Proposed Elimination of UHF Discount Could Be Reaction to Mergers, Attorneys Say
A draft rulemaking notice that could lead to elimination of the UHF TV ownership discount listed as on circulation at the FCC may partially be a reaction to a recent spate of broadcasting mergers, said broadcast attorneys in interviews Monday. They said the change in the value of UHF stations since the DTV transition also could be a reason for the FCC to nix the discount. With the Sinclair/Allbritton and Tribune/Local TV deals brushing against or even exceeding the 39 percent ownership cap without the discount, according to Free Press, the commission may be trying to eliminate the UHF discount in advance of ruling on those mergers, said Fletcher Heald broadcast attorney Peter Tannenwald.
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The NPRM “leans toward” eliminating the UHF discount but also asks for comment on whether existing ownership situations or pending transactions should be grandfathered in, said an FCC official. “We fully expect that the Commission will deal fairly and promptly with a transaction undertaken and filed at the Commission in reliance on the current rule,” said a Tribune spokesman by email. A Media Bureau spokeswoman declined to comment for this story.
The current FCC seems more “amenable” to eliminating the UHF discount and ownership rules than previous commissions, said attorney Andrew Schwartzman, who advocated against the discount for years while with the now-shuttered Media Access Project. It’s possible the draft rule came out of the commission’s work on the 2010 quadrennial review, said Schwartzman, who has represented Free Press in that quadrennial proceeding. Keeping the discount would be hard to defend, Tannenwald said. It’s an “outdated rule” that “doesn’t make logical sense,” since UHF has been preferable to broadcasters since the DTV transition, he said.
Several attorneys said it was surprising for an NPRM on such a substantive issue to arise under an acting FCC chair, while there isn’t yet a full five-member commission. It may have been caused by a desire to complete the rule in advance of the pending mergers or even well in advance of the incentive auction, said Tannenwald. Getting rid of the discount could be an attempt to increase participation in the incentive auction by creating a reason for owners to divest themselves of stations, suggested some communications attorneys. If the rule change doesn’t grandfather in exiting stations, some broadcasters would “have to get rid of some stations,” and the number of possible buyers would be decreased, making the auction a more attractive option, Tannenwald said. A commission official said the proposed rule isn’t intended to increase turnout for the auction.
It would be “surprising” if there was a vote on a UHF discount rule before there is a full commission, “but not because there’s any substantive reason to delay addressing these abuses,” said Free Press Policy Director Matt Wood. The NPRM being on circulation could be a reaction to the recent mergers, though it would be very unusual for the FCC to react to a merger so quickly, he said. If pending transactions and exiting owners are grandfathered in, eliminating the UHF discount “wouldn’t be very useful,” said Wood.