Hank Price
If yesterday’s decision by the Federal Trade Commission to ban all noncompete agreements in business stands up to the inevitable legal challenges, it will be a kick in the teeth to television stations across the country. The decision also has the potential to lower anchor and reporter salaries, especially in larger markets.
Since the very beginning of television, anchors have been a primary reason viewers choose one station’s newscasts over another. That unique value is why most stations spend a fortune on everything from makeup and clothes to regular coaching. Successful anchors are, of course, also highly paid, but the investments stations make in the marketing and promotion of anchors can be even larger.
The building of anchor value is a two-way street that requires investment from both parties. Stations provide huge resources, including high salaries, over the long term. In return, anchors agree to contracts that stipulate that if an anchor chooses to leave the station’s employment, that person will wait a reasonable time before seeking work at another station in the same market.
If noncompetes did not exist, a major anchor could resign from one station on a Friday, then appear on a competing station on Monday. The massive investment the first station had made in that anchor would immediately transfer to the competing station, no strings attached.
Without noncompetes, every television station would be forced to re-think anchor compensation and benefits such as clothing allowances. Why pay huge salaries to a person who could move “across the street” at any time?
The same situation applies to higher-paid reporters.
As for those low-level employees who make entry level salaries, they should probably not be put under contract in the first place. Their departure from a station creates no harm, so forcing them to abide by a noncompete seems unfair.
Unfortunately, the Federal Trade Commission is following in the steps of the FCC, which seems to have no concept of how business actually works.
If there is any hope in this radical decision, it is that the FTC is attacking not only broadcasting, but the entire business infrastructure of the nation, ensuring a massive legal battle. Let’s hope an appropriate court not only stays this misguided regulation but overturns it as well.
Hank Price spent 30 years leading television stations for Hearst, CBS and Gannett while concurrently building a career in executive education. He is the author of?
Leading Local Television
?and two other books.