Wheeler: Broadcasters have reached an 'inflection point' as OTT disrupts industry

LAS VEGAS--The broadcast industry has reached an "inflection point" where broadcast licensees, such as online video providers like Netflix, "can move from being the disrupted to the disruptor," FCC Chairman Tom Wheeler told NAB Show attendees at a keynote here. And he warned that the industry needs to pivot or risk being overtaken by companies that are taking advantage of the changing technology landscape.

NAB Tom Wheeler keynote

At left, NAB President Gordon Smith interviews FCC Chairman Tom Wheeler, right. (Photo courtesy of NAB)

Calling over-the-top "the hottest topic in the industry today," Wheeler said Netflix was the prime example of an entrepreneurial-focused company that seized the opportunity to buy content and distribute it via OTT. And Wheeler pointed out that cable companies have already recognized the danger and begun to redefine themselves from video transmitters to telecommunication companies.

At the same time, Wheeler said he doesn't see broadcasting's importance changing. In fact, he sees the industry as having a "powerful opportunity" to continue to be relevant and profitable, and offered a few suggestions as to the tack broadcasters should take--leveraging local broadcast content, participating in spectrum sharing, or taking advantage of a new broadcasting standard, ATSC-3.

"Broadcasters have two of the most important components of digital strategy: compelling content and the ability to promote it. Even better, you can leverage off those advantages at only incremental cost," he said.

Wheeler and the FCC have increasingly locked horns with broadcasters over a few issues, most recently joint sharing agreements. While both the chairman and NAB President Gordon Smith, who introduced Wheeler and interviewed him after the presentation, played the situation for laughs--"Gordon Smith & Tom Wheeler: mano a mano live in Las Vegas. It would be a great UFC paid event," Wheeler said--broadcasters' concerns about FCC rulemaking is deadly serious.

Wheeler addressed those issues directly in his keynote, stepping out from behind the podium to speak to the audience.

"Here's the former head of the cable and wireless industry at NAB telling you he's your friend. That's crazy. … I realize the challenge," he said, pointing out that he "led the charge" to convince the Obama administration to delay the transition to digital television "so it would go as smoothly as it did." He also mentioned his efforts to make mobile TV a reality. "I put my money on the future of broadcasting."

Still, he said, the FCC has a bigger responsibility. "Today, I have the American people as my client, and the actions of the FCC are built around that client."

With that footnote constantly informing his speech, Wheeler touted FCC initiatives like its in-progress revamp of the Open Internet Order, and laid out the opportunities available for broadcasters, particularly in OTT.

Licensing local content and providing it over-the-top to their audience is a key opportunity for broadcasters, he said--but that window is closing rapidly. Yahoo acquired NDN (News Distribution Network), an Atlanta-based company that syndicates local news content, paying $300 million for the opportunity to stream that content to its subscribers to leverage its CPM model, Wheeler said. And Verizon and AT&T are reportedly exploring new lines of business based on LTE, he added, saying that the carriers are very aware of history and the danger of not adapting to a changing technology landscape.

In the post-keynote chat, Smith asked for the FCC's position on the ongoing issue of sports blackout controversies, and where such problems intersect with retransmission consent issues.

"The key to retransmission consent is dealing in good faith. In absence of that, our authority is limited," Wheeler replied.

Both Smith and Wheeler sounded reconciliatory notes, with Wheeler reiterating that the FCC is trying to help broadcasters, not hinder them, while meeting the mandates of Congress.

"We're pro-competition; you are an important competitive component… Let's focus on going there rather than fight yesterday's battles," he said.

Related articles:
Wheeler takes 'prism' view on net neutrality, retrans, process reform
FCC's Wheeler lays out vision for 3.5 GHz band, incentive auctions
Distributors cheer proposal to prohibit coordinated retrans negotiations
FCC to rework existing net neutrality rules, won't appeal Verizon ruling
Yahoo, Google reportedly plotting more 'conventional' TV plays

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