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NAB Alleges Interconnects Collusion

26 Mar, 2014 By: Doug McPherson

WASHINGTON, D.C. – The National Association of Broadcasters (NAB) is alleging that local market cable TV interconnect ad sales groups are colluding and has asked the Federal Communications Commission (FCC) to review pay TV advertising practices.

NAB 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 FCC 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.

"We believe that collusion in the pay-TV advertising business deserves better oversight from the FCC," said NAB President and CEO Gordon 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.”

He added that 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,” Smith continued. “NAB urges the FCC to conduct a serious and thorough review of the pay-TV interconnect advertising arrangements.”

Michael Powell, president/chief executive officer of the National Cable and Telecommunications Association (NCTA), responded, “NAB’s latest attack is an unfortunate and desperate attempt to divert attention from examination of discrete broadcast ownership issues." 

Wayne Friedman, a writer with MediaPost News, writes that for most businesses using any TV leverage is just fair game – in almost any platform. He adds that big media companies’ national TV advertising teams – with an array of broadcast and cable TV networks, as well as associated Web areas – continue to seek that leverage, and not just with TV advertisers.

“Free-market business leaders would push to open up all doors, and eliminate all regulatory barriers,” Friedman writes. “On the other side, many worry that even bigger media consolidation means less competition as well as fewer, less diverse TV voices. On the other end of things, there’s the Internet, which has been inundated with the growth of ad buying and selling networks – all looking to gain their own scale and leverage. End result: More messaging.”

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