The Federal Communications Commission on Thursday voted to rescind the rule that capped any broadcaster's reach at 39% of U.S. television households, replacing the fixed limit with an individualized review process. The 2-1 vote abandons the numerical ceiling that had constrained how many households a single local broadcast owner could cover.
Under the new framework, the FCC will consider merger applications that would push an owner beyond the former 39% threshold on a case-by-case basis, evaluating whether each proposed transaction is in the public interest. The agency said the change is aimed at removing what it described as "artificial restrictions" that limit broadcasters' ability to attract capital and grow revenue.
FCC Chair Brendan Carr framed the move as a measure to help local broadcasters adapt in a changing media landscape, noting the steep decline in local newspapers as part of his rationale. Carr said the prior restriction hamstrung one segment of the broader market with outdated rules and argued that allowing greater scale could enable owners to invest more in local programming and strengthen their bargaining position with national networks.
The commission's sole Democrat, Commissioner Anna Gomez, dissented. She characterized the proposal as unlawful and said that any change to the ownership cap should come from Congress rather than the FCC. Critics of the rule change have warned that lifting the cap could concentrate market power among station owners.
The FCC has counted stations with weaker over-the-air signals as partially contributing toward an owner's cap under the prior rules. Limits on ownership of local broadcast stations date back to 1941, and the numerical cap was most recently set at 39% in 2004.
In related regulatory developments earlier this year, the FCC in March approved the $3.54 billion sale of local television company Tegna to Nexstar, a deal that faced objections from Democratic-led states. The agency said it was waiving the 39% rule in approving that transaction. If that acquisition stands and is not overturned by courts, Nexstar's reach would expand to cover 80% of U.S. television households.
Separately, Senate Commerce Committee Chair Ted Cruz said last month he is skeptical that the FCC can increase the cap without Congressional action. The issue of whether the commission has the legal authority to lift the numerical limit was a central point in the lone dissent and remains a source of uncertainty.
Implications
- Broadcast owners may be able to pursue larger mergers, subject to individualized public interest reviews by the FCC.
- The decision could spur media industry consolidation if case-by-case approvals are granted for deals that exceed the prior cap.
- Regulatory and legal challenges could follow given the dissenting view that only Congress can change the cap.