Industry Keeping ‘Powder Dry’ on UHF Discount NPRM, Say Lobbyist, Attorneys
Industry interest is high in an NPRM on circulation that would end the UHF discount for broadcast ownership, but attempts to lobby the FCC on one side or the other haven’t yet begun, said agency and industry officials. Although the eighth floor has received many phone calls for information about the item, there hasn’t been any substantive advocacy, said an FCC official. If the discount is revoked, large broadcasters such as Sinclair could find themselves close to the 39 percent national ownership cap, and a pending purchase by Tribune of Local Broadcasting would leave the new company at 44 percent, public interest groups have said (CD July 2 p2). Large companies that could be affected by the deal are likely waiting for an NPRM to be issued with specific language, said a longtime industry official who lobbies the FCC. The status of existing broadcast operations and pending transactions is one of the questions asked in the NPRM (CD Aug 6 p1). Companies may be “keeping their powder dry” until they have something to respond to, said the lobbyist.
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They may not have long to wait, based on comments made by acting Chairwoman Mignon Clyburn at a news conference after Friday’s FCC meeting. “I look forward to an expedited exchange and ruling” on the NPRM, Clyburn said. “We made a commitment to look at this at an appropriate time, and the appropriate time is now,” she said. The NPRM is “relatively short,” she said, characterizing changing the rule as a “cleanup” left over from the DTV transition.
An item in the commission’s order on regulatory fees released Monday (see separate report in this issue) also indicates a change in the Commission’s view toward treating UHF and VHF differently, said Cinnamon Mueller cable attorney Barbara Esbin. The order (http://bit.ly/16GB8PE) ends the commission policy of charging higher regulatory fees for VHF stations than UHF stations in the same market, starting in FY2014. “After the digital conversion, it became evident that VHF channels were less desirable than digital UHF channels, and thus there may no longer be a basis in which to assess a higher regulatory fee on VHF channels,” said the order. The order “takes a baby step in the direction of eliminating the discount,” said Esbin.
Broadcasters need to wait to see the NPRM’s specific language, because the issues of grandfathering and pending transactions are thorny ones, said a broadcast attorney. “If I'm over the cap and grandfathered in, can I buy another station? Or do I need to divest some stations first?” Other issues could arise when such stations change owners or become publicly traded. “Grandfathering is a broad term,” said the attorney. Opposition to getting rid of the discount may not come only from large broadcasters, the attorney said. “There are smaller groups that want to grow” that may also weigh in, he said. NAB hasn’t contacted the FCC about the UHF discount, and is “having initial discussions with our membership,” said an association spokesman.
Cable industry stakeholders also have yet to weigh in on the matter, but some cable operators will support ending the discount because it would limit broadcast consolidation, said several cable attorneys. American Cable Association “has raised concerns about the harmful effects of broadcast TV consolidation in the past, and updating the FCC’s rules by eliminating the outmoded UHF discount is something we would seriously consider supporting,” said Vice President-Government Affairs Ross Lieberman. The NPRM to end the discount appears to have originated within the FCC rather than from external pressure, and it may be seen by the commission as an opportunity to flex its regulatory muscles, said a cable attorney. “This is a commission that has sat by watching a tremendous amount of consolidation, and I think they're starting to take a lot of heat,” said another cable attorney.