Broadcasters Jump After Court Says FCC Can Revive Station Ownership Rule

Shares of broadcast companies jumped this afternoon after a U.S appeals court rejected a request to block the FCC rule change that would make M&A in the space easier.

UHF DISCOUNT: In late March, broadcasters rallied on news that FCC Chairman Ajit Pai signaled that the agency was moving toward a vote that could reinstate the so-called UHF discount. The UHF discount, which was instituted by President Ronald Reagan's FCC in the mid-1980s and then rolled back during the Obama Administration, gave station owners the lenience of not having to fully count UHF stations in calculating their share because in theory UHF stations provided less coverage than their VHF counterparts. This conclusion was reached because UHF frequencies have coverage limitations.

DISCOUNT SIDELINED: In early June, a federal appeals court issued a stay to the FCC's earlier decision to restore the UHF discount, which has allowed major media companies to exceed limitations on the number of stations that they can own. June's put a major roadblock on Sinclair Broadcast Group's (SBGI) pending $3.9B acquisition of Tribune Media (TRCO). At the time, Stephens analyst Kyle Evans noted that the ruling to block the UHF discount may jeopardize the deal.

PRICE ACTION: Shares of Tribune Media are up 5.6% to $41.24, while shares of its suitor Sinclair are up 3.1% to $35.95.

OTHERS: Other broadcasters trading higher include Nexstar Media Group (NXST), E.W. Scripps (SSP), Tegna (TGNA) and Gray Television (GTN).