FCC Killed the Broadcast TV Ownership Cap. Will Local Stations Get Gobbled Up?

On Thursday, the Federal Communications Commission (FCC) abolished a 22-year-old law that limited the number of local TV stations a company could own. This decision, which is likely to transform the industry and stimulate more mergers and acquisitions (M&A), overturns the cap imposed in 2004 by Congress. The cap restricted firms from owning or controlling broadcast television stations that reached over 39% of U.S. TV households, with the aim of preventing monopolization and maintaining diversity of viewpoint.

Since then, the FCC plans to conduct case-by-case reviews, evaluating each deal based on its adherence to the agency's public interest standard rather than a specific percentage cap. Companies such as Nexstar and Sinclair, which have been lobbying for the cap's elimination, argue that a more flexible policy is needed to address competition from streaming services and tech giants like Amazon and YouTube, which are not bound by the same restrictions.

They contend that industry consolidation is crucial to their survival in the current media landscape.

However, critics argue that only Congress has the legal authority to alter the cap, and that industry consolidation could result in newsroom closures, reduced independent voices, and higher costs for consumers. Furthermore, state attorneys general have become increasingly involved in antitrust enforcement, posing another significant obstacle.

The merger between Nexstar and Tegna, which the FCC had already approved with a waiver that bypassed the cap, remains on hold due to a preliminary injunction successfully won by 13 states challenging the deal on antitrust grounds.

Commissioner Carr argued that the cap is outdated and that its removal would provide "essential relief for local broadcasters by restoring a healthy counterbalance to the growing influence of national programmers." He also highlighted that increased scale could enable broadcasters to attract the necessary capital and advertising revenue to sustain and produce local news and programming.

Commissioner Trusty emphasized that while the decision is not a "silver bullet," it would enhance local broadcasters' financial stability, bargaining power, and ability to invest in local journalism, emergency coverage, investigative reporting, and community programming. "The future of local broadcast TV has to be localism," Carr stated.