WASHINGTON--As expected the FCC on Dec. 12 will officially launch its latest congressionally mandated "Quadrennial" review of broadcast ownership rules.

FCC chair Ajit Pai did the unveiling Tuesday (Nov. 20) in his monthly blog post on the items the FCC plans to vote on at its next public meeting, which he does when the tentative agenda is released 21 days before the meeting.

"On the media front, we’ll be kicking off a review of our media ownership rules — a review we’re required by statute to conduct every four years," he said. "The 2018 Quadrennial Review, as it’s called, will begin with a Notice of Proposed Rulemaking which seeks public input on the relevant rules, such as the Local Radio Ownership Rule, as well as several diversity-related proposals."

Senior FCC officials speaking on background said the review would not include either the 39% cap on national audience reach or the UHF discount from that cap.

The reason is that they were not among the rules the Congress requires it to review. They said the cap and discount would continue to be reviewed on a parallel track.

The rules up for review in the Quad are the local radio ownership rules, local TV ownership limits and the dual-network rule. But they said it was an open-ended review with no tentative conclusions.

It will ask whether the rules should remain, be modified, or eliminated.

The FCC will also review a trio of diversity-related proposals--one is whether to extend the cable procurement EEO regs to broadcast, whether to identify a "tipping point" of source diversity in lieu of ownership rules and on tradeable diversity credits, all issues MMTC has raised.

Chairman Ajit Pai had told Congress that the review was coming by year's end, so it was no surprise that it was teed up for the meeting. The FCC has let the quadrennial deadline for concluding the review slip in the past for a variety of reasons--including having to repeatedly respond to court decisions on rule challenges--only wrapping up a combined 2010 and 2014 review in November of last year.

So the chairman is getting what could arguably be called an early start even though the lookback will clearly be primarily a 2019 review. A senior official said they did not want this review to drag on for years, but would not put a deadline on it.

Also at the meeting, the FCC will vote on a declaratory ruling that wireless text messages are information services, not telecom services, so that service providers can continue to protect their customers from span and scam robocalls, said senior FCC officials.

That ruling would deny petitions to declare text messages a telecom service. Texts had not previously been classified and the petitions gave the FCC a chance to weigh in.

The FCC says a text messaging service provides for storing and retrieving information, so it is like email. It also finds that text messaging, like wireless broadband service, is a commercial mobile service, not a private service, because it is not connected to the public-switched service.

The U.S. Court of Appeals for the D.C. Circuit has declined to overturn the FCC's restoration of the UHF discount on the grounds that the parties challenging it--Free Press, Prometheus Radio--did not have standing to bring the challenge.

That could be a big boost to broadcast M&A, though it might not be the big boost for the Sinclair-Tribune deal given the FCC's other problems with it.

The UHF discount means that only half of a UHF TV station's audience counts towards the 39% national ownership cap. The discount allowed Sinclair to bid for Tribune stations that otherwise would have pushed it to almost double that 39% cap.

“I’m pleased with the court’s decision to reject this challenge to the reinstatement of the UHF discount pending the completion of our comprehensive review of the national ownership cap," said FCC chair Ajit Pai.

[Read: Report: Pai Preparing July Vote On 39 Percent Cap/UHF Discount Review]

During oral argument last April, the judges clearly had concerns about not having statements from individual members of the associations establishing particular harms related to the Sinclair-Tribune deal, which the petitioners used as an example of the harms of the discount. The court wanted the petitioners to have identified at least one Free Press member or Prometheus member in a Sinclair market that would have been affected by the potential merger.

The three-judge panel of the court said the argument did not even warrant a published opinion, adding that it did not have to reach the merits of the decision because of that lack of standing.

Those merits were whether it was within the FCC's discretion to reinstate the UHF discount pending “a broader review of the [national ownership] cap” itself after the FCC, under previous chair Tom Wheeler, had concluded it had erred in eliminating the UHF discount before that review.

Since there is no published opinion, it is unclear whether the petitioners could have won on the merits, though two of the three judges appeared inclined to agree with them. Most observers of that oral argument had speculated that, if the standing issue did not derail the challenge, it had a good chance of succeeding and the discount repealed and remanded back to the FCC.

But in a two-page document dismissing the petition to overturn the FCC decision, the three-judge panel said: "Membership organizations may assert standing on behalf of their members, but in order to do so they must show that at least one member “would otherwise have standing to sue in [his or her] own right.”

The court said Prometheus and Free Press did not do that, and it did not accept those showings in a supplement filed after oral argument.

Now that the court has ruled, Pai is expected to proceed with an item that combines the discount with re-thinking the 39% national audience reach cap to which the discount is tied, perhaps by raising it to 50%, as some broadcasters have asked for, with a review of that move down the line in case it needs some more raising.

Free Press and Prometheus can appeal the three-judge decision to the full court.

Free Press attorney Andrew Schwartzman had no comment on next steps, saying he was still processing the decision and that it was too early to make that call.

"This should remove the cloud hanging over broadcasters, preventing them from further growth. The next, and most important, step is for the Commission to eliminate the national cap altogether," said Adonis Hoffman, former top FCC staffer and currently head of Business in the Public Interest. "Taken together, these actions will give broadcasters the regulatory foundation yo compete in a rapidly changing media market against the likes of FAANG [Facebook, Amazon, Apple, Netflix and Google]."

Equity Research analyst Marci Ryvicker called it a "nice and unexpected positive for the broadcast space."

WASHINGTON--FCC chairman Ajit Pai is said to be planning a vote at the July 12 meeting on adjusting the 39 percent audience reach cap on a broadcast group's TV station ownership, according to a report in Bloomberg News.

If the FCC votes to retain the UHF discount or alternatively raise the cap, it could allow Sinclair's proposed merger with Tribune to go through even if a court decision ultimately reverses the FCC's UHF discount decision.

The court could rule before July 12 to reverse the FCC and thus invalidate the discount, but if the FCC votes to eliminate the discount but raise the cap to achieve a similar loosening on national station ownership, the deal could still go through, but with Sinclair having to spin off more stations. The FCC could also eliminate the cap altogether, which would mean the deal could proceed as planned, presuming the FCC ultimately approved it.

Pai has said that the UHF discount is arguably an anachronism that could be eliminated, but that that would have to be considered along with the 39 percent cap. He is widely expected to loosen the cap to allow broadcasters to heavy up in the face of competitors--cable and over-the-top and satellite and telco video providers--who have no similar local or national ownership limits.  

[Read: FCC, Broadcasters: UHF Challenge Has No 'Standing' Legs To Stand On]

Critics of that view argue that broadcasting is meant to be a local service and has a special public interest obligation that separates it from other video providers.

There are almost certainly three Republican votes for at least loosening the ownership cap. Some broadcasters have argued for raising the cap to 50 percent or grandfathering current UHF discounts for groups that would otherwise exceed the cap. Others have argued for shifting the discount to VHFs--the UHF cap dates from analog days when those stations were inferior to VHFs', a situation that is reversed in digital.

July 12 is also the deadline for comment on the Sinclair deal and the date on which the FCC is expected to re-start its clock on vetting the deal.

An FCC spokesperson said he could not confirm whether the item was on the July meeting agenda.

The FCC opened a combined cap and discount proceeding after reinstating the UHF discount, arguing the previous FCC should not have eliminated the discount without also considering the cap at the same time, since the two were linked. The FCC was under no obligation to review the cap, but it is part of current chairman Ajit Pai's broader deregulatory review.  

WASHINGTON—The American Cable Association is among those raising concerns about the potential impact of any new media consolidation.

ACA represents smaller and medium-sized, independent cable companies whose subscribers primarily are in rural and smaller suburban markets.

In comments to the Federal Communications Commission, the trade group discussed possible changes to the rule that bans a TV station group from reaching more than 39 percent of U.S. TV households.

It said that broadcasters must demonstrate that any benefits of new consolidation would outweigh the downsides including harms related to retransmission consent. “ACA remains skeptical that such a case can be made, and the recent revelations that allegedly ‘local’ news anchors must read scripts delivered from Sinclair corporate headquarters have only deepened our skepticism," ACA President and CEO Matthew M. Polka stated in an announcement.

[Read: State AGs Say FCC Can't Raise Ownership Cap]

The group responded to discussions about the UHF discount, which allows UHFs to reduce the number of households their signals reach when calculating audience reach. It noted that the system was created when analog UHF signals were weaker than analog VHF signals; now, it said, the NAB wants to expand the discount based not on signal strength but because stations “reach” a smaller audience than they did before as broadcast ratings have decreased — thus all stations UHF and VHF alike should now receive a discount.

ACA countered by saying the FCC has no discretion to change the basis of how the UHF discount is calculated; and that even if it could, the commission can’t rationally provide all stations with the same discount. “Ratings have nothing to do with a station’s ‘reach,’ at least as the FCC has always understood that term, and the FCC cannot now change that understanding, which, since at least 2004, has been Congress’ understanding too,” it wrote.

The cable group said the commission will have to justify any “Everybody Discount” in the same way it must justify raising or eliminating the national 39 percent cap itself. “If the FCC lacks authority to raise the ownership cap directly, it also lacks authority to circumvent the cap through creative changes to the UHF discount.”

WASHINGTON—A vote has been scheduled for a review of the 39 percent national TV station audience reach cap, aka national cap, per a statement from FCC Chairman Ajit Pai. In the official order circulated to the FCC commissioners, Pai is proposing a review of the national cap and the UHF discount that could lead result in modified, retained or eliminated regulations.

The national cap and UHF discount are broadcast ownership regulations that determine how many TV stations one owner can have. The UHF discount, specifically, enables UHF TV station owners to only have to count half of its stations’ audience toward the 39 percent cap.

This is different from the media ownership rules that were eliminated at the FCC’s November meeting, as those pertained to whether a single group could own a combination of TV stations, radio stations or newspapers.

Last April, Pai and his fellow Republicans voted to reinstate the UHF discount after it had been eliminated by former FCC Chairman Tom Wheeler. Pai has said that the reason for restoring the discount was to be able to evaluate the national cap and UHF discount together, as he has described them as “inextricably linked” and said the decision to eliminate the discount without reviewing the national cap “effectively tightened the cap without determining whether that was in the public interest.”

The official Notice of Proposed Rulemaking for the national cap/UHF discount, according to Pai’s statement, would determine the future of the regulations “the right way.”

“We would seek public input on whether to modify, retain or eliminate the 39 percent national cap as well as the UHF discount,” Pai said in his statement. “With respect to legal authority, in 2016 the Commission ‘conclude[d] that [it] has the authority to modify the national audience reach cap, including the authority to revise or eliminate the UHF discount’; we will take a fresh look at this issue as well.

“A comprehensive review of the rule is warranted in light of considerable marketplace changes, such as technological developments and increased video programming options for consumers, since the cap was last modified in 2004.”

Democratic commissioner Jessica Rosenworcel released her own statement in response to Pai:

“Today's proposal from the FCC leadership asks to either eliminate or modify the existing national media ownership cap. On this subject, Congress has made it clear that the FCC is not permitted to change or evade the cap, which statutorily probhits a single broadcaster from acquiring stations that reach more than 39 percent of the national television audience. In fact, just yesterday, Congressional leaders warned the FCC not to use its regulatory authority to ignore the law. The FCC proposal asks what authority the Commission has to eliminate or modify the ownership cap and the answer is simple: there is none. This proposal is a giveaway to the largest station group at the expense of diversity, localism and competition.”

Those members of Congress referred to by Rosenworcel that reached out to the FCC include House Minority Leader Nancy Pelosi (D-Calif.), Energy and Commerce ranking member Frank Pallone (D-N.J.) and Rep. Mike Doyle (D-Pa.). The letter also addressed the Sinclair-Tribune merger directly, which if passed would have Sinclair reaching 72 percent of U.S. households.

The organization Allied Progress, in a release issued after Pai's statement, brought up that Republican FCC commissioner Michael O'Rielly has said in the past he believes the FCC does not have jursidiction to raise the ownership caps, saying that only Congress was capable of changing the ownership rules.

“The lengths to which Chairman Pai will go in order to help Sinclair monopolize the local television news industry is astonishing,” said Karl Frisch, executive director of Allied Progress. “This move is not only the latest in a series of rule changes tailor-made for Sinclair's benefit, it is an egregious, and likley illegal, example of overreach by the FCC.” 

The vote for the review is scheduled to take place in December. The FCC is expected to give commenters 30-60 days to respond, meaning a decision is not likely before the first quarter of 2018.

WASHINGTON—In an opening brief filed in the U.S. Court of Appeals for the D.C. Circuit, the FCC laid out its claim that it was reasonable to reinstate the UHF discount immediately while it considers adjusting the national audience reach cap, that is has the authority to adjust that cap, and that the discount and the cap have to be considered together because the UHF discount is meaningless except in relation to the cap.

This is in response to the challenge to its UHF decision filed by Free Press, Office of Communications of the United Church of Christ, Prometheus Radio Project, Media Mobilizing Project, Media Alliance, National Hispanic, Media Coalition and Common Cause.

To read the full story, visit TVT’s sister publication B&C.

WASHINGTON—The UHF discount is back, the national audience reach cap is on the table, noncommercial TV stations can do third-party fundraisers and the members of their governing boards can keep their private data to themselves. So unfolded today’s Federal Communications Commission monthly open meeting, but not without an ear-scorching rebuke from the commission’s only Democrat over reinstatement of the UHF discount, which counts just half the population covered by a UHF TV signal toward the 39 percent national audience cap.

“Welcome to industry consolidation month at the FCC,” Commissioner Mignon Clyburn said in her dissent. “The UHF discount—a rule that everyone, including the majority, admits has no place in a post-digital transition era [has been] snatched from the regulatory crypt, outdated and divorced from the technical realities of broadcast television in the digital age… Inertia is not the culprit, but rather an overzealous, misguided willingness to ignore the realities of today’s marketplace, much to the detriment of the viewing public.”

The UHF discount is a relic of analog broadcasting, when transmitting in the UHF band was less efficient than in VHF. Such is not the case with digital transmission. A docket was opened in 2013 under Clyburn’s interim tenure as chair to eliminate the discount. Former Chairman Tom Wheeler took up the issue in an item circulated last summer and it was eliminated last fall. Republican Commissioner Michael O’Rielly kept it brief, saying that he didn’t “believe the commission has the authority to alter the UHF discount, and certainly not separate from the national ownership rule.”

Reinstatement allows ownership of more TV stations under the 39 percent national audience cap, which current Chairman Ajit Pai said is on the table after a litany of pop-culture references to that which is “inextricably linked” such as Kanye West and Kim Kardashian.

“Back in 2013, when the commission began this proceeding, I had a simple request,” Pai said. “I asked my colleagues to seek comment on both eliminating the UHF discount and adjusting the national ownership cap. I specifically argued we cannot do one without the other.”

“Today, the FCC is wiping the slate clean, and later this year, we will begin a new proceeding to review comprehensively the future of the national cap, including the UHF discount,” he said, pledging to “everything in my power to ensure that this review does not similarly take three years to complete.”

The National Association of Broadcasters high-fived the 3-2 vote to reinstate the discount. "NAB supports today's FCC action reinstating the UHF TV station ownership discount and commends Chairman Pai for his leadership on this issue. This represents a rational first step in media ownership reform policy allowing free and local broadcasters to remain competitive with multi-national pay TV giants and broadband providers."

Former Democratic Commissioner Michael Copps, who is now with the public interest think tank Common Cause, called the UHF discount a “huge handout to big broadcasting” that would lead to higher cable rates.

In other actions, the commission voted unanimously to let non-commercial educational stations engage in fundraising for third parties. Stations receiving funding from the Corporation for Public Broadcasting were excluded from the order that allows NCEs to “devote up to 1 percent of their annual airtime to fundraising for third-party organizations that qualify as tax-exempt non-profits… without having to first seek a waiver fro the FCC.”

Additionally, the members of NCE governing board will no longer have to reveal personal data on ownership reports, but will instead use a “special use” registration number. Clyburn also dissented on this one because she considered it detrimental to media diversity.

Citing a Government Accountability Office report, Clyburn said it “specifically affirms data from NCE stations is needed to have a comprehensive picture of ownership diversity, including representation from women and minorities.”

She was outvoted by her GOP colleagues, much to the delight of the America’s Public Television Stations, a nonprofit representing NCEs in D.C.

“We are grateful that the FCC has resolved these two long-standing proceedings and has adopted final orders in a manner that recognizes the distinction of NCE television and radio stations from other broadcasters in terms of structure, governance and finances,” said Lonna Thompson, the organization’s executive vice president, chief operating officer and general counsel.

The commission also voted to propose rules making it easier for broadband providers to navigate municipal access rules, and to deregulate the business data services market, which was met with “mixed reviews,” according to B&C’s John Eggerton.


Also see…
Jan. 25, 2017
“CBS Urges FCC to Reinstate UHF Discount”
CBS government affairs executive vice president, John Orlando, met with FCC Republicans earlier this month to argue that broadcasters “desperately” need to get out from under the new ownership limits imposed by the FCC’s decision to eliminate the UHF discount immediately, “without waiting to launch any further proceeding on other ownership issue.”

Sept. 7, 2017
“FCC Abandons UHF Discount”
Wednesday’s 3-2 partisan vote includes a grandfather clause, which means that current owner groups would not have to divest stations. But it could affect future acquisitions. In his dissent, Republican commissioner Ajit Pai suggested that the looming threat of eliminating the UHF discount has already cast a pall over station transactions.

Jan. 25, 2017
“Report: CBS Urges FCC to Reinstate UHF Discount”

Nov. 14, 2013
“UHF Discount Comment Due Date Set”

Sept. 26, 2013
“FCC Opens Docket on Ending UHF Discount”

Oct. 30, 2006
“Stations call for end of UHF discount”

March 2, 2004
“FCC Media Bureau issues Public Notice seeking comment on 50 percent UHF discount”

March 1, 2004
“FCC revisits ‘UHF discount’ rule”

June 26, 2003
“UHF Discount Under Fire”

WASHINGTON—B&C’s John Eggerton reports that “CBS government affairs executive Vice President John Orlando met with FCC Republicans earlier this month to argue that broadcasters ‘desperately’ need to get out from under the new ownership limits imposed by the FCC's decision to eliminate the UHF discount.” Eggerton said the meeting took place with FCC chairman Ajit Pai when he was still a commissioner and Michael O'Rielly, according to ex parte filing,

See more atB&C.