Appeals Court Dismisses Challenge to FCC’s ‘UHF Discount’

By Ted Johnson

LOS ANGELES (Variety.com) – WASHINGTON — A federal appeals court dismissed a challenge to the ’s continued use of a rule that allows broadcasters to get a break for their UHF holdings.

The so-called “UHF discount” allows media companies to count their UHF stations at half their reach, which has allowed many station groups to amass more outlets and still fall within limits to broadcast ownership.

The appeals court said that the plaintiffs in the case, including the public interest group Free Press, lacked standing, but said that they did not consider the merits of the case.

FCC chairman Ajit Pai said that he was “pleased with the court’s decision to reject this challenge to the reinstatement of the pending the completion of our comprehensive review of the national ownership cap.”

The discount was put in place in the 1980s as a way to give stations a break given that the UHF signal was typically a poorer quality with a shorter reach. But those differences disappeared with the transition to digital television, and in 2016, the FCC voted to abolish it.

That changed when Pai became chairman and Republicans took the majority on the commission. They voted to restore the discount in April, 2017, arguing that it such a move had to be considered in conjunction with looking at other media ownership limits.

At a D.C. Circuit hearing in the spring, a three-judge panel appeared to question why an obsolete rule was still on the books. But they also raised some questions about the standing of public interest advocates who brought the case.

“The administrative record here identified a proposed merger (between Sinclair Broadcast Group and Tribune Media Company) that petitioners contend would result in a degree of broadcaster consolidation permissible only with the reinstatement of the challenged UHF discount,” the judges said in an unpublished order issued on Wednesday . “But the record did not contain — and petitioners’ initial submissions failed to provide — evidence that any member of any petitioner organization is a viewer in an affected market or otherwise stands to be injured by the identified consolidation.”

Critics said that the FCC’s move last year to reinstate the UHF discount paved the way for Sinclair’s agreement to acquire Tribune Media. But now that merger is in doubt, after Pai, citing “serious concerns,” moved last week to send the transaction to an administrative law judge for review.

Pai launched a proceeding earlier this year to consider changes to the FCC’s media ownership rules, including the cap that limits broadcast station holdings to no more than 39% of the country.

Jessica Gonzalez of Free Press, which was one of the group’s that challenged the UHF discount, said that they were “disappointed that this panel of judges refused to rule on the FCC’s phony math and poor excuses for the obsolete and harmful UHF discount.”

She said that  “it’s especially unfortunate that the FCC and the big broadcasters the UHF discount favors chose to put the question of standing in front of the judges, rather than engaging strictly on the merits — or lack thereof — in the agency’s decision. We’re consulting with our fellow petitioners and the lawyers who handled the case to explore what options we might have in court.”

Other groups that joined Free Press as plaintiffs were Common Cause, Media Alliance, the Media Mobilizing Project, the National Hispanic Media Coalition, Prometheus Radio Project and the United Church of Christ Office of Communication.