Comments Divided On UHF Discount

Sinclair Broadcast Group and Fox Television told the FCC that the agency has no authority to ax its UHF discount — a long-time loophole in the agency’s ownership rules that some broadcasters have been relying on to beef up their station portfolios.

Nonetheless, in separate comment filings that appeared on the FCC’s website Tuesday, Sinclair and Fox also agreed that if the FCC decides to eliminate the discount, it should nuke its national cap on broadcast station ownership — which currently bars broadcasters from owning TV stations reaching more than 39% of the nation’s TV homes.

“Maintenance of the [39%] cap serves only to deprive those most willing to invest in broadcasting of the opportunity to participate as they see fit in an incredibly competitive and diverse video market,” said Fox in its comments.

The comments come in response to a controversial FCC proposal in September to eliminate the UHF discount without considering relaxing the 39% cap — a move that observers said could slam the brakes on consolidation in the TV media marketplace.

The discount basically allows broadcasters to count UHF stations in their portfolios as reaching only half the homes in their markets, while the VHF stations in their portfolios count all homes in the market toward the 39% cap.

The discount was adopted by the FCC in 1985, during the analog broadcast era, when V’s were generally considered technically superior to UHF signals. Since broadcasters switched to digital transmission technology in 2009, U’s have generally been considered superior to V’s, undermining the discount’s technical justification.

The FCC’s proposal to do away the discount would grandfather the portfolios of groups that exceeded the cap, thanks to the discount, as of September.

Those are Ion Media, Trinity Broadcasting and Univision. The proposal would not grandfather the UHF discounts of Sinclair and Fox, which were close to the cap but not above it in September.

In its comments, Sinclair suggested that the FCC grandfather the discounts for all U’s in a group’s portfolios, at least pending their sales.

Ion, in its filing, meanwhile, urged the FCC to extend grandfathering protection proposed for its UHF stations when sold to a new owner.

In separate comments, Univision urged the agency to include consideration of any change in the UHF discount in a broader proceeding that would also revisit the “continuing validity of, and justification for,” the 39% cap — a tandem analysis that the National Association of Broadcasters also generally endorsed in its comments.

Unlike Sinclair and Fox, NAB said that it agreed with the FCC’s tentative conclusion that the agency has “authority to reexamine and modify its national television ownership cap and the methodologies used to calculate compliance with that rule.”

“In making this comment, NAB wishes to make clear that it takes no position on whether the commission should eliminate, retain or modify the current national television ownership cap,” NAB added.

In separate comments, the Competitive Carrier Association, which represents wireless companies, supported the elimination of the UHF discount because it “has the potential to discourage robust participation” in the agency’s planned incentive auction to repurpose TV spectrum for smartphones and other wireless devices.

The watchdog group Free Press urged the FCC to limit grandfathering to only those groups that would already be above the cap, absent the discount, and “then only for a maximum of 18 months.”