WASHINGTON—In a landmark vote that is likely to encourage a wave of deals in the broadcast station business, the Federal Communications Commission has voted to change TV station ownership rules in a way that would allow the agency to approve mergers that exceed the caps on a case by case basis if they are “in the public interest.”
The 2-1 vote on party lines, with Commissioner Anna Gomez dissenting, was applauded by broadcasters who have lobbied for decades to end the caps. It is likely, however, to face lengthy legal challenges from opponents who argue the ownership limits can only be changed by Congress.
Shortly after the vote, the public interest group Free Press announced plans to file a lawsuit against the FCC, call the FCC Order an "unlawful power grab" because only Congress has the authority to change the ownership caps.
FCC Chair Brendan Carr, who proposed the changes as a way to protect local news and help TV stations better compete in a media landscape dominated by big tech and large streamers like Netflix, stressed the importance of localism and the need to strengthen the economics of local news as the prime reasons for approving changes in the ownership caps.
“I don't want local broadcast TV to go the way of local newspapers, and yet the risk is real,” Carr said, adding that over the last two decades “more than 80% of local journalism jobs have vanished.”
Carr also stressed that the Order would replace a “blunt instrument” of a 39% ownership cap with a nuanced case by case approach.
“Maybe a deal that exceeds a 39% cap is a good one,” Carr said. “Maybe it's a bad one. Today's decision lets the parties make their case, allows all stakeholders to be heard, ensures that the agency will decide, consistent with our public interest review. We're replacing a blunt instrument with a much more granular case-by-case approach.”
He also argued that “the FCC's legal authority to modify the national cap is also clear. The D.C. Circuit has already rejected the argument that Congress's decision to pass a statute directing the agency to set the cap at a specific percentage prevents the FCC from later modifying the cap. The court stated that Congress's statutory instruction to the Commission to set the cap at a specific percentage determined, quote, only the starting point from which the Commission was to assess the need for further change.”
“The FCC has the authority to modify the cap as we do today, and it is the right policy answer to, if you care about the future of trusted local news,” he concluded. “It's time to restore balance to the broadcast airwaves. Repealing the national cap will provide essential relief for local broadcasters by restoring a healthy counterbalance to the growing leverage and power of national programmers. Increased scale could enable broadcasters to attract the capital and advertising revenue needed to sustain and produce trusted community-focused news and programming. We should learn from our mistake with local newspaper industry, and we should not let the same thing happen to local broadcast TV industry.”
As expected, Gomez opposed the Order, arguing that “today's decision to eliminate the 39% national audience reach cap is unlawful on its face and a profound departure from both statutory boundaries and longstanding broadcasting policy. Congress set this cap in federal law, and only Congress can change it. I cannot support an action that so plainly violates the law and exceeds the Commission's authority while simultaneously overlooking the real-world consequences for the public we serve. The national cap matters, and Congress, not this Commission, controls its fate. Today's action undermines our core public interest principles of localism, viewpoint diversity, and competition, while failing to consider or to address the interconnected rules, market realities, and economic pressures that define today's media ecosystem.”
Gomez also cited a number of Republicans, including former House Majority Leader Tom Delay who helped pass legislation that included the 39% cap, who have argued that only Congress can change the cap.
In her comments before casting the second vote need to pass the proposal, Commissioner Olivia Trusty said that “today's vote recognizes that the media marketplace has changed dramatically, while many of our rules have not. When the national broadcast television ownership rule was last meaningfully updated, Netflix had not yet begun its streaming service. YouTube did not exist, and appointment television was still very much the norm. With many American families planning their evenings around linear broadcast schedules, now over two decades later, audiences have shifted from scheduled broadcasts to on-demand viewing, with millions opting for the convenience of near-endless streaming libraries. The data confirm these trends. Today, streaming viewership surpasses the combined share of broadcast and cable, and is more than double that of broadcast television alone. These changes have fundamentally altered the competitive landscape for local broadcasters.”
That means the caps are no longer “in the public interest” and needs to be repealed, she said.
The FCC proposal adopting “a case-by-case licensing approach is particularly appropriate, rather than relying on a rigid nationwide ownership cap, the Commission can evaluate each proposed transaction on its individual merits, considering specific competitive effects, local market conditions, and public interest benefits presented by the record,” she added. “That approach is firmly grounded in long-standing Commission practice and well-established principles of administrative law.”
In a statement, NAB president and CEO Curtis LeGeyt applauded the move, saying “[t]he FCC’s decision to eliminate the outdated national television ownership cap marks a generational step toward strengthening local stations and ensuring they can compete in today’s media marketplace. We applaud Chairman Carr and the Commission for recognizing that rules adopted decades ago should not constrain local broadcasters’ ability to invest in journalism, innovation and service to their communities. Today the FCC helped level the playing field and strengthen local stations’ ability to deliver the trusted news and emergency information millions of Americans rely on.”
The American Television Alliance (ATVA), which is backed by the pay TV industry, released a statement condemning the Federal Communications Commission’s (FCC) decision to repeal the 39 percent national broadcast ownership cap at its August Open Meeting.
“The FCC’s decision to eliminate the national broadcast ownership cap is a serious setback for American consumers and local communities,” said ATVA spokesman Hunter Wilson. “Congress established the 39 percent national ownership cap in 2004 to protect localism, viewpoint diversity and consumer choice. By eliminating this safeguard, the FCC has ignored Congressional intent and opened the door to unchecked ‘Big Broadcast’ consolidation that will drive up costs for viewers and reduce local news programming.”
