Sinclair HDO; UHF Discount Ruling Seen Unlikely to Shift Eventual Cap Number
The anticipated unwinding of Sinclair's planned buy of Tribune and last week’s court decision upholding the UHF discount aren’t considered likely to affect what the FCC eventually does to the national cap (see 1807250050). They could affect timing, said broadcasters, attorneys and industry officials in interviews.
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Though the Sinclair/Tribune hearing designation order frustrates a line of attack against Chairman Ajit Pai frequently exploited by media consolidation opponents, broadcasters and industry officials don’t expect the deal’s end to lead to a higher cap. The deal's end and the UHF discount now being likely safe from legal challenge means there’s less reason for the FCC to hurry, but it doesn’t substantially weaken the opposition to such a move, they said. Sinclair/Tribune was “a case study showing what would happen under a raised cap,” said Common Cause Director-Media and Democracy Yosef Getachew. The deal’s likely dissolution “doesn’t mean raising the cap is suddenly a good thing,” he said.
Before Wednesday’s court decision, broadcast industry stakeholders expected FCC action on the cap to possibly occur in September. Afterward, they agreed the court decision and HDO made timing uncertain. The agency is no longer seen as rushing to issue an order, though industry officials said the chairman’s office is still working on possible changes to the cap. Until it appeared the FCC might lose the legal battle over the UHF discount, industry officials didn’t expect the agency to rush to act on the cap (see 1711210044).
Though the discount now appears to be in less danger, broadcasters, analysts and station lawyers believe the agency will still work to move the cap. Leaving the status quo in place would make it too easy for future administrations to simply repeal the UHF discount again, one said. The FCC, NAB and broadcasters conceded in filings in either the U.S. Court of Appeals for the D.C. Circuit case or in the cap docket that the UHF discount is outdated and doesn’t reflect the current value and utility of UHF spectrum (see 1803200059.
What exactly will happen to the cap is thought to be up in the air. The chairman’s office is considered underwhelmed about all of the proposals, including NAB’s for a TV industrywide 50 percent discount pegged to media competition, a plan backed by medium-sized groups to dissolve the UHF discount and set the cap at 50 percent, a plan to base ownership limits on ratings, and the total removal of the cap pushed by Sinclair and Nexstar. NAB suggested there’s no pressure to act, meeting last week with Pai Chief of Staff Matthew Berry, an ex parte filing said. “There is no evidence in the record to roll back the status quo,” NAB said. “If the Commission eliminates the UHF discount, it should ensure that it does no harm to the current state of broadcast TV ownership.”
Though broadcast officials said the HDO gave Pai distance from allegations the FCC was favoring Sinclair, Getachew disputed that without the Sinclair deal, it would be harder to push back against an order raising the cap. A higher cap would open the door to similar media consolidation, he said. Though Commissioner Jessica Rosenworcel, Free Press and others reference Sinclair in opposition statements to action on the cap (see 1804090050), that opposition will still be effective with a less specific threat, an industry lawyer said. Deal opponents also may be able to continue citing Sinclair/Tribune as a threat. Former FCC Chairman Tom Wheeler blogged that the HDO might be intended as a “smokescreen” to enable the deal.
A court challenge of any FCC move to raise the cap is guaranteed, said those on both sides. Wells Fargo analyst Marci Ryvicker said any media consolidation enabled by a raised cap won’t proceed until the dust settles on such a court case. “If history is a guide, then any attempt by the current majority to raise the ownership cap will be overturned in court,” emailed former Commissioner Mignon Clyburn Tuesday, the day before the UHF discount ruling.