Says FCC should retain 39 percent cap but adjust for 'artificially presumed reach' of all stations

WASHINGTONThe National Association of Broadcasters isn't asking the FCC to raise the bridge to more station ownership, but instead to lower the river.

That came in comments on the FCC's review of the 39 percent cap on a TV station group owner's national reach. NAB is not asking the FCC to increase that cap, but instead to retain the 50 percent UHF discount from that cap and extend it to VHF stations, based on "effectively competitive reach," rather than a calculus of "artificially presumed reach" dating from the days of limited channel and service offerings in which broadcasting dominated.

NAB says the FCC can't—"consistent with the law"—change the 39 percent cap (NAB says "cut back" the percentage of allowable reach, but presumably that also applies to raising it). The cap was set by Congress, but what authority the FCC has to adjust it remains an issue of debate. For example, a handful of state attorneys general has told the FCC that it can’t legally raise the cap.

[State AGS Say FCC Can't Raise Ownership Cap]

As to extending the discount, NAB says it has been established that the broadcast reach on which the cap is based is “potential audience” and that, "in practice," broadcasters can't achieve an audience share that approaches their potential reach.

NAB also sees an unfair regulatory disparity in the way cable and broadcasting are treated since a home is only attributed to cable if it actually serves a home, not if it is simply available to it ("homes passed"), while the 39 percent cap is based on broadcast homes "passed."

NAB argues that a decades-old rule calculated on presumed audience when that audience has been splintered by cable and satellite and phone company and internet video is an anachronism and does not address the competitive realities of the marketplace.

"In today's fragmented video market where viewers easily access hundreds of channels and thousands of programs, and where advertisers have myriad options, the potential reach of a station or station group in the abstract says little about the competitively effective reach of the station group in the marketplace,” the association told the FCC.

A politically, and philosophically, divided FCC voted last December to launch the review of the 39 percent broadcast audience reach cap.

[FCC Seeks Comment on National Reach Cap]

TV station group owners cannot own stations that reach more than 39 percent of the nation, with waivers in some circumstances.

The FCC is looking at whether it can modify the cap, which was created by Congress, and if so, whether it should be lowered or, more likely under this FCC, raised or eliminated altogether given the increasing programing and technological options for accessing content.

It also asks whether to retain the UHF discount, which allows station groups to count only half their UHF station audience toward that cap and if not, should the cap be adjusted.

"We need to take a holistic look at the national cap rule, including the UHF discount," chairman Ajit Pai said following the Dec. 14, 2017, vote. "The marketplace has changed considerably due to the explosion of video programming options and various technological advances that have occurred since the cap was last considered in 2004. So we need to examine whether our rules should change accordingly. That’s an important discussion that will be informed by the facts in the record—not anything else."

The item drew no tentative conclusions. Chairman Pai said the review was all about developing a record and could not say when any action would be taken.

The vote was 3-2, with the Democrats strongly opposing. But at least one Republican also had issues with the FCC's authority to take action.

Commissioner Michael O'Rielly said he still didn't think the FCC had the authority to modify the congressionally mandated cap—he is a former congressional staffer who worked on the legislation. He said Congress would need to weigh in ultimately, but he supported the FCC review since that congressional review did not look like it was forthcoming.

The FCC under Pai voted to reinstate the UHF discount last year, with the signal that its elimination was tied to the cap review. That discount dates from the analog days when UHF stations were less desirable signals than VHF, which is the reverse in digital TV.

More than a decade ago the FCC, under a Republican chairman, wanted to raise the cap from 35 percent to 45 percent, but Congress stepped in to set it at 39 percent. The broadcast networks favored the 45 percent figure. But many station groups feared network-owned station groups getting bigger would give them even more power over affiliates. The issue so divided broadcasters that NBC, CBS and finally ABC quit the National Association of Broadcasters because NAB wouldn't support the higher limit. They all eventually returned to the fold after Congress split the difference.

This story was originally published on TVT's sister publication B&C.