November 21, 2024 • 16 mins
From technological innovations that could impact the future of local TV, such as ATSC 3.0., to pending regulatory policy changes under forthcoming FCC Chairman Brendan Carr, Deutsche Bank Director of Equity Research Ben Soff shared the Wall Street viewpoint on how linear TV could benefit during a TVB Executive Summit session held Thursday in New York.
The conversation begins with an assessment of BIA Advisory Services' 2025 local TV advertising outlook presented by Tom Buono, its CEO. It concludes with Soff's comments on how investors "should be able to find the right assets at the right price."
In this InFOCUS Podcast, presented by dot.FM, Soff shares his thoughts in a conversation with TVB President/CEO Steve Lanzano.
The conversation begins with an assessment of BIA Advisory Services' 2025 local TV advertising outlook presented by Tom Buono, its CEO. It concludes with Soff's comments on how investors "should be able to find the right assets at the right price."
In this InFOCUS Podcast, presented by dot.FM, Soff shares his thoughts in a conversation with TVB President/CEO Steve Lanzano.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:04):
This is the RBR TVB R in Focus podcast.
Speaker 2 (00:08):
Here's your host, Radio and Television Business Report Editor in
Chief Adam R.
Speaker 3 (00:13):
Jacobson.
Speaker 4 (00:15):
Hello, and welcome to the in Focus podcast, which is
presented by dot fm, streaming social podcast or broadcast. Get
a dot fm domain name by heading over to get
dot fm. Today and today we're offering coverage of a
conversation between TVB President and CEO Steve Lonzano and Deutsche
Bank Director of Equity Research Bensoff from the TVB Executive
(00:40):
Summit held on the morning of November twenty first at
Hurst Tower, just off of Columbus.
Speaker 3 (00:45):
Circle in the city of New York.
Speaker 4 (00:47):
We're pleased to offer exclusive coverage of this conversation and
it is part of a day long series of events
began at eight thirty am Thursday, November twenty first, ran
through lunch and some afternoon events, including the TVB Excellence
Award for Career Achievement being presented to Dave Aluji, the
(01:09):
former president and CEO of Tegna, and Leo mccordy, former
president and CEO of Cats Television Group, who was recently
honored as a Lifetime Leadership Award winner at Forecast twenty
twenty five, November thirteenth in New York City.
Speaker 3 (01:25):
Let's get right to the conversation.
Speaker 4 (01:26):
Here is Steve Lonzano from TVB chatting with Ben Soff
from Deutsche Bank.
Speaker 2 (01:34):
Well, let's start off with Tom's presentation. So what did
you see that stood out or might have surprised you?
Speaker 1 (01:44):
Well, first of all, it's a pleasure to be here
with all of you, Thanks for having me. I always
enjoy market forecasts, and it looks like from Thom's perspective
that twenty twenty five could be a pretty strong year
for the local, non political side. I also thought it
was interesting how broadcast share a viewership with Steady this
year after declining the prior to and his last light
(02:06):
about the potential for M and A after the election
certainly a big topic. I'm sure we'll get to that,
but I thought it was an interesting take. So let's
start off on more like a broader perspective. So, investors,
what are they most interested in hearing a local broadcaster?
Speaker 3 (02:23):
Yeah?
Speaker 1 (02:23):
When I talked to investors, I would say their questions
really boil down to three main topics. The first is
what's the trajectory of PATV subs, both linear and virtual,
and does cord cutting continue at this pace? Does it
slow potentially in the future does it stabilize? Second, how
much runway is left for price increases and what kind
(02:44):
of leverage do the stations have to keep taking price to.
Speaker 3 (02:47):
Offset that churn? And third kind of bigger picture, how.
Speaker 1 (02:50):
Does the PATV ecosystem evolve in the future, What are
the new products that might show up, how could it
disrupt the industry, and how does broadcast navigate that shift
to digital.
Speaker 3 (03:00):
In the future.
Speaker 2 (03:01):
So with that, what are the key metrics you focus
on when you evaluate a local broadcast group.
Speaker 1 (03:07):
Yeah, so most of the investors that follow this space
are value oriented and what that means is that they're
focused mainly on free cash flow. So anything that's going
to drive healthy free cash flow for a longer period
of time, that's going to be the main focus. So
going through some of the key inputs there for the broadcasters,
what's their trajectory of net retrands, both on the pricing
(03:29):
and the reverse compensation side. Today, broadcasters under earn in
terms of the fees that they get relative to the
ratings that they generate. So over time, as those contract
renews should they get higher pricing even if the total
fee pool shrinks. On the reverse side, the dynamic with
the networks seem to have gotten more favorable in the
(03:50):
last couple of years as those companies have focused on
digital and other platforms, and so with each round of renewals,
investors are looking for evidence of how those themes are
playing out. And then on the ad side, time touched
on it. Advertising is always going to be a big focus.
It's cyclical. So what's happening in key categories, what's happening
(04:12):
with consumer spending in general? We've seen recently local advertising
is held up better than national I think that's probably
because it's closer to demand generation for those businesses. But
if we see a pullback in the economy, certainly the
whole picture is going to be impacted. Political that's another
big one. Every other year, as you all know, is
(04:33):
a big tailwind for political I think this time around
was interesting for a few reasons. Fundraising was really strong,
especially when the Democrats switch their candidate at our candidate
out over the summer, and then we saw some late
shifts towards markets where the race is more competitive, So
we also saw campaigns shift more to digital. Time touched
(04:55):
on that as well, and looking ahead we're going to
see how does that play out in the future.
Speaker 3 (05:01):
So what happens with fundraising?
Speaker 1 (05:03):
Twenty twenty eight will probably have two primaries this time
we basically had zero, So what does that mean for
fundraising at the same time, how does that shift to
digital playout? The next one is really margins. Our companies
operating efficiently? Are they doing a good job? And lastly,
capital allocation. Are companies investing for growth while also creating
(05:26):
value for shareholders? So what kinds of investments are they making?
Are they getting a good return? How do companies think
about allocating access cash flow? One of the interesting dynamics
we saw in the last couple of years is as
interest rates went higher, the market wanted to see companies
reduce their financial risk, and so we saw broadcasters proactively
(05:49):
look to address their balance sheets. That's something that's been
viewed positively both by credit and equity investors. So long answer,
but all of those things really boil down to what
does the free cash flow outlook for these companies because
that's ultimately what investors are looking for.
Speaker 2 (06:06):
Okay, so what do you see as the biggest challenge
is facing local broadcasts cap from an investment.
Speaker 1 (06:14):
Perspective, Yeah, so I mean PayTV has secular headwind instead
of is facing and I think on the surface, that
is a challenge. The key to investing successfully though, is
finding pockets of value where something is underappreciated. So maybe
that's a business, maybe that's a piece of a business
that's going to be more durable than expected, or maybe
(06:37):
there's an improvement or a change in the structure of
the industry that benefits the whole ecosystem.
Speaker 3 (06:42):
But finding those pockets the value takes a lot of work.
Speaker 1 (06:45):
The other challenge that I would say is just sort
of education and perception. So you'd be surprised how many
conversations I have with investors where I'm breaking down.
Speaker 3 (06:55):
The very basics of the industry.
Speaker 1 (06:57):
The business model, as you all know, PayTV is complicated.
There's a lot of different moving pieces, and investors who
come into the space for the first time often come
with some skepticism or some preconceived notions that requires some
work to overcome. So those are the challenges I would highlight.
Speaker 2 (07:15):
Okay, so one of the questions I've been getting, but
you'll be better to answer this is now with a
new administration.
Speaker 3 (07:22):
And it looks like Brenton Carr is going to head
the FCC.
Speaker 2 (07:25):
So what are the regulatory of policy changes that could
impact the future of local broadcast TV.
Speaker 3 (07:30):
With a new administration.
Speaker 2 (07:32):
So like sunsetting ATSC one point oh, the cap owning
multiple stations or multiple top four stations in a market,
about categorizing virtual MVPDs is MVPD. So what do you
see that you think he will address first? And what
do you think will be his priorities in terms of
what a lot address.
Speaker 1 (07:52):
Yeah, now this is the main question that investors are
talking about coming out of this earning cycle. As you said,
there are number of regulations that affect the broadcast industry
today which could get looked at. So the thirty nine
percent national cap, if they were to get rid of it,
that could lead to consolidation, the in market cap, owning
(08:14):
multiple stations in a market. I think getting rid of
that would allow broadcasters to build more scale, which is
obviously important sunsetting ATSC one dotzo. If the FCC helps
accelerate that process, it could mean broadcasters could adopt modern
technology faster. And then yeah, the virtual services, giving the
(08:34):
affiliate groups a seat of the table during those negotiations would.
Speaker 3 (08:38):
Probably lead to better pricing.
Speaker 1 (08:40):
So in my view, after the election, we are more
likely to see deregulation. As you mentioned FCC Commissioner car
who I think was recently.
Speaker 3 (08:50):
Tapped to lead the agency. He's been vocal in the
past about.
Speaker 1 (08:54):
The need for more modern regulation and a more modern
regulatory framework for a more modern media ecosystem.
Speaker 3 (09:02):
I think the big question.
Speaker 1 (09:03):
In my mind is how much of a priority this
is going to be for regulators, because the FCC and
especially Congress, they have a lot of things on their plate.
They have a lot of priorities, so we need to
see how much of a focus this becomes for them.
On timing, typically appointments are confirmed late in the year
(09:24):
following an election, so we're really talking about this time
next year for the people to be put in place,
and then you have to go through all the work
of figuring out, Okay, what are our priorities, what do
the rules look like actually implementing them, So I think
that's a variable. My gut though, is that the items
that the FCC governs, like the in market cap, those
(09:45):
are more likely to get looked at, and they're more
likely to happen sooner than the items.
Speaker 3 (09:50):
That are governed by Congress.
Speaker 2 (09:53):
I know that Rosen Warsl said she's going to exit,
so then came through a lot of work because they'll
be two to two, two Republicans two Democrats until the end.
Speaker 3 (10:00):
Of the year. But has there been anything that he's talked.
Speaker 2 (10:04):
About in the past of the issues that we spoke
about that you say, yeah, he's going to go after
the ownership cap, or he's going to go after multiple
stations in the market. I mean, what would be the
one thing you think would be the first thing on
his list.
Speaker 1 (10:18):
Yeah, Well, the FCC recently, I believe it was December
of last year, they made a ruling to not eliminate
the in market cap, and Brendan Carr wrote a letter
in descent of that opinion where he basically outlined that
we need to we need to count all these other
mediums of entertainment in our market definition because that's the reality.
Speaker 3 (10:41):
Of what consumers are doing.
Speaker 1 (10:43):
And I thought that letter was pretty encouraging for the
prospects of his FCC then going and looking at something
like the in market cap.
Speaker 3 (10:52):
So that's probably my answer.
Speaker 2 (10:54):
Okay, so covered regulatory issues So what do you see
as the role of local broadcast TV evolving in the
age of streaming.
Speaker 3 (11:04):
And digital media.
Speaker 1 (11:06):
Yeah, it's a really interesting question. I would say, first,
even as the ecosystem shifts to digital, there's still a
very large base of people who like watching linear TV.
They like local news, they like sports, and they're happy
to keep paying for the.
Speaker 3 (11:22):
Service in the traditional way. That's not going to change overnight.
Speaker 1 (11:27):
Over time, as viewership does go more digital, the value
that broadcasters bring to the table, I think changes, and
I think what I mean by that is it becomes
less about being a distribution platform and more about the
content that you provide.
Speaker 3 (11:43):
So what's the value of local news? What's the value
of sports?
Speaker 1 (11:47):
If people want to watch that programming, regardless of the
distribution platform, virtual services should find a way to include
it and pay for it.
Speaker 2 (11:56):
Okay, Okay, So are there any specific, I will say,
technological innovations that you believe will significantly impact the future
of local TV.
Speaker 3 (12:07):
Yeah.
Speaker 1 (12:07):
So I think ATSC Fridado is probably the most relevant one.
Any opportunity to use broadcast spectrum for additional use cases
is going to be pretty exciting.
Speaker 3 (12:18):
And clearly this is a focus for the industry.
Speaker 1 (12:22):
Early use cases that I've heard of are things like
enhanced GPS, IoT, connected cars, mobile data transmission. These are
potentially very large markets. That said, I think it's still
pretty early in the life cycle for this technology, and
most investors that I speak to really think about this
as a call option. And the reason for that is
(12:45):
these wireless business models have in the past taken longer
to play out than expected. So take five G for example.
The wireless carriers spent billions of dollars acquiring and then
deploying the spectrum, and they still think of five G
as a great business.
Speaker 3 (13:01):
It's really important to their future. It's going to be
a growth driver.
Speaker 1 (13:05):
I think it's fair to say, though, that it's been
slower to develop commercially than they had initially anticipated. So
if you're an investor in the broadcast space, I think
the key is that you need the stock to work
without ATSC three auto and if it does work, then
that's great.
Speaker 2 (13:24):
Okay, we got a couple of minutes, So do we
have any questions from the audience. Anybody if you have
a question, to stand up and.
Speaker 3 (13:34):
Okay, we do have one question in the back and.
Speaker 1 (13:41):
Things do you think broadcasters should be investing in.
Speaker 2 (13:47):
So if you didn't hear and she's talked about local
news in local sports, but what other things should local
broadcasts invest in in terms of content?
Speaker 3 (13:56):
Yeah?
Speaker 1 (13:56):
So, I think beyond the local news, the local dues
offering the opportunity to bring in more live sports is
an exciting one. Ultimately, that's what drives the highest ratings,
That's what creates the value in entertainment is the eyeballs.
So we're seeing an evolution right now in regional sports
where many leagues and teams might need to find new
(14:19):
homes in the future. Broadcast isn't going to be able
to offer the same fees as the rs ns, but
what they will be able to do is offer a.
Speaker 3 (14:28):
Much wider audience, and so that's valuable for the team.
Speaker 1 (14:32):
So I think the key is finding a deal that's
a win win between the team and the broadcast and
you know that that'll be exciting going forward.
Speaker 2 (14:41):
Okay, one more question, any more questions? If not, I
have a last question for you, so to kind of
bring us all together. What makes local broadcast TV such
a compelling investment despite competition.
Speaker 3 (14:59):
For you media?
Speaker 1 (15:00):
Yeah, so, I think investors understand that there are secular
headwinds facing PATV, but that doesn't mean that you can't
find good investments.
Speaker 3 (15:11):
So some of the most important.
Speaker 1 (15:12):
Qualities that I point to are things like scale, which
tends to lead to better outcomes when you do renewals,
strong management teams that's always important, a healthy balance sheet,
capital allocation like we talked about.
Speaker 3 (15:26):
So when you identify a.
Speaker 1 (15:27):
Good business, it's all about finding what the right price
is for that business.
Speaker 3 (15:31):
And you know, building on.
Speaker 1 (15:33):
Some of my previous answers, if broadcast is going to
continue adding value in the media ecosystem because it has
stuff that people want to watch, investors should be able
to find good assets at the right price.
Speaker 3 (15:46):
Well, please run a flaws. But Ben Salt, thanks so
much for I'm supposing time doing your best to.
Speaker 4 (15:52):
Do and with that we thank you for tuning into
this in focus podcast, which is presented by dot fm
arding social podcast broadcast. Get a dot fm domain name
by heading over to get dot fm today. Special thanks
to TVB and to Jennifer Newman at JCIR for hooking
us up and getting us connected to the TVB Executive
(16:13):
Summit at Hurst Tower in the City of New York
on November twenty first. For more information on TVB events,
visit TVB dot org. And for more information on what
we do, please visit the Radio and Television Business Reports
website at RBR dot com.
Speaker 3 (16:27):
We'll see you next time.
Speaker 4 (16:28):
Have a great day.
This is the RBR TVB R in Focus podcast.
Speaker 2 (00:08):
Here's your host, Radio and Television Business Report Editor in
Chief Adam R.
Speaker 3 (00:13):
Jacobson.
Speaker 4 (00:15):
Hello, and welcome to the in Focus podcast, which is
presented by dot fm, streaming social podcast or broadcast. Get
a dot fm domain name by heading over to get
dot fm. Today and today we're offering coverage of a
conversation between TVB President and CEO Steve Lonzano and Deutsche
Bank Director of Equity Research Bensoff from the TVB Executive
(00:40):
Summit held on the morning of November twenty first at
Hurst Tower, just off of Columbus.
Speaker 3 (00:45):
Circle in the city of New York.
Speaker 4 (00:47):
We're pleased to offer exclusive coverage of this conversation and
it is part of a day long series of events
began at eight thirty am Thursday, November twenty first, ran
through lunch and some afternoon events, including the TVB Excellence
Award for Career Achievement being presented to Dave Aluji, the
(01:09):
former president and CEO of Tegna, and Leo mccordy, former
president and CEO of Cats Television Group, who was recently
honored as a Lifetime Leadership Award winner at Forecast twenty
twenty five, November thirteenth in New York City.
Speaker 3 (01:25):
Let's get right to the conversation.
Speaker 4 (01:26):
Here is Steve Lonzano from TVB chatting with Ben Soff
from Deutsche Bank.
Speaker 2 (01:34):
Well, let's start off with Tom's presentation. So what did
you see that stood out or might have surprised you?
Speaker 1 (01:44):
Well, first of all, it's a pleasure to be here
with all of you, Thanks for having me. I always
enjoy market forecasts, and it looks like from Thom's perspective
that twenty twenty five could be a pretty strong year
for the local, non political side. I also thought it
was interesting how broadcast share a viewership with Steady this
year after declining the prior to and his last light
(02:06):
about the potential for M and A after the election
certainly a big topic. I'm sure we'll get to that,
but I thought it was an interesting take. So let's
start off on more like a broader perspective. So, investors,
what are they most interested in hearing a local broadcaster?
Speaker 3 (02:23):
Yeah?
Speaker 1 (02:23):
When I talked to investors, I would say their questions
really boil down to three main topics. The first is
what's the trajectory of PATV subs, both linear and virtual,
and does cord cutting continue at this pace? Does it
slow potentially in the future does it stabilize? Second, how
much runway is left for price increases and what kind
(02:44):
of leverage do the stations have to keep taking price to.
Speaker 3 (02:47):
Offset that churn? And third kind of bigger picture, how.
Speaker 1 (02:50):
Does the PATV ecosystem evolve in the future, What are
the new products that might show up, how could it
disrupt the industry, and how does broadcast navigate that shift
to digital.
Speaker 3 (03:00):
In the future.
Speaker 2 (03:01):
So with that, what are the key metrics you focus
on when you evaluate a local broadcast group.
Speaker 1 (03:07):
Yeah, so most of the investors that follow this space
are value oriented and what that means is that they're
focused mainly on free cash flow. So anything that's going
to drive healthy free cash flow for a longer period
of time, that's going to be the main focus. So
going through some of the key inputs there for the broadcasters,
what's their trajectory of net retrands, both on the pricing
(03:29):
and the reverse compensation side. Today, broadcasters under earn in
terms of the fees that they get relative to the
ratings that they generate. So over time, as those contract
renews should they get higher pricing even if the total
fee pool shrinks. On the reverse side, the dynamic with
the networks seem to have gotten more favorable in the
(03:50):
last couple of years as those companies have focused on
digital and other platforms, and so with each round of renewals,
investors are looking for evidence of how those themes are
playing out. And then on the ad side, time touched
on it. Advertising is always going to be a big focus.
It's cyclical. So what's happening in key categories, what's happening
(04:12):
with consumer spending in general? We've seen recently local advertising
is held up better than national I think that's probably
because it's closer to demand generation for those businesses. But
if we see a pullback in the economy, certainly the
whole picture is going to be impacted. Political that's another
big one. Every other year, as you all know, is
(04:33):
a big tailwind for political I think this time around
was interesting for a few reasons. Fundraising was really strong,
especially when the Democrats switch their candidate at our candidate
out over the summer, and then we saw some late
shifts towards markets where the race is more competitive, So
we also saw campaigns shift more to digital. Time touched
(04:55):
on that as well, and looking ahead we're going to
see how does that play out in the future.
Speaker 3 (05:01):
So what happens with fundraising?
Speaker 1 (05:03):
Twenty twenty eight will probably have two primaries this time
we basically had zero, So what does that mean for
fundraising at the same time, how does that shift to
digital playout? The next one is really margins. Our companies
operating efficiently? Are they doing a good job? And lastly,
capital allocation. Are companies investing for growth while also creating
(05:26):
value for shareholders? So what kinds of investments are they making?
Are they getting a good return? How do companies think
about allocating access cash flow? One of the interesting dynamics
we saw in the last couple of years is as
interest rates went higher, the market wanted to see companies
reduce their financial risk, and so we saw broadcasters proactively
(05:49):
look to address their balance sheets. That's something that's been
viewed positively both by credit and equity investors. So long answer,
but all of those things really boil down to what
does the free cash flow outlook for these companies because
that's ultimately what investors are looking for.
Speaker 2 (06:06):
Okay, so what do you see as the biggest challenge
is facing local broadcasts cap from an investment.
Speaker 1 (06:14):
Perspective, Yeah, so I mean PayTV has secular headwind instead
of is facing and I think on the surface, that
is a challenge. The key to investing successfully though, is
finding pockets of value where something is underappreciated. So maybe
that's a business, maybe that's a piece of a business
that's going to be more durable than expected, or maybe
(06:37):
there's an improvement or a change in the structure of
the industry that benefits the whole ecosystem.
Speaker 3 (06:42):
But finding those pockets the value takes a lot of work.
Speaker 1 (06:45):
The other challenge that I would say is just sort
of education and perception. So you'd be surprised how many
conversations I have with investors where I'm breaking down.
Speaker 3 (06:55):
The very basics of the industry.
Speaker 1 (06:57):
The business model, as you all know, PayTV is complicated.
There's a lot of different moving pieces, and investors who
come into the space for the first time often come
with some skepticism or some preconceived notions that requires some
work to overcome. So those are the challenges I would highlight.
Speaker 2 (07:15):
Okay, so one of the questions I've been getting, but
you'll be better to answer this is now with a
new administration.
Speaker 3 (07:22):
And it looks like Brenton Carr is going to head
the FCC.
Speaker 2 (07:25):
So what are the regulatory of policy changes that could
impact the future of local broadcast TV.
Speaker 3 (07:30):
With a new administration.
Speaker 2 (07:32):
So like sunsetting ATSC one point oh, the cap owning
multiple stations or multiple top four stations in a market,
about categorizing virtual MVPDs is MVPD. So what do you
see that you think he will address first? And what
do you think will be his priorities in terms of
what a lot address.
Speaker 1 (07:52):
Yeah, now this is the main question that investors are
talking about coming out of this earning cycle. As you said,
there are number of regulations that affect the broadcast industry
today which could get looked at. So the thirty nine
percent national cap, if they were to get rid of it,
that could lead to consolidation, the in market cap, owning
(08:14):
multiple stations in a market. I think getting rid of
that would allow broadcasters to build more scale, which is
obviously important sunsetting ATSC one dotzo. If the FCC helps
accelerate that process, it could mean broadcasters could adopt modern
technology faster. And then yeah, the virtual services, giving the
(08:34):
affiliate groups a seat of the table during those negotiations would.
Speaker 3 (08:38):
Probably lead to better pricing.
Speaker 1 (08:40):
So in my view, after the election, we are more
likely to see deregulation. As you mentioned FCC Commissioner car
who I think was recently.
Speaker 3 (08:50):
Tapped to lead the agency. He's been vocal in the
past about.
Speaker 1 (08:54):
The need for more modern regulation and a more modern
regulatory framework for a more modern media ecosystem.
Speaker 3 (09:02):
I think the big question.
Speaker 1 (09:03):
In my mind is how much of a priority this
is going to be for regulators, because the FCC and
especially Congress, they have a lot of things on their plate.
They have a lot of priorities, so we need to
see how much of a focus this becomes for them.
On timing, typically appointments are confirmed late in the year
(09:24):
following an election, so we're really talking about this time
next year for the people to be put in place,
and then you have to go through all the work
of figuring out, Okay, what are our priorities, what do
the rules look like actually implementing them, So I think
that's a variable. My gut though, is that the items
that the FCC governs, like the in market cap, those
(09:45):
are more likely to get looked at, and they're more
likely to happen sooner than the items.
Speaker 3 (09:50):
That are governed by Congress.
Speaker 2 (09:53):
I know that Rosen Warsl said she's going to exit,
so then came through a lot of work because they'll
be two to two, two Republicans two Democrats until the end.
Speaker 3 (10:00):
Of the year. But has there been anything that he's talked.
Speaker 2 (10:04):
About in the past of the issues that we spoke
about that you say, yeah, he's going to go after
the ownership cap, or he's going to go after multiple
stations in the market. I mean, what would be the
one thing you think would be the first thing on
his list.
Speaker 1 (10:18):
Yeah, Well, the FCC recently, I believe it was December
of last year, they made a ruling to not eliminate
the in market cap, and Brendan Carr wrote a letter
in descent of that opinion where he basically outlined that
we need to we need to count all these other
mediums of entertainment in our market definition because that's the reality.
Speaker 3 (10:41):
Of what consumers are doing.
Speaker 1 (10:43):
And I thought that letter was pretty encouraging for the
prospects of his FCC then going and looking at something
like the in market cap.
Speaker 3 (10:52):
So that's probably my answer.
Speaker 2 (10:54):
Okay, so covered regulatory issues So what do you see
as the role of local broadcast TV evolving in the
age of streaming.
Speaker 3 (11:04):
And digital media.
Speaker 1 (11:06):
Yeah, it's a really interesting question. I would say, first,
even as the ecosystem shifts to digital, there's still a
very large base of people who like watching linear TV.
They like local news, they like sports, and they're happy
to keep paying for the.
Speaker 3 (11:22):
Service in the traditional way. That's not going to change overnight.
Speaker 1 (11:27):
Over time, as viewership does go more digital, the value
that broadcasters bring to the table, I think changes, and
I think what I mean by that is it becomes
less about being a distribution platform and more about the
content that you provide.
Speaker 3 (11:43):
So what's the value of local news? What's the value
of sports?
Speaker 1 (11:47):
If people want to watch that programming, regardless of the
distribution platform, virtual services should find a way to include
it and pay for it.
Speaker 2 (11:56):
Okay, Okay, So are there any specific, I will say,
technological innovations that you believe will significantly impact the future
of local TV.
Speaker 3 (12:07):
Yeah.
Speaker 1 (12:07):
So I think ATSC Fridado is probably the most relevant one.
Any opportunity to use broadcast spectrum for additional use cases
is going to be pretty exciting.
Speaker 3 (12:18):
And clearly this is a focus for the industry.
Speaker 1 (12:22):
Early use cases that I've heard of are things like
enhanced GPS, IoT, connected cars, mobile data transmission. These are
potentially very large markets. That said, I think it's still
pretty early in the life cycle for this technology, and
most investors that I speak to really think about this
as a call option. And the reason for that is
(12:45):
these wireless business models have in the past taken longer
to play out than expected. So take five G for example.
The wireless carriers spent billions of dollars acquiring and then
deploying the spectrum, and they still think of five G
as a great business.
Speaker 3 (13:01):
It's really important to their future. It's going to be
a growth driver.
Speaker 1 (13:05):
I think it's fair to say, though, that it's been
slower to develop commercially than they had initially anticipated. So
if you're an investor in the broadcast space, I think
the key is that you need the stock to work
without ATSC three auto and if it does work, then
that's great.
Speaker 2 (13:24):
Okay, we got a couple of minutes, So do we
have any questions from the audience. Anybody if you have
a question, to stand up and.
Speaker 3 (13:34):
Okay, we do have one question in the back and.
Speaker 1 (13:41):
Things do you think broadcasters should be investing in.
Speaker 2 (13:47):
So if you didn't hear and she's talked about local
news in local sports, but what other things should local
broadcasts invest in in terms of content?
Speaker 3 (13:56):
Yeah?
Speaker 1 (13:56):
So, I think beyond the local news, the local dues
offering the opportunity to bring in more live sports is
an exciting one. Ultimately, that's what drives the highest ratings,
That's what creates the value in entertainment is the eyeballs.
So we're seeing an evolution right now in regional sports
where many leagues and teams might need to find new
(14:19):
homes in the future. Broadcast isn't going to be able
to offer the same fees as the rs ns, but
what they will be able to do is offer a.
Speaker 3 (14:28):
Much wider audience, and so that's valuable for the team.
Speaker 1 (14:32):
So I think the key is finding a deal that's
a win win between the team and the broadcast and
you know that that'll be exciting going forward.
Speaker 2 (14:41):
Okay, one more question, any more questions? If not, I
have a last question for you, so to kind of
bring us all together. What makes local broadcast TV such
a compelling investment despite competition.
Speaker 3 (14:59):
For you media?
Speaker 1 (15:00):
Yeah, so, I think investors understand that there are secular
headwinds facing PATV, but that doesn't mean that you can't
find good investments.
Speaker 3 (15:11):
So some of the most important.
Speaker 1 (15:12):
Qualities that I point to are things like scale, which
tends to lead to better outcomes when you do renewals,
strong management teams that's always important, a healthy balance sheet,
capital allocation like we talked about.
Speaker 3 (15:26):
So when you identify a.
Speaker 1 (15:27):
Good business, it's all about finding what the right price
is for that business.
Speaker 3 (15:31):
And you know, building on.
Speaker 1 (15:33):
Some of my previous answers, if broadcast is going to
continue adding value in the media ecosystem because it has
stuff that people want to watch, investors should be able
to find good assets at the right price.
Speaker 3 (15:46):
Well, please run a flaws. But Ben Salt, thanks so
much for I'm supposing time doing your best to.
Speaker 4 (15:52):
Do and with that we thank you for tuning into
this in focus podcast, which is presented by dot fm
arding social podcast broadcast. Get a dot fm domain name
by heading over to get dot fm today. Special thanks
to TVB and to Jennifer Newman at JCIR for hooking
us up and getting us connected to the TVB Executive
(16:13):
Summit at Hurst Tower in the City of New York
on November twenty first. For more information on TVB events,
visit TVB dot org. And for more information on what
we do, please visit the Radio and Television Business Reports
website at RBR dot com.
Speaker 3 (16:27):
We'll see you next time.
Speaker 4 (16:28):
Have a great day.
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