Big Owners Worried Over UHF Discount

With the Federal Communications Commission making clear that it is likely to shut down a long-time loophole in its national ownership cap, some broadcasters are scrambling to ensure that they don’t get caught in the regulatory squeeze.

The loophole, known as the UHF discount, allows station groups to exceed the nominal cap that limits them to coverage of no more than 39% of US TV homes by discounting the reach of stations operating in the UHF band (ch. 14 and above) by half. While eliminating the discount, the FCC is expected to grandfather the portfolios of groups that long ago blew past the 39% cap thanks to the discount, notably Ion Media (64.8% coverage), Trinity Broadcasting (40.1%) and Univision (44.1%). But without expansion of the grandfathering provisions, jettisoning the UHF discount could force Tribune to unravel all or part of its pending $2.7 billion deal to acquire Local TV LLC and block the growth ambitions of Fox and Sinclair Broadcast Group. In their effort to secure these provisions, affected broadcasters should not expect much help from the National Association of Broadcasters. With so few broadcasters affected, the industry's principal lobby looks like it will be sitting this one out.