Tax Reform and Advertising Deductibility: Now Is the Time to Act!
Despite the current chaos in Washington, tax reform remains a key objective for the Trump Administration and House Speaker Paul Ryan. Efforts to cut the corporate tax rate could potentially result in the reduction or elimination of certain business deductions including advertising expenses.
Loss of advertising deductibility would strike a devastating blow to the broadcasting industry and main street America, stalling the engine that drives the nation’s economy.
Here’s what you can do now to protect advertising deductibility. Enlist the support of your local advertisers. Ask them to join the growing coalition of businesses that are actively opposing any efforts to alter the tax treatment of advertising expenses. Encourage your advertisers to visit Businesses Against the Ad Tax (The BAAD Tax Coalition). Urge them to use the resources in this online toolkit in their conversations with lawmakers.
The time to act is now. Tax reform momentum will likely accelerate in the months ahead. Advertising-based media and local businesses are uniting to fight the ad tax, so please do all you can to promote this effort.
Jim du Bois, MBA President/CEO
MBA Members Receive Discount On Conclave Registration
The Conclave is set for July 26th-28th at the Doubletree by Hilton-Park Place in St. Louis Park. MBA members receive a $50 discount on each registration. Register here and enter the code STA42 when prompted.
NAB Pushes Back On Repack Schedule Resistance
The National Association of Broadcasters says again that the FCC should take “a more flexible, fact-based approach” to the TV spectrum repack process, which also has implications for some FM stations. NAB earlier had asked the commission to reconsider its plan to develop a repack transition schedule. Wireless companies T-Mobile USA, Competitive Carriers Association and CTIA then opposed that request.
More Millennials Likely To Cut TV Service
The number of current TV cord cutters continues to increase. A third-quarter 2016 Forrester Research survey of 3,542 to 3,697 U.S online adults 18 years and older with current TV service found that 19% are likely to cut their traditional pay TV service in the next six months. This is up from a 9% number conducted in a survey in 2013.
FCC Officially Proposes to Eliminate Main Studio Rule for Radio/TV
The Federal Communications Commission has formally released a Notice of Proposed Rulemaking, proposing to eliminate the main studio rule. It requires each AM, FM and television broadcast station to have a main studio in or near its local community. The commission had indicated earlier that it planned to do so as new Chairman Ajit Pai moves quickly to pursue his agenda of removing what he sees as outdated or unnecessary regulations.
FCC Announces Translator Filing Window For AM Owners
For a second consecutive year the Federal Communications Commission is opening a pair of filing windows that will allow AM broadcasters to secure an FM translator upon which to simulcast their station. The first window will open July 26.
Techsurvey Reports Big Changes As Listening Gets More Mobile
In Jacobs Media Techsurvey 13, “Navigating the Digital Landscape,” it appears “the traditional pattern of media usage and radio listening are changing—in some cases, rapidly.” Those traditional locations—the home, the car and the workplace—are feeling the effect of new listening devices and technology. Where and how consumers listen to radio may be evolving but they’re still listening, as over 90% of respondents tune in at least an hour per day.
Competitive Info: Newspapers See More Circulation Drop
While surging interest in news following the presidential election is benefitting some of the nation’s largest newspapers, overall newspaper circulation is down to its lowest levels in more than 50 years. According to a new analysis from the Pew Research Center, total weekday circulation dropped to 35 million, while Sunday circulation hit 38 million, the lowest totals since 1945.
2017 – Year of the Towers
By Gregg Skall, MBA FCC Counsel
Womble Carlyle Sandridge Rice, Washington, DC
A number of factors are converging to make 2017 an especially eventful year for communications engineering and construction. While there are many changes afoot, they are converging is a way that may make the year remembered as “The Year of the Towers.”
Nearly every area of communications technology is in some state of transition that will have an effect on new and existing communications towers. FM radio is experiencing a convulsion of spectrum assignment issues caused by the widespread use of FM translators by AM stations and wireless broadband is involved in an explosion of new spectrum implementation.
The FCC has now concluded the reverse and forward 600 MHz spectrum auction. All phases of the channel reassignment process for stations that are to relocate are about to begin with the impending release of the Closing and Channel Reassignment Public Notice (the “CCR-PN”). Although we cannot now estimate the number, it is believed that a considerable number of repack stations will involve a change of or modification to their tower.
With new generations of viewers increasingly moving to personal devices for news and video entertainment, many television broadcasters believe there is an urgent need for a broadcast standard capable of reaching those devices. To hit that target, and other new media opportunities, One Media, a joint venture of Sinclair Broadcasting Group and Coherent Logix, has advocated an ATSC 3.0 standard and the Commission appears read to accommodate. Recently, the Commission proposed to authorize its use on a voluntary, market-driven basis, provided that licensees continue to deliver the current-generation “ATSC 1.0 digital” to their viewers. One Media’s goal is to have the rules adopted in time to be implemented in the repack schedule without negatively affecting the post-incentive auction transition process.
Under the Commission’s proposal, each television station choosing to broadcast its signal in both ATSC 1.0 and ATSC 3.0 would arrange for another station in its local market to act as a “host” and “simulcast” one of the two signals. In turn, it will broadcast the “host” ATSC 1.0 program stream in ATSC 3.0. Yet to be decided is how the Commission will handle ATSC 1.0 simulcast hosting of stations with different service contours or communities of license, or even class of service, i.e., full-power and Class A stations.
ATSC 3.0 also offers the ability to create single frequency networks, allowing a station to extend its signal to distant parts of the DMA that may have been lost in the digital transition, or even new areas without the need for satellite stations. It can also use a fill-in transmitter for high interference areas, as well as mobile service, hyper-local zoning and programmatic advertising opportunities with in contour transmitters offering zonal service capability. Importantly, for smaller markets where build-out has been neglected by the large ISPs, ATSC 3.0 will offer broadcasters the data capacity for diverse traffic delivery, enabling TV to expand its service offerings to one-way over-the-air ISP traffic. One Media estimates this could bring as much as $12.2 billion in new revenue to broadcasters.
The implications are clear. ATSC 3.0 is going to involve a lot of transmitter and tower modifications to accomplish even a partial transition, and that has implications for co-located radio stations.
Just when it seemed that most of the issues presented by FM translator expansion under the AM Revitalization 250 mile waiver were close to being resolved, the Commission released its Second Report and Order in AM Revitalization that again changes the ground rules. Many AM stations found it difficult to place their relocated translator at a useful location, so the Commission acted on a “leftover” item from the 2015 First Report & Order to allow siting of a new translator within the greater, rather than the lesser of the 2 m/Vm daytime contour of the AM station, or a 25 mile radius from the AM transmitter site. It also eliminated the 40 mile limit. This change may also result in new demands for tower space. Moreover, the Commission has pledged to open two new windows for AM stations that were unable to take advantage of the 250 mile waiver windows to apply for new translators, with the first supposed to come in 2017.
With the influx of relocated and new translators, the potential for and complaints of interference conflicts with licensed full-power FM stations will accelerate. While the secondary status of FM translators would seem to be an easy response to such interference complaints, in practice resolution has not been so easy, with “pleading wars” breaking out among translator and full-power licensees. The resolution of these conflicts often results in the relocation of the translator even after construction, resulting in a new tower location requirement.
The mobile broadband industry is also queued up to need additional tower space as it plans to implement AWS-3 Band 66 and the 600 MHz band made available by the forward TV auction along with the anticipated rollout of 5G and micro-cell technology.
ANSI/TIA-222-G (and H) THE COMPLICATING FACTOR
Rev G: Just when the need for new towers and tower reloading becomes a critical factor, along comes a new structural standard for communications towers. TIA 222 Rev G provides the requirements for the structural design and fabrication of new, and the modification of existing support structures. This is important as ANSI/TIA 222 and its revisions it is specifically tracked in many state building codes.
As explained by Rohn Towers, Rev G changes the calculation for wind from the fastest-mile wind speed, to a 3-second gust wind speed. “For a given location, the 3-second gust wind speed represents the peak gust wind speed whereas the fastest-mile wind speed represents the average wind speed over the time required for one mile of wind to pass the site.”
Rev G also added other factors for the design or modification of structures. These include classification of structures into three classes and the ability to adjust wind speed based on the type of surrounding terrain. The three reliability classes are based on the type of service and the structure’s potential hazard to human life and property. And excellent description and PDF file is available at http://www.rohnnet.com/revg
Rev G also adopted a performance specification for grounding systems greater than the Rev F prescriptive requirements. It also made significant additions addressing climber safety, categorizing climbers with each category having different requirements and limitations, and requiring tower safety climb systems.
The critical issue is that many exiting towers were not constructed under Rev G, but will be required to comply with it when reloading the tower with new or additional antennas and transmission lines required for the repack and ATSC 3.0 conversion. Furthermore, structural issues may be presented in the process of moving antenna locations and reloading towers in accomplishing the repack, adding new FM translators or seeking to share or expand return on tower real estate by offering space for new mobile broadband expansion.
Rev H: Further complicating the picture is Rev ANSI/TIA-222-H looming on the horizon. Rev H, expected to be adopted sometime in late 2017, would make changes regarding loading and design strength requirements to comply with changes in national standards; and could add several new annexes for Wind Induced Structural Oscillations (Annex M), New Tower Construction (Annex N), Existing Tower Modification Inspection (Annex O) and Tubular Pole Weld Toe Crack Evaluation (Annex P).
PROTECTION: THE TOWER LEASE
Among the first questions likely to be addressed once tower space and structural issues are identified are who will be responsible for the inspection, cost, relocation and construction and how are these responsibilities and liabilities to be allocated?
Ultimately, whether the asked by tower owner or the tower tenant, the answer will lie in the tower lease. A well prepared tower lease provides for the allocation of responsibility when interference occurs, priorities between pre-existing and newer tenants when any of them is required to change their location on the tower or leaving the tower, or otherwise modify their transmission parameters.
This is particularly important with respect to the repack. The FCC staff has indicated that impositions on other tower occupants by a television station’s required move may only be eligible as a reimbursable expense if legally required by the terms of the tower lease or other binding contractual commitment. Accordingly, it will serve every broadcaster, tower owner, or other FCC licensed transmitting service well to begin an immediate review of its tower leases and related contracts. After all, 2017 will be the “Year of the Towers.”
This column is provided for general information purposes only and should not be relied upon as legal advice pertaining to any specific factual situation. Legal decisions should be made only after proper consultation with a legal professional of your choosing.
Gregg Skall is a partner of the law firm Womble Carlyle Sandridge & Rice, LLC. He frequently lectures on FCC rules and regulations, represents several state broadcaster associations and individual broadcasters and other parties before the Federal Communications Commission in their commercial business dealings. Prior to private practice, Mr. Skall served as the Chief Counsel for the National Telecommunications and Information Administration and General Counsel to the White House Office of Telecommunications Policy.
The MBA can help you with your community issues programming. Access Minnesota is a high-quality, weekly 30-minute public affairs radio show that focuses on issues of importance to Minnesotans. This program is available as a free service to MBA member stations. The show currently airs on 43 stations throughout Minnesota. Visit www.accessminnesotaonline.com for more information. (Please note that the Access Minnesota website is currently being redesigned.) A monthly 30-minute TV version of Access Minnesota is also available. You can view previous episodes here.
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