When the National Association of Broadcasters (NAB) convention opens April 22 in Las Vegas, it will be the first NAB conference since Donald Trump took office as president and named new FCC chairman Ajit Pai. Pai is scheduled to deliver a keynote, and NAB president and CEO Gordon Smith - a former two-term U.S. Senator from Oregon who was named to his role at NAB in 2009 - will deliver the opening address about the state of the broadcast industry.
In advance of NAB, Smith answered questions from The Hollywood Reporter about some of the association's key agenda items, including ATSC 3.0, the overhaul of the industry's over-the-air transmission standard.
Under the new Trump administration, what are the most vital issues for the NAB?
With the incentive auction coming to a close, the FCC should now turn its attention to ensuring the repacking transition [the multi-year process of moving select stations to new channels] goes smoothly. That means consumers don't lose access to their favorite local news, weather, community service and emergency information programming. Members of Congress in both chambers have introduced bills to ensure no station is forced off the air for not meeting the FCC's deadlines because of circumstances out of their control. We look forward to working with them to ensure that promise.
In addition to the spectrum repack, this is also a period of transition for broadcasters because of the [voluntary] next gen TV transmission standard [ATSC 3.0]. The FCC has initiated a rulemaking that will hopefully allow broadcasters to voluntarily adopt this innovate new standard using a market-based approach. We are excited by the opportunities offered by the new standard such as Ultra HD, immersive sound, mobility and interactive emergency alerting.
NAB also supports the relaxation of media ownership rules that have either far outlived their usefulness or hurt broadcasters' ability to compete with an increasingly consolidated pay-TV industry. We have asked the FCC to reconsider elements of its media ownership order from last summer. For instance, the crossownership ban that bars the common ownership of a broadcast station and a newspaper in the same market is outdated with the newspaper business model collapsing. If a broadcaster can preserve hometown newspapers and save some journalism jobs, why would anyone be opposed to that?
We are also committed to fighting a performance royalty on local radio stations that would impose a job-killing fee for the free promotional airplay of music. For decades, radio and the recording industry have enjoyed a mutually beneficial relationship. Free airplay on radio has promoted new artists, helped established musicians in the public eye, and driven album, concert tickets and merchandise sales. A performance royalty would destroy that relationship and financially cripple hometown radio stations. We're thankful for the almost 200 members of Congress who have recognized radio's indispensable role and support a resolution opposing a performance fee.
As Congress discusses comprehensive tax reform, NAB will be vigilant in ensuring no changes are made that would make advertising more expensive for advertisers. Advertising is a key driver of economic growth and helps businesses reach new customers. In addition, broadcasters use advertising revenue to support their operations and reinvest in their newsrooms. An estimated $1 trillion in U.S. economic output and 1.38 million jobs are attributable to the stimulating effects of advertising on local television and radio. We will make sure Congress understands the devastating effect changes to the tax treatment of advertising could have on the economy.
What is the next step that NAB hopes to address now that the auction has been completed?
Our hope is that broadcasters that did not participate in the auction are held harmless and the impact to consumers is minimal. But as the FCC prepares for the post-post auction spectrum repack, there are real issues that need to be addressed by both Congress and the FCC to avoid consumers losing access to their favorite stations. For example, the $1.75 billion relocation fund set up by Congress to compensate the more than 1,000 TV stations that will be forced to move is insufficient. There could also be issues for radio stations whose transmitters are located on TV towers. We also think an arbitrary 39-month timeframe is insufficient to complete all of this work. Thankfully, there is bipartisan support in Congress for fixing this, and we believe the FCC will be sympathetic to consumers who could be impacted if this is not done right.
Have you had a discussion with Ajit Pai since he was named FCC commissioner? What do you expect the relationship to be like?
I have met with the chairman, and through his words and actions, it is clear that he recognizes broadcasting's indispensable role in serving American communities with free, local and lifeline programming. We may not always agree with Chairman Pai, and he may not always agree with us, but I believe we will at least be given a fair shake.
I believe Chairman Pai's appreciation for broadcasting stems from his upbringing. In his address to FCC staff after he became chairman, he spoke about how his parents came to this country with $10 in their pocket and a transistor radio. I think he has also gained an appreciation for broadcasting through his visits to stations around the country during his tenure at the commission. He has spoken to broadcasters and seen first-hand the impact that FCC regulations have on radio and TV stations.
In his first few months as chairman, the FCC has already acted on several items favorable to broadcasters. The commission approved an order that will help revitalize the AM radio band, moved forward on a Next Gen TV standard, and taken steps to reform outdated media ownership rules. We expect to have a great working relationship with Chairman Pai and his fellow commissioners as they address other broadcast issues.