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Temporary stay in UHF discount case hangs over Sinclair/Tribune deal

The U.S. Court of Appeals for the D.C. Circuit issued a temporary stay on June 1 of the Federal Communications Commission's reinstatement of the UHF discount.

The discount, which was eliminated in 2016 under former FCC Chairman Tom Wheeler and then reinstated in April under current FCC Chairman Ajit Pai, allows stations broadcasting in the UHF spectrum — or on channels 14 to 51 — to attribute only 50% of their TV households in their designated market areas toward the overall national ownership cap. Under the current cap, a single broadcast station group cannot own TV stations that together reach more than 39% of U.S. TV households.

Since the FCC digital TV transition in 2009 and the resulting technical improvements in the delivery of UHF signals, there is no longer any technical reason for the discount. But in reinstating the discount, Pai argued it cannot be considered separately from a reconsideration of the national cap.

A number of groups led by the public interest group Free Press filed a petition with the D.C. Circuit Court asking the court to vacate the reinstatement of the discount. The groups argued the FCC lacks statutory authority to modify the national ownership cap.

In granting the temporary stay, the D.C. Circuit Court said the administrative stay would give the court "sufficient opportunity to consider the emergency motion for stay pending review and should not be construed in any way as a ruling on the merits of that motion." Free Press and its fellow petitioners have until June 7 to file a single reply in support of the motion.

Notably, both Sinclair Broadcast Group Inc. and Tribune Media Co. have filed in opposition of the stay. The two broadcasters, which are in the midst of a $3.9 billion deal under which Sinclair is seeking to buy Tribune, said the petition for a stay fails on several fronts. Calling the legal maneuver "an attempt to side-step the Commission's reasoned decisionmaking," Sinclair said the petition "fails to identify any actual harm, irreparable or otherwise, that Petitioners would suffer absent a stay." As a result, Sinclair argues it is doubtful petitioners even have standing to challenge the UHF discount reinstatement.

Moreover, Sinclair noted that while Free Press and its fellow petitioners will not suffer harm without a stay, Sinclair and "other third parties" would suffer "significant and concrete harms" as a result of one. Without the UHF discount, Tribune is already over the national ownership cap, meaning Sinclair's purchase of the company would face significant challenges were the discount eliminated and the cap kept unchanged.