The FCC Is Using an Obsolete Loophole to Help a Pro-Trump Media Company Take Over Local TV
Sinclair Broadcast Group will soon be able to reach 72 percent of all American households.
President Trump's administration has had a stormy relationship with the US news media, to put it mildly. He has repeatedly disparaged reporters, branded legitimate journalism as "fake news," and even described media organizations as "the enemy of the American people."
But the Trump administration's hostility to the media is hardly universal. In fact, Trump's top telecom regulator is in the process of delivering a major gift to a media organization that has consistently showered the president with positive coverage, by paving the way for a merger that could dramatically increase that company's national reach.
Earlier this year, Sinclair Broadcast Group, the nation's largest television station operator by coverage, announced plans to buy Tribune Media, another large TV station operator, in a $3.9 billion deal that would create a national broadcasting juggernaut with more than 230 stations reaching 72 percent of households across the country. Sinclair has drawn criticism for forcing its local stations—which include FOX, NBC, ABC and CBS affiliates—to air one-sided and fawning commentary about the president, including by Boris Epshteyn, a former Trump aide who is now Sinclair's chief political analyst.
"No one company should have such power over the news and information that citizens must have to successfully practice the art of self-government."
Until recently, such a merger would have faced long odds, because the deal would have violated federal media ownership rules that prohibit a single company from owning TV stations that reach more than 39 percent of the nation's audience. Those rules are designed to advance federally mandated goals of media diversity, localism, and competition, and to prevent any one media company from becoming too powerful.
But in April, Trump's Federal Communications Commission chief, Republican Ajit Pai, pushed through a measure that will allow the Sinclair-Tribune merger to proceed. Pai accomplished this by reinstating an obsolete loophole called the "UHF discount," which allows broadcasters to discount by 50 percent the reach of local stations that use ultra-high-frequency (UHF) TV signals.
The practical result of Pai's action is to make it easier for TV station owners like Sinclair and Tribune to merge. That prospect has drawn withering criticism from public interest advocates at a time when many media experts are warning about out-of-control corporate consolidation in the media industry.
"No one company should have such power over the news and information that citizens must have to successfully practice the art of self-government," Michael Copps, former FCC Commissioner and Special Adviser at public interest group Common Cause, said in a recent statement about the Sinclair-Tribune deal. "And that doesn't even get into the vices of this particular company."
What is the UHF discount?
The UHF discount is an obsolete relic of a pre-digital TV era in which consumers received over-the-air analog television signals via old-school rabbit-ear antennas. Those broadcast signals were classified as VHF (very-high-frequency), which comprised Channels 2-13, and UHF (ultra-high-frequency), which comprised Channel 14 and above.
Due to their shorter wavelengths, UHF signals cannot travel through the air as far—nor propagate as well through walls and humans—as VHF signals. Over-the-air UHF signals are also more prone to interference than VHF signals. That's why, as a historical matter, Channels 2-13 were generally more powerful than higher channels, and why those spots on the TV "dial" were occupied by affiliates of the traditional "Big 3" TV networks. For example, in New York City, CBS is available on Channel 2, NBC on Channel 4, and ABC on Channel 7. The higher channels were often the domain of less powerful, low-budget broadcasters of the "public access" variety.
The FCC "wrapped up and put a bow on a huge gift for those large broadcasters."
As a result of this disparity in the relative "strength" between VHF and UHF signals, broadcasters using the latter were allowed to "discount" by 50% the reach of these stations for the purposes of federal media ownership rules. As a practical matter, this meant that broadcast TV owners could exceed federal media ownership limits by "discounting" the reach of UHF stations as compared to VHF stations.
Years ago, the UHF-discount made sense, but it doesn't anymore, because the 2009 transition of over-the-air television to digital broadcasting made UHF stations equal in quality to VHF stations. So what was Pai's rationale for reinstating the UHF discount? The chairman argued that the FCC had erred in removing the discount without simultaneously considering changes to the 39% national broadcast ownership cap, which he wants to raise.
Pai's action faced fierce criticism from opponents of media consolidation, including Democratic FCC commissioner Mignon Clyburn, who warned that reinstating the UHF discount would allow a small group of big TV station owners to get even bigger.
"The Commission just wrapped up and put a bow on a huge gift for those large broadcasters with ambitious dreams of more consolidation," Clyburn said at the FCC's April meeting. "Now I am not a betting woman, but mark my word: This Order will have an immediate impact on the purchase and sale of television stations."
What is Sinclair Broadcast Group?
Maryland-based Sinclair Broadcast Group is the second largest TV station owner in the country, with 173 stations in dozens of US markets, and is the largest station owner by geographic reach. Among Sinclair's holdings are dozens of FOX, NBC, CBS, and ABC affiliates across the country. A publicly traded company, Sinclair is controlled by the sons of the company's founder, Julian Sinclair Smith, who died in 1993.
For years, Sinclair has faced criticism for the conservative slant of its news programming. In many cases, this programming is not produced locally, but instead consists of "must run" stories and editorials that that the company requires all of its stations to broadcast. Among other controversies, Sinclair ordered its stations in 2004 to air a documentary critical of then-presidential candidate John Kerry's Vietnam War record. Also that year, Sinclair ordered seven of its stations not to run an ABC News Nightline report on Iraq War casualties that highlighted the human toll of the conflict.
The Trump campaign struck an agreement with Sinclair that offered the company exclusive access to key campaign personnel in hopes of receiving "straighter" coverage. At the time, Trump's son-in-law Jared Kushner noted that Sinclair reaches more people than CNN in many states: "It's math," he said.
In 2010, several Sinclair stations broadcast what critics called an "infomercial" funded by a Republican political action committee that made several incendiary claims against President Obama, including that he was a "socialist" who had raised money from Hamas. In 2012, Sinclair again faced controversy for forcing many of its stations to run an election-eve special that was criticized as being unfairly harsh toward Obama.
In December 2016, The Washington Post reported that a "review of Sinclair's reporting and internal documents shows a strong tilt toward Trump." The Post's analysis showed that "Sinclair gave a disproportionate amount of neutral or favorable coverage to Trump during the campaign while often casting Clinton in an unfavorable light."
That report followed news that the Trump campaign struck an agreement with Sinclair that offered the company exclusive access to key campaign personnel in hopes of receiving "straighter" coverage. At the time, Trump's son-in-law Jared Kushner noted that Sinclair reaches more people than CNN in many states: "It's math," he said. In April, Sinclair hired former Trump aide and cable news surrogate Boris Epshteyn to be the company's "chief political analyst."
Some public interest advocates see a connection between Sinclair's pro-Trump stance and the Trump FCC's efforts to create the conditions for the company to grow even larger.
"Sure looks like a quid pro quo: friendly coverage and full employment for ex-Trump mouthpieces in exchange for a green light to get as big as Sinclair wants," Craig Aaron, CEO of DC-based public interest group Free Press, said in a May statement. "This deal would have been DOA in any other administration, but the Trump FCC isn't just approving it; they're practically arranging it."
For his part, Pai denies that his move to reinstate the UHF discount is designed to smooth the merger's path forward. "If you look at our regulatory actions, they're not designed to benefit any company or segment of the industry," Pai told Congress during a recent Capitol Hill hearing. The final deadline for the American public to file reply comments with the FCC on Sinclair's proposed merger with Tribune (Docket No. 17-179) is August 29, 2017.