WASHINGTON, D.C. -- The National Association of Broadcasters today highlighted collusive advertising practices of the pay television industry and urged the Federal Communications Commission to examine whether consumers and advertisers are harmed by the joint advertising sales of pay TV providers.
NAB's comments were included in a filing submitted to the FCC, in which the trade association cited documents demonstrating collusive television advertising selling arrangements by the largest players in the pay television business. The collusive "interconnect" advertising activities by cable, satellite and telephone companies allow companies like Time Warner Cable, DirecTV, DISH, Verizon and AT&T to jointly commission one person to sell TV advertising across multiple pay-TV platforms in cities across America.
NAB's request for an FCC review of pay-TV advertising collusion comes as the Commission is reviewing "joint sales agreements" of free and local TV stations.
Using a company called NCC Media (formerly known as National Cable Communications), multiple pay-TV providers in a given market hire a single sales employee to sell local and national advertising that later appears on the local cable system, on satellite TV companies DirecTV and DISH, and on telephone video providers such as Verizon FIOS and AT&T U-Verse.
NCC's brochure "The Essential Guide" to interconnects describes how the top pay-TV providers jointly sell advertising:
"Interconnects make it easy to plan and buy cable in local markets. With only one buy, one commercial and one invoice, an advertiser can reach an entire market full of cable homes with one call. …NCC is your single-source connection to all interconnects, and all cable homes, throughout the U.S." -page 6
"Leading cable operators have significantly expanded local market ad penetration, by incorporating DirecTV, Verizon FIOS, and AT&T U-Verse subscriber homes into their offerings." -page 7
With the addition of DISH, NCC Media even brags that this "arrangement crowns a decade-long effort by NCC and its owners to consolidate the advertising reach of all US MVPD's" for local and national television advertisers.
NAB President and CEO Gordon Smith issued the following statement in response to the collaborative buying practices of the pay-TV industry.
"We believe that collusion in the pay-TV advertising business deserves better oversight from the FCC," said Smith. "This deeply troubling practice would appear to allow the largest pay-TV companies in the country to game the advertising sales market and set above-market ad rates for local and national businesses.
"Heavily regulated local broadcasters in smaller markets are being scrutinized by the FCC for a practice that involves one local TV station selling ads for another local TV station. Yet the heavily consolidated pay-TV industry, unshackled by any ownership rules, is free to engage in this most collusive of advertising sales practice on a massive scale in multiple markets. NAB urges the FCC to conduct a serious and thorough review of the pay-TV interconnect advertising arrangements."
The National Association of Broadcasters is the premier advocacy association for America's broadcasters. NAB advances radio and television interests in legislative, regulatory and public affairs. Through advocacy, education and innovation, NAB enables broadcasters to best serve their communities, strengthen their businesses and seize new opportunities in the digital age. Learn more at www.nab.org.