With the FCC poised to consider major changes to TV ownership rules, the most frequently-mentioned part of the regulations seems to be the national ownership cap.
Right now, rules prohibit one company from owning TV stations that reach more than 39% of U.S. TV households. (The figure is computed by adding up the number of TV households in each market where the company owns stations.)
But in reality, the cap is 78% due to an analog-era rule known as the UHF Discount. The rule means nearly three-quarters of U.S. TV stations are not counted as reaching their full markets because they transmit on UHF frequencies. If all of a company’s stations are on UHF, they can get to 78% national reach.
The discount was originally implemented to reflect the fact that analog UHF TV stations (RF channels 14 and up) had inferior coverage to VHF stations. Even a 5,000kW analog UHF station could not replicate the coverage area of a 100kW VHF Low station (channels 2 to 6) or a 316kW VHF High station (channels 7 to 13).
The discount uses simple math: If a station transmits on a UHF frequency, it’s only considered to reach half of the households in its market when computing national ownership.
When TV finished the switch from analog to digital, there was also a switch in which band is the best. UHF has proven to be the far superior place for digital TV broadcasting, a fact acknowledged when the FCC paid some broadcasters to move to VHF so that a portion of the UHF spectrum could be sold to wireless providers.
But the UHF Discount is still on the books, meaning stations transmitting on the most desirable frequencies now count as only reaching half their markets. Stations transmitting on VHF frequencies, plagued by reception problems in the digital era, still count as reaching their entire markets.
(Further complicating understanding of the situation, digital TV stations use virtual channels which may not match up with their actual broadcast frequency. A station that appears on virtual channel 4 may actually be transmitting on UHF channel 32, for example.)
A vast majority of full-power TV stations are now on UHF. A quick search of the FCC’s TV Query shows 468 active licenses on VHF and 1,291 on UHF. That means only 27% of TV stations actually count as full-market signals.
TVNewsCheck’s ranking of station groups shows that three companies would already be over the national ownership cap if all households in their markets were counted, but comply with the rules because of the UHF Discount.
The FCC is currently taking public comments on possible changes to ownership rules.
The National Association of Broadcasters has advocated for a full elimination of the national ownership cap, arguing that digital media has far surpassed radio and TV in local advertising revenue and that online video services face no ownership caps.
Groups including Free Press have argued against media consolidation, saying it leads to cuts to journalism.