Loophole Could Thwart Cap

Mar 29, 2004  •  Post A Comment

Due to a bizarre legislative twist, the Federal Communications Commission may be powerless to prevent broadcasters from buying enough TV stations to reach as many as 78 percent of the nation’s TV homes, Tribune Broadcasting and TV network representatives have told the agency.
That’s a shocker because recently enacted legislation was supposed to finally settle a long-running dispute over how many television stations a single company can acquire by setting a permanent cap on TV station ownership by any one company at 39 percent.
But according to lawyers for Tribune and other major broadcast companies, Congress may have shot itself in the foot because the law, which also bars the FCC from reviewing the cap, prevents the agency from changing a rule that has long allowed broadcasters to count the reach of UHF TV stations as half their market size.
“The plain language of the statute prohibits the commission from changing, phasing out, or repealing the UHF discount,” said Tribune, in a legal filing at the FCC.
Added Univision Communications, “The UHF discount must be retained.”
But in its own filing at the FCC, the Network Affiliated Stations Alliance contends that the FCC has the authority to phase out the UHF cap, at least for the Big 4 TV networks.
“If the commission were to conclude otherwise, it would undermine the integrity and effectiveness of the 39 percent national ownership limit enacted by Congress,” NASA said.
In an interview, Alan Frank, NASA chairman and president of Post-Newsweek Stations, said FCC leeway to ax the discount could prove particularly important when the broadcast industry switches to digital TV transmission in several years, because many stations that now broadcast on VHF channels-which have to count 100 percent of a market’s audience reach-are expected to be switched to UHF channels.
Retaining the UHF discount in a digital world, according to Mr. Frank, could have the effect of doubling the cap, allowing broadcast companies to reach 78 percent of TV homes.
“Clearly that was not Congress’ intent,” Mr. Frank said. “This is just the effort of the networks to do an end run on Congress.”
Said the National Association of Broadcasters, in another filing at the FCC, “In those circumstances, the commission would have to modify the UHF discount so that the change in channel assignments would not have the unintended effect of allowing an increase in station ownership levels beyond those existing today.”
Important for Fox, Viacom
But other legal filings at the FCC have contrary arguments.
“It will require action by Congress to permit the commission to phase out or repeal the UHF discount in the future,” Tribune said.
Also arguing that Congress has put the UHF cap off-limits, at least for the immediate future, were Fox, NBC and Viacom. “The UHF discount remains a valid and integral aspect of the national television ownership rule,” the networks said in a joint FCC filing.
The discount is important for Fox and Viacom-companies that are already near the 39 percent limit (Fox is at 37.9 percent, while Viacom is at 39 percent) and own enough UHF stations to put them over the top if the discount were eliminated.