July 2009

Bankruptcy looms for Sinclair, Nation's 12th-Largest TV Station Owner

Sinclair Broadcasting Group, which owns or operates 58 television stations in 35 U.S. markets, said slow political advertising and a drop in auto advertising -- along with a recent downgrade of the company's debt -- will make it difficult to meet certain financial obligations. The company said that auto ads used to make up a quarter of its business, but that sector dipped to 18% last year and to 14% in the first quarter this year. Sinclair has $1.33 billion in debt and about $11 million in cash on hand. Last year, it lost $241 million on revenue of $756 million. Sinclair faces debt covenant violations, sagging revenues and cash flow that may make it impossible to service that debt, and what could be contentious negotiations with ABC over its affiliation agreement, which expires at year end. But the key and most immediate threat is the potential credit default of Cunningham Broadcasting Corp., with which Sinclair has local market agreements (LMAs) encompassing six stations. That could push Sinclair over the edge as soon as the end of July. Cunningham, which has at least two of the same lenders as Sinclair and which is controlled by members of the Smith family other than those who control Sinclair, has already defaulted on a $33 million term loan but obtained a reprieve from lenders until July 31.

New York Times to sell NYC radio station

The New York Times Co said it will sell its New York City classical music radio station WQXR for $45 million, in a two-part sale that will help the struggling newspaper publisher pay off debt. The station will continue to broadcast classical music, something it has done for 73 years, but at 105.9 on the FM radio dial instead of 96.3 FM. Under the terms of the deal, Spanish-language broadcaster Univision Radio will pay $33.5 million for the 96.3 slot on the FM radio dial that the Times uses to broadcast WQXR. The Times in turn will get the broadcast license for 105.9 FM, the slot that Univision currently owns. It plans to sell the license, its transmitting equipment and the WQXR call letters to WNYC Radio for $11.5 million. The deal is expected to close in the second half of the year. The Federal Communications Commission, which supervises broadcast licenses, must approve the sales.

Give Clyburn a Chance at the FCC

[Commentary] On Wednesday, the Senate Commerce Committee holds a confirmation hearing for Mignon Clyburn to become a commissioner at the Federal Communications Commission. As the third Democrat on the five-member commission, Clyburn would cast a deciding vote for President Obama's bold technology agenda. And yet, Clyburn's nomination has met with a mixed reaction from FCC-watchers. Some fear she may already have pitched her tent with the entrenched special interests that have controlled media policy for decades. It's been asked: What do we know about her position on key issues such as Net Neutrality? Can she be counted on to break open wireless markets for more innovation and consumer choice? Will she stand with Obama's reform agenda and help overhaul an agency that's long been in the thrall of corporate lobbyists?

New Hires For Obama's SciTech Team

Former Google Head of Global Public Policy and Government Affairs Andrew McLaughlin and Congressional Research Service veteran Deborah Stine have joined the Obama administration. McLaughlin will serve as a deputy chief technology officer under Chief Technology Officer Aneesh Chopra at the White House Office of Science and Technology Policy. Stine will be the executive director of the Council of Advisors on Science and Technology Policy. PCAST is co-chaired by Obama's science adviser and OSTP Director John Holdren; Eric Lander, director of the Broad Institute of MIT and Harvard; and Harold Varmus, president of the Memorial Sloan-Kettering Cancer Center.

Health Care Bill Won't End Tax Deductions For Prescription Drug Ads

Broadcasters, cable operators and the ad community were breathing a little easier Monday when the health care bill was introduced without a proposal to end the tax deduction for prescription drug ads, though the battle may not be over. The major networks, ad associations, and others including the National Cable & Telecommunications Association, joined in a full-court press in the past few weeks against the provision, sending Ways and Means Chairman Charlie Rangel (D-NY) in particular, and his colleagues, a number of letters detailing the impact on their business of eliminating the deduction on the multi-billion ad category. The plan had been to eliminate the deduction to help foot the bill for broader healthcare reform. The industry countered that doing so by removing the deduction on what they said was a legitimate business expense, and a short-term revenue raiser, is a long-term adverse precedent for equal treatment and an economic hit at a time when the ad dollars in TV are already getting fewer and farther between.

Rep. Mike Ross's Local TV Freedom Act Aimed At Resolving Issues Around DMAs That Cross State Lines

Rep. Mike Ross (D-Arkansas) and 10 co-sponsors have introduced the Local TV Freedom Act, which would attempt to fix the so-called split TV markets issue which has been costing you sleep. Split markets are Nielsen DMAs that cross state lines and in which some viewers to cable and satellite services are getting the local station from the adjacent state rather than their own. Broadcasters say the bill changes in policy could cost them hundreds of million of dollars [collectively, of course... individually -- that would be some sort of record]. Rep Ross and satellite operators argue that it is simply giving local viewers access to their local stations denied by a gerrymandered DMA system. They also counter that the exclusivity argument is weakened by the availability of most TV shows worldwide at the click of a mouse.

Senate Passes R&D Reauthorization

The Senate late Monday unanimously passed legislation to reauthorize two federal programs intended to increase research and development funding for small businesses, which are slated to expire July 31 absent congressional action. The House passed its version of the bill to prolong the Small Business Innovation Research and Small Business Technology Transfer programs last Wednesday. The Senate bill, which differs from the House version, provides for an increase to the SBIR program allocation, raising it to 3.5 percent, spread out over 11 years. The SBIR allocation increase includes all agencies, including the National Institutes of Health. The bill also increases the STTR program allocation from 0.3 percent to 0.6 percent over six years. Additionally, the Senate bill would amend eligibility requirements to allow businesses owned and controlled by multiple venture capital firms to compete for a percentage of SBIR projects. To improve the diversity of the programs, the measure also reauthorizes the Federal and State Technology program and Rural Outreach Program.

GE: Smart grid yields net-zero energy home

General Electric unveiled a project at its research labs that will let homeowners cut annual energy consumption to zero by 2015. These "net-zero energy homes" will combine on-site power generation through solar panels or wind turbines with energy-efficient appliances and on-site storage. Consumers will get detailed energy data and potentially control appliances with Home Energy Manager, a device that is expected to cost between $200 and $250. Studies show that when consumers have more detailed information on their energy use, they can find ways to reduce consumption by 5 to 10 percent. When utilities have variable, or time-of-use, pricing, consumers could cut electricity use by 15 percent at on-peak times, typically in the morning and early evening. GE appliances have been converted to have electronic controls and will have a small module in the back that will allow it to communicate with a home's smart meter. With that communication link in place, consumers can find out how much electricity individual appliances use and program them to take advantage of off-peak rates.

Ford Foundation Gives $100,000 to Aid Rural Papers with Digital

The Ford Foundation is donating $100,000 to a West Virginia University effort that helps rural newspapers adapt to the digital age. The Perley Isaac Reed School of Journalism runs the West Virginia Uncovered program, which began last fall. Students and professor John Temple travel the state to help papers create multimedia content for their Web sites. The team also conducts training sessions for reporters.

Jamming Prison Cell Phones Threatens Public Safety, Groups Tell Senate

A day in advance of a Senate Commerce Committee hearing on legislation (S. 251) to allow interference with cellular phones in prisons, nine public interest groups and consumer organizations told the Committee in a July 14 letter that the legislation would cause more serious problems than it would solve. "Jamming prison cell phones would jeopardize public safety because there is no way to jam only phones used by prisoners. All wireless communications could be shut down within a prison," said Harold Feld, legal director for Public Knowledge, adding, "Jamming won't work. You can beat jammers with a few pieces of tin foil. We have better ways of dealing with the problem. Feld also warned: "Once such a jamming device is built, it will inevitably become available on a wider basis. Who knows what chaos that will cause?" According to the letter, "Only a complete prohibition on cell phone jammers has successfully limited the sale and deployment of them in this country. Despite their availability in other countries, use of cell phone jammers in this country is forced underground and does little to interfere with commercial or public safety wireless use." The threat of widespread jammers is one reason commercial and public safety licensees oppose the attempts of one company, CellAntenna, to deploy the technology.

Benton

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