FCC takes first step toward allowing more broadcast TV mergers

In a divided vote today, the Federal Communications Commission took steps that could lead to more consolidation among TV broadcasters, reducing the number of sources of local news.

The changes have drawn the ire of Democrats, though they’ve struggled to get the message out in part because the legal mechanics involved are somewhat dense and confusing.

Today’s changes revolve around the media ownership cap — a limit on how many households a TV or radio broadcaster is allowed to reach.

The rules are meant to promote diversity of media ownership, giving consumers access to different content and viewpoints. The cap currently prevents a company from reaching no more than 39 percent of US households with broadcast TV.

Large broadcasters hate the cap because it prevents them from getting even bigger. And since Trump took office and Ajit Pai was named chairman of the FCC, they’ve been lobbying to have it revised.

The FCC’s vote today starts to do that. First, it reinstates a rule known as the “UHF discount,” which lets broadcasters have a bigger reach in areas where they use a certain type of technology. And second, it starts plans to revisit and raise the media ownership cap.

It’s hard to say exactly how much the initial action will change. Major broadcasters, including Sinclair and Univision, are said to be bumping up against the cap. Reinstating the UHF discount might allow for more expansion — it allows for twice as much household reach by UHF stations — but it’s not clear that it would be enough to enable big mergers. Some Democrats suspect it will.

The UHF discount was put in place in the mid-’80s and only removed last September. The “discount” doesn’t refer to a price discount, but a discount on how many households UHF broadcasts are considered to have reached. It was put in place because UHF — ultra high frequency — TV broadcasting was considered worse and less reliable. (This is part of why we have Weird Al’s 1989 classic UHF, about a guy running a weird low-budget TV station.)

But that changed after broadcasters transitioned from analog to digital in 2009. Now, UHF stations are considered to be on par with, if not at an advantage to, other stations. So last year, the commission voted to remove the UHF discount going forward (existing stations were grandfathered in), since its purpose wasn’t relevant any more.

Both Republicans on the commission — Pai and Mike O’Rielly — voted against killing the discount last year, though for different reasons. Pai said the UHF discount can’t be changed without also changing the media ownership cap, since the two are related. O’Rielly argued the commission doesn’t actually have the authority to change either, since Congress last set the ownership cap.

That’s the setup for today’s changes: Pai isn’t necessarily saying the UHF discount makes sense, he’s just saying that if it’s being removed, broadcasters should be given other ways to get bigger.

And that’s the bigger part of today’s vote. The commission is promising to revisit the ownership cap later this year. Should it pass something, that’ll go a much further way to enable bigger broadcasters by allowing companies to reach a larger percentage of households.

The FCC’s lone Democrat, commissioner Mignon Clyburn, stood in staunch opposition, beginning her remarks by saying, “Welcome again to industry consolidation month at the FCC.” Clyburn said reinstating the discount could let broadcasters reach up to 78 percent of US households, instead of just 39 percent. “Most troubling … the discount will actually harm the public interest by reducing diversity, competition, and localism.”

Pai also heard from Congressional Democrats over the past week. Representative Anna Eshoo sent a letter saying, “Further consolidation will ensure that there are fewer independent news outlets serving as a counter-balance to misleading or inaccurate information from other sources. This will not serve the public interest or our democracy well.”

House minority leader Nancy Pelosi sent a letter alongside House commerce committee ranking member Frank Pallone, saying they were concerned that reinstating the UHF discount would allow Sinclair to purchase Tribune’s TV stations.

“First, consumers would lose an independent voice in their media market,” Pelosi and Pallone wrote. “And second, consumers could see their cable bills go up because Sinclair charges cable operators more than Tribune for retransmission consent.”

But today’s rule doesn’t guarantee that the media ownership cap will actually get changed. In fact, Pai is putting the commission in a bit of a weird position. Clyburn is likely to be opposed, and O’Rielly doesn’t believe the commission has the authority. So it’s very possible that today’s action will simply reinstate the UHF discount, without addressing the situation further.

It may also be just the start of Pai’s efforts to allow more consolidation. During a Senate hearing last month, Pai said that he’s also interested in lifting FCC restrictions that prevent the local consolidation of newspapers, radio stations, and TV stations.