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FCC: Localism May Outweigh Viewpoint Diversity in Certain Merger Considerations

FCC seal
(Image credit: FCC)

WASHINGTON—In today’s TV landscape, it is important that local news stations have the ability to provide high quality programming to strengthen localism. According to the FCC, localism may outweigh other points of consideration when determining if two stations are able to merge.

In a new FCC paper, “Market Size and Local Television News,” the commission has three policy goals when considering local TV station ownership: competition, diversity and localism. The paper analyzes how the FCC’s structural regulation of station ownership affects the achievement of its policy goals.

A 2017 FCC Reconsideration Order, as well as the commission’s 2018 Quadrennial Review Notice of media policy goals, cited that diversity (primarily referring to diversity of voice) and localism could be relevant in an evaluation of a proposed merger of top-four TV stations—a typically prohibited practice—that serves the greater public interest.

The FCC says that in a typical situation, having more stations in a market will likely increase both the diversity of voices, as well as competition and localism. However, if a market is “out of equilibrium,” then the reduction of independent newsrooms could actually increase the quantity and quality of local news because it may help reduce the high costs of news production as revenue is increased and costs are split between the stations, according to the analysis.

To help prove this, the FCC estimated market size thresholds above which a market can likely sustain two, three or four or more local news operations, based on an acceptance criterion of either 50% or 75% to determine entry threshold values. Higher acceptance criterion lead to higher threshold estimates and make it more likely that a market may not be able to sustain the targeted number of stations. In markets below the threshold, mergers may be considered more favorable.

Using data from 2019 and a 50% acceptance criterion, market sizes for two, three and four or more local news stations came out to 35,000, 175,000 and 615,000 TV households, respectively. Using a 75% acceptance criterion, the results were 70,000, 310,000 and 800,000 for two, three and four or more operations.

“We expect our findings to be useful in merger deliberations to better understand the effects of a proposed merger on the Commission’s policy goals,” the FCC wrote in the paper. “In a merger analysis, the regression results and data from the market could be used to assess the likelihood that the market will sustain the current number of local news operations. In some markets, there may be a tradeoff between localism and diversity. A merger that eliminates a source of local news may be optimal, even though it reduces viewpoint diversity, if the merged entity improves the quality or increases the quantity of local news programming, strengthening localism.”

The full FCC paper is available online