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House Republicans: Don't Eliminate UHF Discount on Deals In Pipeline

House Energy & Commerce Committee Chairman Fred Upton (R-Mich.) and Communications Subcommittee Chairman Gret Walden (R-Ore.) have asked the FCC not to apply its proposed elimination of the UHF discount to transactions currently in the pipeline.

They argue that to do so would unfairly penalize companies who struck those deals based on the FCC rules in effect at the time.

In a letter to acting FCC Chairwoman Mignon Clyburn, the two said: "While we are not convinced that the existing limitations on broadcast ownership as a whole are appropriate or necessary in today's competitive media marketplace, we have particular apprehension about this proposed change and its effect on the business decisions of broadcast station group owners. Specifically, we are concerned that elimination of the UHF discount could inequitably harm those broadcast owners with pending transactions that were initiated under the existing UHF discount rule."

Tribune's purchase of local TV stations, for one, could run into trouble if the FCC applied its removal of the discount to that deal.

Clyburn has scheduled a vote on the discount for the Commission's Sept. 26 meeting. The Commission is expected to vote to end the discount, which only counts 50% of a UHF TV station's audience toward the FCC's 39% national ownership cap. Those figures date back to the analog world when UHF stations were weaker than VHF. Those fortunes are reversed in digital.

"We urge the Commission to ensure that any changes it makes to the UHF discount rule respect the holdings of existing licensees and applications pending at the Commission and are only applied prospectively to applications filed after the adoption of a new rule," they said.

The FCC is expected to at least raise the question of whether it should apply the UHF discount elimination to deals currently under review.