Court Rejects Request To Stay UHF Discount

It turns down public interest groups that say the move will “make it easier for the nation’s largest television ownership groups to acquire additional stations, and crowd out diverse and local voices.” The move clears the way for Sinclair's purchase of Tribune.

Today, the U.S. Court of Appeals for the D.C. Circuit denied the emergency stay motion filed by public interest groups that sought to prevent the FCC from implementing its decision to reinstate the so-called UHF discount that the groups claim will “make it easier for the nation’s largest television ownership groups to acquire additional stations, and crowd out diverse and local voices.”

A stay would have prevented the UHF discount from going into effect while the court hears the case on its merits.

Restoring the UHF discount to its national ownership rule, in effect, raises the limit on household coverage of TV station groups from 39% to 78%.

The decision is good news for Sinclair Broadcast Group, which needs it to implement its proposed agreement to buy Tribune Media for $3.9 billion and assumption of debt. That deal would increase Sinclair’s household reach to 72%.

Sinclair issued a statement following the court’s announcement: “We are pleased that the court denied the motion for an emergency stay of a rule that had been in effect for decades. We remain confident that the court will conclude on the merits that the UHF discount should remain in place until a thorough review of the current ownership rules is completed.”

The FCC had urged the court to deny the stay, saying the public interest groups’ request fell “far short” of meeting the criteria for a stay.

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Last year, the FCC, led by Democratic Chairman Tom Wheeler, voted to eliminate the discount, lowing the cap. But that action was reversed in April by the Trump-appointed Republican Chairman Ajit Pai.

Before the Wheeler action, the FCC said in opposing the stay, “the ownership cap and the UHF discount used in calculating coverage “operated together for more than three decades, and they are … ‘inextricably linked.’ “

Commenting on the court’s ruling, Wells Fargo analyst Marci Ryvicker said: “This is clearly a positive for the proposed Sinclair-Tribune transaction, in our view, which may now proceed through the typical FCC approval process. Recall, the companies expect the transaction to close in 4Q 2017.”

And, she added: “While we are not legal experts, the better news is that the denial of a stay likely indicates that [the groups] will not win the full case on the merits. Recall that one of the major factors the court considers when deciding on stay is the likelihood that the petitioner’s win the case on its merits. Further, in its decision the court specifically stated that ‘petitioners have not satisfied the stringent requirements for a stay pending review.’

“Bottom line: We view this as a clear near-term positive for the broadcast stocks as it removes one of the major overhangs the space has faced over the last few weeks.”

The groups seeking the stay included Free Press, the National Hispanic Media Coalition, Cause, Media Alliance and United Church of Christ. They were represented by the Institute for Public Representation at Georgetown University Law Center.

“This case is far from over,” said Professor Angela J. Campbell, Director of the Communications and Technology Clinic at Georgetown University Law Center’s Institute for Public Representation. “Most stay motions are denied. The court’s unwillingness to grant our motion doesn’t change the fact that we have strong legal arguments against Chairman Pai’s unseemly rush to allow the nation’s largest broadcasters to become even larger.”

NAB EVP of Communications Dennis Wharton commented: “The FCC’s order eliminating the UHF discount was made without a comprehensive review of broadcast media ownership rules. NAB supports the Court’s decision denying the stay request.”


Comments (14)

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Debra Rein says:

June 15, 2017 at 12:56 pm

Professor, I would not say it is far from over. It’s actually very close to being over. As a matter of fact, the court says it is over. Good luck with your life in academia.

    Veronica Serrano Padilla says:

    June 15, 2017 at 1:05 pm

    The court didn’t say “it is over” only that the stay was denied. There is still a court case scheduled to decide the matter.

Alexandra Pina says:

June 15, 2017 at 1:07 pm

Professor, 10.0 Broadcast ratings are now 0.1’s. Not Larger.

John Bagwell says:

June 15, 2017 at 1:30 pm

Say what you want about Sinclair as a company and about them buying Tribune, but their CEO, Chris Ripley, said this a few weeks ago and I think it is pretty true. “The special-interest groups are just anti-media consolidation, but they miss the bigger picture – this industry won’t survive in the land of giants if it doesn’t scale up,” he said. “Everyone wishes that we were back in the 1950s and there were only three channels and people were just getting color television. We can’t turn back time. The world moves on.”

    Brian Bussey says:

    June 15, 2017 at 2:26 pm

    giant tv groups do a terrible disservice to their communities. mergers exist to lay off college grads and funnel their income into the executive suite. we have 30 years of merger data and a nutcase in the white house to show for it.

    John Bagwell says:

    June 15, 2017 at 6:17 pm

    If they don’t grow and create scale, then they won’t be around to do any service to their communities at all in the future.

    John Livingston says:

    June 16, 2017 at 12:31 am

    I agree Free Press and groups like them aren’t going to get back to where it was in the 50’s or 60’s that is long gone. Just like the prepackage fluff pieces that Free Press doesn’t like that is pretty much what local news does to fill time mainly morning, midday news, 5PM & 5:30PM newscast as well.

Dan Levitt says:

June 15, 2017 at 3:54 pm

If consolidation was such a great idea – the 4 Networks would be buying up both Tribune AND Sinclair stations, they don’t have to because they provide the Programming. Sinclair can go knock itself out – Dumbest move Ever. I see where Sinclair is going, they are going to drop their affiliations and start their own network – Problem is they don’t have the knowledge or experience creating original programming. the Tribune Orig Prog was a failure and now they created a morning news show for that Eye-Opener group of 6 stations. Obviously a test for a nationwide morning show – that is Doomed. FCC has apparently been corrupted. Ridgeline is correct, court didn’t say it’s a done deal

    John Bagwell says:

    June 15, 2017 at 6:10 pm

    FOX came close to bidding on Tribune and CBS has even said that it would like more stations. It is highly doubtful that Sinclair is going to create its own true network. Instead, it is just going to sell all of their stations grouped together as one network and compete for national advertisers. Starting their own true network and losing all of the sports and primetime programming that being an affiliate would give them wouldn’t make any sense – especially when their new scale gives them higher leverage on reverse-comp paid back to the networks. Again, also highly doubtful that Eye Opener or this new show is anything more than a way to give their large market CW’s something other than syndication to sell.

    Dan Levitt says:

    June 16, 2017 at 12:27 am

    Fox never came close to bidding on Tribune because Blackstone thought it was a bad idea, if Blackstone thinks it’s a bad idea – it’s a bad idea. JP Morgan Chase on the other hand would lend money to Ringling Bros. Circus if they could. Fox was Never close to bidding that was rumor attempting to keep the stock price jacked-up, the bidding war that never was. I also think we will see Pai pulling an Eddie Lazarus (former FCC now at Tribune who was instrumental in changing ownership rules) and taking a multi-million dollar position at Sinclair After he leaves the FCC.

Geoffrey Miller says:

June 15, 2017 at 4:01 pm

Ownership rules must change to have a diversity of voices. Just look at the newspaper industry. If newspapers and TV stations co-ownership had been allowed we would have more robust journalism than we have today. Broadcasters must have scale to level the playing field with their behemoth networks, cable and satellite companies. These groups need to get their heads out of the 20th century and realize we are at a much different point today.

Kris Raghavan says:

June 15, 2017 at 4:10 pm

There is no reason for a local broadcaster to go black. We (Spincast TV) have an independent ad supported Network and our focus is local broadcasters. We’re in a position to take local markets globally with no permission from anyone required.

John Livingston says:

June 16, 2017 at 12:34 am

I thought that the court wasn’t going to grant the stay since the FCC, NAB, Fox, NBC, CBS, have agreed with FCC on UHF discount. Groups that don’t want the discount haven’t made there case since there claims are without merit.

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