FCC lifts limit on media monopolisation

This is intended to empower the FCC to approve deals that promote the public interest while enabling the agency to reject any deals that do not meet that standard.

Through this action, the commission exercises its authority to modify the FCC rule for the first time in over 20 years and align it with current market realities.  

When revealing the change, the FCC stated: “The video marketplace has changed dramatically with the proliferation of digital platforms – all of which enjoy unrestricted national reach. Streaming services now reach over 80% of US adults, and this scale provides them with a competitive edge in terms of attracting investment capital and increased advertising revenue. Eliminating the national cap will allow broadcasters to better compete with these unregulated digital giants.  

“The market also reflects a growing imbalance of power in the network-affiliate relationship, which the national cap intended, but failed, to curb – as evidenced by network control over online video carriage, pre-emption rights, and revenue sharing requirements. In its current formulation, the national cap generally has operated as a blanket prohibition on transactions that would result in the merged entity achieving a national audience reach greater than 39% of television households.  

“Under a case-by-case approach, the commission’s interests in localism, viewpoint diversity, and competition (to the extent they are implicated in a case) can be fully analysed and vindicated in the context of a specific transaction. There may be transactions that would have exceeded the limits of the 39% national cap that do not promote the public interest, and those will be denied. On the other hand, there may be transactions that would have exceeded the cap that do promote the public interest and could gain commission approval.”  

Action by the Commission by Report and Order has gained approval from Chairman Brendan Carr and Commissioner Olivia Trusty.  

In a separate statement, Carr said: “A daily local newspaper is hard to come by these days. The industry is largely dominated by a handful of effectively national papers. That is not an outcome consistent with localism. It does not promote a diversity of views… I don’t want local broadcast TV to go the way of local newspapers… We should stop hamstringing this one segment of the broader market with outdated restrictions. National programmers today are free to reach 100% of their relevant markets by distributing their programming direct to consumers or through deals they cut with virtual cable companies. Cable channels can reach 100% of the country. Social media sites can reach 100% too. Same with Netflix, podcasts, and all other forms of digital content. Even the old newspaper has no limit on marketing itself to 100% of households. But not so with the owners of local broadcasters… Today’s decision lets the parties make their case, allows all stakeholders to be heard, and ensures that the agency will then decide, consistent with our public interest review.  

However, Commissioner Anna Gomez has dissented against the action. Before the vote even took place, Gomez released a statement.  

She said: “This unlawful effort to hand control of the public airwaves to billionaire buddies of this administration will destroy local newsrooms, silence community reporting, and drive up costs for the American families who depend on local stations for news and emergency alerts. A free and diverse media landscape depends on real limits on how much of the public airwaves any one company can control, and this FCC is now poised to allow local broadcasters to sell those airwaves off to the highest bidder. Congress set the 39% national ownership cap in federal law, and only Congress has the authority to raise or eliminate it. The commission cannot waive away that limit simply because these corporate behemoths want to get out from under it.”  

The Commissioner also highlighted that the 39% cap is not an FCC rule that the commission can change on its own. Congress wrote that specific number into federal law in 2004. When it acted, Congress also removed the cap from the routine review process it had previously established for the FCC to update its other media ownership rules, so the FCC is prohibited from revisiting the number the way it revisits rules it established independent of a congressional directive. Congress went further and told the FCC it could not simply decline to enforce the cap. It also required any company that goes over the limit to sell off stations within two years. Taken together, these provisions mean the 39% cap can only be changed by Congress, not by an FCC vote.  

To this, Carr added: “The FCC’s legal authority to modify the national cap is also clear. Indeed, the D.C. Circuit has already rejected the argument that congress’s decision to pass a statute directing the FCC to set the cap at a specific percentage prevents the FCC from later modifying the cap. The court stated that Congress’s statutory instruction to the Commission to set the cap at a specific percentage determined ‘only the starting point from which the Commission was to assess the need for further change.’ The D.C. Circuit is not alone in expressing this view. An unbroken line of FCC Chairs going back more than a dozen years all agreed that the FCC has the authority to modify the cap.”  

Paramount Skydance’s $111bn acquisition of Warner Bros. Discovery (WBD) was recently given the greenlight by UK authorities. Discover more here.