Key Points:

• The FCC prohibits broadcasters from owning TV stations that reach more than 39% of American households; the agency is considering a modification or elimination of that rule.
• Newsmax CEO Christopher Ruddy warned that removing the cap would let major networks dominate local markets, reducing incentives for community-focused programming.
• In his letter, Ruddy called out Fox and Nexstar, accusing them of abusing their market dominance during carriage discussions with cable and satellite TV companies.

Newsmax has broken rank with its television peers by urging the Federal Communications Commission (FCC) to preserve certain national TV ownership rules.

In a 33-page letter filed with the FCC this week, Newsmax executives said the agency should resist calls by the National Association of Broadcasters (NAB) and commercial media companies to eliminate rules that limit the number of licensed TV stations a single entity may directly own.

Under current federal law, broadcasters are not allowed to accrue direct ownership in TV stations that reach more than 39 percent of American households. Most broadcasters skirt this rule by using a little-known exception called the “UHF Discount,” and by entering into shared services agreements with shell companies that hold broadcast licenses on paper but otherwise cede control of their stations to bigger entities.

Congress gives the FCC authority to impose ownership caps, and requires the agency to review its rules once every four years. In 2023, the FCC acted on a late review of its rules by preserving all of them, despite calls from broadcasters to modify certain rules on account of increased competition from streaming services.

Earlier this year, the NAB said it was time for the FCC to eliminate broadcast TV ownership caps entirely. The lobbying group argued broadcasters are competitively disadvantaged when compared to tech companies that operate streaming services, which are not restrained by the FCC or other federal agencies and are allowed to scale their businesses with near impunity.

The FCC has not acted on the NAB’s suggestion, but FCC Chairman Brendan Carr has opened the matter for public comment. Newsmax is one of the few media companies to oppose a lifting of ownership rules, claiming Americans would be harmed by near-instantaneous consolidation in the broadcast TV industry if the ownership caps are tossed entirely.

“Americans of every political persuasion, demographic, and location would be harmed by any weakening of the national ownership limit,” the company wrote in its submission. Newsmax contends the rule is essential to maintaining healthy competition, promoting localism, and safeguarding the diversity of viewpoints in the American broadcast system.

The letter was signed by Christopher Ruddy, the CEO of Newsmax, who warned that lifting the ownership caps could benefit broadcast networks like ABC, CBS, Fox and NBC, who would not be restrained from acquiring affiliated stations.

Ruddy also claims the FCC lacks the legal authority to modify the ownership cap, pointing to a 1980s-era rule that was updated nearly two decades ago in which Congress required the FCC to set a minimum ownership cap.

“There could be no greater ‘basic and fundamental change’ to a limit set by Congress than abolishing it altogether,” Ruddy argued.

In a particularly aggressive section of the letter, Ruddy accused Fox Corporation and Nexstar Media Group of abusing their market positions to suppress competition. Specifically, Ruddy claims Fox has pressured pay TV companies to drop Newsmax from their channel lineups — an allegation that wasn’t substantiated with evidence — and accused Nexstar of extorting cable and satellite companies to carry rival channel NewsNation when negotiating distribution agreements for its highly-valued ABC, CBS, Fox and NBC affiliates.

“The FCC must reject any proposal to raise or remove the cap — not just to honor congressional law, but to defend America’s media landscape from monopolization and political manipulation,” Ruddy said.

Newsmax does not own any broadcast TV stations, but its free, ad-supported streaming TV (FAST) channel Newsmax 2 is available on some low-power TV stations in key markets across the country.

Ruddy’s letter to the FCC is available to view by clicking or tapping here.