Regulators voted today to consider a change in its media ownership rules in a way that has irked station owners, but cheered public interest activists. In a 2-to-1 vote, the FCC approved a Notice of Proposed Rulemaking that might scrap a 30-year-old provision called the UHF discount. It relates to the law Congress passed in 2004 that bars a company from controlling stations that reach more than 39% of all households. For the purpose of that calculation, the discount requires the agency to just count half of the audience reached by UHF stations. The outlets used to transmit weaker signals than other stations on the VHF band, which included channels 2-to-13. That distinction became virtually meaningless after 2009 when stations replaced their analog signals with digital ones. So, a simple change? Nope. Broadcasters including Univision and ION feared that they might find themselves over the 39% cap — or so close that they couldn’t participate in the torrid deal market for TV stations. The FCC appears to have addressed their biggest concerns by grandfathering station groups that might find themselves above the cap, and those that applied to the FCC for approval of a deal before today’s vote. “The Commission and the television industry have anticipated the elimination of this discount for well over a decade,” Acting Chairwoman Mignon Clyburn says. “It is our task as regulators to ensure that our rules reflect current market realities.”
Free Press Policy Director Matt Wood likes the change even though he says regulators were too lenient: Dealmakers “had no right to expect the continuation of this outdated loophole.” But the FCC’s lone Republican, Ajit Pai, dissented. Although he agrees it’s time to end the UHF discount, he wants this to happen as part of a larger proceeding where “we should ask whether it is time to raise the 39% cap.” He also objects to a grandfathering provision that’s tied to a proposed change, not a final vote. That “effectively tells the private marketplace to behave as if the UHF discount has already been eliminated” which could “dampen the market for broadcast transactions and depress station values.”
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