UHF Discount NPRM Proposes Grandfathering Existing Broadcasters, Applying to New Deals
A draft FCC NPRM on the UHF discount proposes grandfathering existing companies but applying a new nationwide ownership limit calculation to any deals pending between the rulemaking’s issuance and when an order is adopted, FCC officials told us Tuesday. Deals pending now with Tribune’s buying Local TV and Sinclair’s buying Allbritton’s TV stations could put those companies close to or over the 39 percent nationwide ownership cap on U.S. viewers reached by a broadcaster, said market research firm BIA/Kelsey. Tribune/Local TV would be at 42.7 percent, while Sinclair would be just under the cap at 38.2 percent, said BIA/Kelsey. If the rule is approved in the form proposed in the NPRM (CD Aug 6 p1), it could affect Tribune/Local TV and others coming down the pike, said SNL Kagan analyst Robin Flynn. “This sounds like changing the rules in midstream."
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Broadcasters grandfathered under the old calculation would not be allowed to transfer ownership that would put the new owner over the cap under the proposed rule change, but may be able to seek waivers from the commission, said FCC officials. “Another way of grandfathering would be to allow [transactions] that have already been announced once the process started,” said BIA Kelsey Chief Economist Mark Fratrik. “I find it very odd to look at national ownership in today’s environment when people have so much access to so many sources of local entertainment.”
The effect of grandfathering broadcasters depends on the specific language in the NPRM, said Free Press Policy Director Matt Wood. If grandfathered stations are allowed to keep their discounted ownership cap number, they might be allowed to continue acquiring new stations even if the discount were eliminated, he said. Since UHF became more desirable than VHF after the DTV transition, “the technical reason for the discount doesn’t exist,” said Wood.
The NPRM also explores the question of whether the commission has the authority to eliminate the UHF discount or alter the 39 percent ownership cap, said an agency official. It also asks if the FCC should replace the UHF discount with a similar one for VHF, since those stations became less desirable with the DTV transition, the official said. Since broadcast content is now transmitted through multichannel video programming distributors and the Internet as well as over the air, a VHF discount isn’t warranted, said Wood. “Signal strength is not the only way stations get out there.”