NAB: FCC Should Look at 'Collusive' Cable Ad Sales

Says NCC is Effort to Game System by Big Operators

In the spirit of the best defense is a good offense, the National Association of Broadcasters wants the FCC to look into cable ad buying consortia it argues are collusive arrangements that allow them to game the system and charge above-market rates.

Cable operators have been cheering on an FCC proposal to limit TV station joint sales agreements (JSAs), which they see as a way to coordinate retrans negotiations, and seeking similar help in Congress. For their part, broadcasters have been arguing that the arrangements are beneficial and should not be circumscribed because they promote localism by "increasing broadcast programming, especially local news, supporting the development of diverse and nicheprogramming, and encouraging technological investment."

"We believe that collusion in the pay-TV advertising business deserves better oversight from the FCC," said NAB president Gordon Smith.

In a filing with the commission, which is preparing to vote March 31 on limiting JSAs, NAB pointed to the interconnects as evidence that broadcasters faced their own coordinated competition, but did not specifically ask it to look into the practice.

But NAB said Wednesday the FCC needs to investigate.

The association cited NCC an ad sales rep owned by Comcast, Cox Media and Time Warner Cable that sells avails across cable ops, DirecTV, Verizon FiOS and AT&T U-Verse in a market as a single buy. Smith calls that a "deeply troubling practice [that] would appear to allow the largest pay-TV companies in the country to game the advertising sales market and set above-market ad rates for local and national businesses."

NAB also made clear the request was driven by the FCC's focus on broadcast sales arrangements.

"Heavily regulated local broadcasters in smaller markets are being scrutinized by the FCC for a practice that involves one local TV station selling ads for another local TV station," said Smith in calling for the investigation. "Yet the heavily consolidated pay-TV industry, unshackled by any ownership rules, is free to engage in this most collusive of advertising sales practice on a massive scale in multiple markets. NAB urges the FCC to conduct a serious and thorough review of the pay-TV interconnect advertising arrangements."