10 Observations From The NAB Show In Las Vegas

(By John Garziglia) The NAB Show in Las Vegas has morphed into a media extravaganza in which radio plays just a part. Nonetheless, radio broadcasters continue to be exceedingly catered to by the NAB, both in sessions and on the exhibit floor. Here are my top 10 observations on legal, regulatory and operational issues having been one of the 100,000+ NAB Show attendees:

1. Radio Broadcaster Finances. Discussions among attorneys, brokers and broadcasters invariably touched on the reported financial difficulties of our nation’s largest broadcasters with the recent iHeart story provoking speculation, particularly the anticipated disclosure indicating a substantial doubt of iHeart to “continue as a going concern.”  The question was asked what exactly happens if iHeart’s financial issues cause a dumping of all of its stations on the market.   Would there be a potential US buyer for the entire group? If there is not a US buyer, could some foreign entity willing to pay a premium for a US media presence swoop in to buy the entire group, and would FCC and governmental reviews allow for that. The FCC did recently sign off on Australian citizens owning 100% of a US radio group. Would the FCC similarly approve a Chinese entity buying iHeart if it was the only potential purchaser? Something to consider.

2. FM Translator Windows and Interference. Chairman Pai announced that this summer would be the first AM-exclusive FM translator filing window. This is welcome news for many AM broadcasters. For any AM station that did not previously participate in last year’s 250 mile FM translator move window, this proposed window may be an opportunity to obtain an FM translator. It is not too early to contact a consulting engineer about possible frequencies. With this near certainty of the filing window, however, the FCC’s FM translator interference rules continue to be a significant question for broadcasters.   Discussions centered around a recent Petition for Rulemaking in RM-11786 filed by Aztec Capital Partners, Inc. asking that local listeners to an FM translator carrying a local AM or HD signal be favored over a distant listener to another station far outside of the distant station’s service area, as well as a Petition for Rulemaking in RM-11787 filed by the National Association of Broadcasters seeking the expansion of FM translator modifications to any channel in interference situations along with interference complaint procedural changes. The FCC is now accepting comments on both Petitions for Rulemaking.

3. AM and FM Sub-Caps. A prevalent question in conversations with broadcasters was whether the FCC’s ownership sub-caps would be lifted, removing the restriction of a single owner from owning no more than either five FM stations, or five AM stations, in radio markets in which eight stations may be owned. There is the argument that removing the sub-caps would simply make the strong stronger and the weak weaker. Just as compelling, however, is the argument that removing the sub-caps allows the radio industry as whole to compete with all media. It is a coin toss which way the removal of the sub-caps will go.

4. Chairman Pai. If there was universal agreement at the NAB Show on one premise, it is that Chairman Pai is good for broadcasters. I observed in the April 17, 2017 edition of Radio Ink Magazine that “radio broadcasters are fortunate to have [in Chairman Pai] as our chief regulator a dedicated public servant who not only understands the broadcasting business but also highly enjoys our programming. Chairman Pai may not always agree with us, but we can be confident that he will appreciate our issues. We cannot ask for more.”

5. Main Studio Rule. The FCC’s proposed elimination of main studio requirements is still in the “can-this-be-believed” category. The FCC is moving amazingly fast, proposing to consider a Notice of Proposed Rulemaking at its May, 2017 open meeting. Immediately prior to the NAB Show I was asked whether I thought the rule would be eliminated. I predicted that “the FCC will do away with the main studio rule. It is an easy target for regulation elimination, and there is absolutely no public constituency for it (unlike net neutrality and privacy that does have a constituency of millions to whom the chairman is about to be introduced).”

6. TV Repack and FMs. The effects of TV stations changing antennas and facilities in the repack, was a topic on both FM broadcasters’ and NAB minds. Whether there will be any TV repack money to assist FMs in a forced facility change is one of those complicated questions without an immediate resolution.

7. Performance Fees. Legislation in Congress asking radio stations to pay performance fees to recording artists continues to be one of the top issues for radio and NAB government relations officials. Grassroots broadcaster lobbying to members of Congress has so far saved radio broadcasters from a substantial new property right being accorded to owners of musical recordings with consequent fees being owed by radio broadcasters.

8. Global Media Rights. GMR was oft asked about at the NAB Show, with a recognition of the hard slog radio broadcasters continue to have with songwriter music rights organizations trying to legally eat more than 100% of the money pie for songs played on the radio. The RMLC’s representation of radio broadcaster interests with the GMR challenge continues to be the answer.

9. Ad Tax Deductibility. Tax reform is alive and well in Congress. If present policies hold, for every dollar that taxes are reduced, there will be a commensurate “pay-for” sought. The deductibility of advertising expenses is a big, attractive, pay-for. It is only the concerted lobbying efforts of NAB and other broadcasters organizations working with members of Congress who understand the broadcasting business that keep advertising dollars currently deductible as a business expense.

10. Next Radio. Finally, Jeff Smulyan received recognition at the NAB Show from the Broadcasters Foundation of America as an industry leader, with the recognition noting in particular the Next Radio app. If an FM chip in a cell phone is the “how”, then the graphics and tuning capabilities of the Next Radio app is the “why”. If you do not know what is this organization that gave Jeff the award, please take a look at Broadcasters Foundation. The Broadcasters Foundation of America reaches across the country to provide an anonymous safety net for radio and television broadcasters who find themselves in acute financial need. If radio is now treating you very well, the Broadcasters Foundation is a way to say thank you.

Hope to see you at the NAB/RAB Radio Show in Austin where we once again can compare notes on the top 10!

John F. Garziglia is a Communications Law Attorney with Womble Carlyle Sandridge & Rice in Washington, DC and can be reached at (202) 857-4455. or[email protected]