Report: Pai Preparing July Vote on 39% Cap/UHF Discount Review - Broadcasting & Cable

Report: Pai Preparing July Vote on 39% Cap/UHF Discount Review

Would likely loosen ownership restrictions
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FCC chairman Ajit Pai is said to be planning a vote at the July 12 meeting on adjusting the 39% 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.

Related: Some Major TV Groups Push FCC for Right to Keep, Transfer UHF Discount

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% 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.

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% 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.

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