FCC Defends UHF Discount Decision in Court

Says opponents lack standing, have no case against temporary reinstatement

The FCC has told a federal court that it was reasonable to reinstate the UHF discount immediately while it considers adjusting the national audience reach cap, that it has the authority to adjust that cap, and that the discount and the cap have to be considered together because the UHF discount is meaningless except in relation to the cap.

That came in an opening brief filed in the U.S. Court of Appeals for the D.C. Circuit in the challenge to its UHF decision filed by Free Press, Office of Communication of the United Church of Christ (UCC), Prometheus Radio Project, Media Mobilizing Project, Media Alliance, National Hispanic, Media Coalition, and Common Cause. 

The FCC under new chair Ajit Pai voted back in April to reverse the previous Democratic majority's decision to eliminate the discount. That discount meant TV station group owners only had to count half of the audience to their UHF stations toward the 39% national audience reach cap. It dated from the days of analog TV, when UHF signals were weaker than VHF signals, and its restoration paved the way Sinclair to try and buy the Tribune stations.

Pai has long opposed repealing the discount without also considering adjusting the audience reach cap in the same proceeding. The FCC reinstated it in response to a petition to do so by Ion Media, a major UHF station group.

"The FCC’s decision to restore temporarily a settled framework that had previously been in place for three decades rests well within its discretion under the Administrative Procedure Act, other Congressional enactments and its own rules," the FCC told the court in asking it to reject the various groups' challenges.

The FCC argued that the cap and discount are inextricably linked, so must be reconsidered together given the potential impact of eliminating the discount without raising the cap to mitigate the impact, and given the increased competition in the marketplace that could justify raising the cap.

"[T]he percentage ceiling and the UHF discount reflected a collective policy judgment on the extent to which a single broadcaster could permeate the national market consistent with the public interest," the agency said.

The previous decision to eliminate the discount without also considering the cap is where the FCC got it wrong, not that the discount should necessarily be maintained, the FCC said.

The Pai commission branded the decision under predecessor Tom Wheeler to eliminate the discount as a "piecemeal, patchwork regulatory approach that married elimination of the UHF discount with selective exemptions for certain broadcasters." Those exemptions would be all the grandfathered groups that would otherwise have immediately been in violation of ownership rules, the one part of the UHF discount's elimination broadcasters strongly favored.

The FCC told the court that eliminating the discount amounted to a stricter cap without any showing that it furthered the public interest, which it says made that decision arbitrary and capricious, which violates the Administrative Procedures Act requirement that an agency justify its regulations.

"Rather than assume that the public interest is best served by the existing cap, no UHF discount, and grandfathered exemptions, the Commission has now decided to solicit a robust public record on, and consider the need for, the present cap and the discount as a whole in light of current marketplace realities," the FCC said.

The challengers to the decision don't even have standing to bring the suit, the FCC said, because they have not shown they have suffered any particular injury from the decision.

The FCC also said its opponents were procedurally barred from raising the issue of FCC authority, since they took the opposite view earlier in the proceedings. And even if it were not procedurally barred, Congress never foreclosed it from reconsidering the rule, which they could have done in statute, and has twice directed it to reconsider the rule, which signaled it was free to do so on its own initiative.

Republican commissioner Michael O'Rielly, who voted to reinstate the discount, does not think the FCC had the authority to change the discount, including eliminating it.

As to restoring it immediately rather than waiting for the dual consideration of the cap and discount, the FCC pointed out that it had been in place for three decades (that includes most of a decade sense the DTV switch made UHFs the favored stations).