The Federal Communications Commission has rejected a call from independently-owned broadcast television stations to lift certain rules that limit the number of licensed TV stations any one company may own.
The 3-2 decision made along partisan lines came on Wednesday after several years of intense lobbying from broadcast television station owners and various public interest groups, who argued that the limitations were outdated in the era of streaming media.
Independent broadcast television stations are ones owned by companies like Nexstar Media Group, the E. W. Scripps Company, Gray Television, TEGNA and Sinclair Broadcast Group, which transmit network programming from ABC, CBS, Fox and NBC under affiliation deals.
For years, independent broadcast station owners have relied on a mixture of advertising revenue and affiliate fees charged to cable and satellite companies to keep their operations afloat. Challenged by a weakened advertising market and a move by most broadcasters to shift their premium prime-time programming and live sports to streaming services sold directly to consumers, independent broadcasters have relied more heavily on affiliate fees charged to cable and satellite companies to offset lost revenue in other parts of their businesses.
For several years, those broadcasters and their main lobbying group, the National Association of Broadcasters (NAB), have been pushing federal regulators and lawmakers to amend broadcast ownership rules, which prohibit any one company from owning an aggregate of licensed TV stations that reach more than 38 percent of American TV households.
Broadcasters say the rules are outdated because they face increased competition from direct-to-consumer streaming services owned by the networks — including Hulu, Disney Plus, Peacock and Paramount Plus — which didn’t exist when the rules were originally put in place.
Raising or lifting the ownership cap would help them better compete in the era of streaming, they argue, by allowing them to scale up their operations. By growing bigger, broadcasters argue they would be able to invest more in locally-produced programming like news and community-oriented (though some broadcasters, like Sinclair, have recently done the opposite).
The broadcast ownership rules had been under review for several years, and were part of the FCC’s obligation to regularly scrutinize the regulations as part of its quadrennial review. After a court order imposed a deadline for the FCC to issue a decision on the matter, the agency finally released the findings of its quadrennial review on Tuesday.
Officials at the FCC said the decision to uphold the rules in the era of streaming came amid a desire to preserve the original intent of the regulations, which was to ensure one broadcaster did not exert too much control over the public airwaves.
“This approach is a product of the Communications Act and the values in the law that have always informed our approach to media policy — support for localism, competition, and diversity of ownership,” Jessica Rosenworcel, the chairperson at the FCC, said in a statement. “These values support jobs and journalism. They are important. Even as times change, these values remain. So does the law.”
“While the ways we consume news and content in the digital age have changed, this approach is consistent with our longstanding values,” Rosenworcel continued. “It helps ensure that entities — both big and small — play by the same rules when they seek to build a station and audience in local markets.”
What are the FCC’s ownership rules?
- No broadcaster can own all the TV stations in a single market.
- No broadcaster can own all the radio stations in a single market.
- No broadcaster can own two of the top four network affiliates in a single market.
The FCC allows a broadcaster to apply for a waiver of its rules in certain circumstances. For example, in the El Paso market, Sinclair Broadcast Group owns the local CBS and Fox affiliates, in a market with few full-power, English-language stations. Sinclair was able to argue in favor of a waiver by noting that, due to the market’s cross-border audience and sizable Spanish-speaking audience, the two affiliates are not among the top four most-watched stations in El Paso.
Likewise, there are certain loopholes that broadcasters can exploit by increasing the number of TV stations they own. The FCC’s ownership cap does not apply to low-power or “translator” stations, and broadcasters are able to own more UHF-transmitting stations above the ownership cap because of a prolonged perk called the “UHF discount.”
Prior to the FCC’s decision this week, public advocacy groups warned that allowing broadcasters to increase their ownership of local TV stations would lead to significantly higher fees charged to cable and satellite companies for carriage of those channels. Those fees have been the driving force behind rising cable and satellite bills over the past decade.
On Wednesday, a spokesperson for the American Television Alliance said they were pleased with the FCC’s decision to preserve its ownership rules.
“For too long, these loopholes have allowed broadcasters to control distribution of two, three, or even all four major networks in markets throughout the country,” the ATVA said in a statement. “This is part of the reason broadcasters have been able to raise their rates by more than 5000 percent since 2006 — even while viewership for these stations has dropped 45 percent during the last decade. Today’s action promises some long-awaited relief for consumers and their pocketbook.”
But the issue remains far from settled. Some Republican commissioners at the FCC are taking the side of broadcasters, saying the agency’s ownership rules have not kept up with the times.
“The Commission has consistently ignored Congress’s deregulatory mandate under the statute, the realities of the modern media marketplace, and the many ways that Americans now consume news, information, and entertainment programming,” FCC Commissioner Brendan Carr said in a statement. “This failure does not serve anyone’s interest, as a broad range of stakeholders have made clear in this record, once again. But despite a record bursting with evidence of a vibrant media marketplace, the Commission continues to advance the fiction that broadcast radio and broadcast television stations exist in markets unto themselves.”
Carr noted that the FCC tends to be more reactive than proactive when it comes to its ownership rules. He pointed to the FCC’s action in lifting cross-ownership regulations between newspapers and broadcasters, which were finally eliminted in 2017
“This restriction was born in an era when newspapers and broadcasters were the only games in town for local news and information. Back then, Americans got their news in the morning when a newspaper clunked onto the front doorstep and in the evening when they tuned into one of three nightly newscasts,” Carr said. “But over time, the FCC failed to acknowledge the titanic changes taking place in the news business, particularly with the rise of the Internet. Our prohibition on newspaper-broadcast crossownership only made it harder for them to gain the scale needed to compete with the Internet giants.”
The rule was eliminated in 2003, before being partially reinstated four years later. The amended rule allowed a newspaper owner to also own a TV station in a “Top 20” TV market like New York or Los Angeles, as long as there were more than a half-dozen other TV stations operating in the same area. The rule remained in place until it was fully lifted again in 2017.
By the time the FCC did away with cross-ownership rules between newspapers and TV stations, more than 1,800 local newspapers had gone under, Carr said, suggesting their fate might not have been sealed if the FCC allowed broadcast stations to supplement the dwindling revenue of print media much earlier.
“This doesn’t make much sense to me,” Carr said, warning that the same fate could befall TV stations who might have to pull back on investments in local news (which some are already doing) if the FCC doesn’t change its rules when presented with the opportunity.
“The FCC must enact significant reforms to help promote competition and increase access to the local news and information that is so vital yet is too often out of reach for those in rural and other underserved communities,” Carr said.
Another FCC commissioner, Nathan Simington, put public interest groups on blast, saying they disincentivized broadcasters from making investments in smaller markets at a time when local news production in rural areas was increasing (he did not provide information to support this narrative, and all signs point to the opposite happening).
“This decision is anti-localism and hastens the death of local news in small markets, and it does so on the thinnest of gruels supplied in the factual record,” Simington complained. “The item tells a just-so story about viewpoint diversity and public interest while, at the same time, destroying the asset value of the very small market stations providing what limited viewpoint diversity remains. The Commission did not kill local print journalism, but it prepaid its ticket across the Styx, and today’s decision is a second punch in the loyalty card.”