Broadcast Mergers 'Putting Pressure' on UHF Discount Proposal, Lake Says
A recent spate of broadcast mergers is “putting pressure” on the FCC’s proposal to eliminate the UHF discount, Media Bureau Chief Bill Lake said on Friday at the Practising Law Institute’s Institute on Telecommunications Policy & Regulation. The deals, which include Gray’s purchase of Schurz’s stations and the proposed Media General/Meredith and Nexstar/Media General combinations, are seen as part of a scale “arms race” between broadcasters and multichannel video programming distributors, Lake said.
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The discount, which reduces the amount UHF TV stations count against the 39 percent viewership cap on broadcast ownership, “doesn’t really make sense anymore” since UHF spectrum is now much more desirable than VHF, Lake said. The FCC shouldn’t take up the UHF discount unless it's part of a holistic look at the ownership rules, Gray TV Deputy General Counsel Robert Folliard said, saying revoking the discount would still leave Gray under the ownership cap. FCC Chairman Tom Wheeler has promised to have recommendations for changes to the ownership rules as part of the quadrennial review by next year, Lake said.
The software and structure of the incentive auction is on track for it to proceed on schedule, Lake said. “I am tremendously confident we have a machine that will work,” he said of the auction. Lake also said he's “very bullish” on there being significant broadcaster participation in the auction. Since FCC commissioners told legislators they wouldn’t force broadcasters off the air 39 months after the auction, the deadline for broadcasters to move to their new channels is likely to be changed, Folliard said. That deadline is based on the 36-month time limit Congress gave the FCC to spend the repacking relocation funding, Lake said. Congress would need to change the spending timeline for the FCC to adjust the 39-month limit, he said.
An extension of the 39-month deadline could make it easier for the rollout of ATSC 3.0 to coincide with the repacking, Folliard said. The new broadcast standard will vastly improve TV reception and take pressure off mobile data limits, he said.
Lake and several video industry officials highlighted the growing importance of online video. Gray TV is focused on getting its content into mobile devices, Folliard said, touting Gray’s mobile app. The video industry is concerned about online video “getting saddled with legacy regulations” in the form of the FCC’s proposal to make OVDs into MVPDs, AT&T Services Vice President-Federal Regulatory Stacy Fuller said. Similarly, MVPDs shouldn’t be “burdened” by regulations that don’t affect their competitors, she said. “What regulators should do is nothing,” Folliard said. But regulators should make sure over-the-top services aren’t able to use broadcast content without paying retrans fees, he said.