TAB makes headway on key DC concerns

posted on 2.29.2016

An aggressive advocacy push before Texas members of Congress by TAB last week yielded strong support for broadcasters on a number of key issues confronting the industry.  From music royalties and the tax deductibility of advertising costs to the anticipated TV spectrum repack and the retransmission consent process, the 15-member TAB delegation covered a lot of policy territory in two days.

Despite the support received in DC, all station owners and GMs are encouraged to address the following issues whenever members of Congress visit their stations.

2016 Background Information/Talking Points

Tax Deductibility of Advertising – Lawmakers expressed skepticism or outright opposition to tinkering with the advertising deduction which has been in place since the income tax was established a century ago.  Advertising costs are fully deductible in the year they are incurred.  The former chairman of the House Ways and Means Committee proposed just before retiring a couple years ago to alter the deduction so that 50 percent would be deductible in the year costs are incurred, and the deduction of the remaining 50 percent would be amortized over five to 10 years.

The proposal was reportedly rooted in a desire by multinational corporations to reduce their U.S. marginal tax rate from 35 to 25 percent.  TAB argued that retailers and other local businesses that advertise heavily would be harmed in such a scheme and that new businesses especially cannot wait five years or longer to deduct such costs as many fail in the first five years.

With every dollar spent on advertising shown to generate $20 in economic activity, there appeared to be no appetite for entertaining such a change, but all industries dependent on advertising remain wary because the proposal is projected to generate as much as $167 billion in revenue for government coffers if approved.  That’s a significant amount of money even in a trillion-dollar budget.

Performance Tax – Already leading the country in the number of co-sponsors for The Local Radio Freedom Act, TAB enlisted another supporter in Rep. Brian Babin, R-Woodville. Babin signed onto HConRes 17 by Texas Reps. Mike Conaway, R-Midland, and Gene Green, D-Houston, which opposes requiring local radio stations pay an additional royalty to record labels.

TAB countered the record labels’ arguments on alleged “platform parity,” promotion of artists, and introduction of new music, while underscoring the hundreds of millions of dollars broadcast radio already pays to songwriters and composers, the extensive community service stations provide and federal regulatory compliance that applies only to local radio stations, and not streaming or satellite services.                                                        

TV Relocation Fund/Spectrum Repack – Lawmakers universally expressed concern about the possibility that TV stations that choose to continue serving their communities after the spectrum auction could be left holding the bag for some repacking costs despite Congress’ intentions.

The $1.75 billion relocation fund Congress established to fully reimburse stations for repacking costs may be insufficient if, as expected, hundreds of stations need to be repacked.  Some Texas members of the House Appropriations Committee already are working closely with TAB to prepare for addressing that concern, if needed, in a funding bill expected at year-end.

The 39 month timeframe for completing the relocation also was a sore spot for members who overwhelmingly expressed support for extending the deadline by which stations must complete their channel relocation or face going off the air.  The timeframe is set in law and an extensive study by the NAB indicates that a scarcity of equipment manufacturers and tower and engineering crews, as well as inclement weather in the northern reaches of the country could drag out the transition by another five years.

Retransmission Consent – Members overwhelmingly expressed dismay at efforts within the FCC to undo the private, free-market negotiations between broadcasters and Pay-TV providers that determine how much local TV stations are compensated for their programming which is the most popular among Pay-TV’s offerings. Such efforts include a proposal to reveal the exclusivity rules and others that would remove all leverage that local stations have in negotiating with Pay-TV behemoths.

TAB’s delegation, which visited with 35 of Texas’ 38 congressional offices over two days and encompassed nearly every media market, included:

• Roger Bare, KIAH-TV Houston
• Ben Downs, Bryan Broadcasting
• Tom Ehlmann, KXAS-TV Dallas-Fort Worth
• Sara Frazier, CBS Radio Houston
• Tami Honesty, Radio One Dallas-Fort Worth
• John Kittleman, KRGV-TV Rio Grande Valley
• Mark Krieschen, Cox Media Group Houston
• Jerry Martin, KPRC-TV Houston
• Mark McKay, KTAL-TV Texarkana
• Chris Pruitt, KYLE-KWKT-TV Bryan
• Ben Reed, Cox Media Group San Antonio
• John Seabers, Sinclair Broadcast Group
• Pat Stacey, KLTV/KTRE-TV Tyler-Lufkin

Questions? Contact TAB's Oscar Rodriguez or call (512) 322-9944.

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