FCC votes to change media ownership rules

Federal agency decided Thursday to remove roadblocks to media consolidation

FILE PHOTO: Ajit Pai, Chairman of the Federal Communications Commission, testifies before a U.S. Senate Appropriations Financial Services and General Government Subcommittee on Capitol Hill in Washington, DC, U.S. on June 20, 2017. REUTERS/Aaron P. Bernstein/File Photo

WASHINGTON, D.C. — The U.S. Federal Communications Commission on Thursday voted to remove key roadblocks to increased consolidation among media companies, potentially unleashing new deals among TV, radio and newspaper owners as they seek to better compete with online media.

The Republican-led FCC voted 3-2 to eliminate the 42-year-old ban on cross-ownership of a newspaper and TV station in a major market. It also voted to make it easier for media companies to buy additional TV stations in the same market, and for local stations to jointly sell advertising time and for companies to buy additional radio stations in some markets.

Big media companies including Tegna, CBS and Nexstar Media Group have cited the expected rule change as motivation for considering expansion opportunities.

“This is really about helping large media companies grow even bigger,” said Democratic FCC Commissioner Mignon Clyburn, adding that Republicans were “more intent on granting the industry’s holiday wish list early rather than looking out for the public interest.”

FCC Chairman Ajit Pai defended the rule change, saying it was “utter nonsense” that rules banning cross ownership of a newspaper and broadcast station were still in place after massive changes in media over the last four decades.

The decision could also allow Sinclair Broadcast Group, which is seeking approval for its proposed $3.9 billion acquisition of Tribune Media Co., to avoid some divestitures in order to gain approval of the deal.

Moody’s said on Thursday the move was credit-positive for TV broadcasters. “Under the revised FCC rules, U.S. television broadcasters will benefit from the ability to consolidate local market ownership through acquisitions and station swaps,” said Jason Cuomo, author of the Moody’s report. “Broadcasters that increase their scale in local markets will attract more advertising, improve their negotiating leverage and bring down their costs.”

A federal appeals court, which has been grappling with the FCC’s media ownership rules for more than a decade, is expected to hear challenges to the new rules.

Sen. Bill Nelson (D-Fla.) said the vote “will pave the way for massive broadcast conglomerates to increasingly provide local viewers with nationalized cookie-cutter news and corporate propaganda that’s produced elsewhere.”

But the National Association of Broadcasters said the rules were “not only irrational in today’s media environment, but they have also weakened the newspaper industry, cost journalism jobs and forced local broadcast stations onto unequal footing with our national pay-TV and radio competitors.”

Pai is also expected to call for an initial vote in December to rescind rules prohibiting one company from owning stations that serve more than 39 percent of U.S. television households, Reuters reported on Wednesday, citing two people briefed on the matter.

In April, the FCC voted to reverse a 2016 decision that limits the number of television stations some broadcasters could buy.