Court Stays TV Discount Rule Affecting Sinclair-Tribune Deal

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By Kyle Daly

A federal appeals court June 1 temporarily blocked the Federal Communications Commission from restoring a discount under a TV station ownership rule ( Free Press, et al v. FCC, et al , D.C. Cir., 17-01129, stay order 6/1/17 ).

The GOP-controlled agency moved in April to restore the UHF discount, which only counts ultra high frequency stations halfway toward a nationwide cap on how many stations broadcasters such as Sinclair Broadcast Group Inc. and CBS Corp. can own. Sinclair has made a $3.9 billion bid for Tribune Media Co.

The U.S. Court of Appeals for the District of Columbia Circuit issued a brief order staying the restoration of the discount and ordering public policy groups that had asked for a stay to file another brief by June 7. The court said it issued the administrative stay to give itself enough time to consider the groups’ motion and that its action “should not be construed in any way as a ruling on the merits of that motion.”

A lengthy stay would make it difficult for Sinclair and Tribune to consummate their proposed merger, and may also limit other broadcast industry consolidation. Many top broadcasters are at, near or above the ownership cap without the discount.

Petitioners led by public interest group Free Press want the court to block the FCC’s restoration of the UHF discount. The FCC argued in a court filing earlier June 1 that the groups “fall far short” of demonstrating that the court needs to stay the move.

The FCC has acknowledged that the discount is technologically obsolete, dating back to the analog broadcast era when UHF signals were less desirable than very high frequency (VHF) ones.

The ownership cap bars individual entities from owning an aggregate of TV stations that reach more than 39 percent of households. The Democrat-controlled FCC scrapped the discount last year, arguing that it was obsolete in the digital television era. The current FCC voted April 20 to restore the discount, saying it’s too linked to the overall national ownership cap to be considered on its own. The discount was scheduled to be back in effect June 5.

Sinclair also filed its own brief June 1, opposing the Free Press-led motion for a stay. The company said it would be “specifically and directly impacted” by a stay.

To contact the reporter on this story: Kyle Daly in Washington at kdaly@bna.com

To contact the editor responsible for this story: Keith Perine at kperine@bna.com

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