FCC Seen Aiming to Address National TV Ownership Limit at July Meeting
The FCC is seen as aiming to include an order on the national TV ownership cap on the July 12 commissioners’ meeting agenda, with the goal of getting ahead of an expected unfavorable court ruling on the UHF discount (see 1804200059), broadcasters, their lawyers and an official told us. All said it’s not clear what that order will do to the cap, and broadcasters are divided (see 1806050040). Broadcast groups such as Hearst and Gray filed a BIA Kelsey study posted Monday supporting their call for a 50 percent cap that would block Sinclair buying Tribune as currently constructed, while NAB recently met with aides to Chairman Ajit Pai on the association’s pitch to apply a rebranded UHF discount to all TV broadcasters.
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The July 12 agenda isn’t expected to be released until June 21, so the expected cap order could be held until August, said broadcast and FCC officials. Since the rulemaking proceeding on the cap closed in April, the agency has a record to draw on, and former officials said it would be possible for the agency to quickly pull together an order, since the commission has done so much prior work on the UHF discount and the cap. Since any order altering the cap is effectively guaranteed to face a substantial court challenge, it’s possible the agency could delay until August to make it “ironclad,” one broadcast official said. Sinclair and the FCC didn’t comment.
“The unseemly haste with which the commission is rumored to be moving is transparent and unbecoming,” said Andrew Schwartzman, senior counselor at Georgetown Law’s Institute for Public Representation and attorney for the petitioners challenging the UHF discount in the U.S. Court of Appeals for the D.C. Circuit case an FCC cap order would upstage. A rushed-out order would be more vulnerable to appeal, Schwartzman said.
Industry stakeholders aren’t sure what action on the cap the FCC will take, but many broadcast attorneys and officials said they expect the agency not to rush out a cap order to beat the D.C. Circuit if the order doesn’t also preserve the viability of Sinclair/Tribune. The comment period on the transaction ends July 12. Sinclair has pushed for the cap to be eliminated entirely, but industry lawyers see that option as politically untenable. NAB’s 50 percent discount for all TV broadcasters would let Sinclair/Tribune proceed, but broadcast industry officials said Pai’s office doesn't look upon that option favorably.
The NAB plan “would be simple and straightforward to apply and would obviate the need for the FCC to address thorny questions about grandfathering and the transferability of grandfathered station groups,” the association filed. A recent filing from Ion, Univision and Trinity said permanent grandfathering should be included in any cap action (see 1806080049).
The proposal by Hearst, Morgan Murphy Media and other broadcasters to drop the UHF discount entirely and raise the cap by 50 percent is seen as an effort to provide an alternative to the NAB plan, industry officials said. Owners of TV stations affiliated with major networks and programmer Newsmax support the proposal, but it would likely prevent growth by Fox and Nexstar, and keep Sinclair/Tribune from moving forward without additional divestitures. As currently constructed, Sinclair/Tribune would reach 58.7 percent of U.S. households without a UHF discount.
The 50 percent cap without a UHF discount “would constrain consolidation involving the largest groups” while smaller groups “could combine and remain well under the 50% threshold, making them more efficient and competitive,” said BIA Kelsey Chief Economist Mark Fratrik in the report. “Larger groups already have benefitted from scale efficiencies, and the rest of the industry could still pursue combinations to gain such efficiencies with a 50% cap.”