Request for Stay of UHF Discount a Long Shot, Attorneys Say

The standard that must be overcome for a court to issue an emergency stay is much higher than the standard petitioners Free Press, Common Cause, the National Hispanic Media Coalition and others would have to meet to win the case on the merits, lawyers on both sides said. Whatever the decision, the stay will likely be seen as an indication of the court’s opinions of the larger case, attorneys said. UHF discount restoration takes effect Monday.

The emergency stay is necessary because as soon as the discount is restored, broadcasters will start making deals that will be difficult or impossible to unwind if the public interest groups win the case, said the request, referencing Sinclair buying Tribune. “Even if the Commission were to condition approval upon the outcome of judicial review, history demonstrates that the Commission has repeatedly failed to enforce previously-mandated divestitures." Since the absence of a discount is the current status quo, a stay won’t cause any irreparable harm, the request said. Part of the requirement for a stay is petitioners must show they're likely to win on the merits. Public interest groups say the FCC acted arbitrarily in restoring the discount when technical reasons for its creation had changed, and conditioning the discount’s restoration on the future review of the national cap was outside agency authority: “It is arbitrary and capricious to reinstate the UHF Discount on the assumption the FCC will conduct a future proceeding to consider both raising the cap and modifying the UHF Discount at the same time.”

The arguments are unlikely to go far, said industry lawyers. The FCC takes lots of actions that are contingent on future proceedings, they said. Though they conceded UHF spectrum is now no longer inferior to VHF spectrum, several said justifications exist, and the court is likely to defer to the FCC on whether those reasons to reinstate the discount are sufficient. Any group challenging a federal agency’s order is starting from behind, one attorney said.

If the D.C. Circuit is open to petitioners’ points, it's likely that arguments about whether the FCC acted arbitrarily to restore the discount without considering alternatives will get more traction than arguments about the discount's technical underpinning, an industry ally said. The court is seen as likely to take a hard stance against violations of proper procedure, an attorney said. If the FCC action on the UHF discount is seen as a simple reversal of the previous commission’s policies, it might not play well with Judges Sri Srinivasan and Nina Pillard, the two members of the case’s three-judge panel who were appointed by Barack Obama, one attorney said. Former President George W. Bush appointed the panel's third judge, Thomas Griffith.

Intervenors argue the decision to restore the discount wasn’t arbitrary, unlike the previous FCC’s action to get rid of it without examining the national cap. “Granting the relief requested by Petitioners in this case would directly harm NAB members by tightening the national TV ownership limit through alteration of the rule’s calculation methodology without any consideration of whether a more restrictive rule serves the public interest,” said NAB. Eliminating the discount was “arbitrary, capricious, and unwise as a matter of policy,” said Univision. A stay of the discount’s restoration could affect Sinclair/Tribune, attorneys said. Sinclair didn’t comment. Both companies filed as intervenors, and Tribune’s filing warns that the restoration of the discount “has a direct impact on the marketplace value and transferability of the stations that Tribune owns.”

If the court approves the emergency stay, it will be seen as an indication the case on the merits has traction with the court, and the opposite is also true, attorneys said. This case also could have implications for other FCC moves on media ownership, said consultant and former eighth-floor aide Adonis Hoffman. "I'm looking forward to the court's decision on the stay because it will set the pace for the Commission's review of the ownership rules, in toto," he said. Another possibility is that the court doesn’t rule either way, but grants an administrative stay of Monday’s effective date, seeking more time to make a ruling, an attorney said.