UHF discount

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When the FCC last month reinstated the UHF discount (see our article here), it opened the door to ownership consolidation in the television industry, and immediately deals were announced based on the discount being back in place. But public interest groups in DC, fearing too much consolidation, asked the FCC to stay the effect of the rules. When the FCC did not act, the public interest groups last week asked the US Court of Appeals in the District of Columbia for a stay to put the rules on hold. In response, the Court order expedited briefing on the stay request, with the FCC filing its brief Thursday (here) and the public interest groups scheduled to file their brief shortly. Then late yesterday, the Court issued what it termed an “administrative stay” – temporarily putting the rules on hold while it considers the briefs filed by the parties. The Court was careful to say that this administrative stay was not any sort of judgment on the merits of the stay request – it was just putting everything on hold while the Court considered the arguments of the parties.

While there seems to be a rush to put everything on hold, it is interesting to note that there does not seem to be any imminent risk of anything happening, as the FCC procedurally does not seem to be in a position to imminently grant any application that would create new combinations taking advantage of the reinstated UHF discount. Regardless of this anomalous rush to a decision, the issue to be considered by the Court in assessing any stay request is whether the public interest groups have a likelihood of success on the merits of the case, and whether there is irreparable injury if the stay is not issued (see our article here discussing the standards for a judicial stay). In this case, the Court will be assessing whether the new FCC’s reinstatement of the UHF discount was an arbitrary and capricious decision to overturn the FCC’s abolition of the discount – which took place just last August (see our article after the full text of that order was released in September, here).
Continue Reading Court Issues an Administrative Stay on Effective Date of Reinstatement of UHF Discount While It Considers Arguments as to Whether to Put the Discount on Hold

The FCC yesterday released the agenda for its April 20th meeting – and it includes three broadcast items.  Two deal with noncommercial broadcasters (undoing the requirement for noncommercial broadcasters to get Social Security Numbers from its board members so that they can acquire an FCC Registration Number for them – see our articles here and here on this issue – and one allowing noncommercial broadcasters to interrupt programming to raise funds for unrelated non-profit organizations- see our article below).  But in a decision which, if adopted, will likely have an immediate impact on the market for the purchase and sale of television stations, the FCC released a draft order, to be voted on at the April 20 meeting, proposing to reinstate the UHF discount.

That discount, in assessing the broadcaster’s compliance with the 39% cap on the nationwide audience that any broadcaster can reach with TV stations in which it has an attributable interest, accords half the weight to the population of television markets in which a broadcaster holds a UHF station.  The discount was adopted back in the days of analog television, when UHF stations had signals that were harder for most viewers to receive, and the stations were more expensive to operate than VHF stations.  In the digital world, that deficit has disappeared, underlying the September decision of the Commission (which we summarized here) to abolish the discount.  The September decision did away with the discount, and the Commission had effectively put on hold television transactions that would exceed the cap for several years while considering the September order.  This effectively froze the acquisition of new stations by the major television groups – a freeze that may quickly thaw if the Commission follows through and adopts its draft order on April 20.
Continue Reading FCC Releases Draft Order to Reinstate UHF Discount at April 20 Meeting – A New Round of TV Consolidation? 

A new President and a new Chair of the FCC have already demonstrated that change is in the air in Washington. Already we’ve seen Chairman Pai lead the FCC to abolish the requirement that broadcasters maintain letters from the public about station operations in their public file (which will take effect once the Paperwork Reduction Act analysis is finalized), revoke the Media Bureau guidance that had limited Shared Services Agreements in connection with the sales of television stations, and rescind for further consideration FCC decisions about the reporting of those with attributable interests in noncommercial broadcast stations and the admonitions given to TV stations for violations of the obligation for reporting the issues discussed in, and sponsors of, political ads (see our article here). Also on the table for consideration next week are orders that have already been released for public review on expanding the use of FM translators for AM stations and proposing rules for the roll-out of the new ATSC 3.0 standard for television. Plus, the television incentive auction moves toward its conclusion in the repacking of the television spectrum to clear space for new wireless users. Plenty of action in just over 3 weeks.

But there are many other broadcast issues that are unresolved to one degree or another – and potentially new issues ready to be discussed by the FCC this year. We usually dust off the crystal ball and make predictions about the legal issues that will impact the business of broadcasters earlier in the year, but we have waited this year to get a taste for the changes in store from the new administration. So we’ll try to look at the issues that are on the table in Washington that could affect broadcasters, and make some general assessments on the likelihood that they will be addressed this year. While we try to look ahead to identify the issues that are on the agenda of the FCC, there are always surprises as the regulators come up with issues that we did not anticipate. With this being the first year of a new administration that promises a different approach to regulation generally, what lies ahead is particularly hard to predict.
Continue Reading What’s Up for Broadcasters in Washington Under the New Administration – A Look Ahead at TV and Radio FCC Issues for the Rest of 2017

As we wrote here, the FCC has requested comments on a petition for reconsideration of the elimination of the UHF discount – which had counted UHF stations as reaching only half of their market in assessing an owner’s compliance with the National Ownership Rules for TV.  These rules limit an attributable owner from having…

After months of speculation, Chairman Wheeler today announced that he will step down from the FCC on Inauguration Day. Together with the Senate not confirming the renomination of Commissioner Rosenworcel (as the Senate is effectively on recess and not expected to return before the end of the term, her renomination will almost certainly not be approved in this session of Congress, meaning that she must step down when the Congress adjourns on January 3), that leaves three Commissioners on the FCC. Two are the current Republican commissioners – Pai and O’Rielly – and Democratic Commissioner Mignon Clyburn. What will that mean for broadcasters?

First, it is expected that one of the two Republicans will be named as Acting Chairman to set the agenda for the first few months of the Trump administration, until a permanent Chair is announced (and confirmed by the Senate, if that Chair is not one of the two current Republicans). These commissioners have been vocal in their dissents on several big issues for broadcasters – including the repeal of the UHF discount (about which we wrote earlier this week) and on other issues dealing with the ownership of television stations – including the decision to not repeal the newspaper-broadcast cross-ownership rules, and the decision to reinstate the FCC’s ban on Joint Sales Agreements in TV unless they are done between stations that can be co-owned. We already speculated about these issues being on the Republican agenda soon after the election. What other issues are likely to be considered?
Continue Reading And Then There Were Three – Chairman Wheeler to Step Down on Inauguration Day Leaving a Republican-Controlled FCC – What’s It Mean for Broadcasters?

While several parties went to Court to challenge the FCC’s decision ending the UHF discount, one broadcaster decided instead to ask for reconsideration. That petition for reconsideration has now been published in the Federal Register, giving interested parties until December 27 to comment, and other parties until January 6 to reply to any comments that are filed. This reconsideration petition may give a new Republican-led FCC its first opportunity to revisit the FCC’s multiple ownership rules which have been the subject of several petitions for reconsideration, as we suggested might happen in our review (here) of the impact on communications law of the election of Donald Trump as the new President.

The UHF discount counted only half the audience reached by UHF stations in assessing an owner’s compliance with the 39% national cap on audience. The FCC ended that discount in September (see our summary here), finding that in a digital world, UHF channels were no longer inferior to VHF ones. Given that most TV stations are operating on the UHF band after the digital conversion, the FCC determined that the discount was not justified in the current television marketplace. A number of TV groups argued with that determination, contending that, in today’s media market, there was no reason to impose what was in effect a tightening of the national ownership cap. The elimination of the discount capped acquisitions by several TV groups, and actually put a few over the 39% limit. In addition, broadcasters have argued that the discount was in effect when Congress adopted the 39% cap, so any change would need to be authorized by Congress. While other parties have filed an appeal with the US Court of Appeals, it is likely that the Court will defer to the FCC and allow it to reconsider the abolition of the UHF discount (which the two Republican Commissioners opposed when it was adopted).
Continue Reading Reconsideration of FCC Order on UHF Discount Published in the Federal Register – Starts Clock on Comments and Consideration of the Multiple Ownership Rules by a Republican-Led FCC

Last week, the FCC released its order eliminating the UHF discount. Under this discount, a TV broadcaster, in determining its compliance with the national ownership limit prohibiting any owner from having attributable interests in stations serving more than 39% of the nationwide television audience, would include in its count only one-half of the audience of any market served by a UHF station. This discount originated in the analog world, when UHF stations tended to have smaller audiences as their signals were harder to receive, and yet their operational costs were higher. Three years ago, the FCC proposed to eliminate the discount, as the technical inferiority of UHF stations no longer exists in the digital world (see our post here describing the FCC’s proposed action). This decision, reached in a 3 to 2 vote of the Commissioners, will put several broadcast groups over the national cap, while others will come close to it, limiting their ability to expand into new markets. Did the video distribution marketplace demand this action?

In fact, the Commission’s majority decision really did not examine in any detail the public interest factors justifying this action. Instead, the FCC focused almost totally on the fact that, in the digital world, UHF stations were no longer technically inferior. That was essentially stipulated by all parties, and the Commission viewed the decision as simply being one that was necessary to keep up with technology – as UHF stations were no longer inferior to VHF stations, there was no reason to give owners of these stations a discount in computing compliance with the national ownership limits. The Commission also pointed to the fact that, in the days before the digital transition, it had warned TV broadcasters that an end to the UHF discount was coming. But changes in the media marketplace in the 15 years since many of these statements were made, with the rise of multichannel video program providers and over-the-top television services like Netflix that were not even imagined 15 years ago, are given only a passing reference, as pointed out by the dissenting Republican commissioners.
Continue Reading Eliminating the UHF Discount and Limiting the National Ownership Reach of Television Groups Without Reviewing the Media Marketplace

While the trade press has been full of reports that the FCC has voted on an order addressing the issues raised in its Quadrennial Review of its multiple ownership rules, and that the decision largely left those rules unchanged (including the broad ban on the cross-ownership of daily newspapers and broadcast stations), no final decision on the review has yet been released. However, we did see on Friday that, in the FCC’s list of matters pending before the Commission for approval “on circulation” (i.e. to be voted on without being considered at an FCC open meeting) the ownership item was removed from the list of pending items, seemingly confirming that the decision has in fact been voted on and is thus no longer circulating for approval. If the press reports are to be believed, there has been no major change in the rules despite much last minute hope for some relaxation of the newspaper cross-interest rule. The rules are thus likely to be those indicated by the Chairman in his blog post in late June, which we summarized here. Even if the most significant rules (e.g. local ownership rules for radio and TV – the “duopoly” rules, and the newspaper-broadcast cross-ownership rules) remain unchanged, that does not mean that the broadcast community should ignore the upcoming decision, as there are bound to be other issues addressed in the order that may be of significance.

In connection with the newspaper cross-ownership rules, while the press reports indicate that the rules will remain in place, there are reports that there will be some sort of waiver allowed, seemingly where economics justify the combination. If this is akin to the “failing station” waiver used to justify the ownership of 2 TV stations in markets where such ownership would normally not be allowed, some have wondered, given the economic state of the newspaper industry, if such a waiver would ever be used as it will be a rare case where a last-minute broadcast combination will rescue a failing newspaper. But we will need to see what the details are of the waiver standard to be applied.
Continue Reading Preparing for the FCC’s Soon to be Released Decision on Changes to its Multiple Ownership Rules

It’s that time of the year when we need to dust off the crystal ball and make predictions about the legal issues that will impact the business of broadcasters in 2016.  While we try to look ahead to identify the issues that are on the agenda of the FCC and other government agencies, there are always surprises as the regulators come up with issues that we did not anticipate. With this being an election year, issues may arise as regulators look to make a political point, or as Commissioners look to establish a legacy before the end of their terms in office.  And you can count on there being issues that arise that were unanticipated at the beginning of the year.

But, we’ll nevertheless give it a try – trying to guess the issues that we will likely be covering this year.  We’ll start today with issues likely to be considered by the FCC, and we’ll write later about issues that may arise on Capitol Hill and elsewhere in the maze of government agencies and courts who deal with broadcast issues.  In addition, watch these pages for our calendar of regulatory deadlines for broadcasters in the next few days.

So here are some issues that are on the table at the FCC.  While the TV incentive auction may well suck up much of the attention, especially in the first half of the year, there are many other issues to consider.  We’ll start below with issues affecting all stations, and then move on to TV and radio issues in separate sections below. 
Continue Reading What Washington Has in Store for Broadcasters in 2016 – Looking at the Legal Issues that the FCC Will Be Considering in the New Year

Each year, at about this time, we pull out the crystal ball and make predictions of the issues affecting broadcasters that will likely bubble up to the top of the FCC’s agenda in the coming year.  While we try each year to throw in a mention of the issues that come to our mind, there are always surprises, and new issues that we did not anticipate. Sometimes policy decisions will come from individual cases, and sometimes they will be driven by a particular FCC Commissioner who finds a specific issue that is of specific interest to him or her.  But here is our try at listing at least some of the issues that broadcasters should expect from Washington in the coming year.  With so many issues on the table, we’ll divide the issues into two parts – talking about FCC issues today, and issues from Capitol Hill and elsewhere in the maze of government agencies and courts who deal with broadcast issues.  In addition, watch these pages for our calendar of regulatory deadlines for broadcasters in the next few days.

So here are some issues that are on the table at the FCC – starting first with issues affecting all stations, then on to TV and radio issues in separate sections below. 

General Broadcast Issues

There are numerous issues before the FCC that affect both radio and television broadcasters, some of which have been pending for many years and are ripe for resolution, while others are raised in proceedings that are just beginning. These include:

Multiple Ownership Rules Review: In April, the FCC finally addressed its long outstanding Quadrennial Review of the broadcast multiple ownership rules – essentially by punting most of them into the next Quadrennial Review, which probably won’t be resolved until 2016.  Issues deferred include any revisions to the local ownership limits for radio or TV (such as loosening the ownership caps for TV stations in smaller markets, which the FCC tentatively suggested that they would not do), any revision to the newspaper-broadcast cross-ownership rule (which the FCC tentatively suggested that they would consider – perhaps so that this rule can be changed before the newspaper becomes extinct), and questions about the attribution of TV Shared Services Agreements (which the FCC is already scrutinizing under an Interim Policy adopted by the Media Bureau).
Continue Reading What Washington Has in Store for Broadcasters in 2015 – Part 1, What’s Up at the FCC