It will be a harder for big TV station owners to expand following an FCC vote along party lines, disclosed today, that abolishes a 30-year rule allowing them to discount the reach of stations that broadcast on the UHF band.
Station groups are limited to reaching a maximum of 39% of all TV households. But with the discount, they only had to count half of the households reached by UHF stations.
That made sense in the days of analog TV. UHF stations lacked the reach of rivals on the lower-numbered VHF band. The high-numbered channels often used to be owned by small companies struggling to compete with stations owned by major networks and their affiliates.
But following the national transition in 2009 to digital over-the-air broadcasts, “UHF channels are equal, if not superior, to VHF channels,” the FCC says.
It grandfathered arrangements in place on, or proposed before, September 26, 2013 — the date when the FCC released its proposed rule change.
That should protect companies including ION Media, Trinity Broadcasting Network, and Univision that opposed the abolition of the UHF discount. They say the change could thwart new competitors from challenging the major networks.
Broadcasters also opposed the change outside of the FCC’s broad review of media ownership rules.
“While other industries are allowed to innovate without stifling regulation, when it comes to broadcasters, the FCC acts as if we still live in an era of I Love Lucy,” National Association of Broadcasters EVP Dennis Wharton says. “It’s time for the FCC to look at broadcast ownership rules in a manner that reflects the current marketplace.”
Commissioner Ajit Pai, who dissented from the majority, wondered whether there’s “any indication that any of the core objectives of the Commission’s media ownership policies—competition, diversity, and localism—have been harmed [by the discount]? Tellingly, the Commission is unable to point to any such evidence.”
The American Cable Association, which supports the change, told the FCC that the UHF discount “will exacerbate the harmful effects of the large scale consolidation occurring in the broadcast industry by potentially allowing some of the largest station groups to maintain a greater share of the national audience than Congress intended. This will adversely impact localism and diversity and increase the already significant bargaining power that large station groups possess in retransmission consent harming consumers with supra competitive fees and more impact blackouts.”