Click here to read the full article.
Broadcast TV station owners have been stuck in media’s wilderness for most of the past two decades or so as the internet and streaming have defined the state of the art in television. But this year, independent broadcast
TV station owners are being heard as they haven’t in years by crusading Federal Communications Commission chairman Brendan Carr, who has probed into areas of long-festering aggravation for station owners.
Carr is poised to bring broadcasters a long-sought victory by removing the “station cap,”or the FCC regulation that limits the number of U.S. TV stations that a single entity can own. The FCC is set to vote Aug. 6 on whether to eliminate the restriction, a regulatory principle that was first enacted for radio stations in 1941.
Carr is also promising to push the commission’s agenda further into tensions around sports rights and the spread of major leagues and big-time teams to subscription-based streaming platforms a la Amazon Prime Video and Apple TV. Broadcasters and some in Congress see this as a violation of the letter of the law as spelled out in the Sports Broadcasting Act. That’s the 1961 legislation that provides an antitrust exemption to the team owners in the NFL, NBA, Major League Baseball et al. to band together and negotiate media rights deals as a unit.
There’s industry speculation that Carr is paying close attention to broadcast TV issues because independent Big Four affiliate station owners can be allies in his high-profile regulatory jousts with Disney (owner of ABC) and Comcast (owner of NBC), among other media heavyweights.
Front and center for broadcasters is the FCC’s national station ownership cap. The commission is expected to vote on Aug. 6 to eliminate the restriction entirely, something broadcast station owners have sought for years. The cap’s parameters have been adjusted numerous times over the past 85 years. In the mid-1990s the national limit was 12 stations total. Today, Nexstar owns more than 200 and Sinclair Broadcast Group is pushing 180. Since 2012, the cap has been set at a total reach of 39% of U.S. TV households — but with a big caveat that allows companies like Nexstar and Sinclair significant wiggle room. The station cap, as it stands today, is a pillar of the lawsuit that eight state attorneys general filed to block the Nexstar-Tegna merger on antitrust grounds — and won a court-ordered injunction freezing the companies’ integration.
The station cap has stood for decades as an media ownership restriction rooted in First Amendment principles of fostering a diversity of voices and opinions on America’s airwaves. For a century, media law and regulatory policy has followed the gospel that this is best accomplished in a free-market environment by having a broad range of owners, to ensure that one company can’t dominate the airwaves on a national or near-national basis. The idea of localism, or the concept that local station ownership and management naturally aligns its interests with community mores and values, has been challenged over the past 30 years as TV and radio station ownership has steadily compressed into fewer hands. At present, the FCC estimates there are about 1,400 commercial TV stations operating across the U.S., plus another 400 public TV and educational stations.
Carr declined an interview request from Variety but he did address the cap issue on July 22 at an FCC press conference, saying it was an effort to give local stations “a fighting chance” in a changing market.
“The national programmers — Comcast, Disney, Fox, Paramount — in a lot of ways I think a lot of them have amassed a tremendous amount of power over the last decade-plus. I think things are out of balance and one of the reasons we’re doing this is to help bring balance back to the broadcast airwaves,” Carr said.
He asserted that the cap was originally designed to protect local station owners from the market power of the Big Three (and then Big Four) networks, by putting limits on their ability to amass O&O stations. But these days, broadcast TV distribution is less important to Big Four owners, and that shift has had the reverse effect of making the cap a burden for the independent owners that it was designed to serve.
“The cap originally was it was designed to constrain the power of the national programmers. We didn’t want them to combine significant scale in the programming side with significant scale in the TV side and so you limited it,” Carr said.
“What’s happened though is that the cap is no longer constraining the power of the national programmers but instead holding back locals. The reason for that part is because the national programmers don’t rely in the same way anymore on ownership of TV stations to get their power. Instead, they go directly to consumers in ways that [are] unconstrained by any percentage limitation,” he said. “They have their own streaming services that can reach 100% of the population, their own apps that can reach 100% of the population. They negotiate directly with the national virtual cable companies like YouTube TV. So now the national programmers have clear paths to 100% of the regulant market, but the ones that are supposed to benefit from 39% constraint are the ones still stuck with it. Now is the right time to move forward so we can give local broadcast TV stations a fighting chance of scaling up and competing and it has the knock-on benefit I think to bring some additional balance back to the broadcast airwaves.”
Ending the ownership cap has been a long-stated policy goal of the National Association of Broadcasters, which represents most of the largest TV station owners in the U.S. The NAB and other industry organizations say rules that govern how many TV stations a company can own in the U.S. — as well as limits on the ownership of multiple stations in a single market — are wildly outmoded at a time when broadcasters compete for viewers and advertising dollars with global giants such as Netflix, Google, Meta, Amazon, Apple and TikTok.
“These FCC restrictions that were written for a time when broadcasters only competed against other broadcasters for advertising dollars, for audience, for programming rights. They are outdated and they artificially impede our ability to compete,” says Curtis LeGeyt, president and CEO of NAB. “When you think about Netflix, Amazon, Google — these are global behemoths, not just with 100% national reach, but global reach. Yet, broadcasters are the only form of media with restrictions in place, preventing our ability to reach certain households. So, we believe those rules are drastically outdated.”
LeGeyt, a copyright and First Amendment attorney who worked on staff for Democratic Senator Patrick Leahy before joining NAB in 2011, asserts that local broadcast TV station newsrooms are essentially the last bastions of locally oriented newsgathering. Local newspapers and magazines have been particularly decimated by the cultural shift to online and social platforms. But running TV newsrooms comes at a high cost, starting with the labor of journalists and production staff as well as technology and equipment. Broadcast owners and the NAB have argued for years that they need the benefit of having significant national scale to pay for local and regional journalism in the modern era.
In many markets, LeGeyt says, “TV stations are the only ones doing trusted local content, especially local content that is freely available, which every broadcaster in this country is doing. It costs a lot of money. It’s as simple as that.” He continues, “If we’re going to provide that trusted boots-on-the-ground programming that’s an antidote to all the disinformation that’s online, if we’re going to invest in bringing communities together versus those other forms of media that are dividing them, and we’re going to do all of that for free to the consumer, we need to have the ability to gain some scale from an advertising perspective and from a business perspective to be able to reinvest in that locally focused journalism.”
LeGeyt emphasized that in his view, 20 or so years ago, the FCC was too slow to loosen restrictions around local newspaper and TV station ownership. He sees this as a cautionary tale for TV stations today.
“We’ve seen the fate of the newspaper industry. The FCC waited far too long to lift the restrictions on newspaper ownership that could have served as a lifeline to local newspapers,” LeGeyt says. “When you look at communities across the country, especially when you get outside of the major cities, in many cases broadcast newsrooms are the only locally focused newsrooms left. We want to ensure they’re viable. For certain companies, scale is a major part of allowing that business of local to thrive.”
Patrick Sholl, a managing director of Barrington Research, who focuses on TV stations, theatrical exhibition and out-of-home advertising, sees the demise of the station ownership cap as important but not life-changing for broadcast owners, at this point.
“If they’re able to expand into additional markets, it will allow for better reach to consumers and that is more attractive to advertisers,” Sholl says. Station owners “can better leverage their own infrastructure to improve economics of the business.”
Sholl also notes that the largest station groups may not immediately rush to buy competitors because many of the most logical acquirers are already shouldering a lot of debt. Some have made commitments to investors regarding debt reduction targets.
Opposition to the FCC’s move on the station cap has been muted — a clear sign that local TV is a low-profile issue in the world of media policy and regulation. The most vocal critics of the FCC’s move have come from another sector that has struggled with the seismic shifts in TV over the past 15 years. The American Television Alliance, a coalition of cable and satellite distribution platforms, blasted the FCC’s move by saying it will raise the prices that Comcast, Charter, DirecTV and other large distributors pay local stations in so-called retransmission consent fees every year. The ATVA in a statement points to the inevitable legal clash over the FCC’s move, should the commission vote as expected to nix the cap.
“The Commission’s attempt to repeal the broadcast ownership cap ignores Congress’s clear instructions and opens the door to further big media consolidation, driving up costs and undermining localism by reducing local news programming for tens of millions of Americans. There is no evidence that further broadcast consolidation improves the quality of local content. We are confident that reviewing courts will quickly overturn this misguided action,” the ATVA said in a statement earlier this month.
The other explosive issue on the horizon for station owners will come if the FCC and members of Congress follow through on signals that they plan to get aggressive on Sports Broadcasting Act enforcement efforts. The antitrust subcommittee of the House Judiciary Committee held a hearing on the SBA last month that included testimony from LeGeyt and sports commentator Clay Travis of Fox’s OutKick Media, among others.
The SBA was enacted in 1961 as part of the antitrust exemption granted by Congress to the NFL for league-wide negotiations in business, particularly for media and sponsorship deals. The law was constructed for a very different media marketplace in which broadcast TV distribution was the only game in town. In the view of the NAB and other broadcast interests, the SBA should ensure that most if not all big-league action stays on free over-the-air platforms, with an emphasis on local availability for hometown teams.
“The SBA was written 65 years ago to give the pro sports leagues the right to pool rights among teams and do those league-wide negotiations in exchange for what was really a public access bargain, which is rights negotiations for distribution on broadcast television,” LeGeyt says.
In recent years, Amazon, Apple and others have taken big swings on streaming-only sports rights deals. Even Netflix is diving in on a selective high-profile events such as Christmas Day NFL games. This has led to a rising tide of fist-shaking among sports fans that leagues and teams are harder than ever to follow amid a checkerboard of free and subscription distribution deals. The aggressive push by streamers has coincided with the near-total collapse of regional sports cable channels — outlets that were not so long ago the most profitable engines of pay TV.
Broadcast TV station owners have been watching the trends with concern that access to live sports, one of their last strongholds, is evaporating. The renewed scrutiny of the SBA could help their cause if Congress strengthens the legislation to reinforce the specific broadcast TV requirement.
“The legislative history is clear that the law was not intended to allow those games to be tucked behind subscription services,” LeGeyt says. “As we now fast forward to today’s media ecosystem, where NFL games are migrating to Amazon on Thursday nights and Netflix on certain holidays and you’ve got YouTube TV for NFL Sunday Ticket, we believe it’s extremely important that Congress reaffirm that this antitrust exemption is meant only to govern its negotiations with broadcast. We believe Congress has certainly an oversight role here in ensuring that the law is followed.”
The NAB has been complimentary of Carr’s efforts on the station cap, which has been in a long-standing review phase that started well before the second Trump administration. But the NAB’s members include the Walt Disney Co., which is in a highly public fight with Carr over the chairman’s decision to initiate an early review ABC’s broadcast station licenses. The review comes amid Trump’s pointed call for ABC to fire late-night host Jimmy Kimmel, who is one of Trump’s loudest and most consistent critics. The pressure that Carr and the Trump administration put on Paramount last year undoubtedly contributed to CBS’ decision to pull the plug on “The Late Show With Stephen Colbert” in May.
LeGeyt gracefully dodged the question of how the NAB feels about Carr’s moves related ABC. The situation has led ABC O&Os in New York, Los Angeles, Chicago, Philadelphia, Houston and three other markets to run on-air promos urging viewers to tap a QR code to file a comment with the FCC in support of the station and its contributions to local communities.
“We’re following the proceeding closely,” LeGeyt says. “Undoubtedly for broadcast station licenses, the predictability that the license term affords is paramount to any local station, television or radio, in this country.”
