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FCC proposes eliminating UHF discount from TV ownership rules

Media IndustryFederal Communications CommissionTelevision IndustryUnivision (tv network)PoliticsFreedom of the PressSinclair Broadcast Group Inc.

Remember when you had to jiggle an antenna on your TV set to get good reception for a UHF signal?

Well, those days are long gone and the Federal Communications Commission thinks it is time to stop treating a UHF channel as a weak sister to a VHF channel.

For those of you born after the days of rabbit ears, UHF stands for ultra high frequency and refers to channels above 13. A UHF signal was not as strong as a VHF signal. VHF stands for very high frequency and refers to channels 2 through 13. Why "ultra" was weaker than "very" when it seems that it should have been the other way around will just have to remain a mystery.

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The transition from analog to digital spectrum has actually made UHF signals stronger than VHF. That, coupled with the fact that most viewers receive broadcast signals via a pay-TV distributor and not an antenna on the roof, makes the UHF discount seem outdated.

Because of the original disparity, a UHF TV station is not treated the same as VHF station when the FCC is determining whether a broadcaster is in compliance with its television ownership rules, which limit a broadcaster to reaching 39% of the country.  In determining reach, a UHF signal is valued at 50% of a VHF signal. For example, a VHF signal in Los Angeles counts as 4.92% toward the national cap while a UHF signal counts for just 2.46%.

That discount has allowed several big broadcasters to gobble up TV stations without running afoul of the 39% cap.

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But that all could change if an FCC proposal to gut the so-called UHF discount is approved. On Thursday, the regulatory agency voted to launch a review of the UHF loophole which, if passed, may put a crimp on media consolidation.

Some broadcasters, such as Fox, would see their reach grow from about 25% to almost 39% without the UHF discount. Sinclair Broadcast Group, which is currently just over 20%, would also be very close to the cap with no discount factored in. A handful -- including ION and Univision -- would actually exceed the cap without the discount.

The FCC's proposal would grandfather companies who would exceed the 39% cap without the UHF discount. Also grandfathered are announced mergers that have yet to receive FCC approval. 

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Once the FCC issues the official notice of its proposed changes to the UHF discount, the industry, advocacy groups and general public will have several weeks to file comments on the matter. Many of the big broadcasters whose growth opportunities would be limited without the discount are expected to argue that no change should be made.

Media watchdogs will counter that the discount has long outlived its purpose.

"The rule lost its technical justification long ago and became nothing more than a gift for large conglomerates," said Matt Wood, policy director for Free Press, a media advocacy group concerned about consolidation.

Although acting FCC Chairwoman Mignon Clyburn and Commissioner Jessica Rosenworcel, both Democrats, voted for the review, Commissioner Ajit Pai, a Republican, dissented. However, the reason for his dissent was not because he wants to keep the discount but rather because he wants a broader review of the ownership rules including further relaxing the 39% cap.

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Follow Joe Flint on Twitter @JBFlint.

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Media IndustryFederal Communications CommissionTelevision IndustryUnivision (tv network)PoliticsFreedom of the PressSinclair Broadcast Group Inc.
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