Editor’s Corner—ATSC 3.0, M&A, digital dominate discussions at NAB 2017

The Next-Gen TV Hub at the NAB Show in Las Vegas.
Ben Munson

LAS VEGAS—The annual National Association of Broadcasters show sprawled out across the entire Las Vegas Convention Center, but at its heart was ATSC 3.0.

Upon entering the event, which drew more than 103,000 attendees this year, one of the first sights is a shiny red Ferrari parked in the Next-Gen TV Hub. The car was there to show off ATSC 3.0 broadcast signal delivery to mobile devices and built-in displays within a vehicle. The Hub also set up various monitors to show off the enhanced image quality, immersive audio, addressable advertising, audience measurement, and other features that will arrive once ATSC 3.0 deployments begin.

The Hub even received its own ribbon-cutting ceremony.

“We’re nearing completion of the ATSC 3.0 broadcast standard, and this NextGen TV Hub allows us to show off the key functions of the standard—improvements that affect both viewers and broadcasters themselves,” said Mark Richer, president of the Advanced Television Systems Committee. “We’re very pleased that so many have come together to craft the standard and to show the industry how broadcasting will evolve to meet the ever-changing tastes of viewers while also providing more tools for broadcasters.”

With his opening remarks, NAB President and CEO Gordon Smith touted the evolution that ATSC 3.0 will provide.

“With Next Gen TV, we see the seamless convergence of over-the-air and over-the-top. In other words, increasing the efficiency and value of our remaining spectrum,” said Smith, adding that NAB is happy the FCC is considering broadcasters’ request to allow for the voluntary adoption of the new standards, similar to how mobile operators have been able to move from 3G to 4G to 5G.

The words of praise and ceremonies served as a celebration of ATSC 3.0, which graduated from future technology to imminent reality this year. But amid the party over ATSC 3.0’s clearer-than-ever path to commercial use, questions still remain about the overall impact to the broadcast industry. With the improved image quality and broadcast range for over-the-air signals comes the significant concern that retransmission consent revenues could suffer. And retrans is no chump change for broadcasters. Recent figures from BIA/Kelsey estimate that $6.8 billion of the $28.4 billion in total TV broadcast revenue in 2016 came from retrans deals.

Independent programmers are also concerned about being forced off the air by ATSC 3.0. With the limited bandwidth afforded pay-TV providers, a scenario where they carry both legacy ATSC 1.0 signals and ATSC 3.0 signals could potentially leave some channels out in the cold as operators make room.

ATSC 3.0 is still a ways down the road, though, and is likely to be preceded by a wave of M&A in the broadcast TV industry.

Analyst firm Jefferies, which said it spoke with the management teams from 15 broadcasters during NAB, said the renewed potential for consolidation, after the FCC reinstated the UHF discount and pledged to review broadcast ownership rules, was top of mind for broadcasters during the show.

“The consensus view is that the ownership cap will have to be addressed by Congress, not the FCC, pushing out the time line, with the decision potentially ending up with the Supreme Court in mid '18,” wrote Jefferies’ John Janedis in a research note. “The reinstatement of the UHF discount does create opportunity for M&A to occur ahead of that, with deals done in the meantime receiving a grandfathering. Most feel the 8 voice and cross-ownership rules will also be eliminated over time.”

While none of those potential deals went public during the show, broadcasters and programmers did spend a good portion of their stage time attempting to lay to rest the idea that linear TV is circling the drain.

CBS Interactive CEO Jim Lanzone assured an audience that many CBS All Access subscribers continue to be pay-TV subscribers as well. NBC Entertainment CEO Bob Greenblatt told a crowd that traditional TV isn’t going anywhere; it’s merely evolving to incorporate digital and social media strategies along with linear production. Turner Sports Chief Content Officer Craig Barry promised that live sports still holds tremendous value for broadcasters and that digital giants like Amazon, Facebook and Twitter won’t be competition for sports rights.

In addition to the hopefulness around broadcast TV’s potential to shift toward a digital media model, the world of the NAB Show was optimistic that new FCC Chairman Ajit Pai, who spoke on Tuesday, would create a friendlier regulatory environment for broadcasters.

“The last thing broadcast needs are outdated rules standing in their way,” said Pai. “We want to make sure the rules match the reality of 2017, not 1987.”

Meanwhile, away from the crowds at the convention center, discussions focused on advertising. Gabriel Greenberg is the CEO and co-founder of Gabbcon, an organization that partnered with NAB this year to hold the Ad Innovation Lab and Executive Summit at the nearby Encore. He said that event drew speakers from companies including Bayer, W Hotels, Caesars Entertainment, Singularity, UFC, Dentsu Aegis, WPP, Publicis, US Interactive, and iHeart Radio, as well as many broadcasters and advertising tech companies.

“Based on feedback from the brands and agencies in attendance the event was a great success and in their words ‘can be on a similar path to CES where GABBCON is catalyst and facilitator to bring the marketing community to NAB,’” Greenberg said.

As Dennis Wharton, executive vice president of media relations for NAB, said when I bumped into him in the press room, he didn’t hear any complaints from broadcasters. With a show this comprehensive and with a lot of technological promise on the horizon, despite the concerns and hurdles yet to clear, spirits seemed high at this year’s NAB Show. — Ben