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Obama Puts Squeeze on TV Industry

By Kim McAvoy
TVNEWSDAY, Dec 10 2008, 3:24 PM ET

The Obama crowd is not waiting for Inauguration Day to begin managing the FCC-regulated media.

At a meeting in Washington last Friday, Obama transition team officials demanded that broadcasters and cable operators establish or help fund call centers to handle the anticipated flood of complaints and questions in the wake of the analog cut-off on Feb. 17, 2009.

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The transition officials, led by one-time National Cable & Telecommunications Association President Tom Wheeler, had invited representatives of the broadcast, cable and consumer electronics industries to the meeting to discuss what needs to be done to ensure a smooth and successful DTV transition.

According to industry sources, Wheeler, who heads the Obama review group looking at the FCC and other agencies, suggested that it makes sense for the various segments of the TV industry to pick up the tab for the call centers.

Broadcasters are the beneficiaries of billions of dollars worth of free spectrum and cable operators are gaining more subscribers because of the DTV transition, he said. He also noted that the consumer electronics industry is reaping billions of dollars from the sale of DTV products.

In addition to NCTA, Wheeler once headed the Cellular Telecommunications & Internet Association. Today, he is managing director of Core Capital Partners, a high-tech investment firm.

He was joined at the meeting by fellow transition members Larry Irving and Larry Strickling.

Irving is the former head of Commerce Department's National Telecommunications and Information Administration and he serves on the transition's Commerce Department review team.

Strickling comes from the Obama presidential campaign and was the FCC's Common Carrier Bureau chief under former FCC Chairman Bill Kennard. His role on the transition is unclear, but his name has surfaced as a possible FCC chairman.

Sources say that Wheeler, Irving and Strickling ran the meeting.

However, FCC transition team leaders Susan Crawford and Kevin Werbach were also on hand. Crawford is a professor of law at the University of Michigan, teaching communications law and Internet law. Werbach is an assistant professor of legal studies and business ethics at the University

Broadcaster representatives at the meeting included David Rehr and Jonathan Collegio of the NAB; Kurt Wimmer of Gannett; Scott Blumenthal of LIN TV;  Maureen O'Connell and Dianne Smith of Fox; Susan Fox of Walt Disney Co.;  Anne Lucey of CBS; Brian Brady, president of Northwest Broadcasting; and Margaret Tobey of NBC Universal.

Representing cable was National Cable & Telecommunications Association President Kyle McSlarrow.

The Consumer Electronics Association sent Michael Petricone and Jamie Hedlund.

None of the industry organizations or individuals at the meeting would comment on the record. The transition team officials did not respond to repeated phone calls.

However, the transition team asked the industries group to submit ideas and comments about the DTV transition and said it would post them on the Obama-Biden transition Web site.

Setting up and operating one or more DTV call centers is an expensive undertaking.

FCC Chairman Kevin Martin has promised to dedicate much of the additional $20 million Congress gave the agency for DTV education to funding the agency's call center, which was tested in September when the Wilmington, N.C., market made an early shift to DTV.

NAB's Rehr wrote Martin in October urging the agency to use the extra congressional money to make the FCC call center as "robust and prepared as possible for the massive number of consumer calls that will come in during these last few months before the transition is completed on Feb. 17, 2009."

But whatever the FCC has earmarked for its call center, the Obama team apparently feels it isn't enough.

Comments (34) - Post a comment

Fred Fourcher posted 210 days, 10 hours, 30 minutes ago
Broadcasters have had to foot the bill for the DTV transition so the Government can make the money off the spectrum. The Obama administration seems to have a distorted view of where the money is coming from.
TVCHICK Nicknameposted 210 days, 10 hours, 29 minutes ago
God help us if we have Scott Blumenthal representing the broadcast industry. How anyone put that man in charge of anything is beyond me. Ugh.
Kate Mucci posted 210 days, 10 hours, 28 minutes ago
Since the government has mandated this change to digital, and it is already costing us broadcasters to upgrade our systems to meet their requirements, why should we have to fund the complaints lines? This is heavy-handed and typical. Every broadcaster should stand up and say, "You made this mess, you fix it!"
tvemployee Nicknameposted 210 days, 10 hours, 14 minutes ago
I personally have seen the all the invoices for our digital towers and all that is included. No wonder so many are going bankrupt. We should not be responsible for trhis part also.
Gus Ruibal posted 210 days, 10 hours, 24 minutes ago
"you made this mess you fix it"
DCInsider Nicknameposted 210 days, 10 hours, 19 minutes ago
We are in for a long haul if this is how the new administration is starting out with us. The whole perception is that broadcasters are somehow profiting from public airwaves which would have no value without all of our investment. Now, although the government is going to re-sell the analog specturm and reap billions, we should pay even more. God help us as we move forward. Do something. Send money to NABPAC so that the rascals can be contained.
Broadcaster Nicknameposted 210 days, 10 hours, 16 minutes ago
We have payed millions of dollars so others can profit, and yet the Over the Air broadcastes have not seen a ROI. The people poised to make great gains are the Cable and Satellite providers. Will the Satelliate providers be involved and ask to bear the expense?
DoesTV Nicknameposted 210 days, 10 hours, 16 minutes ago
Exactly - the government mandated the change. Us OTA broadcasters spend millions to convert with no ROI on the investment. But we're benefiting from it... Lord forbid someone actually make money from a forced conversion. Hope all the Democrat supporters in the broadcast industry are happy with their man...
digitalis Nicknameposted 210 days, 10 hours, 14 minutes ago
"you made this mess you fix it"
mandatemadness Nicknameposted 210 days, 10 hours, 11 minutes ago
The feds have had the cart so far in front of the horse on this mandated technological back stepping-why can the call centers just refer the comlaints to their local reps-and let congress field the mess they created, aren't they promoting transparency.
RayNet Nicknameposted 210 days, 10 hours, 4 minutes ago
Broadcasters across the country are spending tons of money running DTV education spots, half hour shows, crawls etc. to promote the digital transition. In addition many are conducting "soft" tests prior to the switch, all for the purpose of decreasing the number of calls for help that ultimately are made to the FCC call center. It seems Obama and his transition team are failing to perceive that there is a big dollar figure on these efforts by local broadcasters.
Dr. Bob Jacobs posted 210 days, 10 hours, 1 minute ago
If you think this is tough, just hang on to your checkbooks. Our former junior senator from the state of Illinois, whose old pal and governor tried to sell his vacant senate seat to the highest bidder, represents a "machine" which has squeezed kickbacks and payoffs from businesses (like ours) since the days of Al Capone. Toss in his socialist philosophy (spread the wealth around) and you get a pretty nasty picture of the next four years. I hope the folks at NBC who really sold the Obama Man to America, are happy.
BennyJets Nicknameposted 210 days, 9 hours, 51 minutes ago
The comments stated by Wheeler are absolutely ridiculous. It's the typical Social Liberal, "Invent & Fictionalize" any statement to justify your position. It really bothers me when I hear comments that have no basis in fact, cannot be legitimized or supported, but are made with the authority of being real, i.e. "it makes sense for the various segments of the TV industry to pick up the tab..." HOW! Makes sense to who? We didn't ask to be forced to comply to this transition by a specific date, and many have broken the bank just to meet this government forced requirement. Oh and I love this one..."Broadcasters are the beneficiaries of billions of dollars worth of free spectrum..." WOW...as if it's something we've secretly been tapping into for years. Give me a break, there's a reason it's called the "Broadcast Spectrum"...because have never existed without "Broadcasters" ...duh! It's like saying light bulb companies have been reaping the benefits off the "light Spectrum" for years and now should pay. If it wasn't for the Feds wanting more use of the broadcast spectrum for themselves and their own greedy interests, this would not have been pushed along as fast as it has. Now we have the Democrats coming to power...God help us...and it now going to be whipping time for anyone who's been successful in business. But wait...aren't we all feeling the pinch of the economic "downturn"? Just read this morning’s articles to see how many organizations and facilities are cutting staff. But WE have to pay to respond to a government regulation. Well, if this is a sign of the future, I can only say, get out while you still can cause the next 4 years is going to hurt...all of us.
nefnet Nicknameposted 210 days, 9 hours, 19 minutes ago
Great comment, Benny. I nominate you for the new head of the FCC.
Bailusout Nicknameposted 210 days, 9 hours, 44 minutes ago
Can no one in DC read? Broadcasters are falling like the fall leaves. These guys are nutzzzz.
Bailusout Nicknameposted 210 days, 9 hours, 40 minutes ago
McCain would have been just as bad. He was no friend of the Broadcasters....
TV-1 One posted 210 days, 9 hours, 33 minutes ago
BennyJets, you hit a home run! Bravo!!!
NashvilleNow Nicknameposted 210 days, 9 hours, 28 minutes ago
What BennyJets said. He shoots and he scores the three pointer. Is anyone surprised? Get ready to lose our ability broadcast "for the public good". Most stations have become nothing more than another cable channel until news &/or prime time programming kicks in. Unless you’re a CW affiliate and then you are better off until prime time programming lowers your ratings. Of course we are to blame for all of the confusion, cost and inconvenience. What were we thinking when we demanded a transition to digital so that we could sell off some of the spectrum to make capital to fund our other projects? Oh… wait, that wasn’t us. But at least the 2GHz transition is going well. Ha. I know it is hard to believe that there can be any intelligent thought in Washington but it is not that hard to see that those steering the political machine can have an well thought out agenda. Microsoft, Google, Motorola, etc... are all gunning for our Bandwidth so don't believe that our new Socialistic administration would not just love to lease this to them for the funds they could then use to "make all of our lives more complete". Besides on the scale of public interest, internet porn beats out local news every time, right. We have become a country of the disabled as anyone that voted for this administration cannot possibly have any self-respect. Prepare to be regulated and vilified out of business. Is Ayn Rand writing a new novel from the dead? Obama sounds like her greatest antagonist yet.
nefnet Nicknameposted 210 days, 9 hours, 20 minutes ago
I think broadcasters should also pick up the tab for the body work on the #38 DTV Transition race car as well.
Dan Ullmer posted 210 days, 9 hours, 4 minutes ago
We broadcasters will need to staff phone banks if we want to provide the viewers having problems with the right information they need to access our stations digital signal. We set up our own call center here in Wilmington after we made the switch on September 8th. After receiving our permission, the FCC routed many station specific calls from our viewers to our line so we could provide them with more detailed information. I would not trust this very important duty to a government agency and it gave us the opportunity to provide outreach to many and held their loyalty. Furthermore, the feedback from these calls provided us with needed information on the issues out there and allowed us to respond quickly in a way we never would have been able to if we were not intimately involved. It was not expensive because we hired a few part time employees which we trained and provided the right information that needed to be conveyed. I don’t disagree with many of the opinions presented here, but the fact is, you want to control the message and help your viewers as much as possible since you will be reaping the results.
bigbenlore Nicknameposted 210 days, 7 hours, 55 minutes ago
Okay, this has reached far beyond the rediculous stage. Mr. Government, If you want broadcast TV to go away, just say it! Stop cutting strips of meat one piece at a time, bleeding us to a slow agonizing death. You mandidated the switch to digital, we practically sold the house to make it happen. You mandidated we run your DTV alert promos, we cut inventory (that pays our daily operational costs) to make it happen. Now you're mandidating we offset the price tag of YOUR call centers. No problem, we'll just let a few more honest hard-working Americans hit the streets looking for a job so we can MAKE IT HAPPEN!! What the heck; afterall they're just taxpaying citizens that gave you a JOB.
GuyFawkes Nicknameposted 210 days, 7 hours, 17 minutes ago
DCInsider, you are so right. "Broadcasters are the beneficiaries of billions of dollars worth of free spectrum ..." says Obama's point man?! This is the same canard peddled years ago by Bill Safire and other media-company haters, all of whom have ignored the fact that spectrum auctioned to wireless companies wound up fetching a fraction of what these geniuses predicted. They're also blissfully ignorant of the money poured out by license-holders to actually program the analog (now digital) spectrum -- and the fact that broadcasters have been unable to monetize the DTV spectrum (advertisers aren't paying a nickel more per spot). It's one thing to ask broadcasters to pick up the tab for phone banks -- but please don't continue to insult broadcasters by telling them how wealthy they are all while continuing to subject broadcasters (and newspaper publishers) to abusive, anachronistic ownership regulations.
George Merlis posted 210 days, 6 hours, 53 minutes ago
I can't believe the whining by you broadcasters. For 50 years you've held government licenses to print money. What sort of infantile slobbering will attend the long-overdue restoration of the Fairness Doctrine? Grow up; you operate on the PUBLIC's airwaves, so there's a (modest) price to be paid. -George Merlis (fomer exec producer, Good Morning America)
NewOwner Nicknameposted 210 days, 4 hours, 14 minutes ago
George, there is some whining going on, but if any of these "whiners" are like me, they are scared for the heavy investment they've made in this great business of broadcasting. For major markets, big group owners, and the networks, there is plenty of profit to be made if managed properly. For small market broadcasters the burden of taking on another hit to the expenses right now after spending (or borrowing) millions to comply with DTV is possibly the difference in staying afloat or sinking. There are potential benefits to the new spectrum with the ability to add new channels of programming. This is our hope of offsetting the costs to build DTV, but right now placing the burden of call center costs on us seems egregious. Any responsible broadcaster is doing everything possible to ensure a smooth DTV transition. Doing anything less would only hurt our bottom line even more. We need the viewers, we need the ratings, and we need to satisfy our advertisers.
Kevin Taglang posted 209 days, 17 hours, 40 minutes ago
Have you people never read Defining Vision? Are you joking when you suggest that the digital TV transition is something the government mandated but broadcasters didn't ask for? See http://www.amazon.com/Defining-Vision-Broadcasters-Government-Revolution/dp/0156005972/ref=sr_1_1?ie=UTF8&s=books&qid=1229001277&sr=1-1
Aldo Cugnini posted 209 days, 11 hours, 26 minutes ago
Thanks Kevin, for that reminder. As someone who has been part of this transition for nearly twenty years (minor mention in Brinkley's book), I can substantiate your comment. The broadcasters wanted this transition so that they could get more efficient use of the spectrum. All stakeholders need to stop whining and pointing fingers at each other. The economy is bad, and that will make marginal businesses fail. Everyone needs to work together and contribute to maximize the likelihood of success. Progress is evolutionary, and with that will come winners and losers. Take advantage of the transition and you will profit. Blame someone else for your lack of initiative and you won't.
GuyFawkes Nicknameposted 209 days, 16 hours, 30 minutes ago
George Merlis (former exec producer, Good Morning America, no less!): Your comments embody the very asininity that's being spread in Washington. This isn't "whining" -- it's a call for REALITY in D.C. You toiled in broadcasting when it WAS a "license to print money." And Leonard Goldenson's ABC and CapCities after it did just that. Those days have been gone for at least 15 YEARS! Disney makes its money today from ESPN, not ABC. And yet regulations persist. It's obvious you read at least some of the articles in TVWeek.com (otherwise you wouldn't be posting here) but it's apparent the articles here and elsewhere about the collapse in TV advertising have failed to get through to you. Count yourself fortunate that you were in the biz prior to something called the INTERNET (and Tivo, etc etc). Perhaps if you'd taken the time to learn a little bit about the economics of the biz while you were working in it, you might be better informed. And the Fairness Doctrine??!! Now I know who besides Chuck Schumer is idiotic enough to call for that again!
couryhouse Nicknameposted 209 days, 12 hours, 4 minutes ago
Yes... but the bdroadcasters aslo got xtra channels... ie 12 12.1 12.2 they just need to figure out how to monitize them! Ed - www.smecc.org
RadioGuy Nicknameposted 209 days, 11 hours, 58 minutes ago
You TV guys shouldn't be complaining. You've only spent millions of dollars to upgrade to digital with no apparent ROI, run hundreds of thousands of dollars worth of spots to educate viewers on what is going to happen, and put up with the constant complaining that you aren't doing enough to prepare the public. If the politicians were not so frightened about what will happen on "D" day in February, they wouldn't be pushing you to establish phone banks. I have an idea. On "D" day, just put a message on all your incoming phone lines giving callers the numbers of their elected representatives in Washington. Let the guys at all your local Radio station news departments know those numbers the day before. That should be interesting. I'll bet the call volume would shut down the East coast.
JaneAsher Nicknameposted 209 days, 11 hours, 43 minutes ago
To Kevin Taglang - Yes, I've read "Defining Vision." Despite the negative spin Joel Brinkley puts on it, what John Abel and the NAB were trying to do was PROTECT SPECTRUM. Well -- where's John Abel now? I suspect he looked down the long future, saw the chaos he'd brought about, and took the first train out. Now the FCC has given away the beachfront "white spaces" to Microsoft, Google et al., so they can get rich selling widgets that will mess with TV signals -- even IEEE admits that the only way for white-space devices to work is if the spectrum is completely cleared of TV signals -- so how's about we get Microsoft, Google et al. to pay for the DTV call centers, since they didn't have to pay for the spectrum either and they're sure going to make a heck of a profit off it, with not even a nickel's worth of "public interest" payback. Nice job of "spectrum management," which is what the core mission of the FCC is *supposed* to be. "you made this mess you fix it"
Kevin Taglang posted 209 days, 11 hours, 7 minutes ago
JaneAsher -- By PROTECT SPECTRUM do you mean "get more for free"? If you're a broadcaster and your lobbying org made this happen, then it is your mess, isn't it?
Credo12 Nicknameposted 209 days, 10 hours, 1 minute ago
Why for the sake of the viewers, the sake of broadcastes in trouble just postpone the switch? This thing was never planned out properly and is going to disenfranchise our country's most vunerable citizens (the poor, the elderly).
PSIPthing Nicknameposted 209 days, 7 hours, 31 minutes ago
This is just a small example of the heavy-handed "Chicago Style" (as opposed to "Chicago School") approach that we can expect from the Obamaites. However, I note that TVB is predicting that TV revenues will be down 7-11% next year, due in no large part to the travails of auto companies. In my years in the business, I've never heard of TVB announcing an expected year-to-year decline in revenues, but perhaps it happened a few decades ago. The real question is: would you be happy with that level of decline, or would you like your stations' revenues to beat that amount because you lost just a few percentage points of faithtul viewers due to the DTV transition. Time to get real; with the coming administration, the beatings will continue until morale improves.
onthesidelines Nicknameposted 209 days, 5 hours, 47 minutes ago
Reading through all these comments, why do I get the sense that too many folks are going after the wrong target? Yes, many broadcasters are hurting right now, but it isn't the government that has been inflicting the pain. The real problem is that three of the major players at the national level (NBC/Universal, ABC/Disney, Fox/NewsCorp) are more committed to their cable offerings than they are to their broadcast networks. An even bigger problem is that the economic models that are currently in place allow cable networks to extract the cost of program acquisition from cable/satellite subscribers in the form of monthly "per subscriber" fees with no real checks and balances (since subscribers can't cancel individual channels that they feel are overpriced). And broadcasters, of course, don't really have that option. Many years ago (back in the sixties), the NAB ran "scare tactic" ads warning viewers about the danger of seeing popular programming siphoned away from broadcast TV by pay TV services. It turns out that the NAB was right. The cost of the digital transition (and the requirement to set up these hotlines) is a pin prick compared to the damage caused by the uneven economic playing field between small broadcasters and the big players in cable and satellite. And, guess what, the solution won't be found in further deregulation or in "getting the government off your back", because the government isn't the problem. Instead, the solution can only come from levelling the economic differences that exist between the broadcast side and the cable side -- especially when it comes to small broadcasters. Perhaps the time has come to reconsider the "if carry, must pay" proposals that surfaced in the early nineties, but that were dismissed in favor of retransmission consent. Develop a formula by which broadcasters will be compensated for their signals -- and base that formula on a combination of ratings and the cost that cable/satellite companies are paying for the most expensive basic cable channels. After all, if cable companies feel that ESPN is worth $4/month to their viewers, shouldn't that be taken into account in developing the compensation that broadcasters with several times the audience of ESPN can earn? Alternatively, take away the ability of cable networks to just stick their program acquisition costs onto the backs of subscribers by mandating a la carte offering of cable/satellite channels that charge anything more than a very modest monthly fee. I wonder how ESPN's ability to steal prime sporting events away from broadcasters would fare if they had to convince viewers to pay $8/month (based on their current $4 wholesale rate and assuming that the retail cost would be roughly double) for the privilege of getting MNF and college bowl games on a cable channel instead of a free channel? I'm not sure what the best solution is, but I do know this -- until broadcasters are willing to aggressively tackle their main problem (the tilted playing field between broadcasters and cable/satellite), the bleeding will continue.
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