Broadcasters Seek Expanded UHF Discount, MVPDs and Interest Groups Oppose
Broadcaster ideas for the future of the 39 percent national ownership cap range from getting rid of it completely to applying the 50 percent discount currently reserved for UHF stations to all TV stations, said comments filed Monday in docket 17-318 responding to an FCC NPRM on modifying or eliminating the cap and discount. “The traditional competition and diversity justifications for a broadcast-only national TV ownership rule have significantly eroded,” said NAB. Anti-media consolidation groups and MVPDs argued the cap should be preserved and the UHF discount should be eliminated. The proposals in the NPRM would “overrule Congress” to “suit the interests of Donald Trump’s cronies” at Sinclair and Fox, commented Free Press.
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Broadcasters shouldn't be constrained by a national ownership cap, but instead of eliminating it, the FCC should leave it in place and apply the 50 percent ownership discount across the board to both UHF and VHF stations, said NAB. Applying the discount to all broadcasters would recognize the increased competition faced by stations without the need to preserve “an analog-era rationale for attributing UHF stations,” NAB said. Since more than 70 percent of full-power stations are UHF stations already attributed under the UHF discount, the proposal would have “a relatively limited overall effect,” NAB said.
Network affiliate groups backed a similar change, saying the 50 percent discount should be applied only to stations that aren't owned by a top-four network. Alternatively, the cap should be changed to apply only to network-owned stations, said ABC, NBC, CBS and Fox affiliate groups. “A tiered ownership cap will restore some equilibrium to the steadily-eroding network-affiliate dynamic and ensure that local stations have the opportunity to participate fully.”
Sinclair and Nexstar said the cap should be eliminated entirely. Elimination “is necessary to level the playing field between broadcasters and other media content providers,” Sinclair said. A national footprint would also help the ATSC 3.0 rollout “by creating a critical mass,” Sinclair said. The number of nationwide viewers a broadcaster reaches “has no correlation whatsoever to how a television broadcaster serves its viewers in individual markets,” Nexstar said.
Several cited Sinclair and its proposed buy of Tribune as an example of why the FCC shouldn't eliminate the cap or keep the UHF discount. Without the cap, “Sinclair and other dominant national players will gobble up TV stations in 'Pac Man' fashion and operate them like a national 'network' with no legal boundaries,” said Reston-Herndon Indivisible, a member of merger opposition group the Save Local Media Coalition.
Commenters that supported removing the cap -- such as Sinclair and Nexstar -- argued the FCC has the authority to alter it, but opponents such as Dish Network said only Congress could do so. Consumers Union was an exception, arguing that the FCC could change the cap but shouldn't. The American Cable Association said in a footnote that it previously had argued the FCC had the authority to alter the cap, but that changed after recent Free Press filings in the court challenge of the reinstated UHF discount. “It now strikes us as reasonable to conclude that Congress intended to remove the Commission’s discretion” to alter the cap, ACA said.
No commenters argued that technical reasons for the UHF discount still applied after the DTV transition, but broadcasters Ion, Univision and Trinity Christian Center of Santa Ana said the discount should be retained because it encouraged diversity and the creation of their relatively young networks. The FCC “should not now take any action that would result in dissolution of these new networks,” they said. Those broadcasters and Sinclair said if the FCC eliminates the UHF discount, it should allow permanent grandfathering for existing and pending combinations. The discount is “demonstrably irrelevant,” said Writers Guild of America West, echoing numerous other commenters.
Removing the cap and encouraging broadcast consolidation would hurt consumers by driving up retransmission consent rates and MVPD fees, said ACA, NTCA and CU. Larger broadcasters will be able to pressure smaller MVPDs into paying higher fees, NTCA said. Since the FCC is emphasizing economic analyses with its new Economics Office, it would be “arbitrary and capricious” not to quantify the effects of altering the cap on MVPD subscribers, ACA said. Broadcasters should be compelled to provide the required data, ACA said.
Reducing the cap or keeping the UHF discount would hurt broadcast diversity and localism, numerous commenters said. “Rules permitting additional consolidation will lead to fewer owners and thus fewer women owners and owners of color,” said the Leadership Conference on Civil and Human Rights. TV station news websites have become an increasingly important source of local news, said the Office of Communication of the United Church of Christ, Common Cause, National Hispanic Media Coalition and Public Knowledge. An increased cap would hurt local news competition, they said. Getting rid of the cap would be the latest in a series of moves hurting broadcast localism, programmer Newsmax said. “This FCC has systematically eliminated many of the structural underpinnings that ensure broadcasters remain connected to their local communities.”