Gomez Calls Ownership Cap Notice a 'Chain Saw'; Carr Says He's 'Open-Minded'
FCC Chairman Brendan Carr said Thursday that he's “open-minded” about the result of the agency’s proceeding on modifying the national broadcast-ownership cap (see 2506180082), while Commissioner Anna Gomez denounced it as “a sweeping effort to tip the scales even further in favor of a handful of powerful corporations.” Gomez said she knows broadcasters are facing economic pressures and the FCC may need to provide relief, “but this is where we need a scalpel, not a chain saw.” Broadcast officials told us that keeping the ownership cap in place only for network-owned stations -- as the public notice suggests -- could make the rule change more vulnerable in court.
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“At this point, we're very open-minded as to the outcome,” said Carr in a news conference. “There’s a whole range of options that could be possible.” He said the proceeding is intended to boost local broadcasters. “One of the themes that I've tried to be pretty clear about, and maybe some people would think I've been too blunt about, is I want to work to empower local broadcasters.”
The public notice sought comment on modifying the national ownership cap and the UHF discount, as well as on retaining the cap for stations owned by the top-four networks. That proposal stems from a 2017 NPRM on eliminating the cap. Placing limits on the expansion of network-owned station groups could “preserve a balance in the marketplace between the networks and their local affiliates,” the notice said.
Broadcast industry officials told us that carving out network-owned stations from a rule eliminating the national cap would accomplish little and make it more difficult for the rule change to survive an inevitable court battle. The top-four networks are widely seen as looking more toward streaming offerings than increasing broadcast holdings, broadcast attorneys and media brokers told us. “Leaving the cap in place for networks is a moot point. Period,” said Tideline Partners broker Gregory Guy. “There've been discussions and rumblings of various networks putting stations up for sale over the past few years.”
Keeping the rule for some broadcast stations and not others would likely draw negative scrutiny in litigation, attorneys told us. Broadcasting is speech, and rules that negatively affect only some speakers are more vulnerable to legal challenges, they added. Broadcasters need the FCC’s expected elimination of the cap to have sound legal footing, because it's widely seen as an existential issue for the industry, broadcast officials told us.
If the FCC issues an order relaxing the ownership cap, MVPD interests are expected to challenge it, using arguments that the measure would provide broadcasters with even more oversized leverage in retransmission consent talks, cable experts told us. Arguments from MVPDs and public interest groups that the FCC lacks authority to alter the cap are also widely expected.
Legacy cable providers will have largely similar positions as they did in 2017, asserting that additional broadcaster leverage ultimately will raise consumer costs, ACA Connects President Grant Spellmeyer said. Owning two channels in a market gives a broadcaster more leverage to black out both of them and thus be in a better bargaining position, he said. The broadcast industry faces business challenges but ultimately can’t balance its books on the backs of declining cable subscriptions, Spellmeyer added.
Cablers will also likely urge the FCC to hold off on broadcast-ownership moves to see what happens with a recent call from House Commerce Committee Chairman Brett Guthrie, R-Ky., for an update to the Cable Act (see 2506240059). “We’re treating this very seriously,” Spellmeyer said. “This is real.”
Gomez said the economic woes of the broadcast industry call for “tailored, market-specific solutions” from the FCC, “not a one-size-fits-all policy that deepens outside corporate control.” Eliminating the cap would be “a radical change in vision by this FCC that will dramatically hand power to large, billion-dollar media companies at the expense of local broadcasters.”
In addition, she condemned Carr for releasing the public notice the evening before the Juneteenth federal holiday. “Most [people] likely missed this last-minute release, and that's no accident, because we know, and they know, this isn't about strengthening journalism or preserving local news. This is a proposal to unleash a new era of unregulated media consolidation.” The notice would lead to “the disappearance of independent community-focused journalism across the country.”
Pillsbury broadcast attorney Scott Flick, in an interview, said that broadcasters face competition from tech platforms that reach 100% of the country and lack the regulatory burden and overhead costs of station owners, who are limited to 39% of U.S. households. A solution from the FCC that still limits them to less reach than tech platforms won’t be sufficient, he said. “When everyone else reaches 100%, what number between 39% and 100% is right? I mean, no other number makes sense other than 100%.”
"Giving local broadcasters the ability to scale isn’t about profits -- it’s about the survival of local journalism," an NAB spokesperson said. "Eliminating outdated caps helps local stations pool resources, invest in vital journalism and continue delivering the sports, emergency information and trusted, community-focused news Americans depend on."