FCC Rolls Back Media Regulations

The Federal Communications Commission on Thursday reversed longstanding limits on local ownership of TV stations as well as radio stations and newspapers, opening the door to a new wave of consolidation.

The vote was three to two, along party lines, according to The Wall Street Journal.

Ajit Pai

FCC Chairman Ajit Pai, a Republican who led the charge for the overhaul, said that “few of the FCC’s rules are staler” than the broadcast media ownership rules. “It’s about time” that the agency overhauled them to make sense in the digital-media age, he added.

In a statement, Democratic Commissioner Mignon Clyburn predicted that new media consolidation could come “at the expense of localism, competition and viewpoint diversity.”

Television station owners have long complained that the federal rules, enacted over the years to ensure diversity of views, have become an impediment to their ability to compete, particularly at a time when online rivals are disrupting their markets.

The local TV business has been consolidating rapidly in recent years because of the pressures, leading to the emergence of super groups such as Sinclair Broadcast Group .

Some critics say the changes also could help conservative-leaning Sinclair in its pending merger with Tribune Media, which is currently under consideration by the FCC. Aides to Mr. Pai have said that most of the changes have no impact on the proposed merger. The changes that might didn’t go as far as broadcasters requested, they added.

Commissioner Clyburn

The changes will end or loosen several basic ownership limits in the FCC’s rules.

One revision eliminates the longstanding rule that generally prohibits a single individual or company from possessing a daily newspaper and a radio or TV station in the same market. A second change eliminates a similar rule regarding cross-ownership of radio and TV stations.

Other alterations make it somewhat easier for a company to own two TV stations in a single market. For instance, Mr. Pai’s plan eliminates a rule known as the “eight-voices test” that says a station owner can buy a second station in the same market only if there would be eight independently owned stations following the purchase.

Still another change would eliminate the prohibition on owning two of the top four stations in a market. But the FCC will review deals combining two top-four stations on a case-by-case basis.

The FCC also reversed course from its previously released draft and tweaked its ownership limits in embedded markets. While not granting a wholesale change in the way the agency counts stations in embedded markets, the Commission voted to take a presumptive waiver approach that would bring more certainty to the marketplace. Groups that had sought a revamp of the formula the Commission uses to count stations in embedded markets will need to wait until the next quadrennial ownership review.

Also eliminated from the FCC’s rulebook are the radio-television cross-ownership rule and several media ownership regulations targeting the television industry—including eliminating the attribution rule for TV joint sales agreements and eliminating the so-called eight voices test. The Commission also voted to launch a rulemaking for determining how an incubator program that would “encourage greater diversity” in broadcasting can be crafted.

Court Challenge Looms

InsideRadio reports the public interest group Free Press said the Commission’s decision will “weaken the standards” on a variety of media regulations including the rules which prevented a single company from owning radio stations, TV and a daily newspaper in the same market. It’s vowing to take its fight to federal court.

The National Association of Broadcasters has dismissed allegations that the FCC is playing favorites. NAB president Gordon Smith said the rule changes are “broader than any one company” pointing out the broadcast industry has asked the FCC to modernize its media ownership rules for decades.