Jessell | On TV Station Cap, Nothing May Be Something

Last June, when last I wrote about the national TV ownership cap, I suggested that FCC Chairman Ajit Pai (with the Republican majority in tow) might as well go along with the proposal of eight prominent affiliate groups and set the new cap at 50% of TV homes. I saw it a nice incremental move, a reasonable compromise among vocal stakeholders on a volatile issue.

But now I’m thinking he might do nothing?

He might be thinking that way too. He collected final comments on a rulemaking to relax the cap last April, but since then he has let several months slip by without bringing it up for a vote. It is certainly not among his priorities.

Pai is a classic free-market deregulator. The fewer rules governing business the better he likes it. Ever since he moved up to the chairmanship, he has been ripping up rules and tossing them out. Broadcasting is only one industry benefitting from his anti-reg philosophy in action.

That’s why he restored the UHF discount to the national ownership cap in April 2017. It had the effect of lifting the 39% cap to between roughly 50% and 78% depending on a group’s mix of UHF and VHF stations. It gave big station groups plenty of room to grow.

(The cap is a percentage of total TV homes in the U.S. With the discount, only half of a market’s actual homes are counted in calculating a group’s coverage.)

So, what’s the case for Pai doing nothing?

If he does nothing, he still gets to chalk up a big deregulatory win in broadcasting, putting himself in the pantheon of great broadcast deregulators like former FCC Chairmen Mark Fowler and Dennis Patrick of the Reagan years. And Pai will have gotten more than three-quarters of the way to where deep down he probably wants to go — no cap at all.

If he does nothing, he doesn’t have to worry about some federal appeals court sweeping in and sweeping away the new cap. A challenge to his restoration of the UHF discount was dismissed in July. But if he imposes a one-size-fits-all cap of, say, 50% or 60%, he opens the door to a new legal challenge from those who believe it too high or too low.

And Pai’s fellow Republican Michael O’Rielly is on record questioning whether the FCC even has the authority to change the cap since it was Congress that first established it. He might be right.

If he does nothing, he avoids any political blowback in Washington, which could be severe if the Democrats who hate media consolidation win the House next week. (The pollsters say they will, but anybody who bets on the on polls learned nothing in 2016.)

If he does nothing, he doesn’t have to give a definitive no to any of his many friends in broadcasting.

You see, national ownership has riven broadcasters for at least the last two decades. Today, the networks and consolidators Sinclair and Nexstar want to eliminate or substantially raise the cap. But many of the small and mid-size groups, wary of the power the networks and consolidators are accumulating, want to keep a tight lid on them. The internecine debate rages on and can get nasty at times.

If he does nothing, major station groups that want to get bigger can get bigger, probably as big as they would want. They can gobble up Tribune or absorb or merge with other big groups. By my calculations, Fox could grow to 66%; CBS, to 67%; and Tegna to 56.7%. Those percentages are based on the group buying only UHF stations. Mixing in VHF stations would lower the figures.

Yes, it is true that somewhere down the line, a Democratic chairman might do something — that is, impose a cap lower than the level to which some groups have grown. But, if history is any guide, those overgrown groups would be grandfathered.

Much has been written (some of it by me) about how ridiculous the current rule is. The UHF discount is a vestige of analog days when reception of UHF signals was more difficult. That’s no longer true. In fact, in the digital broadcasting age, UHF signals are easier to receive. So, if anything, broadcasters should be getting a VHF discount, not a UHF discount.

Restoring the UHF discount was an expedient. It was the quickest and surest way Pai had of liberalizing the ownership rule and he took advantage of it. It’s not pretty, but, as I said, it’s legally sound and it will do the job.

The agenda for the next FCC open meeting on Nov. 19 came out last week and, again, it did not include the ownership cap.

At a press briefing following last week’s open meeting, Pai said that, as he is required by law to do every four years, he will launch by the end of the year a proceeding to review all the broadcast ownership rules, presumably at the year’s last scheduled meeting on Dec. 12.

At this point, I wouldn’t be surprised if he tosses the national ownership cap into that slow-moving proceeding and leaves the matter to his successors.

Harry A. Jessell is editor of TVNewsCheck. He can be contacted at 973-701-1067 or here.