The More Things Change, the More They Stay the Same – UHF Discount Restored
The Commission has acted to restore the UHF discount used to calculate audience reach in connection with determining compliance with television ownership limits. The national ownership cap currently limits the number of stations one owner may control to those which reach no more than 39 percent of national television households (with reach defined as the number of households in a station's DMA). In adding up the number of households reached nationwide by a particular owner's TV stations, for a station which operates on a UHF channel, half of the households in its DMA are not included in the total count.
The Commission had previously eliminated the UHF discount in August 2016, but it did not make any other changes to the national or local TV ownership rules. The UHF discount was initially adopted in 1985 as a means of addressing the technical disadvantages that analog UHF stations then suffered in comparison to VHF stations. These UHF challenges included not only smaller signal coverage areas but also higher construction and operation costs. With the advent of digital television, however, the disparity between UHF and VHF diminished drastically. Indeed, UHF stations generally now have better coverage areas than VHF stations. This recognition was one of the primary reasons cited for eliminating the UHF discount last year.
The ruling was issued over the strenuous objections of the then-minority, which pointed out that eliminating the UHF discount without otherwise adjusting the national cap actually had the effect of tightening the ownership limits. Commissioner O'Reilly expressed his view that Congressional action which enacted the 39 percent cap in statute removed Commission authority to take this action. Various groups, including the National Association of Broadcasters and some large TV station group owners, sought reconsideration of the Commission's ruling.
After the positions of the majority and minority were reversed, the Commission's order also was reversed on April 20, and the UHF discount was reinstated. The Commission does not deny that retention of the discount flies in the face of current technical realities. Nevertheless, the new order indicates that because the issues of the discount and the national ownership cap are inextricably linked, the Commission is restoring the discount simply to restore the status quo ante. Obviously, if one doubles the number of households counted as being in a UHF station's market, the instant result could be to change compliance with a fixed ownership limit into noncompliance. Even if all existing ownership is grandfathered, as Commissioner Clyburn has pointed out that it was, the result would be substantially to decrease an owner's options for adding or changing station ownership.
The Commission has promised that it will undertake a new rulemaking proceeding later this year. At that time, it will consider the UHF discount in conjunction with the national TV ownership cap. The new VHF discount previously requested by Sinclair Broadcasting's petition for reconsideration and rejected in Friday's order also will likely be considered in the context of that comprehensive review.
Not surprisingly, Commissioner Clyburn was not mollified by this promise of future proceedings. She argued that the UHF discount is a return to an outdated rule, and that reinstatement of the rule will have the effect of increasing the cap considerably above the 39 percent level. While she recognizes the promise of a new rulemaking, she is worried that in the interim, large broadcast groups will add more stations and will thereby harm the public interest by reducing localism, competition, and diversity. In her view, the UHF discount was aimed only at addressing analog-era technical disparity, not competitive disadvantages with other types of video programming providers, such as satellite or cable operators.
We will keep you posted as to further developments with the planned new rulemaking proceeding. Check back here to learn of future opportunities to file comments on the matter.