New FCC Rules Change the Game for Local Media Shops

“It’s pretty scary to think that one outlet could control almost all our avenues for reaching our target audience,” said a Memphis ad agency chief last week, an opinion held by many local-media buyers and planners in the wake of the FCC’s ruling allowing media cross-ownership and TV duopolies.

Steven Reid, president and CEO of Sutton Reid Advertising in Memphis, said he is particularly concerned about newspapers being allowed to own television and radio stations. In his market, E.W. Scripps’ The Commercial Appeal has a content partnership with WREG, Tribune’s CBS affiliate. “It could affect our rates,” he said. “The newspaper is already highly priced.”

Newspaper-TV combinations in smaller markets pose a worry for buyers because, as a rule, the newspaper holds a monopoly position and outbills local TV and radio stations combined. Under the new rules, in markets with one daily newspaper, a single media organization could have a 90 percent share of newspaper circulation, one-third of the TV audience and one-third of the radio audience, according to an analysis by the Consumer Federation of America, which opposed the FCC’s decision.

There is a potential for rate abuse. “If duopolies create too much [inventory] tightness, clients may not be able to get on the air and could reconsider spending money in spot,” said Maribeth Papuga, svp, director of local broadcast for Publicis Groupe’s MediaVest in New York. “We’ve seen dupolies try to give make-goods on weaker stations, and certain buyers will willingly go with it.”

Others point to their experience with radio, where rates have yet to rise. “If TV follows radio, TV duopolies will not affect rates. As long as there are multiple suppliers, there will always be the ability to negotiate,” said Karen Agresti, svp, director of local broadcast for Hill Holliday, Connors, Cosmopulos, who has negotiated deals in Boston, where Viacom and Hearst-Argyle both operate duopolies

Still largely untested is the joint newspaper-television sales pitch, although some combinations already exist in the larger markets, including New York, Los Angeles, Phoenix and Tampa, Fla. Because local broadcast buyers do not normally buy print, planners are called in to help facilitate the multimedia buy.

“At this point, companies aren’t prepared. They would have to set up business in a totally different way,” said Michael Thomas, associate media director for Publicis’ Burrell Communications in Chicago.

“No local cross-media deals have been successful yet, because most buyers that look at these deals want low cost,” noted Sue Johenning, evp and director of local broadcast for Interpublic Group’s Initiative Media in Los Angeles.

In some markets, agencies have already started to adapt to the new landscape, because broadcasters and newspaper companies jumped the gun ahead of the FCC’s ruling, betting the rules would be relaxed.

Sinclair Broadcast Group, for example, which owns 62 television stations, has 21 duopolies, 10 of which are local marketing agreements in markets that previously did not allow duopolies. These include Baltimore; Greenville, S.C.; and Charleston, S.C. And newspaper company Media General owns TV-newspaper combinations in six markets, including Roanoke, Va., and Johnson City, Tenn.

“So far it’s been fine because most TV stations continue to have separate sales staffs,” Johenning said. “We’ve been able to work some multistation deals, even a few large corporate deals.”