FCC Should Raise or Eliminate Ownership Cap, Broadcasters Say
The FCC shouldn’t eliminate the UHF discount without also examining the possibility of increasing or eliminating the 39 percent broadcast ownership cap, and the commission may not have the authority to change the discount at all, said 21st Century Fox, Univision, Sinclair and other major broadcasters in comments filed Monday in docket 13-236. The broadcasters were responding to an FCC rulemaking notice seeking comment on eliminating the discount (CD Aug. 14 p1), possibly grandfathering existing and pending ownership combinations, and a proposed VHF discount. Though most broadcaster comments characterized the NPRM as a backdoor method of changing the ownership cap, Free Press, the Competitive Carrier Association and broadcaster Block defended the measure. “Eliminating that discount doesn’t change the cap; it merely changes the calculation under the cap because the equation was unequivocally wrong,” said Free Press.
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The 39 percent cap should be removed because broadcasters face increased competition from cable, direct broadcast satellite and over-the top video, said several large broadcasters. It would be “arbitrary and capricious” for the FCC to “make an ownership limit more restrictive at a time when competition and diversity have never been more abundant,” said 21st Century Fox. The 39 percent cap is a “direct abridgement on the freedom of speech,” said Sinclair. By releasing an NPRM that proposes changing the discount without examining the cap as well, the FCC is being intentionally narrow, said broadcasters. “Significant back-door modification of the national cap, without an opportunity for meaningful public comment and without engaging in a reasoned evaluation of its continuing validity, would be inconsistent with Congressional intent regarding the cap,” said Univision, which along with Ion and Trinity, would currently be over the 39 percent cap without the UHF discount, according to Free Press. “The Notice reflects an agency staring so hard at a single tree that it has lost sight entirely of the forest,” said Fox.
Previous court decisions rejecting commission attempts to modify the ownership cap, such as Prometheus Radio Project v. FCC, prevent the commission from eliminating the discount, said Trinity, echoing a point raised by several broadcasters. “Any changes to the national audience reach cap and associated rules like the UHF Discount require further Congressional action,” said Ion. But Free Press argued that the FCC has the authority to alter the discount, and the NAB concurred. “The Commission has authority to reexamine and modify its national television ownership cap and the methodologies used to calculate compliance with that rule,” said NAB. But NAB said the FCC should consider the discount in the context of the whole cap, and treaded carefully in its comments on the NPRM: “NAB wishes to make clear that it takes no position on whether the Commission should eliminate, retain or modify the current national television ownership cap."
Several broadcasters railed against the grandfathering rules proposed in the NPRM, under which only ownership groups over the cap already in existence or involved in transactions pending when the NPRM was issued would be grandfathered. Several broadcasters argued for permanent grandfathering, wherein grandfathered groups would persist even if they transferred control of their stations. The FCC should grandfather the national audience reach for each UHF station and its owner should be attributed the 50 percent discounted audience reach for that station, for purposes of calculating compliance with the national ownership cap, until the owner sells the station, said Sinclair. The broadcaster and others said the FCC’s pegging the cutoff for grandfathering to the NPRM violated the notice rules in the Administrative Procedures Act. Free Press said the FCC’s proposed grandfathering rules were too permissive, arguing that existing broadcasters should have 18 months after the discount’s elimination to come into compliance. The “detrimental effects” of consolidation would only be “exacerbated by any ‘permanent’ grandfathering proposal,” said Free Press.
Commenters were split on a VHF discount, a possibility the NPRM raised because VHF stations are now considered less desirable than UHF stations (CD Aug 16 p3). The UHF discount discouraged stations from participating in the incentive auction, and the VHF discount would have the same effect, said CCA. “It makes no sense for the Commission to adopt new rules encouraging broadcaster retention of spectrum while simultaneously urging broadcasters to relinquish their spectrum in the incentive auction.” However, 21st Century Fox and other broadcasters said they supported a VHF discount, in the event the UHF discount were eliminated. “If the facts indicate that the relative positions of the bands have ‘reversed’ in the digital era, as the Commission appears to have concluded, it would be arbitrary not to protect VHF stations today from the same audience reach disparities that for so long warranted different treatment of UHF stations for Cap calculations,” said Fox.