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Broadcasters celebrate UHF battle victory, but opponents say war far from over

The yearlong legal battle over the Federal Communications Commission's UHF discount could drag on for another 12 months, despite a recent court victory for broadcasters that favor the discount, lawyers and industry experts said.

The UHF discount allows stations broadcasting on channels 14 to 51 using UHF spectrum to attribute only 50% of their TV households in designated market areas toward the overall 39% national ownership cap for station groups. First eliminated in 2016 under former Democratic FCC Chairman Tom Wheeler, the UHF discount was reinstated earlier this year under current Republican FCC Chairman Ajit Pai.

The April reinstatement decision drew a legal challenge from a number of public interest groups, including the media advocacy group Free Press and the National Hispanic Media Coalition. As part of the lawsuit, the groups sought an emergency stay of the reinstatement order, arguing that without a stay, "the nation's television ownership structure will be significantly and irreparably altered well before this Court will have time to reach a determination on the merits." The U.S. Court of Appeals for the D.C. Circuit recently denied the emergency stay, saying the petitioners had "not satisfied the stringent requirements for a stay pending review."

A court uses four criteria in deciding whether to grant a stay: first, whether the larger appeal is likely to prevail upon the merits of the case; second, whether irreparable injury will occur without a stay; third, whether the stay will substantially harm other interested parties; and finally, what impact the case has on public interest.

"Statistically well over 90% of stay motions are denied. So the odds are very, very long," said Andrew Schwartzman, a lawyer with the Institute for Public Representation at the Georgetown University Law Center who is representing the petitioners in their suit.

Schwartzman said that although the court considers the likely outcome of the larger case in deciding whether to grant or deny a stay, he remains optimistic the petitioners will ultimately succeed in overturning the reinstatement of the UHF discount.

But David Oxenford, a partner at the law firm of Wilkinson Barker Knauer LLP who has represented broadcasters for over 30 years, disagreed.

"The rejection of the stay certainly increases the odds that the FCC will ultimately prevail in its defense of the reinstatement of the UHF discount," Oxenford wrote in a June 16 blog post, saying that new facts or arguments are unlikely to be raised in the full briefs in the case.

The broadcast group Sinclair Broadcast Group Inc. celebrated the news, saying it remains "confident that the Court will conclude on the merits that the UHF discount should remain in place until a thorough review of the current ownership rules is completed."

In reinstating the cap, Pai said he would begin a new proceeding to "review comprehensively" the national ownership cap.

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Sinclair is in the midst of a $3.9 billion deal to buy Tribune Media Co., a fellow broadcast station group. If allowed to combine, Sinclair and Tribune would jointly own 233 stations, not including any divestitures that the companies might make as part of the deal. Excluding the impact of the UHF discount, the combined entity would reach 72% of U.S. households across 108 markets, well above the current 39% cap.

The pending merger, in addition to similar deals that may be announced in the coming months, is one of the major reasons why Schwartzman and the petitioners wanted an emergency stay of the UHF discount reinstatement.

"From our perspective, a lot of damage can be done in the interim. And we've argued it will be very hard to undo it if we win," Schwartzman said.

Carmen Scurato, director of policy and legal affairs at the National Hispanic Media Coalition, said in an interview that her group is particularly concerned the reinstatement of the UHF discount would lead to further consolidations in the media market.

"We already have such little reach when it comes to diversity in the media, this is really going to set us back," Scurato said. She cited a 2017 report from the FCC showing that Hispanic/Latino persons collectively or individually hold a majority of the voting interests in 62 full power commercial television stations, representing 4.5% of the market.

But broadcasters, in turn, had argued that they would have been harmed had the reinstatement been stayed. Sinclair argued its purchase of Tribune would have been suspended for months while the larger case moved forward. "Such a delay would inherently increase financing and other costs and perhaps jeopardize funding and consummation of the transaction completely," Sinclair said in a court filing.

In terms of next steps, Schwartzman said both sides — the FCC and broadcasters on one side and the petitioners on the other — will file briefs with the court in a couple months, followed by oral arguments. He expects a decision "probably next spring."