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Allow Broadcasters to Compete on a Level Playing Field in the Digital Marketplace

ISSUE SUMMARY

For decades, the Department of Justice's (DOJ) Antitrust Division has maintained that local broadcast television stations compete only against one another when analyzing mergers and other competition issues. This view is out of sync with today's media marketplace. With the explosive growth of internet video and digital content along with the proliferation of cable and satellite television channels, broadcasters face intense competition for viewers and local advertising dollars. The DOJ's outdated viewpoint stifles broadcasters' ability to best serve audiences with the high-quality entertainment and locally-focused news, weather and sports they have come to expect. It is well past time for the DOJ to update its regulatory policies to reflect the realities of the 21st century media market.

Here's why:

As a direct result of the DOJ's narrow view of the media marketplace, broadcasters face strict limitations in acquiring stations and taking advantage of important economies of scale. This skews the competitive playing field because large tech companies such as Facebook and Google, giant pay-TV and broadband providers such as AT&T/DirecTV and online video providers like Netflix and Amazon are not subject to comparable limitations. Yet, broadcasters compete with all of these companies for local viewers and advertising dollars. Neither consumers nor advertisers believe that local TV stations are their only options for accessing content or placing advertisements:

  • Broadcast TV stations are increasingly losing advertising dollars to digital platforms. In 2020, Kagan estimated that digital (online/mobile) ad revenues grew by a Compound Annual Growth Rate of 17.7% from 2010-2019, with its share of total U.S. ad revenue growing from 12.6% in 2010 to 42.2% in 2019, while local broadcast TV stations' share of total ad revenue declined during this decade, falling to 7.1%in 2019. Kagan projects these trends will continue, with digital capturing 59.5% of overall U.S. ad revenue by 2029.
  • Google's U.S. advertising revenues will exceed the combined ad revenues of all local TV and radio stations in the country by over $8 billion in 2020, according to recent projections from eMarketer and BIA Advisory Services (BIA). Borrell Associates reports that Facebook has become the most popular marketing vehicle for local advertisers.
  • Surveys conducted by BIA consistently find that advertisers who utilize TV also use a wide range of other platforms, including digital. In BIA's last survey in 2018, TV advertisers reported using 31 different ad platforms. Nearly 78%of TV advertisers reported using targeted social media ads and almost 68% said they used mobile location aware ads.
  • Broadcast TV stations and pay-TV providers are both losing audiences to online options. Nielsen estimates that the weekly time adults ages 18+ spent viewing linear TV (broadcast and cable, either live or time shifted) fell by 15.5% just from 2014-2019, by 23.7% for adults ages 35-49 and much more for adults under age 35. Analysts have found that linear TV viewing declines in close correlation with Netflix's growth.

The bottom line:

The DOJ should recognize what broadcasters, cable and satellite providers, internet services, advertisers and consumers already know: technological advances have transformed the media landscape. In light of these vast changes, the DOJ should reevaluate its definition of the relevant market and analyze competition when reviewing TV station mergers.






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