Don't Hold Your Breath


Last week — after a court ordered the Federal Communications Commission to reconsider its cap on TV-station ownership — speculation boiled over that another heated round of media consolidation would occur.

And in addition to nixing the rule that limited a TV-station owner's reach to 35 percent of the market, the court struck down the regulation barring broadcast and cable-system cross-ownership.

That rule bars a company from owning both a cable system and a broadcast station in the same market. Some newsgathering organizations had a field day with that last week. Now that the handcuffs are off, they predicted, there would be a stampede to the altar.

According to the denizens of Wall Street, who live for such heady and unfettering moments, AOL Time Warner Inc. will gobble up NBC (now owned by General Electric Co.). Likewise, Comcast Corp. would acquire the troubled The Walt Disney Co.

On top of that, cable companies would acquire broadcast-TV stations. And, of course, the broadcast networks would buy up more TV stations.

I truly doubt any of those scenarios will unfold.

Forget about AOL getting its mitts on NBC — even though that would make Ted Turner's life dream (or, some say, pipe dream) come true. There's a burr in that saddle: AOL Time Warner has a heap of debt, and its stock is at a new year-long low.

And why would AOL — whose other businesses enjoy dual revenue streams from both advertising and subscriptions — want to encumber itself with the likes of NBC, mainly a broadcaster that relies almost solely on the vagaries of the advertising? The Peacock does have some successful cable networks in its quill, but that isn't its bread-and-butter business.

Part of AOL's problem right now is that it — like most other media companies — is suffering along with a bum advertising market.

Then there's the speculation that Comcast wants Disney. True, the Philadelphia-based MSO has stated its desire to be a bigger player in the content arena. But Disney? No way.

Comcast has its nose to the grindstone right now, trying to make sense of its recent AT&T Broadband acquisition — a deal that will not close for another year.

Then there's the buzz about cable MSOs buying broadcast stations. That's just too zany to even comment on. Yes, it's true that TV stations enjoy great operating margins — around 30 to 50 percent, depending on whether a station is No. 3 or No. 1 in its market.

But 30 or 50 percent of what? Remember, all of a station's revenue comes from advertising sales, and those revenues are down. The margins, in real dollars and cents, are not as appealing as they sound at first blush.

That leaves us with broadcast networks buying more TV stations: A very real likelihood, because it actually makes a little sense. But those deals will not be mega-mergers, because no one expects the 35 percent cap to go any higher than 50 percent or so. There's only so much room to boogie.

But even a couple of decent station acquisitions in the right markets could help a broadcast network's bottom line. The more TV stations a network owns, the less it has to pay in compensation to affiliates that carry the network feed. The network also gets the benefit of having more ad dollars coming in from its owned-and-operated stations.

So, forget about another heated round of media mergers, at least in the short term. Long-term — that's another story.

Sure, some media mogul will wake up from a bad night's sleep — all in a lather about the upcoming marriage of AT&T Broadband and Comcast, or of EchoStar Communications Corp. and DirecTV Inc. — and forge some bigger and bolder partnership.

But for now, I won't hold my breath.