Interrupting TV’s M&A Broadcast; Proposed Rule Change on How Broadcast Stations Are Treated Could Stymie the Recent Uptick in TV Consolidation

September 30, 2013, 5:11 p.m. ET

Interrupting TV’s M&A Broadcast

Proposed Rule Change on How Broadcast Stations Are Treated Could Stymie the Recent Uptick in TV Consolidation


Broadcast stations may soon be sending a different signal. The Federal Communications Commission has opened a public comment period on a proposal that could make broadcast stations equal for the purpose of determining ownership caps. If adopted, it could put the brakes on the recent round of consolidation among station owners. A single company is currently prohibited from owning stations that, in aggregate, reach more than 39% of total TV households nationwide. But owners have been allowed to count only 50% of the TV households in their market areas toward the cap for stations broadcasting via ultrahigh frequency, or UHF, signals.The FCC says the so-called UHF discount was adopted 30 years ago when those signals were considered technically inferior to very high frequency, or VHF, signals. But the transition from analog to digital broadcasting means that is no longer true. UHF signals are now, if anything, superior to VHF, the FCC argues.

By making it easier to breach ownership caps, removing the discount could make it more difficult for companies to merge in order to gain heft in negotiations with TV networks and pay-TV providers. The past year has seen numerous examples of this, including Gannett’s agreement to buy Belo, Media General‘s MEG +4.70% deal to merge with Young Broadcasting and Sinclair Broadcast Group‘s SBGI -1.53%agreements to buy Fisher Communications and the Allbritton TV stations. Under the proposal, these deals would be grandfathered in.

The FCC is asking whether it should instead apply a VHF discount. But there are many more UHF stations than VHF ones. Another possibility: The FCC could issue a separate proposal to raise the overall cap, which it claims it has the power to do. Still, Congress may disagree.

What is clear: Uncertainty over the issue will likely knock deal making back down to a very low frequency.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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