, and Memphis; (Jun. 14, 2014); https://www.21cf.com/news/business/2014/fox-television-stations-and-cox-media-group-announce-agreement-exchange-stations.

293^ Press Release, Gray, Gray Closes Hoak Acquisition and Completes Refinancing of its Senior Credit Facility (Jun. 13, 2014), http://gray.tv/uploads/documents/pressreleases/1939826.pdf.

294^ Press Release, Gray, Gray Closes Schurz Acquisition, Related Transactions, and Incremental Term Loan Facility (Feb. 16, 2016), http://gray.tv/OLD/uploads/documents/pressreleases/2139772.pdf.

295^ Press Release, Gray, Gray Reports Record Operating Results (Feb. 26, 2016), http://gray.tv/uploads/documents/pressreleases/Press%20Release%20re%20Q4%2015%20Operating
%20Results.pdf.

296
^ Press Release, Scripps, Scripps, Journal merging broadcast operations, spinning off newspapers; (Jul. 30, 2014; http://www.scripps.com/press-releases/873-ew-scripps-company-completes-merger-spinoff-transaction-with-journal-communications. See also BIA/Kelsey, BIA Media Access Pro Television Database as of May 2014 (evaluation of network affiliation data for all Nielsen DMAs).

297
^ Press Release, SBG, SBG to close on Allbritton stations August 1, 2014 (Jul. 25, 2014), http://sbgi.net/pr-news/sbg-to-close-on-allbritton-stations-august-1-2014/.

298
^ Applications for Consent to Assignment of Licenses Letter Order DA 14-1757 at 1-3 (MB December 4, 2014); Nexstar 2014 Form 10-K at 3.

299
^ See infra, Section III.B.4.b for detailed information about revenue sources for broadcast television stations.

300
^ National Universe Estimates -- Market Breaks, Nielsen, Mar. 1, 2015 (data as of November 2014). Some local broadcast stations are carried pursuant to must-carry, which does not involve payment of a fee by the MVPD.

301
^ 47 U.S.C. § 543(b)(7), 47 CFR § 76.901(a). See also supra, paras. 49-51 and Table III A.3. Some MVPDs include broadcast retransmission fees as a separate item on customer bills. See supra, para. 58.

302
^ SNL Kagan, Total TV Station Industry Revenue Projections, March 2015 (2015 SNL Kagan TV Revenues).

303
^ See infra, Table III.B.5.

304
^ Nexstar 2014 Form 10-K at 11; Gray 2014 Form 10-K at 12; Sinclair 2014 Form 10-K at 23.

305
^ Nexstar 2014 Form 10-K at 10; Gray 2014 Form 10-K at 4; Sinclair 2014 Form 10-K at 23.

306
^ Nexstar 2014 Form 10-K at 9.

307
^ Vogel at 317, n. 29.

308
^ Nexstar 2014 Form 10-K at 9.

309
^ Id.; Entravision, SEC Form 10-K for the Year Ended December 2014, at 11. 

310
^ Nexstar 2014 Form 10-K at 9.

311
^ Gray 2014 Form 10K at 13.

312
^ See TVB, Trends: TV Cost & CPM Trends, http://www.tvb.org/trends/4718 (last visited December 7, 2015) (TV Cost & CPM Trends).

313
^ See The Museum of Broadcast Communications, Cost-Per-Thousand (CPM) and Cost-Per-Point (CPP), http://www.museum.tv/eotvsection.php?entrycode=cost-per-thou (last visited June 23, 2014); Vogel at 290-91, 574-75. For example, if 100,000 households in a DMA own television sets, and 20,000 of those households are tuned to a particular broadcast television station, then a station’s rating is 20. If it charges $25,000 per point during a particular program, then it can earn $500,000.

314
^ TV Cost & CPM Trends.

315
^ Other non-advertising sources of revenue for broadcast television stations include retransmission consent fees, network compensation, DTV revenue, online revenue, and mobile revenue. These sources of revenue are discussed further at infra, Section III.B.4.b.

316
^ Vogel at 292.

317
^ See TV Cost & CPM Trends (last visited December 7, 2015) (citing SQAD Media Market Guide 1^st Quarter Projections (Fall books)).

318
^ Nexstar 2014 Form 10-K at 10; Gray 2014 Form 10-K at 12; Sinclair 2014 Form 10-K at 23.

319
^ Gray 2014 Form 10-K at 12; Nexstar 2014 Form 10-K at 10.

320
^ SNL Kagan, TV Station Multi-Platform Report-Update (May 2015).

321
^ Id.

322
^ Nexstar 2014 Form 10-K at 4; Sinclair 2014 Form 10-K at 13-14. The network affiliation agreements, generally exclusive for each of the 210 DMAs, provide affiliates with the right to air network programming first. The contracts may run from two to 10 or more years. The Commission’s right-to-reject rule grants an affiliate the right to (1) reject or refuse network programs which the station reasonably believes to be unsatisfactory, unsuitable, or contrary to the public interest and (2) substitute a program which, in the station’s opinion, is of greater local or national importance. 47 CFR § 73.658(e).

323
^ While networks and stations consider May to be the most important measuring period of the year, they also compete intensely in February and November, when audiences are likely to stay at home. Vogel at 291. See also Nielsen Media Research, Glossary of Media Terms, Sweeps, http://www.nielsenmedia.com/glossary/ (last visited October 15, 2015). Nielsen refers to these months as “sweeps months.” Nielsen excludes the Honolulu, Fairbanks, and Juneau DMAs from its July measurement period.

324
^ STELAR, § 105, 128 Stat. 2063.

325
^ Sinclair 2014 Form 10-K at 11.

326
^ Vogel at 304. See 16th Report 30 FCC Rcd at 3334 para. 181.

327
^ See, e.g., Nexstar 2014 Form 10-K at 2. Nexstar states that they strive to increase the audience share of the stations by creating a strong local broadcasting presence based on highly rated local news, local sports coverage, and active community sponsorship. In 2014, Nexstar earned approximately 71.7 percent of its net advertising revenues from spots aired during local news programming. Id. at 49.

328
^ Id. at 11; Gray 2014 Form 10-K at 13.

329
^ Robert Papper, Survey Shows that the amount of local TV news remains at Near-record highs: Research: tracking local news, RTDNA (June 15, 2015), http://www.rtdna.org/article/research_tracking_local_. While RTNDA/Hofstra released survey results in 2015, the survey was conducted during the fourth quarter of 2014. This survey presents the national average hours of news for all stations. A 2011 FCC staff analysis found, however, that 258 commercial and 262 noncommercial stations do no local news. See FCC, The Information Needs of Communities, July 2011, at 100, http://www.fcc.gov/infoneedsreport.

330
^ See, e.g., Nexstar 2014 Form 10-K at 11, 10; Sinclair 2014 Form 10-K at 11; Gray 2014 Form 10-K at 13.

331
^ Nexstar 2014 Form 10-K at 11.

332
^ Id.; Gray 2014 Form 10-K 13. In addition, cable networks occasionally acquire programs that might otherwise be offered to stations. For example, Twentieth Century Fox TV and Twentieth TV negotiated the first cable syndication and VOD deal of The Simpsons to FXX for all past and future episodes, within the time period of the deal, for approximately $750 million. Cynthia Littleton, ‘The Simpsons’ Lands $750 Mil Cable Syndication, VOD Pact with FXX, Variety, Nov. 15, 2013, http://variety.com/2013/tv/news/the-simpsons-lands-750-mil-cable-vod-syndication-pact-with-fxx-1200837036/.

333
^ Syndicated programming can impose financial risks on stations. Broadcast stations cannot predict whether a particular show will be sufficiently popular to enable it to sell enough related advertising time to cover the costs of the program. A station may have to replace a poorly performing program before it has recovered the costs of obtaining it. Sinclair 2014 Form 10-K at 27; Gray 2014 Form 10-K at 24.

334
^ Gray 2014 Form 10-K at 24.

335
^ National Association of Broadcasters, Television Financial Report, at 3 (2015) (2015 NAB Television Financial Report).

336
^ Nielsen, March 2015 Universe Estimate Report (Nielsen 2015 Universe Estimates).

337
^ Nielsen, September 2013 National Media Related Universe Estimates, Oct. 31, 2013. (Nielsen Sept. 2013 Universe Estimates). Figures apply to the television season at issue. MVPD households with HD television sets wishing to receive HD service must have HD service included in their subscriptions.

338
^ 2014, SNL-Kagan TV Station Database; 2014 SNL Kagan TV Station Databook at 11; SNL Kagan, TV Station Deals Databook 2013 Edition, July 2013, at 10 (2013 SNL Kagan TV Stations Databook).

339
^ 2014 SNL Kagan TV Stations Databook at 12.

340
^ SNL Kagan Multiplatform Analysis 2014.

341
^ Mobile 500 Alliance, About, http://mobile500alliance.com/about-2 (last visited Apr. 15, 2016).

342
^ Harry A. Jessell, Mobile DTV is Dead, Long Live ATSC 3.0, TV NewsCheck, Oct. 25, 2013, available at http://www.tvnewscheck.com/article/71507/mobile-dtv-is-dead-long-live-atsc-30 (last visited Apr. 8, 2016). On April 26, 2016, the Commission solicited comment on a Petition for Rulemaking filed by CEA, NAB, APTS, and NAB asking the Commission to “amend its rules to allow broadcasters to use the signaling portion of the physical layer of the new ATSC 3.0 (Next Generation TV) broadcast standard, while they continue to deliver current-generation DTV broadcast service to their communities.” See Media Bureau Seeks Comment on Joint Petition for Rulemaking of America’s Public Television Stations, The AWARN Alliance, The Consumer Technology Association, and The National Association of Broadcasters Seeking to Authorize Permissive Use of the “Next Generation TV” Broadcast Television Standard, GN Docket No. 16-142, Public Notice (rel. Apr 26, 2016). Comments and Reply Comments are due on May 26, 2016 and June 27, 2016, respectively. See id.

343
^ SNL Kagan TV Pure Plays (June 30, 2015). In addition to television properties, Tribune is the licensee of WGN(AM), Chicago, IL.

344
^ Nielsen, News & Insights: Top Tens & Trends, Television, http://www.nielsen.com/us/en/insights/top10s/television.html (last visited Nov. 13, 2012).

345
^ See 16th Report 30 FCC Rcd at 3339, para. 192.

346
^ Compare Nielsen 2014 Universe Estimates with Nielsen 2013 Universe Estimates.

347
^ Nielsen 2015 Universe Estimates.

348
^ Id.

349
^ NAB Comments at 2-3.

350
^ Id. at 2-3.

351
^ Id. at 3.

352
^ Nielsen 2012 Television Audience Report at 15 & Nielsen 2013 Television Audience Report at 15. Total day viewing includes viewing Monday-Sunday, 6 a.m.-6 p.m. A share is the percentage of television households watching television who are watching a particular programming source. Due to simultaneous multiple-set viewing, Nielsen reports audience shares that exceed 100 percent when totaled. We have normalized the audience shares by recalculating them on a base (or denominator) equaling 100 percent and adjusting the numerators accordingly.

353
^ Monday-Saturday, 8-11 p.m. Eastern and Pacific Time (7-10 p.m. Central and Mountain Time), Sunday 7-11 p.m. Eastern and Pacific Time (6-10 p.m. Central and Mountain Time).

354
^ Nielsen 2013 Television Audience Report at 15, Nielsen Viewing Trends May 2015 at 8. Figures apply to the television season at issue. Due to rounding, the primetime total for 2012-2013 does not equal 100 percent.

355
^ Vogel at 301-03; Gray 2014 Form 10-K at 21; Sinclair 2014 Form 10-K at 25.

356
^ See Nexstar 2014 Form 10-K at 24.

357
^ Vogel at 309.

358
^ See Gray 2014 Form 10-K at 7 (“For the years ended December 31, 2014…, we derived approximately 21% . . . of our total broadcast advertising revenue (minus agency commissions) from customers in the automotive industry”).

359
^ Nexstar 2014 Form 10-K at 10; Gray 2014 Form 10-K at 7.

360
^ Vogel at 304.

361
^ 2015 SNL Kagan TV Revenues.

362
^ Id.

363
^ Id.

364
^ Nexstar 2014 Form 10-K at 42.

365
^ See 16th Report, 30 FCC Rcd at 3338, para. 189.

366
^ 2015 NAB Television Financial Report at iv; National Association of Broadcasters, 2014 Television Financial Report, 2014, at 2 (2014 NAB Television Financial Report). Some broadcast station groups cite lower percentages. Nexstar states that local advertising, excluding political, represented 51.0 percent of its stations’ gross revenues (that is, revenues before subtracting agency commissions) in 2013 and 42.3 percent in 2014. Nexstar 2014 Form 10-K at 44. Gray’s percentages were similar: 58.6 percent in 2013 and 65 percent for 2014. Gray 2014 Form 10-K at 37.

367
^ SNL Kagan,

Download 1.1 Mb.

Share with your friends: