US ends cap on local TV station owners amid concerns of media consolidation

The United States Federal Communications Commission has voted to rescind the rule that bars local broadcast station owners from reaching more than 39 percent of the total number of US TV households in a move that could help spark industry consolidation.

The FCC on Thursday voted 2-1 to lift the cap in favour of a new case-by-case approach. The commission’s sole Democrat, Anna Gomez, said the proposal was illegal and argued only the US Congress can lift the cap. Many critics argue the move will lead to excessive market power among station owners.

Under the rules, stations with weaker over-the-air signals can be partially counted against a company’s ownership cap. The FCC has limited ownership of local broadcast stations since 1941 and most recently raised the cap to 39 percent in 2004.

FCC Chairman Brendan Carr said the move is about helping local broadcasters survive and pointed to the sharp decline in local newspapers.

“We should stop hamstringing this one segment of the broader market with outdated restrictions,” Carr said.

“The FCC kept a rule on the books in the name of localism that contributed to the gutting of local newspapers … I don’t want local broadcast TV to go the way of local newspapers.”

The FCC said the new rule would consider applications on television company mergers that would go above 39 percent on an individual basis to determine if they are in the public interest. The agency said it would “remove artificial restrictions on opportunities for broadcast television to attract capital and generate revenue”.

Gomez said the decision is “an invitation to bring in a lot of transactions”.