The FCC votes to eliminate station ownership cap

2-1 vote will have implications for TV

As expected, the FCC has eliminated the station ownership cap and instead evaluate station purchases on a “case-by-case” basis. 

Republicans Brendan Carr and Olivia Trusty voted to drop the 39 percent cap; Anna Gomez, the lone Democrat on the panel, voted against its repeal. The vote is an early Christmas present for Sinclair Broadcasting and Nexstar, whose merger with Tegna is being held up by the courts as it would give Nexstar coverage in 80 percent of the country. Meanwhile, Sinclair is expected to ramp up merger and acquisition activity on its own. 

The case-by-case scenario would also give Carr and the agency more power in determining who owns what. Given Carr is aligned with President Trump, he could approve a station sale in Detroit or Atlanta to conservative broadcaster Sinclair, but could deny NBC the same opportunity in those cities as Trump has called NBC and ABC “fake news”. In other words, the agency can now choose which owner is best suited to serve their city by approving or denying an transaction – even if they doesn’t align with their interests.

Thursday’s action would certainly be challenged in court, saying only Congress has the power to change the cap. But what this means is this move paves the way for broadcasters to consolidate, as they and the NAB claim it’s the only way to complete against unregulated big tech companies.

“It is time to restore balance to the broadcast airwaves,” Carr said. “Repealing the national cap will provide essential relief for local broadcasters by restoring a healthy counterbalance to the growing leverage of national programmers.”

On the other side, Gomez warned about more consolidation. “The large station groups positioned to grow even larger under this decision are not local broadcasters, they are national companies that own local stations and increasingly dictate what airs on them. Trading a squeeze from Big Tech for a squeeze from Big Media does nothing to protect the communities this cap was designed to serve.”

The cap’s removal would mean some significant changes for television. For one, empowered station groups would produce more local news and other programs on a shoestring budget, eliminating the need for syndicated programming (Fox-owned WFLD-TV did exactly that this week by adding the limp Chicago Live from its Fox Local streaming channel and shoved its syndicated shows to Fox Chicago Plus.) The groups would also not only have more leverage over the broadcast networks on financial matters such as “reverse” compensation, but also over program content as Nexstar and Sinclair pulled ABC’s Jimmy Kimmel Live over a joke he made about Charlie Kirk last September.

And with more leverage, station groups will likely demand more retransmission money from cable and satellite providers, which could lead to higher bills and accelerate cord-cutting as more viewers – especially younger ones (what’s left of them) head for the exits for YouTube and streamers – the very platforms hamstringing broadcasters in the first place.

The vote also coincidentally came on the same week broadcast groups announced their quarterly earnings. Nexstar reported record revenue thanks to its merger with Tegna, the success of the World Cup, and increased political advertising, while Sinclair also showed earnings growth. On the other hand, Scripps’ earnings plunged, thanks to now-resolved program disputes with DirecTV and Comcast. 

Station groups claim raising the cap to buy more stations would help them invest more in local news. But the opposite happened in the past year, as these same groups have made sweeping layoffs with Nexstar cutting on-air personnel at WGN-TV and other top-market stations in February and Scripps cutting 268 positions this week, with KJRH Tulsa and KRIS Corpus Christi, Tex. hit very hard.

Don’t be surprised if Congress repeals the law to get rid of the cap if the FCC loses in court as Republicans, whom many support Carr’s actions, controls both houses – but they may have to act soon as the midterms are approaching this fall and are projected to lose several seats to Democrats. 

With the cap gone, there’s speculation the FCC could turn to radio next as several broadcast groups are already lobbying the agency to modify or eliminate existing ownership rules.