Sinclair Plan Shot Down By FCC Fine Print

The FCC has all but slammed the door on a broadcast industry proposal that could have made it easier for TV station groups to introduce a new advanced television standard in the U.S., broadcast industry sources said Tuesday.

Under the proposal, originally pitched at the FCC by Sinclair Broadcast Group, TV station groups that agreed to forego federal reimbursement for any stations forced to move to new channels during the agency’s incentive auction repacking process would have received a waiver allowing them to use the existing spectrum for all their stations’ channels for traditional broadcast and other new services.

Some broadcasters, led by Sinclair, want to be able to use at least part of their existing spectrum capacity to introduce an advanced TV standard that would make it easier for them to broadcast a variety of services to consumer mobile devices.

But in the fine print of the 484-page text of the incentive auction rules the agency released June 2, the FCC rejected the request for a blanket waiver that would have applied to all of a group broadcaster’s stations.

Instead, the FCC said that waiver requests would be considered only for the individual stations that are specifically required to move during the repacking, with the broadcaster’s agreement to forego federal reimbursement a point in a waiver’s favor.

Also under the FCC rule adopted, the broadcaster would have to continue offering at least one free broadcast TV program stream to the public.

One well-placed broadcast industry attorney told TVNewsCheck that the original proposal could have substantially reduced industry demand for repacking expense reimbursements from the federal government.

Serious concerns have been raised that the $1.75 billion fund established by Congress to reimburse the industry for auction-related relocation costs won’t be enough to go around, with broadcasters forced to pick up some of the costs on their own.

A broadcast industry attorney said that the proposal as pitched could have taken a substantial number of station groups out of the reimbursement pool, by allowing them to plan for all of their stations. “A win-win for everybody,” the source said.

But as the rule came down, it applies only to the handful of a group’s stations that may be forced to move during the repacking, severely undermining a group broadcaster’s incentive to participate, the source said, adding: “It’s just short-sighted. It’s useless.”

Another industry source said: “The waiver of the service rules section [in the incentive auction rules] is basically a rejection of Sinclair’s proposal. Sinclair proposed the only meaningful way forward.”

In the text of its rules, the FCC said it would try to hold repacking costs down and didn’t have reason, “at this time,” to believe that the $1.75 billion would fall short.

“If future developments suggest that $1.75 billion is insufficient to cover eligible costs, the commission delegates authority to the Media Bureau to develop a prioritization scheme for reimbursement claims,” the FCC said in its auction rules.

Also in the rules, the FCC made clear that it believes it has wiggle room under Congress’ mandate that it make “all reasonable efforts” to preserve the coverage areas and populations served by stations required to move to new channels during the repacking.

“Congress included the term ‘reasonable’ in the statute [authorizing the incentive auction] because it anticipated that broadcasters’ interests would not be the only interests the commission would have to consider in the repacking process,” the FCC said.

“Accordingly, we do not believe the statute requires us to precisely and strictly preserve broadcasters’ coverage areas and populations served without considering the other objectives in the Spectrum Act.”