Broadband Cable Association of Pennsylvania


March 17, 2014

Washington at its worst typically comes in the second term of an exhausted presidency. Its worst is doubly reinforced by President Obama's decision to unleash his bureaucracy in lieu of any agenda valuable enough to the American people that he could get it through Congress. The result is usually bureaucracy for its own stake.

Here's an example: For more than two decades, the Federal Communications Commission has been blessing so-called sidecar deals in which local TV stations share certain costs and engage in joint sales activities, while the agency sotto voce acknowledges that these waivers are meant to get around its own archaic ownership rules. The rules make no sense in the new digital media world but try getting rid of them. Comes a new FCC chief, a former Obama campaign bundler and former lobbyist for the cable and wireless industries, Tom Wheeler, who now wants to unbless these deals. Under a rule he hopes to pass on March 31 with the votes of two fellow Democratic commissioners, station owners would have two years to unwind the arrangements, a prospect that has hammered the stock prices of Lin Media, Nexstar Broadcasting, Sinclair Broadcast Group and others. But Mr. Wheeler also says the companies could apply for a waiver on a case-by-case basis.

So: The FCC would ban what it previously approved, with the proviso that in the future it might approve what it just banned. This act of bureaucratic metastasization is, as they say in the social science literature, overdetermined. A big loser would be the Sinclair Broadcast Group, a company that famously antagonized Democrats by running Swift Boat ads against John Kerry. A beneficiary would be Mr. Wheeler's former colleagues in the cable industry, who have been whimpering piteously for Washington's help in reducing fees they pay local broadcasters for the right to retransmit their signals. Another beneficiary would be his former colleagues in the wireless industry, in favor of anything that makes life hard for TV stations and encourages them to vacate the spectrum they occupy. Talk about a trifecta.

Mr. Wheeler has supposedly discovered a new reverence for the exact letter of the FCC's ownership rules, but his devotion to competition and diversity in local broadcasting is somewhat attenuated by his clear interest in reducing the number of TV stations so their spectrum can be sold to wireless carriers. Indeed, his fans suspect he's really playing a clever, deep game to reshape spectrum policy for the broadband future. And maybe that's his intention. But here's betting the only real-world consequence will be an increase in the rents flowing to Washington fixerdom.

Now it's true that valuable spectrum is occupied by a TV industry only 10% of whose viewers still rely on over-the-air broadcasting. More important to the FCC than solving this problem, though, is making sure the broadcast industry and other spectrum users don't get together and solve it without the FCC. Under existing law, with waivers from the agency, broadcasters would be free to redeploy their spectrum to new uses and bargain among themselves how to reallocate it. Instead, the agency prefers its own complicated, slow-moving scheme to rescramble the nation's broadcast TV omelet, only part of which involves enticements for broadcasters to surrender spectrum that may or may not be useful to the wireless industry in return for a share of auction proceeds that no one can intelligently forecast.

This baroque scheme was authorized by Congress in 2012 and the FCC now says auctions will take place in 2015. Don't bet the college money on it. In the meantime, the real upshot of the agency's sidecar flip is simply that settled arrangements in the broadcast industry are being unsettled so lawyers, lobbyists, bureaucrats and politicians can collect salaries, fees and donations to resettle them. From wireless carriers to broadcast stations to cable operators to sports leagues to TV production studios, all will have to fork up for a "seat at the table." There is only one winner: the bureaucracy and the swelling parasite corps that has made Washington the most recession-proof city in America. Wall Street Journal