Restoring UHF Discount Seen as Short-Term Priority for Next FCC
Restoring the UHF discount is expected to be an early target of the next iteration of the FCC, several broadcast industry officials and an FCC official told us. Reversing the order doing away with it is seen as relatively simple and having wide Republican support, and as a priority for sitting Republican Commissioners Ajit Pai and Mike O’Rielly, the officials said. Though the item isn’t seen as likely to be taken up this month, it could be soon after, said numerous industry officials. Reconsideration petitions against the item already have been filed, and comments were due Tuesday. The recon proceeding will wrap up Jan. 23, a week before commissioners' first meeting under the new administration.
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Since criticisms of the order from Pai and some broadcasters focused on the discount’s relationship to the 39 percent national ownership cap, the FCC also is seen as likely to examine that issue. “The UHF discount order amounts to an arbitrary and capricious tightening of the congressionally mandated national ownership cap,” Nexstar commented in docket 13-236 supporting reconsideration of the FCC order. “The UHF discount has been a mainstay of broadcast ownership,” said Georgetown University Professor and communications industry consultant Adonis Hoffman, a former aide to Commissioner Mignon Clyburn. “I expect the incoming FCC to prioritize its reinstatement with much support from NAB and the Hill.”
Though a recon order reversing the elimination of the discount is seen as likely, it’s less clear how the FCC would tackle the national ownership cap. Pai repeatedly said it was improper for the FCC to consider the discount without also examining the national cap; O’Rielly said he doesn’t believe the commission has the authority to touch any aspect of the cap. “I reject the assertion that the Commission has authority to modify the National Television Ownership Rule in any way, including eliminating the UHF discount,” O’Rielly said in his dissent from the order eliminating the discount (see 1609070046). That difference of views could lead to the agency taking a more tentative step toward the cap than restoring the discount, said one broadcast industry official.
Nexstar doesn’t believe the cap and the discount can be separated, it commented. “The FCC's Order improperly attempts to divorce the UHF discount from the national audience reach cap despite the fact that the two are inextricably intertwined and must be considered in tandem.” Since eliminating the discount has the effect of tightening the national cap, and the FCC has offered no justifications for doing so, the order should be struck down, Nexstar said.
Former Commissioner and current Cooley partner Robert McDowell and Ion CEO Brandon Burgess made a similar argument on behalf of the broadcaster in a meeting with O’Rielly and Pai Tuesday, said an ex parte filing that is McDowell’s first since leaving the FCC in 2013. Eliminating the discount created “an investment disincentive” for broadcasters that were left close to the ownership cap by the decision, Ion said. Increasing the national ownership cap should be “the subject of future consideration,” the filing said. The company attacked FCC failure to permanently grandfather existing combinations under the order that eliminated the discount. Ion and Trinity Christian Center filed for reconsideration of the UHF discount’s elimination. Broadcasters Mountain Licenses, Broadcasting Licenses, Stainless Broadcasting and Bristlecone Broadcasting jointly argued the FCC shouldn’t adjust the UHF discount without holistically considering the national ownership cap.
The failure to loop in the national cap isn't enough reason to overturn the order eliminating the discount, the American Cable Association said in opposition comments. “Disagreement on a point of the law that has been fully considered and rejected does constitute grounds for reconsideration,” ACA said. “Beyond disagreement on the law, Petitioners have failed to identify material error, omission or other reason warranting reconsideration of this long overdue decision to eliminate the discount.” A group of public interest entities agreed in their own opposition filing. “The Petition merely rehashes a settled argument about the Commission’s statutory authority to eliminate the UHF discount, and simply contradicts or ignores the clear reasoning the Commission articulated to justify its decisions,” said a joint filing from Free Press, the National Hispanic Media Coalition, Common Cause, Media Alliance and the United Church of Christ Office of Communication. “The Commission rightly concluded that after the DTV transition the UHF discount no longer has any sound technical basis,” said the groups. “The Report and Order devoted considerable care, time, and attention to the fact that the UHF discount long ago lost any technical justification or relevance.”