The American Cable Association has made it clear that the restoration of the so-called “UHF discount” by the Ajit Pai-led FCC could be harmful to its member MVPDs.
Now, in reply comments filed Wednesday afternoon in the FCC’s matter of an amendment of Section 73.3555(e) of the Commission’s Rules — the National Television Multiple Ownership Rule — ACA President/CEO Matthew M. Polka and SVP/Government Affairs Ross J. Lieberman are blasting the NAB for moves it believes will expand the discount.
In its initial comments on MB Docket No. 17-318, the ACA suggested that the Commission should employ its new Office of Economic Analysis to carefully consider weighing the harms of raising the 39% national ownership cap—including possible harms from increased retransmission consent prices—against the alleged benefits.
In the reply comments submitted to the FCC on April 18, the ACA focused on broadcast proposals related to the “UHF Discount.”
It wrote, “For years, the Commission’s rules have specified that UHF stations ‘reach’ only half of the households in their local markets for purposes of calculating compliance with the 39% national television audience reach cap. The Commission based this discount on the inferior signal propagation characteristics of UHF stations delivering analog signals. Although all parties now agree that this technical rationale no longer applies because of the transition to digital signals, broadcasters have resisted efforts to eliminate the discount.
“Indeed, the National Association of Broadcasters now wants to expand the discount, based on a new rationale having nothing to do with signal propagation. It argues that, because broadcast ratings have decreased in recent years, stations now ‘reach’ a smaller audience than they did before—so all stations (UHF and VHF alike) should now receive a UHF discount. The four affiliates associations agree but argue that network-owned stations should not receive the new discount.”
As the ACA sees it, both proposals for an “Everybody Discount” are “ill-conceived as a matter of policy and impermissible as a matter of law.”
It suggested that the FCC must justify a new “Everybody Discount” in the same way that it must justify raising or eliminating the national cap itself.
That said, the ACA raised the question of who holds the legislative power in raising or lowering FCC ownership limits
“[If] the Commission lacks authority to raise the ownership cap directly, it also lacks authority to circumvent the cap through creative changes to the UHF discount,” the ACA argues. “First, the Commission has no discretion to change the existing UHF discount from one based on signal propagation to one based on ratings. Second, even if the Commission could lawfully adopt ratings-based discounts of some kind, it cannot rationally provide all stations with the same discount.
The ACA concluded that it continues to believe that the Commission should—”indeed must”—carefully balance the asserted benefits of raising the national cap against what it believes “are the very real harms that would stem from doing so.”
