UHF Discount's Demise Could Crimp M&A, Critics Say

Confirming a movethe agnecy had long signaled, the FCC last week voted 3-2 along partisan lines to eliminate the “UHF discount” on broadcast stations’ reach. The decision came just two months after chairman Tom Wheeler circulated a plan for ditching the discount. It means regulators will now count the entire potential audience—rather than the 50% “discount” they have given to UHF stations for the past 30 years—when tallying owners’ ability to reach the limit of 39% of U.S. television households.

A grandfather clause included in the ruling means that current owner groups would not have to divest stations. But it could affect future acquisitions. In his dissent, Republican commissioner Ajit Pai suggested that the looming threat of eliminating the UHF discount has already cast a pall over station transactions. Major station owners including Sinclair and 21st Century Fox had voiced opposition to the ruling, which follows a decision last month by the FCC not to loosen restrictions on media cross-ownership within markets. 

Gary Arlen

Contributor Gary Arlen is known for his insights into the convergence of media, telecom, content and technology. Gary was founder/editor/publisher of Interactivity Report, TeleServices Report and other influential newsletters; he was the longtime “curmudgeon” columnist for Multichannel News as well as a regular contributor to AdMap, Washington Technology and Telecommunications Reports. He writes regularly about trends and media/marketing for the Consumer Technology Association's i3 magazine plus several blogs. Gary has taught media-focused courses on the adjunct faculties at George Mason University and American University and has guest-lectured at MIT, Harvard, UCLA, University of Southern California and Northwestern University and at countless media, marketing and technology industry events. As President of Arlen Communications LLC, he has provided analyses about the development of applications and services for entertainment, marketing and e-commerce.