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FCC Proposes the Elimination of the UHF Discount

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Released: September 26, 2013

Federal Communications Commission

FCC 13-123

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of
)
)

Amendment of Section 73.3555(e) of the
)
MB Docket No. 13-236
Commission's Rules, National Television Multiple )
Ownership Rule
)

NOTICE OF PROPOSED RULEMAKING

Adopted: September 26, 2013

Released: September 26, 2013

Comment Date: [30 days after date of publication in the Federal Register]
Reply Comment Date: [60 days after date of publication in the Federal Register]

By the Commission: Acting Chairwoman Clyburn and Commissioner Rosenworcel issuing separate
statements; Commissioner Pai dissenting and issuing a statement.

TABLE OF CONTENTS

Heading
Paragraph #
I. INTRODUCTION....................................................................................................1
II. BACKGROUND...................................................................................................3
III. DISCUSSION......................................................................................................13
A. Authority to Modify the UHF Discount....................................................................13
B. Elimination of the UHF Discount...........................................................................16
C. Existing Broadcast Station Combinations.................................................................20
D. VHF Discount.................................................................................................22
IV. PROCEDURAL MATTERS.....................................................................................24
V. ORDERING CLAUSE............................................................................................30
APPENDIX A - Proposed Rule Change
APPENDIX B - Initial Regulatory Flexibility Analysis

I.

INTRODUCTION

1.
This Notice of Proposed Rulemaking ("NPRM") commences a proceeding to consider
elimination of the so-called "UHF discount" in the Commission's national television multiple ownership
rule. Currently, the national television ownership rule prohibits a single entity from owning television
stations that, in the aggregate, reach more than 39 percent of the total television households in the nation.1
In determining compliance with the 39 percent national audience reach cap, the rule provides that
television stations broadcasting in the UHF spectrum will be attributed with only 50 percent of the
television households in their Designated Market Areas ("DMAs"); this is termed the "UHF discount."2
The discount was adopted in 1985, in recognition of the technical inferiority of UHF signals as compared

1 47 C.F.R. 73.3555(e)(1).
2 47 C.F.R. 73.3555(e)(2)(i).

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with VHF signals in analog television broadcasting and was intended to mitigate the competitive
disadvantage that UHF stations experienced in comparison to VHF stations because of their weaker
signals and smaller audience reach.3 However, there is a serious question whether this justification for the
UHF discount continues to exist in light of the transition of full-power television stations to digital
broadcasting (the "DTV transition") completed in June 2009.4 While UHF channels were technically
inferior to VHF channels for purposes of transmitting analog television signals, experience since the DTV
transition suggests that, far from being inferior, they may actually be superior to VHF when it comes to
the transmission of digital television signals, as discussed below.
2.
It thus appears that the DTV transition has rendered the UHF discount obsolete and it
should be eliminated.5 We seek comment on that tentative conclusion. We also tentatively decide, in the
event that we eliminate the UHF discount, to grandfather existing television station combinations that
would exceed the 39 percent national audience reach cap in the absence of the UHF discount and seek
comment on that proposal. Finally, we seek comment on whether a "VHF discount" should be adopted,
as it appears that under current conditions VHF channels may be technically inferior to UHF channels for
the propagation of digital television signals.

II.

BACKGROUND

3.
In 1985, the Commission imposed the national audience restriction together with the
UHF discount.6 To protect localism, diversity, and competition, the Commission determined that both a
station limit, restricting the total number of broadcast stations a single entity could own, and a nationwide
audience reach limit were necessary.7 Thus, in addition to reaffirming its prior decision to limit the
number of AM, FM, and television broadcast stations that a single entity could own, operate, or control to
twelve stations in each service, the Commission revised the national television multiple ownership rule to
prohibit a single entity from owning television stations that collectively exceeded 25 percent of the total
nationwide audience.8
4.
At that time, the Commission recognized the "inherent physical limitations" of the UHF
band.9 It concluded that the technical limitations of UHF stations should be reflected in the
implementation of the national audience cap.10 The Commission specifically found that the delivery of
television signals was more difficult in the UHF band because the strength of UHF television signals
decreased more rapidly with distance in comparison to the signals of stations broadcasting in the VHF
band, resulting in significantly smaller coverage area and audience reach.11 To reflect the coverage

3 Amendment of Section 73.3555 [formerly Sections 73.35, 73.240 and 73.636] of the Commission's Rules Relating
to Multiple Ownership of AM, FM and Television Broadcast Stations,
GN Docket No. 83-1009, Memorandum
Opinion and Order, 100 FCC 2d 74, 92-94, 42-44 (1985) (finding that the "inherent physical limitations" of UHF
broadcasting should be reflected in the national TV ownership rules) ("UHF Discount Order").
4 See 47 U.S.C. 309(j)(14)(A).
5 See Exec. Order No. 13579, 76 Fed. Reg. 41587 (July 14, 2011) (directing independent regulatory agencies to
review their regulations to "determine whether any such regulations should be modified, streamlined, expanded, or
repealed . . . .").
6 UHF Discount Order, 100 FCC 2d at 88-94, 33-44.
7 Id. at 88-92, 33-41. See also Amendment of Section 73.3555 [formerly Sections 73.35, 73.240, and 73.636] of
the Commission's Rules Relating to Multiple Ownership of AM, FM and Television Broadcast Stations,
GN Docket
No. 83-1009, Report and Order, 100 FCC 2d 17, 54-56, 108-12 (1984) (establishing a 12 station multiple
ownership rule).
8 UHF Discount Order, 100 FCC 2d at 90-92, 38-40.
9 Id. at 93, 43.
10 Id.
11 Id.
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limitations of the UHF band, the Commission determined that the licensee of a UHF station should be
attributed with only 50 percent of the television households in its market area for purposes of the national
audience restriction. The Commission concluded that this UHF discount reflected the historical concern
for the viability of UHF television and provided a measure of the actual handicap of UHF "voices," which
was consistent with traditional diversity objectives.12
5.
In the Telecommunications Act of 1996 ("1996 Act"), Congress directed the Commission
to increase the national audience reach cap from 25 percent to 35 percent and to eliminate the rule
restricting an entity to owning no more than twelve television stations nationwide.13 The 1996 Act did
not direct the Commission to amend the UHF discount.14
6.
The Commission subsequently reaffirmed the 35 percent national audience reach cap in
its 1998 Biennial Review Order.15 The Commission reasoned that it was premature to revise the audience
cap because it had not had sufficient time to fully observe the effects of raising the cap from 25 to 35
percent.16 The Commission retained the UHF discount, finding that it remained in the public interest.17
But the Commission indicated that the UHF discount would not likely be necessary after the anticipated
transition to digital television and stated that a Notice of Proposed Rulemaking would be issued in the
future to propose phasing out the discount once the digital transition was complete.18
7.
The Commission reexamined the issue in its 2002 Biennial Review Order.19 At that time,
the Commission found that the national audience reach cap, while not necessary to promote competition
and diversity, nonetheless remained necessary to promote localism.20 Further, the Commission decided
that an increase in the cap to 45 percent was justified.21 The Commission concluded that a 45 percent cap
would strike an appropriate balance, by permitting some growth for the big four network owners and
allowing them to achieve greater economies of scale, while at the same time ensuring that the networks

12 Id. at 93-94, 44. When the Commission adopted the UHF discount in 1985, it calculated television households
based on Arbitron's Area of Dominant Influence ("ADI") market rankings. Currently, the Commission relies on
Nielsen's Designated Market Areas ("DMAs") to calculate television households in a given market.
13 Telecommunications Act of 1996, Pub. L. No. 104-04, 202(c)(1), 110 Stat. 56, 111 (1996) ("1996 Act"). See
also Implementation of Sections 202(c)(1) and 202(e) of the Telecommunications Act of 1996 (National Broadcast
Television Ownership and Dual Network Operations)
, Order, 11 FCC Rcd 12374 (1996) ("Implementation Order of
Section 202(c)(1) of 1996 Act
").
14 Implementation Order of Section 202(c)(1) of 1996 Act, 11 FCC Rcd at 12375, 4.
15 1998 Biennial Review Order Review of the Commission's Broadcast Ownership Rules and Other Rules Adopted
Pursuant to Section 202 of the Telecommunications Act of 1996
, MM Docket No. 98-35, Biennial Review Report,
15 FCC Rcd 11058, 11072-75, 25-30 (2000) ("1998 Biennial Review Order"). The United States Court of the
Appeals for the District of Columbia ("D.C. Circuit") later remanded the 1998 Biennial Review Order after finding
that the decision to retain the national ownership rule was arbitrary and capricious. The D.C. Circuit found the
Commission's "wait-and-see" approach to be inconsistent with its mandate to determine on a biennial basis whether
the rules where in the public interest. In addition, the court found that the Commission failed to demonstrate that the
national audience reach cap advanced competition, diversity, or localism. See Fox Television Stations, Inc. v. FCC,
280 F.3d 1027, 1040-49 (D.C. Cir. 2002).
16 1998 Biennial Review Order, 15 FCC Rcd at 11072, 25.
17 Id. at 11078, 35.
18 Id. at 11079-80, 38.
19 2002 Biennial Review Order Review of the Commission's Broadcast Ownership Rules and Other Rules Adopted
Pursuant to Section 202 of the Telecommunications Act of 1996
, MB Docket No. 02-277, Report and Order and
Notice of Proposed Rulemaking, 18 FCC Rcd 13620, 13845-47, 585-91 (2003) ("2002 Biennial Review Order").
20 Id. at 13842, 578.
21 Id. at 13814, 499.
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could not reach a larger national audience than their affiliates collectively.22 The Commission also found
that setting the cap at 45 percent was consistent with past congressional action to increase the ownership
limit by 10 percentage points.23
8.
At the same time, the Commission upheld the UHF discount once again, finding that
there continued to be a disparity between the household reach of UHF and VHF signals, which
diminished the ability of UHF stations to compete effectively.24 The Commission surmised, however,
that "the digital [television] transition [would] largely eliminate the technical basis for the UHF discount
because UHF and VHF signals [would] be substantially equalized."25 Accordingly, the Commission
decided to sunset application of the UHF discount for stations owned by the top four broadcast networks
(i.e., ABC, CBS, NBC, and Fox) as the digital transition was completed on a market-by-market basis.
The Commission noted that the sunset would apply unless it made an affirmative determination that the
UHF discount continued to serve the public interest beyond the digital transition. The Commission
indicated further that it would review the status of the UHF discount in a subsequent biennial review and
decide at that time whether to extend the sunset to all other networks and station group owners.26
9.
Subsequently, Congress superseded the Commission's modification of the national
audience reach cap in the 2002 Biennial Review Order, including the increased 45 percent limit and the
sunset of the UHF discount. The 2004 Consolidated Appropriations Act directed the Commission to
modify its ownership rules to revise the national audience reach cap from 35 percent to 39 percent.27
Further, it amended Section 202(h) of the 1996 Act to require a quadrennial review of the Commission's
broadcast ownership rules rather than a biennial review, but specifically excluded "any rules relating to
the 39 percent national audience reach limitation" from the quadrennial review.28
10.
Prior to the enactment of the 2004 Consolidated Appropriations Act, several parties had
appealed the Commission's 2002 Biennial Review Order to the U.S. Court of Appeals for the Third
Circuit ("Third Circuit"). In June 2004, the Third Circuit issued a decision in which it found that the
challenges to the Commission's actions with respect to the national audience reach cap and the UHF
discount were moot as a result of Congress's action.29 The court determined that the Commission was
under a statutory directive, following the 2004 Consolidated Appropriations Act, to modify the national
audience reach cap to 39 percent, and that challenges to the Commission's decision to raise the cap to 45
percent therefore were no longer justiciable.30 The court found that challenges to the Commission's
decision to retain the UHF discount were likewise eliminated from the litigation by the language in the
2004 Consolidated Appropriations Act,31 which insulated the UHF discount rule from the Commission's

22 Id. at 13843-44, 581-83.
23 Id. 582.
24 Id. at 13845-46, 586-87. The Commission also determined that UHF stations required more expensive
transmitters and incurred higher electricity costs, as much as 1.5 to 3 times greater than the electricity needed for a
VHF station. The Commission concluded further that the UHF discount was still needed, in part, to encourage entry
and competition among broadcast networks. Id. at 13846-47, 588-89.
25 Id. at 13847, 591.
26 Id.
27 Consolidated Appropriations Act, 2004, Pub. L. No. 108-199, 629, 118 Stat. 3, 99-100 (2004) ("2004
Consolidated Appropriations Act").
28 Id.
29 Prometheus Radio Project v. FCC, 373 F.3d 372, 395-97 (3d Cir. 2004) ("Prometheus I").
30 Id. at 396.
31 Id.
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quadrennial (previously biennial) review of its media ownership rules.32 At the same time, the court
indicated that its decision did not "foreclose the Commission's consideration of its regulation defining the
UHF discount in a rulemaking outside the context of Section 202(h)."33 The court concluded that, barring
congressional intervention, "the Commission may decide, in the first instance, the scope of its authority to
modify or eliminate the UHF discount outside the context of [Section] 202(h)."34
11.
In July 2006, the Commission issued a Further Notice of Proposed Rule Making as part
of its 2006 quadrennial review of the media ownership rules.35 Among other things, the Further Notice
sought comment on the Third Circuit's holding with respect to the UHF discount rule and whether the
Commission "should retain, modify, or eliminate the UHF discount."36 In February 2008, the
Commission concluded in the 2006 Quadrennial Review Order that "the UHF discount is insulated from
review under Section 202(h)" as a result of the 2004 Consolidated Appropriations Act.37 But the
Commission noted the Third Circuit's 2004 decision had left it to the Commission to decide the scope of
its authority to modify or eliminate the UHF discount outside the context of Section 202(h).38
Accordingly, the Commission indicated that it would address the petitions, comments, and replies filed
with respect to the alteration, retention, or elimination of the UHF discount in a separate proceeding.39
12.
Since June 13, 2009, all full-power television stations have broadcast their over-the-air
signals using only digital technology.40 The DTV transition has enabled broadcasters to provide multiple
programming choices and enhanced capabilities to consumers.41 Yet the transition has posed more

32 Id. at 396-97 (reasoning that (1) elimination of the discount would effectively raise the limit above the statutory
level of 39 percent, and (2) Congress excluded from the quadrennial review process any rule "relating to" the
national cap, and the UHF discount is such a rule).
33 Id. at 397.
34 Id.
35 2006 Quadrennial Regulatory Review Review of the Commission's Broadcast Ownership Rules and Other Rules
Adopted Pursuant to Section 202 of the Telecommunications Act of 1996
, MB Docket No. 06-121, Further Notice of
Proposed Rule Making, 21 FCC Rcd 8834 (2006) ("Further Notice").
36 Id. at 8848-49, 34-35. The Further Notice refreshed the Commission's record on its authority to
alter the UHF discount. Following enactment of the 2004 Consolidated Appropriations Act, the Media
Bureau issued a Public Notice in February 2004 also seeking comment specifically on the Commission's
authority to modify or eliminate the UHF discount in light of the new statute. In particular, the Media
Bureau sought comment on whether the "passage of the 39 [percent] cap [signifies] congressional
approval, adoption, or ratification of the 50 [percent] UHF discount." The comments and replies were
filed in the docket for the 2002 Biennial Review Order. Media Bureau Seeks Additional Comment on
UHF Discount in Light of Recent Legislation Affecting National Television Ownership Cap
, MB Docket
No. 02-277, Public Notice, 19 FCC Rcd 2599, 2600 (2004). See also Comment and Reply Comment
Dates Set for Comments on UHF Discount In Light of Recent Legislation Affecting National Television
Ownership Cap
, MB Docket No. 02-277, Public Notice, 19 FCC Rcd 3917 (2004).
37 2006 Quadrennial Regulatory Review Review of the Commission's Broadcast Ownership Rules and Other Rules
Adopted Pursuant to Section 202 of the Telecommunications Act of 1996
, MB Docket No. 06-121, Report and Order
and Order on Reconsideration, 23 FCC Rcd 2010, 2084-85, 143 (2008) ("2006 Quadrennial Review Order"), aff'd
in part, rev'd in part sub nom. Prometheus Radio Project v. FCC
, 652 F.3d 431 (3d Cir. 2011).
38 2006 Quadrennial Review Order, 23 FCC Rcd at 2085, 144.
39 Id.
40 FCC, Digital Television, http://www.fcc.gov/digital-television (visited Aug. 6, 2013) ("DTV Website"). Congress
established June 12, 2009 as the deadline for full-power television stations to stop broadcasting their analog signals.
47 U.S.C. 309(j)(14)(A).
41 See supra DTV Website.
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challenges for VHF channels than UHF channels, because VHF spectrum has proven to have
characteristics that make it less desirable for providing digital television service.42 For instance, nearby
electrical devices tend to emit noise that can cause interference to DTV signals within the VHF band,
creating reception difficulties in urban areas even a short distance from the TV transmitter. The reception
of VHF signals also requires physically larger antennas compared to UHF signals, making VHF signals
less well suited for mobile applications.43 For these reasons among others, television broadcasters
generally have faced greater challenges providing consistent reception on VHF signals than UHF signals
in the digital environment.44

III.

DISCUSSION

A.

Authority to Modify the UHF Discount

13.
We tentatively conclude that the Commission has the authority to modify the national
television ownership rule, including the authority to revise or eliminate the UHF discount.45 Specifically,
we tentatively conclude that the 2004 Consolidated Appropriations Act does not preclude the
Commission from revisiting the national television ownership rule or the UHF discount contained therein,
in a proceeding separate from the quadrennial reviews of the broadcast ownership rules pursuant to
Section 202(h) of the 1996 Act. Notably, in the 2004 Consolidated Appropriations Act, Congress
directed the Commission to revise its rules to reflect a 39 percent audience reach cap. Congress did not
directly establish that limitation by statute or amend the Communications Act of 1934 (the
"Communications Act" or "Act") to address the subject of national television ownership. Further, as the
court in Prometheus I recognized, while Congress excluded the national television ownership rule from
the quadrennial review requirement under 202(h), it did not foreclose Commission action to review or
modify the rule in a separate context.46
14.
In addition, the Communications Act provides the Commission with the statutory
authority to revisit its rules and revise or eliminate them if it concludes such action is appropriate.
Section 4(i) of the Act authorizes the agency to "perform any and all acts, make such rules and
regulations, and issue such orders, not inconsistent with this Act, as may be necessary in the execution of
its functions."47 Similarly, Section 303(r) provides that the FCC may "[m]ake such rules and
regulations . . . not inconsistent with this law, as may be necessary to carry out the provisions of this
Act . . . ."48 Indeed, the courts have held that the Commission has an affirmative obligation to reexamine

42 See Innovation in the Broadcast Television Bands: Allocations, Channel Sharing and Improvements to VHF, ET
Docket No. 10-235, Notice of Proposed Rulemaking, 25 FCC Rcd 16498, 16511, 42 (2010) ("Broadcast
Innovation NPRM
").
43 Id.
44 Id. The Commission has taken a number of actions to help individual VHF stations cope with these difficulties.
See, e.g., Letter from Barbara A. Kreisman, Chief, Video Division, Media Bureau, to ABC, Inc. and Freedom
Broadcasting of New York Licensee, LLC (March 16, 2011), at http://licensing.fcc.gov/cgi-
bin/prod/cdbs/forms/prod/getimportletter_exh.cgi?import_letter_id=24962 (visited July 19, 2013) (permitting two
television broadcasters to operate facilities exceeding the maximum power and antenna height in an attempt to
resolve VHF reception issues).
45 47 C.F.R. 73.3555(e).
46 Prometheus I, 373 F.3d at 397 (holding the determination that the UHF discount is insulated from quadrennial
review does not "foreclose the Commission's consideration of its regulation defining the UHF discount in a
rulemaking outside the context of Section 202(h)"). See also Section 202(h) of the 1996 Act, 47 U.S.C. 303 note.
47 47 U.S.C. 154(i).
48 47 U.S.C. 303(r).
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its rules over time.49 For instance, in Bechtel v FCC, the court observed that "changes in factual and legal
circumstances may impose upon the agency an obligation to reconsider a settled policy or explain its
failure to do so. In the rulemaking context, for example, it is settled law that an agency may be forced to
reexamine its approach `if a significant factual predicate of a prior decision has been removed,'" 50 which
is precisely the case here.
15.
For these reasons, we believe the Commission retains the authority to modify both the
national audience reach restriction and the UHF discount, provided such action is undertaken in a
rulemaking proceeding separate from the Commission's quadrennial review of the broadcast ownership
rules pursuant to Section 202(h). We seek comment on our tentative conclusion and analysis. Does our
tentative conclusion appropriately interpret the 2004 Consolidated Appropriations Act and the Third
Circuit's guidance in its 2004 decision? Is there additional statutory guidance or case law that supports or
undermines our conclusion?

B.

Elimination of the UHF Discount

16.
The Commission has recognized for more than a decade that the underlying basis for the
UHF discount would likely disappear following the transition to digital television. As discussed above,
even as the Commission determined in both the 1998 Biennial Review Order and the 2002 Biennial
Review Order
that the UHF discount was still necessary, it anticipated that the DTV transition would
largely eliminate the technical basis for the UHF discount. 51 The Commission found that the digital
transition would substantially equalize UHF and VHF signals, and, thus, it decided to sunset the discount
for UHF stations owned by the top four broadcast networks (i.e., CBS, NBC, ABC, and Fox).52 As
discussed above, the sunset provisions adopted by the Commission were superseded by Congress's action
in the 2004 Consolidated Appropriations Act. Nevertheless, the DTV transition has borne out the
Commission's expectation. Digital UHF stations do not suffer from the same comparative technical
deficiencies vis--vis VHF facilities that characterized analog UHF stations.
17.
The Commission has acknowledged that UHF spectrum is now highly desirable in light
of its superior propagation characteristics for digital television, and that the disparity between UHF and
VHF channels has if anything been reversed.53 In fact, following the DTV transition, some stations that
initially elected to operate on a VHF channel have sought to relocate to a UHF channel to resolve
technical difficulties encountered in broadcasting on VHF.54 The Commission has explored engineering
options to increase the utility of VHF spectrum for digital television purposes.55 Furthermore, the

49 See, e.g., Cincinnati Bell Tel. Co. v. FCC, 69 F.3d 752, 767 (6th Cir. 1995), citing Bechtel v FCC, 957 F.2d 873,
881 (D.C. Cir. 1992), cert. denied, 506 U.S. 816 (1992) ("Bechtel") ("[W]here the factual assumptions which
support an agency rule are no longer valid, agencies ordinarily must reexamine their approach.").
50 Bechtel, 957 F.2d at 881, quoting WWHT, Inc. v FCC, 656 F.2d 807, 819 (D.C. Cir 1981).
51 2002 Biennial Review Order, 18 FCC Rcd at 13845-47, 586-91; 1998 Biennial Review Order, 15 FCC Rcd at
11078-80, 35-38.
52 2002 Biennial Review Order, 18 FCC Rcd at 13847, 591.
53 Broadcast Innovation NPRM, 25 FCC Rcd at16511-13, 42-45.
54 See, e.g., Amendment of Section 73.622(i), Post-Transition Table of DTV Allotments, Television Broadcast
Stations. (Panama City, Florida)
, MB Docket No. 11-140, Report and Order, 26 FCC Rcd 14415 (Chief, Video
Division, MB 2011) (substituting channel 18 for channel 7 for Gray Television Licensee, LLC); Amendment of
Section 73.622(i), Post-Transition Table of DTV Allotments, Television Broadcast Stations. (Nashville, Tennessee)
,
MB Docket No. 11-29, Report and Order, 26 FCC Rcd 7677 (Chief, Video Division, MB 2011) (substituting
channel 25 for channel 5 for NewsChannel 5 Network, LLC); Amendment of Section 73.622(i), Final DTV Table of
Allotments, Television Broadcast Stations. (Oklahoma City, Oklahoma)
, MB Docket No. 10-19, Report and Order,
25 FCC Rcd 2276 (Associate Chief, Video Division, MB 2010) (substituting channel 39 for channel 9 for Griffin
Licensing, L.L.C.).
55 Broadcast Innovation NPRM, 25 FCC Rcd at 16513-17, 46-57.
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Commission recently determined that annual regulatory fees for UHF and VHF stations will be combined
into one fee category beginning in Fiscal Year 2014, eliminating a distinction based on the historical
disadvantages of UHF.56 Today, rather than offsetting an actual service limitation or reflecting a disparity
in signal coverage, the UHF discount appears only to confer a factually unwarranted benefit on owners of
UHF television stations. If left in place, the UHF discount could undermine the 39 percent national
audience reach cap on the false predicate that UHF stations do not reach equivalent audiences to VHF
stations.
18.
Based on these findings, we tentatively conclude that the historical justification for the
UHF discount no longer exists and the rule is therefore obsolete. We accordingly propose that the UHF
discount should be eliminated from the national television multiple ownership rule.
19.
We seek comment on this proposal. In particular, does the UHF discount still serve the
public interest? Does the discount promote market entry? Does it promote competition among broadcast
networks? Are we correct in concluding that the technical limitations for UHF spectrum that existed for
analog operations are not present in a digital environment? If so, are there other public policy
justifications for maintaining the UHF discount despite the fact that the historical technical inferiority of
UHF spectrum for television broadcasting no longer exists? Is any disparity between the broadcast
coverage of UHF and VHF channels less important today than in 1985 given that many consumers
receive local broadcast stations via a multichannel video programming distributor ("MVPD") and not
over-the-air? Are there any other market conditions that merit our consideration with regard to the UHF
discount? Is there any factual basis to maintain the UHF discount in the current environment? What are
the costs and benefits of eliminating the UHF discount?57

C.

Existing Broadcast Station Combinations

20.
We recognize that the elimination of the UHF discount would impact the calculation of
nationwide audience reach for broadcast station groups with UHF stations. We believe, however, that
only a small number of broadcast station ownership groups have combinations that approach the current
39 percent ownership nationwide cap and that might exceed the cap if the UHF discount were eliminated.
We therefore propose, in the event that we eliminate the UHF discount, to grandfather broadcast station
ownership groups to the extent that they exceed the 39 percent national audience cap solely as a result of
the termination of the UHF discount rule as of the date of the release of this NPRM.58 We also propose to
grandfather proposed station combinations that would exceed the 39 percent cap as a result of the
elimination of the UHF discount for which an application is pending with the Commission or which have
received Commission approval, but are not yet consummated, at that the time this NPRM is released.

56 See, e.g., Assessment and Collection of Regulatory Fees for Fiscal Year 2013, MD Docket No. 13-140, Report
and Order, 28 FCC Rcd 12351, 12361-62, 29-31 (2013) ("Regulatory fees for full-service television stations are
[currently] calculated based on two, five-tiered market segments for [UHF] and [VHF] television stations.").
57 To the extent possible, commenters should quantify the expected costs or benefits of eliminating the UHF
discount and provide detailed support for any estimates.
58 We note that industry participants have effectively been on notice since at least 2000, when the 1998 Biennial
Review Order
was released, that the Commission expected to eliminate the UHF discount after completion of the
DTV transition. See supra 6, note 18. Further, adoption of this grandfathering date is consistent with previous
Commission decisions. See Review of the Commission's Regulations Governing Attribution of Broadcast and
Cable/MDS Interests
, MM Docket No. 94-150, Report and Order, 14 FCC Rcd 12559, 12628-31, 162-73 (1999)
(determining interests acquired on or after the NPRM adoption date subject to the new equity/debt plus rules
adopted in the order). See also Review of the Commission's Regulations Governing Television Broadcasting, MM
Docket No. 91-221, Report and Order, 14 FCC Rcd 12903, 12963, 139 (1999), clarified in Memorandum Opinion
and Second Order on Reconsideration, 16 FCC Rcd 1067, 1085-88, 50-55 (2001) (grandfathering TV LMAs
entered before the release date of the NPRM and not those entered after that date), aff'd in part and remanded in
part sub nom. Sinclair Broadcast Group, Inc. v. FCC
, 284 F.3d 148, 166 (D.C. Cir. 2002).
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Further, we propose that any grandfathered ownership combination subsequently sold or transferred
would be required to comply with the national ownership cap in existence at the time of the transfer.59
21.
We seek comment on these issues. Do our proposals serve the public interest? What is
the potential impact of our grandfathering proposals on broadcast ownership groups, the broadcast
industry, local markets, and consumers? Do our proposals adequately address any potential impact on
existing broadcast station ownership groups? Should we consider any specific circumstances in
evaluating applications for waiver of the national ownership cap received from grandfathered station
groups that enter into subsequent transactions, such as whether the application for waiver seeks to allow a
corporate transformation of an existing station group including a refinancing or restructuring versus
action that would circumvent the proposed rule change? Are there other strategies we should consider or
employ to address existing broadcast station ownership groups that would exceed the 39 percent limit if
the UHF discount were eliminated? Are there other alternatives we should consider with regard to
pending applications? What are the costs and benefits of our grandfathering proposal and any other
proposals offered by commenters?

D.

VHF Discount

22.
As noted above, the Commission has acknowledged that the DTV transition has made
UHF spectrum, if anything, more desirable than VHF spectrum for purposes of digital television
broadcasting.60 While the Commission has proposed solutions to VHF reception challenges, it has
acknowledged that the options for improving digital television service on VHF channels are limited,
especially in the low-VHF band.61 Unfortunately, it is often consumers using indoor antennas who tend
to face reception difficulties most frequently.62 For these reasons, some television stations, as previously
indicated, have sought to relocate to UHF channels in order to resolve the technical difficulties
experienced with their VHF channels.63
23.
Given the challenges that VHF stations face in delivering digital television signals, we
seek comment on whether it would be appropriate at this time to adopt a "VHF discount." Could a VHF
discount function similarly to the current UHF discount in that only a certain percentage of the television
households in a DMA would be attributed to a VHF television station for purposes of calculating a station
group's national audience reach? We seek comment on whether a VHF discount is either warranted or
advisable at this time. If a VHF discount is advisable, would it be appropriate to attribute to VHF stations
only 50 percent of the TV households in their DMA? Would a different percentage be more appropriate?
Is a discount more or less important than it was when the UHF discount was adopted in 1985, because
many television consumers today receive local broadcast stations via an MVPD rather than over-the-air?
Would a VHF discount run the risk of becoming obsolete as a result of market developments, as in the

59 We find this approach is consistent with common Commission practice with regard to grandfathering. See, e.g.,
Review of the Commission's Regulations Governing Television Broadcasting, MM Docket No. 91-221, Report and
Order, 14 FCC Rcd 12903, 12909, 11 (1999) ("Any transfer of a grandfathered combination after the adoption
date of this Report and Order (whether during the initial grandfathering period [or] after a permanent grandfathering
decision has been made) must meet the [existing] radio/TV cross-ownership rule."); Applications of Stauffer
Communications, Inc.
, Memorandum Opinion and Order, 10 FCC Rcd 5165, 5165, 3 (1995) ("[G]randfathered
status under our multiple ownership rules terminates upon Commission approval of a transfer of control.").
60 See supra 12.
61 Broadcast Innovation NPRM, 25 FCC Rcd at 16511-17, 42-57. See also Innovation in the Broadcast
Television Bands: Allocations, Channel Sharing and Improvements to VHF
, ET Docket No. 10-235, Report and
Order, 27 FCC Rcd 4616, 4621, 10 (2012) ("[T]he record in this proceeding does not provide us [with] a clear
direction with respect to significantly increasing the utility of the VHF bands for the operation of television
services.").
62 Broadcast Innovation NPRM, 25 FCC Rcd at 16512, 43.
63 See supra note 54.
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case of the UHF discount? Are there any other market conditions that merit our consideration with regard
to a possible VHF discount? In the event that the Commission adopts a VHF discount, should we
distinguish between high and low VHF channels? Are there options other than a discount to address the
current inferiority of VHF signal propagation for purposes of the national audience reach cap? What are
the costs and benefits of imposing a VHF discount and any other proposal offered by commenters?

IV.

PROCEDURAL MATTERS

A.

Ex Parte Presentations

24.
The proceeding this Notice initiates shall be treated as a "permit-but-disclose" proceeding
in accordance with the Commission's ex parte rules.64 Persons making ex parte presentations must file a
copy of any written presentation or a memorandum summarizing any oral presentation within two
business days after the presentation (unless a different deadline applicable to the Sunshine period applies).
Persons making oral ex parte presentations are reminded that memoranda summarizing the presentation
must (1) list all persons attending or otherwise participating in the meeting at which the ex parte
presentation was made, and (2) summarize all data presented and arguments made during the
presentation. If the presentation consisted in whole or in part of the presentation of data or arguments
already reflected in the presenter's written comments, memoranda or other filings in the proceeding, the
presenter may provide citations to such data or arguments in his or her prior comments, memoranda, or
other filings (specifying the relevant page and/or paragraph numbers where such data or arguments can be
found) in lieu of summarizing them in the memorandum. Documents shown or given to Commission
staff during ex parte meetings are deemed to be written ex parte presentations and must be filed
consistent with rule 1.1206(b). In proceedings governed by rule 1.49(f) or for which the Commission has
made available a method of electronic filing, written ex parte presentations and memoranda summarizing
oral ex parte presentations, and all attachments thereto, must be filed through the electronic comment
filing system available for that proceeding, and must be filed in their native format (e.g., .doc, .xml, .ppt,
searchable .pdf). Participants in this proceeding should familiarize themselves with the Commission's ex
parte
rules.

B.

Initial Regulatory Flexibility Analysis

25.
The Regulatory Flexibility Act of 1980, as amended ("RFA"), requires that a regulatory
flexibility analysis be prepared for notice and comment rule making proceedings, unless the agency
certifies that "the rule will not, if promulgated, have a significant economic impact on a substantial
number of small entities." The RFA generally defines the term "small entity" as having the same
meaning as the terms "small business," "small organization," and "small governmental jurisdiction." In
addition, the term "small business" has the same meaning as the term "small business concern" under the
Small Business Act. A "small business concern" is one which: (1) is independently owned and operated;
(2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the
Small Business Administration (SBA).
26.
With respect to this Notice, an Initial Regulatory Flexibility Analysis ("IRFA") under the
Regulatory Flexibility Act65 is contained in Appendix B. Written public comments are requested in the
IFRA, and must be filed in accordance with the same filing deadlines as comments on this NRPM, with a
distinct heading designating them as responses to the IRFA. The Commission will send a copy of this
NPRM, including the IRFA, in a report to Congress pursuant to the Congressional Review Act. In
addition, a copy of this NPRM and the IRFA will be sent to the Chief Counsel for Advocacy of the SBA,
and will be published in the Federal Register.

64 47 C.F.R. 1.1200 et seq.
65 5 U.S.C. 603.
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C.

Paperwork Reduction Act Analysis

27.
This document does not contain proposed information collection(s) subject to the
Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. In addition, therefore, it does not contain
any new or modified information collection burden for small business concerns with fewer than 25
employees, pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44
U.S.C. 3506(c)(4).

D.

Comment Filing Procedures

28.
Pursuant to sections 1.415 and 1.419 of the Commission's rules, 47 CFR 1.415, 1.419,
interested parties may file comments and reply comments on or before the dates indicated on the first
page of this document. Comments may be filed using the Commission's Electronic Comment Filing
System (ECFS). See Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998).

Electronic Filers: Comments may be filed electronically using the Internet by accessing the
ECFS: http://fjallfoss.fcc.gov/ecfs2/.

Paper Filers: Parties who choose to file by paper must file an original and one copy of each
filing. If more than one docket or rulemaking number appears in the caption of this proceeding,
filers must submit two additional copies for each additional docket or rulemaking number.

Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-
class or overnight U.S. Postal Service mail. All filings must be addressed to the Commission's
Secretary, Office of the Secretary, Federal Communications Commission.

All hand-delivered or messenger-delivered paper filings for the Commission's Secretary
must be delivered to FCC Headquarters at 445 12th St., SW, Room TW-A325,
Washington, DC 20554. The filing hours are 8:00 a.m. to 7:00 p.m. All hand deliveries
must be held together with rubber bands or fasteners. Any envelopes and boxes must be
disposed of before entering the building.

Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority
Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743.

U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445 12th
Street, SW, Washington DC 20554.

People with Disabilities: To request materials in accessible formats for people with disabilities
(braille, large print, electronic files, audio format), send an e-mail to fcc504@fcc.gov or call the
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (tty).
29.
Additional Information: For additional information on this proceeding, please contact
Brendan Holland of the Media Bureau, Industry Analysis Division, Brendan.Holland@fcc.gov, (202)
418-2757, or Johanna Thomas of the Media Bureau, Industry Analysis Division,
Johanna.Thomas@fcc.gov, (202) 418-7551.

V.

ORDERING CLAUSE

30.
Accordingly,

IT IS ORDERED

that, pursuant to the authority contained in Sections 1,
2(a), 4(i), 303(r), 307, 309, and 310 of the Communications Act of 1934, as amended, 47 U.S.C. 151,
152(a), 154(i), 303(r), 307, 309, and 310, this Notice of Proposed Rulemaking

IS ADOPTED

.
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31.
IT IS FURTHER ORDERED that the Commission's Consumer and Governmental
Affairs Bureau, Reference Information Center, SHALL SEND a copy of this Notice, including the Initial
Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business
Administration.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
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APPENDIX A

Proposed Rule Change

PART 73 RADIO BROADCAST SERVICES

1. The authority citation for Part 73 continues to read as follows:
AUTHORITY: 47 U.S.C. 154, 303, 334, 336 and 339.
2. Amend 73.3555 by revising paragraph (e) to read as follows:
73.3555 Multiple ownership.
* * * * *
(e) National television multiple ownership rule.
(1) No license for a commercial television broadcast station shall be granted, transferred or assigned to
any party (including all parties under common control) if the grant, transfer or assignment of such license
would result in such party or any of its stockholders, partners, members, officers or directors having a
cognizable interest in television stations which have an aggregate national audience reach exceeding
thirty-nine (39) percent.
(2) For purposes of this paragraph (e):
(i) National audience reach means the total number of television households in the Nielsen Designated
Market Areas (DMAs) in which the relevant stations are located divided by the total national television
households as measured by DMA data at the time of a grant, transfer, or assignment of a license. For
purposes of making this calculation, UHF television stations shall be attributed with 50 percent of the
television households in their DMA market.
* * * * *
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APPENDIX B

Initial Regulatory Flexibility Act Analysis

1.
As required by the Regulatory Flexibility Act of 1980, as amended ("RFA"), the Federal
Communications Commission ("Commission") has prepared this present Initial Regulatory Flexibility
Analysis ("IRFA") concerning the possible significant economic impact on small entities by the policies
and rules proposed in this Notice of Proposed Rulemaking ("NPRM").1 Written public comments are
requested on this IRFA. Comments must be identified as responses to the IRFA and must be filed by the
deadlines for comments provided on the first page of the NPRM. The Commission will send a copy of
the NPRM, including this IRFA, to the Chief Counsel for Advocacy of the Small Business Administration
("SBA").2 In addition, the NPRM and IRFA (or summaries thereof) will be published in the Federal
Register.3

A.

Need for, and Objectives of, the Proposed Rule Changes

2.
The Commission seeks comment in this NPRM to consider elimination of the so-called
"UHF discount" in the Commission's national television multiple ownership rule. The national television
ownership rule currently prohibits a single entity from owning television stations that, in the aggregate,
reach more than 39 percent of the total television households in the nation.4 The rule provides television
stations broadcasting in the UHF spectrum with a discount by attributing those stations with only 50
percent of the television households in their Designated Market Areas ("DMAs"); this is termed the UHF
discount.5 The UHF discount was adopted in recognition of the technical inferiority of UHF signals in
analog television broadcasting and was intended to mitigate the competitive disadvantages that UHF
stations experienced in comparison to VHF stations because of their weaker signals and smaller audience
reach.6 However, there is serious question whether this justification for the UHF discount continues to
exist in light of the transition of full-power television stations to digital broadcasting (the "DTV
transition") completed on June 12, 2009.7 Our experience since the DTV transition suggests that UHF
channels may actually be superior to VHF channels when it comes to the transmission of digital
television.
3.
This NPRM tentatively concludes that the UHF discount is obsolete since the DTV
transition and should be eliminated. The Commission seeks comment on this tentative conclusion, as
well as on our tentative decision to grandfather existing television station combinations that would exceed
the 39 percent national audience reach cap in the absence of the UHF discount. Finally, we seek
comment on whether a "VHF discount" should be adopted, as it appears that under current conditions
VHF channels may be technically inferior to UHF channels for the propagation of digital television
signals.

1 5 U.S.C. 603. The RFA, 5 U.S.C. 601 612, has been amended by the Small Business Regulatory
Enforcement Fairness Act of 1996, Pub. L. No. 104-121, Title II, 110 Stat. 857 (1996).
2 5 U.S.C. 603(a).
3 See id.
4 47 C.F.R. 73.3555(e)(1).
5 47 C.F.R. 73.3555(e)(2)(i).
6 See Amendment of Section 73.3555 [formerly Sections 73.35, 73.240 and 73.636] of the Commission's Rules
Relating to Multiple Ownership of AM, FM and Television Broadcast Stations,
GN Docket No. 83-1009,
Memorandum Opinion and Order, 100 FCC 2d 74, 92-94, 42-44 (1985).
7 47 U.S.C. 309(j)(14)(A).
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B.

Legal Basis

4.
The proposed action is authorized under Sections 1, 2(a), 4(i), 303(r), 307, 309, and 310
of the Communications Act of 1934, as amended, 47 U.S.C. 151, 152(a), 154(i), 303(r), 307, 309, and
310.

C.

Description and Estimate of the Number of Small Entities to Which the Proposed
Rules Will Apply

5.
The RFA directs agencies to provide a description of and, where feasible, an estimate of
the number of small entities that may be affected by the proposed rules, if adopted.8 The RFA generally
defines the term "small entity" as having the same meaning as the terms "small business," "small
organization," and "small governmental jurisdiction."9 In addition, the term "small business" has the
same meaning as the term "small business concern" under the Small Business Act.10 A small business
concern is one which: (1) is independently owned and operated; (2) is not dominant in its field of
operation; and (3) satisfies any additional criteria established by the SBA.11
6.
Television Broadcasting. The SBA designates television broadcasting stations with $35.5
million or less in annual receipts as small businesses.12 Television broadcasting includes establishments
primarily engaged in broadcasting images together with sound. These establishments operate television
broadcasting studios and facilities for the programming and transmission of programs to the public.
These establishments also produce or transmit visual programming to affiliated broadcast television
stations, which in turn broadcast the programs to the public on a predetermined schedule. Programming
may originate in their own studio, from an affiliated network, or from external sources.13 The
Commission estimates that there are 1,386 licensed commercial television stations in the United States.14
In addition, according to Commission staff review of the BIA Kelsey Inc. Media Access Pro Television
Database as of June 10, 2013, 1,245 (or about 90 percent) of the estimated 1,386 commercial television
stations have revenues of $35.5 million or less and, thus, qualify as small entities under the SBA
definition. We therefore estimate that the majority of commercial television broadcasters are small
entities. The Commission has also estimated the number of licensed noncommercial educational ("NCE")

8 5 U.S.C. 603(b)(3).
9 5 U.S.C. 601(6).
10 5 U.S.C. 601(3) (incorporating by reference the definition of "small business concern" in 15 U.S.C. 632).
Pursuant to the RFA, the statutory definition of a small business applies "unless an agency, after consultation with the
Office of Advocacy of the Small Business Administration and after opportunity for public comment, establishes one or
more definitions of such term which are appropriate to the activities of the agency and publishes such definition(s) in
the Federal Register." 5 U.S.C. 601(3).
11 15 U.S.C. 632.
12 The SBA raised its standards for television broadcasting stations in 2012. Previously, television broadcasting
stations with no more than $14 million in annual receipts were considered a small business pursuant to the SBA's
standards. Those standards have since increased to $35.5 million in annual receipts. See Small Business Size
Standards: Information, 77 Fed. Reg. 72702, 72705 (Dec. 6, 2012). See also 13 C.F.R. 121.201, NAICS code
515120.
13 U.S. Census Bureau, 2012 NAICS Definition, 515120 Television Broadcasting,
http://www.census.gov./eos/www/naics/index.html (visited July 16, 2013).
14 See Broadcast Station Totals as of June 30, 2013, Press Release (rel. July 10, 2013), at
http://transition.fcc.gov/Daily_Releases/Daily_Business/2013/db0710/DOC-322079A1.pdf (visited July 15, 2013).
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television stations to be 396.15 These stations are non-profit, and therefore considered to be small
entities.16
7.
We note, however, that in assessing whether a business concern qualifies as small under
the above definition, business (control) affiliations17 must be included. Our estimate, therefore, likely
overstates the number of small entities that might be affected by our action because the revenue figure on
which it is based does not include or aggregate revenues from affiliated companies. In addition, an
element of the definition of "small business" is that the entity not be dominant in its field of operation.
We are unable at this time to define or quantify the criteria that would establish whether a specific
television station is dominant in its field of operation. Accordingly, the estimate of small businesses to
which rules may apply does not exclude any television station from the definition of a small business on
this basis and is therefore possibly over-inclusive to that extent.

D.

Description of Projected Reporting, Recordkeeping, and Other Compliance
Requirements

8.
The NPRM tentatively concludes to modify the national television multiple ownership
rule as set forth in paragraph 3 above, which would affect reporting, recordkeeping, or other compliance
requirements. The conclusion, if ultimately adopted, would modify several FCC forms and their
instructions: (1) FCC Form 301, Application for Construction Permit For Commercial Broadcast Station;
(2) FCC Form 314, Application for Consent to Assignment of Broadcast Station Construction Permit or
License; and (3) FCC Form 315, Application for Consent to Transfer Control of Corporation Holding
Broadcast Station Construction Permit or License. The Commission may have to modify other forms that
include in their instructions the media ownership rules or citations to media ownership proceedings,
including Form 303-s and Form 323. The impact of these changes will be the same on all entities, and we
do not anticipate that compliance will require the expenditure of any additional resources as the proposed
modification to the national television multiple ownership rule will not place any additional obligations
on small businesses.

E.

Steps Taken to Minimize Significant Impact on Small Entities and Significant
Alternatives Considered

9.
The RFA requires an agency to describe any significant alternatives that it has considered
in reaching its proposed approach, which may include the following four alternatives (among others): (1)
the establishment of differing compliance or reporting requirements or timetables that take into account
the resources available to small entities; (2) the clarification, consolidation, or simplification of
compliance and reporting requirements under the rule for small entities; (3) the use of performance, rather
than design, standards; and (4) an exemption from coverage of the rule, or any part thereof, for small
entities.18
10.
The tentative conclusions and specific proposals on which the NPRM seeks comments, as
set forth in paragraph 3 above, are intended to achieve our public interest goal of competition. By
recognizing the technical advancements of the UHF band after the DTV transition, this NPRM seeks to
create a regulatory landscape that reflects the current value of UHF spectrum in order to better assess
national television ownership figures. Further, this NPRM complies with the President's directive for
independent agencies to review their existing regulation "to determine whether such regulations should be

15 See id.
16 5 U.S.C. 601(4), (6).
17 "[Business concerns] are affiliates of each other when one [concern] controls or has the power to control the
other, or a third party or parties controls or has to power to control both." 13 C.F.R. 121.103(a)(1).
18 5 U.S.C. 603(c).
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modified, streamlined, expanded, or repealed so as to make the agency's regulatory program more
effective or less burdensome in achieving the regulatory objectives."19 As such, our proposed rule seeks
to reduce costs on firms generally, including small business entities, by removing outdated regulations.
In addition, the grandfathering and VHF discount proposals seek to create a more effective regulatory
landscape by addressing current market realities. The NPRM also requests comment on whether any
alternatives to the Commission's tentative conclusions or specific proposals exist, which provides small
entities with the opportunity to indicate any disagreement with our findings and conclusions.

F.

Federal Rules that May Duplicate, Overlap, or Conflict with the Proposed Rule

11.
None.

19 Exec. Order No. 13579, 76 Fed. Reg. 41587 (July 14, 2011).
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STATEMENT OF

ACTING CHAIRWOMAN MIGNON CLYBURN

Re:
Amendment of Section 73.3555(e) of the Commission's Rules, National Television Multiple
Ownership Rule
, MB Docket No. 13-236.
I am pleased today to issue a Notice of Proposed Rulemaking that initiates a proceeding to
consider the elimination of the UHF discount.
The Commission adopted the UHF discount nearly 30 years ago, when UHF signals were
considered to be technically inferior to VHF signals in analog television broadcasting. The rule was a
means to address the competitive disadvantages experienced by UHF stations at the time. Yet with the
transition of full-power stations to digital broadcasting completed in June 2009, the technical inferiority
of UHF channels for the transmission of digital television signals appears to be a thing of the past. Thus,
the technical justification for the UHF discount no longer appears valid.
The Commission and the television industry have anticipated the elimination of this discount for
well over a decade. It is our task as regulators to ensure that our rules reflect current market realities.
While it also may be appropriate to undertake the significant task of reexamining the national cap at some
point in the future, we cannot in the meantime ignore the impact the DTV transition has had in the
marketplace, changes that everyone must acknowledge currently stand this rule on its head.
The questions we ask today are ones the Commission promised to raise many times in written
orders and should not surprise any market participant. The Notice specifically reflects the Commission's
intent to consider fairly and accommodate as appropriate existing television station combinations,
pending applications, and any future transactions that present special circumstances. The common sense
action outlined in this NPRM should help to ensure that our rules reflect the current technical realities of
television broadcasting. It is also consistent with the President's directive in his Executive Order to
review significant regulations and determine whether they still serve the public interest.
I wish to thank Bill Lake and the staff in the Media Bureau, particularly Hillary DeNigro,
Brendan Holland, and Johanna Thomas, for their hard work on this Notice.
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STATEMENT OF

COMMISSIONER JESSICA ROSENWORCEL

Re:
Amendment of Section 73.3555(e) of the Commission's Rules, National Television Multiple
Ownership Rule
, MB Docket No. 13-236.
The mechanics of this rulemaking may seem complex, but the underlying purpose is simple.
Time advances, technology changes, and this agency must update its policies and rules.
Remember 1985? In 1985, broadband was a pipe dream. Dial up meant making a call on a
phone--a hefty thing that was attached to the wall. Wireless handsets were the stuff of science fiction.
Computing power on your desk probably involved a Commodore. A Walkman with a tape cassette was
the portable way to listen to your tunes. On television, we watched Dallas, Dynasty, and Miami Vice. By
any measure, it was a long time ago.
In 1985, the Commission first put its Ultra-High Frequency (UHF) discount for television in
place. It was a product of the analog world. At the time, it compensated for the technical shortcomings
of UHF signals used by television stations allocated to channels above 13. In the analog era, UHF
stations had weaker propagation, limiting audience size. Their signals simply did not travel as far as
Very-High Frequency (VHF) band signals allocated to channels 13 and below. As a result, it was the low
VHF stations that were most desirable--because their signals reached the most viewers. To reflect the
more limited scope of UHF signals and their less desirable status in the marketplace, they counted only
half as much for the purposes of our television ownership rules. By all accounts, this was a fair approach
to analog technology.
However, all of our full-power television stations have now converted to digital technology. The
analog era is over. This is the digital age. With respect to UHF and VHF signals, this means the world is
now upside down. The very UHF signals that had the least reach in analog broadcasting have the furthest
reach in digital broadcasting. Conversely, the once-desirable VHF signals now have the weakest reach in
digital broadcasting. We should here, as elsewhere, update our policies, to reflect current technologies.
Our rules should not be grounded in technical constraints that no longer exist. That is what this
rulemaking is all about.
Still, as we proceed, we must be practical about the impact on the marketplace today. That is
important. I look forward to the record that develops and thank the Media Bureau for their hard work.
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DISSENTING STATEMENT OF

COMMISSIONER AJIT PAI

Re:
Amendment of Section 73.3555(e) of the Commission's Rules, National Television Multiple
Ownership Rule
, MB Docket No. 13-236.
When the Commission issued its 1985 national television multiple ownership rule prohibiting a
single entity from owning television stations that collectively reached more than 25 percent of the
national television audience, it recognized the "inherent physical limitations" of analog television signals
in the UHF band as compared to VHF signals.1 Because these limitations placed licensees of UHF
stations at a competitive disadvantage vis--vis VHF licensees, the Commission determined that UHF
stations should be attributed with only 50 percent of the television households in their Designated Market
Areas for purposes of calculating nationwide audience reach.2 And for the last 28 years, this "UHF
discount" has been an integral component of the Commission's national television ownership rule.
However, our nation's transition from analog to digital television has eroded the basis for the
UHF discount. The Commission recognized more than a decade ago that the DTV transition likely would
eliminate the physical characteristics that made UHF spectrum less desirable than VHF spectrum for
television broadcasting.3 And as today's item indicates, "the DTV transition has borne out the
Commission's expectation."4 Indeed, it now appears that UHF spectrum is more compatible with digital
television signals than VHF spectrum. As the Commission has previously stated, "the disparity between
UHF and VHF channels has if anything been reversed."5
For these reasons, I agree with my colleagues that the time probably has come for the UHF
discount to take its place in the history books alongside the Fairness Doctrine, the Morse Code exam
requirement, and other outdated regulations.
Nevertheless, I am dissenting from this morning's Notice of Proposed Rulemaking (NPRM) for
two reasons.
First, I believe that we cannot modify the UHF discount without simultaneously reviewing the
national audience cap, which currently stands at 39 percent.6 The NPRM recognizes the interdependent
relationship between the national audience cap and the UHF discount, acknowledging that "elimination of
the UHF discount would impact the calculation of nationwide audience reach for broadcast station groups

1 Amendment of Section 73.3555 [formerly Sections 73.35, 73.240 and 73.636] of the Commission's Rules Relating
to Multiple Ownership of AM, FM and Television Stations
, GN Docket No. 83-1009, Memorandum Opinion and
Order, 100 FCC 2d 74 (1985).
2 Id. at 93, paras. 4344.
3 See, e.g., 2002 Biennial Review Order Review of the Commission's Broadcast Ownership Rules and Other Rules
Adopted Pursuant to Section 202 of the Telecommunications Act of 1996
, MB Docket No. 02-277, Report and Order
and Notice of Proposed Rulemaking, 18 FCC Rcd 13620, 13847, para. 591 (2003) (predicting that "the digital
transition [would] largely eliminate the technical basis for the UHF discount").
4 NPRM at para. 16.
5 See Innovation in the Broadcast Television Bands: Allocations, Channel Sharing and Improvements to VHF, ET
Docket No. 10-235, Notice of Proposed Rulemaking, 25 FCC Rcd 16498, 1651113, paras. 4245 (2010).
6 See, e.g., 2004 Consolidated Appropriations Act, Pub. L. No. 108-199, 629, 118 Stat. 3, 99100 (2004).
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with UHF stations."7 Or, to put the matter succinctly, eliminating the UHF discount would substantially
tighten the national ownership limit. For example, one company that is now more than 19 percentage
points under the cap would be only three points below the cap if the UHF discount were eliminated.
But while today's item proposes to tighten the national cap, it does not seek comment on whether
doing so would be a good idea. The NPRM therefore misses the forest (the overall national cap) for the
trees or rather dwells on a single tree (the UHF discount). To be sure, one could argue that Congress took
away our authority to change the cap in 2004 when it instructed us to increase the national cap to 39
percent. But today's NPRM rightly rejects that position and expressly states that the Commission has the
authority to "modify both the national audience reach restriction and the UHF discount."8
Consistent with that view, because we are proposing to end the UHF discount, we should ask
whether it is time to raise the 39 percent cap. Indeed, this step is long overdue notwithstanding any
change to the UHF discount. The Commission has not formally addressed the appropriate level of the
national audience cap since its 2002 Biennial Review Order, and it has been nearly a decade since the 39
percent cap was established. The media landscape has changed dramatically in the many years since.
I've spoken a lot about the importance of reviewing our rules to keep pace with changes in technology
and the marketplace, and I wish today's item had done so with respect to this issue in a comprehensive
manner. I also wish that today's item sought comment about the impact of this proposal on diversity.
Given that companies such as Univision benefit from the UHF discount, I am disappointed that the
NPRM does not explore this important issue. I nonetheless encourage commenters to address it.
Second, I have concerns about how the NPRM addresses grandfathering. I am certainly pleased
that the item at least proposes to grandfather existing combinations that would exceed the 39 percent cap
if the UHF discount were eliminated as well as combinations that would exceed such a cap because of an
application that is currently pending with the Commission. But this does not go far enough. In my view,
any combination that is in existence or pending with the Commission as of the date the UHF discount rule
is eliminated should be grandfathered.
Remember what today's item does. It only proposes to eliminate the UHF discount. It does not
actually end the UHF discount. The UHF discount will be the law of the land tomorrow and every day
after that unless the Commission votes to repeal it. Through its grandfathering proposal, however,
today's NPRM effectively tells the private marketplace to behave as if the UHF discount has already been
eliminated, treating the rest of the rulemaking process like an empty formality. The practical results of
this "sentence first, verdict afterward" approach will be to dampen the market for broadcast transactions
and depress station values. Perhaps that's the point, but it won't serve either private or public interests
well.
In conclusion, I was willing to compromise and support today's item if either of my two major
concerns were addressed. But because the NPRM we adopt this morning proposes to dramatically tighten

7 NPRM at para. 20.
8 Id. at para. 15. This is because the 39 percent cap was neither a direct statutory limitation on the Commission's
authority nor a revision of the Communications Act of 1934. Id. at para. 13. As such, the Commission has the
statutory authority under the Communications Act to "revisit its rules and revise or eliminate them if it concludes
such action is appropriate." Id. at para. 14. The Commission specifically highlights section 4(i) of the
Communications Act, which authorizes the Commission to make any and all rules "as may be necessary in the
execution of its functions." Id. The Commission goes even further, recognizing that "the courts have held that the
Commission has an affirmative obligation to reexamine its rules over time." Id. (citing Cincinnati Bell Tel. Co. v.
FCC
, 69 F.3d 752, 767 (6th Cir. 1995)).
21

Federal Communications Commission

FCC 13-123

our national television ownership cap and to essentially make that rule change effective immediately, I
must respectfully dissent.
22

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