Key Points
- The Senate Commerce Committee will hear testimony on broadcast TV ownership rules from key stakeholders in the industry.
- Broadcasters argue the current ownership cap is outdated and prevents them from competing with streaming platforms like YouTube and Netflix.
- Critics say consolidation would worsen cord-cutting and question whether the FCC can eliminate the cap without congressional action.
The chief executive in charge of the broadcast television industry’s largest lobbying organization and the founder of a right-of-center cable news channel are among the witnesses who will testify at a Senate hearing next week that explores proposed changes to federal broadcast TV ownership rules.
On Wednesday, Senator Ted Cruz of Texas said the Senate Commerce Committee will hear from Curtis LeGeyt, the CEO of the National Association of Broadcasters, and Newsmax CEO Christopher Ruddy during the hearing scheduled for February 10.
LeGeyt and Ruddy have expressed differing views on whether the FCC has the authority to act on various proposals that would eliminate certain broadcast-related rules, including one that limits the number of licensed TV stations a single broadcaster may own outright.
Currently, broadcasters are not allowed to amass a collection of licensed TV stations that reach more than 39 percent of the American viewing audience. Some broadcasters have sidestepped this rule by using loopholes in the law, including shared services agreements with shell companies that hold broadcast licenses on paper while allowing larger companies to operate their stations and a little-known provision that allows broadcasters to amass a larger number of stations that transmit on ultra-high frequencies (UHF).
Proponents of loosening rules on broadcasters, including LeGeyt and the NAB, argue that the media industry has changed since the current ownership cap was put in place two decades ago. Major technology companies like Google and Amazon are now offering entertainment, news and sports fans ways to watch premium programming on streaming services, and those companies are allowed to scale their operations without government-imposed restraints, they argue.
That wasn’t a problem 20 years ago when platforms like YouTube, Prime Video and Netflix were just starting to resonate with audiences, but it has become more of an issue in recent years as those apps and others compete for lucrative sports rights, advertising dollars and attention from TV viewers.
That trend imperils the ability of local broadcasters to make better investments in community-oriented programming, local news and sports, the NAB and other backers of ownership reform rules say. Over the past few years, some broadcasters have consolidated or shut down newsrooms in smaller markets to offset lower advertising revenue.
Opponents, including Ruddy, don’t necessarily argue against the view that local broadcasters face stronger competition from streaming platforms, but contend many of the issues they’ve encountered over the past few years were largely of their own doing.
The owners of major network-affiliated TV stations receive compensation from cable and satellite companies for the privilege of offering their channels to pay TV subscribers. In recent years, those fees have increased in order to offset declines in advertising revenue, which has spurred the trend of “cord-cutting,” or people cancelling their service.
As churn rates in the pay TV sector increase, broadcasters have raised fees to offset declines in distribution revenue, too, which only convinces more cable and satellite customers to walk away from that service. That never-ending cycle will only accelerate faster if broadcasters are allowed to consolidate, as some have expressed a willingness to do, critics say.
Even if the FCC wanted to eliminate the ownership cap, Ruddy says the law wouldn’t allow for it, because Congress specifically required the agency to enforce some limitation on broadcast ownership rules. Ruddy’s channel, Newsmax, competes for cable news distribution and advertising dollars against similar channels. One of its competitors is NewsNation, a channel owned by Nexstar Media Group, a company that is seeking to acquire peer broadcaster TEGNA and which has lobbied for looser media ownership rules for more than a year.
Cruz takes no position either way, though a statement released by his office on Tuesday seems to support the idea that legislative action needs to be taken for ownership reforms to take place.
“As more Americans consume video content through streaming services and social media, the original intent of media ownership rules — to promote competition and diversity by limiting the number of media outlets a single entity may own — warrants review,” Cruz said. “Some telecommunications experts contend, however, that the current 39 percent cap is statutory, meaning it can only be changed by an act of Congress and not through regulation. Other critics worry possible changes to media ownership rules will result in fewer conservative voices on broadcast television.”
The hearing on Tuesday will be live-streamed on the Senate Commerce Committee’s website.
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