Broadcasters Resort to Odd Accounting Trick to Claim Poverty Posted by Bob at 11/14/06 01:20 PM

The folks over at the National Association of Broadcasters have come up with a new creative bookkeeping technique that might even make the accountants from Enron blush.

To help convince the Federal Communications Commission to loosen its current rules on media ownership, NAB in an FCC filing cited a new study it had conducted showing many small and medium-sized television stations are bumping along on the brink of bankruptcy.

The lower-rated stations in medium and small-sized markets, the filing said, “have seen their profits decline by 679% and 148%, respectively, since 1997, and, not surprisingly, have suffered actual losses in both 2001 and 2003.”

Even the ratings leaders in the nation’s small and medium-sized markets are hurting, according to the NAB filing. “Indeed, even the highest-rated network affiliates in many medium and small markets are experiencing flat or declining profits.”

The solution, according to the NAB, is further loosening of existing FCC media ownership rules to allow more consolidation in the radio, television and newspaper businesses. Under proposed FCC rules which were tossed out by a federal court in 2004, a single company would have been able to own a community’s local newspaper, its cable company, three of its top television stations and eight of its top radio stations. NAB backed those earlier proposed rule changes, and has since said even looser ownership regulations should be adopted due to the sickly fiscal condition of local broadcasters.

There’s just one problem with NAB’s argument: Nearly all broadcasters, small to large, are raking in cash at rates that make most every other industry look sickly by comparison. The profit rate at many television stations is 40 percent or higher. It is one of the most profitable businesses around.

So how did NAB get the numbers to look so bad in its filing with the FCC, where it contends looser media ownership rules are a matter of survival? Simple. They just counted odd-numbered years in their calculations.

“This report examined the profitability of ABC, CBS, Fox and NBC affiliated television stations in (small and medium-sized television markets) in 1997, 2001 and 2003,” it says on page 93 of the 139-page NAB filing with the FCC.

The reason the report only looked at those years was explained in a footnote, with an ironic hint that to have done otherwise would have somehow been misleading.

“None of these years involved a national election or the Summer Olympics to avoid the sometimes inconsistent impact of advertising associated with these events,” says the footnote.

Huh?

It has been impossible to turn on the television in recent months without being buried by political ads – and this wasn’t even a presidential election year, when such ads are even more ubiquitous.

As for the Olympics, they are a bi-annual advertising bonanza for everyone involved – especially the Summer Olympics.

Not to put too fine a point on this, but NAB including only odd years in it calculations is akin to ski resort not reporting its winter months or a toy store ignoring all the money it makes during the Christmas season.

The highly-regarded Project for Excellence in Journalism says political advertising has skyrocketed in recent years, particularly those with presidential races.

This is all made the more troubling by the fact that FCC Chairman Kevin Martin has indicated he wants to grant the wish of big media companies and loosen the ownership regulations, the sooner the better.

If it has any desire to be fair and evenhanded, the FCC should send the NAB filing back to the broadcaster group and tell them to do it again. And this time include both the odd and the even years.

comments (2)

1 Posted by Rev. Charles S. Cavanaugh at 11/30/06 08:29 PM

Ho-Hum... So what else is new? Ignorance, apathy and avarice in both The Commercial and Governmental entities.

There does not appear to be anything like honesty or adherance to sworn oaths of office based on my experience of working with the "Government". The only thing that seems to have, even reasonable chance of success is to hold their feet to the flames of public opinion, and even that is beginning to pale as an incentive.

So much of the citizenery is so ignorant AND apathetic that one has to actually point a gun in their faces, for them to realize, or believe, that they are being robbed.

How sad! Sigh...

2 Posted by Martha Adams at 12/01/06 01:30 PM

I have begun to believe that honest accounting has ceased to exist. All corporations cook their books, and government consents to most of it. Political office has become a license to steal. I wish that more citizens would inform themselves of what actually goes on in our government.