Washington Post 2015 Annual Report Download - page 31

Digital Television (DTV) and Spectrum Issues. Each GMG station (and each full-power television station
nationwide) now broadcasts only in digital format, which allows transmission of HDTV programming, multiple
channels of standard-definition television programming (multicasting) and subchannels of programming
designed for reception by mobile devices (mobile DTV).
Television stations may receive interference from a variety of sources, including interference from other
broadcast stations that is below a threshold established by the FCC. That interference could limit viewers’ ability
to receive television stations’ signals. The amount of interference to stations could increase in the future because
of the FCC’s decision to allow electronic devices, known as “white space” devices, to operate in the television
frequency band on an unlicensed basis on channels not used by nearby television stations.
Congress has authorized reallocation of spectrum for use by wireless broadband providers, including substantial
amounts of spectrum currently in the television broadcast band. Congress has authorized incentive auctions
whereby the FCC would auction spectrum relinquished by broadcast television stations in exchange for a share of
the auction revenues. The FCC has adopted rules, and is expected to continue adopting rules, addressing, among
other things, how the incentive auction process will work and how the FCC will conduct a “repacking,” whereby
the FCC will require certain stations to move to new channel allotments so as to free up a nationwide block of
spectrum for wireless broadband use. The repacking and incentive auction processes are subject to certain
requirements established by Congress in legislation enacted in February 2012. The incentive auction is currently
scheduled to begin in March 2016. On January 12, 2016, stations wishing to remain eligible to bid to relinquish
some or all of their current spectrum rights must submit their initial applications to the FCC. On the same date, a
“quiet period” established by the FCC’s auction anti-collusion rules goes into effect and continues until the FCC
publicly announces the results of the incentive auction. During this quiet period, broadcast television licensees
eligible to participate in the reverse-auction phase of the incentive auction may not directly or indirectly
communicate with each other or with forward-auction applicants regarding licensees’bids or bidding strategies.
The repacking and incentive auction processes could have an adverse effect on GMG. For example, a repacking
could result in GMG stations having smaller service areas and/or receiving more interference than they do
currently. Stations moving to new channels also could incur significant expense. The legislation requires that
stations be compensated for the expenses of moving to a new channel from spectrum auction proceeds, from a
$1.75 billion reimbursement fund. The Company cannot predict what effect a repacking will have on the GMG
stations’ coverage or whether the GMG stations will be fully compensated for expenses that they incur in
connection with a repacking.
Carriage of Local Broadcast Signals. The Communications Act and the FCC rules allow a commercial
television broadcast station, under certain circumstances, to insist on mandatory carriage of its signal on cable
systems serving the station’s market area (must carry). Alternatively, stations may elect, at three-year intervals,
to forego must-carry rights and allow their signals to be carried by cable systems only pursuant to a
“retransmission consent” agreement. Commercial television stations also may elect either mandatory carriage or
retransmission consent with respect to the carriage of their signals on DBS systems that choose to provide “local-
into-local” service (i.e., to distribute the signals of local television stations to viewers in the local market area).
Stations that elect retransmission consent may negotiate for compensation from cable or DBS systems in
exchange for the right to carry their signals. Each of GMG’s television stations is being carried on all of the
major cable and DBS systems serving each station’s respective local market, pursuant to retransmission consent
agreements.
In March 2011, the FCC initiated a rulemaking seeking comments on changes to the FCC’s retransmission
consent and exclusivity rules, many of which had been proposed by cable and DBS operators, such as
authorization for “interim carriage” of a broadcaster’s signal by cable and DBS operators after the broadcaster’s
grant of retransmission consent has expired. Broadcasters opposed many of the proposed rule changes. In March
2014, the FCC adopted a rule prohibiting certain practices in the negotiation of retransmission consent
agreements and seeking additional comments on possible changes to the exclusivity rules. In the STELA
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