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Change in Federal Rules Could Impact Sinclair Broadcast Group’s Expansion

sinclair_304USA Today looks at how Sinclair Broadcast Group’s recent expansion has “fueled debate about enduring questions on concentration of media ownership and fresh attempts by federal regulators to scale back broadcasters’ ambitions.” When Sinclair’s pending acquisitions are completed, the company will be the largest broadcaster in terms of number of stations.

If federal regulators have their way, the industry’s big players, including Sinclair, could be forced to rein in their ambitions. Under current FCC rules, the reach of a broadcaster’s TV stations may not exceed 39% of U.S. households. But broadcasters have been allowed to count UHF stations as having only 50% of the reach of VHF stations. UHF signals didn’t cover as much ground when stations were still broadcasting in analog signals.

The prevalence of digital signals now makes the UHF-VHF distinction largely moot, and the FCC has plans to eliminate the UHF discount. “It’s most likely going away,” says Marci Ryvicker, a media analyst at Wells Fargo.”Sinclair is probably going to be impacted.”

If the discount is eliminated, Sinclair’s total U.S. household reach — if counting all 149 stations — will jump overnight to about 38.2%, bringing it awfully close to that 39% limit. With the discount, Sinclair’s reach would be about 22%.

[Sinclair CEO David] Smith vows to fight the change. Cable and phone companies are increasingly encroaching on broadcasters’ business territory without such restrictions, he said. “Frankly, I am OK with that,” Smith said during the August call. “But let us go. Let us go compete.”

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