Responding to a recent rulemaking notice (NPRM) in which the FCC solicited stakeholder input on whether the agency’s 39% cap on national TV station ownership should be retained, modified or eliminated, the National Association of Broadcasters (NAB) recommended a different approach, in advising the FCC this week not to change the 39% cap but to extend the “UHF Discount” to VHF television stations. The NAB is one of about 20 broadcast, cable, and consumer groups that filed comments on Monday in response to the NPRM, which was adopted by a 3-2 vote along party lines by the FCC in December. Last assessed by the FCC in 2004, the TV ownership cap limits any single entity from owning or controlling television stations that, together, reach more than 39 percent of the national viewing audience. The UHF Discount—which was repealed by the Tom Wheeler-led FCC in 2016 before being reinstated last year—allows licensees of commercial television stations in the UHF bands (Channels 14 through 51) to count half of their potential viewers in every market when calculating their compliance with the national audience cap.
As part of its review of the 39% ownership cap, the FCC is also considering the related question of whether the UHF Discount should be eliminated. Noting that Congress directed the FCC in 2004 to set the national ownership cap at 39% and that the cap itself is not enshrined in statute, NAB argued in its comments that the FCC has the authority to modify the cap. Nevertheless, because compliance with the 39% cap is based on a theoretical standard of audience reach that fails to account for actual viewers who have not been lured away from over-the-air broadcasting by online video and other alternative platforms, the NAB told the FCC that modifications of that cap, whether upward or downward, make no sense. Instead, the NAB said its proposal of allowing both VHF and UHF broadcasters to count half of their audience reach in calculating cap compliance would compensate “for the arbitrary audience reach metric underlying the national TV ownership rule” and would treat “all stations more rationally and consistently, given current market conditions.” Asserting that its plan is “clear, simple and straightforward to apply,” the NAB thus proclaimed that its approach is “more equitable for VHF stations which, in the digital TV environment, are not technically disadvantaged vis-à-vis UHF stations” and would not “significantly expand the already permitted levels of common TV station ownership nationwide.”
Meanwhile, several cable groups warned that any move to raise the 39% cap would increase broadcast ownership concentration to levels that would hinder competition, jeopardize localism, and raise prices for multichannel video program distributor (MVPD) carriage of broadcast channels. As it maintained that the FCC lacks the authority to change the ownership cap which was set by Congress, cable network Newsmax declared that, “by nationalizing their footprints, broadcast ownership groups are able to use the tools meant to ensure free and local content to force out competition from independent programmers and raise pay TV prices.” Cautioning the FCC against raising the cap, the American Cable Association remarked: “the more of an MVPD’s subscribers a broadcaster can reach, the more leverage it has in negotiations with that MVPD—and the more leverage a broadcaster has, the more harm it can do to the MVPD and its subscribers.”