UHF Discount Expected in April; Other Ownership Changes Could Take Longer
The FCC is expected to reinstate the UHF discount at its April meeting but the rollback of other ownership rules could take longer, broadcast attorneys said in interviews Tuesday (see 1703010074). Though broadcasters are looking at the deal opportunities that could be opened up by relaxing media ownership rules, “Clearly some stars have to align” for large deals such as a Sinclair Broadcasting/Tribune, said Wells Fargo analyst Marci Ryvicker in an email to investors. There is a pending reconsideration proceeding on the 2014 quadrennial ownership rule review, but the FCC could issue an NPRM on changes to the ownership rules before or in addition to a reconsideration order, a broadcast attorney said, which could lead to a longer process. Raising the national ownership cap, which would be needed for the Sinclair/Tribune deal, could require congressional action, and there’s still an outstanding court proceeding on the quadrennial review, said Fletcher Heald broadcast attorney Dan Kirkpatrick. “It could take some time," he said.
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Issuing an NPRM on possible changes to the media ownership rules instead of merely using a recon order would allow the FCC to take on ownership matters that weren’t addressed in the 2014 quadrennial review, broadcast attorneys said. It also would make such changes less vulnerable to a court challenge, since the supporting record would be refreshed, said a broadcast attorney. If the rules restricting broadcast ownership are changed, those changes are certain to be challenged in court, Kirkpatrick said. Even with an NPRM, the FCC could still take action on the rules this year, said a broadcast attorney. The UHF discount, which also has a pending reconsideration process, is a simpler matter, attorneys said. An order restoring it was expected to be on the March agenda, but it is now widely expected in April, numerous attorneys said.
Though companies are looking at deals that might be possible under looser regulations, it’s unlikely any agreements will be reached that are totally dependent on rules being rolled back, attorneys said. Broadcasters are likely looking at transactions that would be partially contingent on certain rule changes, or that are structured not to be consummated for a while, attorneys said. Having an agreement already in place also can put pressure on the FCC to change rules, Kirkpatrick said. Ryvicker described scenarios where Sinclair/Tribune could occur without regulations, either through Sinclair acquiring only portions of Tribune, or by Sinclair divesting some of its existing holdings. “All of this can be solved via divestitures, with Sinclair having the option to sell the weakest stations among the two portfolios,” Ryvicker said.
Several radio broadcasters want the FCC to eliminate the AM and FM subcaps as part of any action ownership rules, according to ex parte filings. The subcaps limit how many stations a licensee is permitted to own in a band. Though the broadcasters argued enough comments are in the record to justify eliminating the subcaps in a recon order, it’s an issue that could be fleshed out if the FCC issued an NPRM on media ownership, an attorney said. Some broadcasters are concerned that doing away with the subcaps could hurt the AM band, an attorney said.
Numerous state broadcasters and NAB representatives lobbied the Media Bureau and FCC staff on addressing the UHF discount and ownership rules as part of the association’s “fly-in” last week, according to ex parte filings.