US agency ends 39% local TV station ownership cap

By David Shepardson

WASHINGTON, Aug 6 (Reuters) – The Federal Communications Commission voted on Thursday to rescind the rule that bars local broadcast station owners from reaching more than 39% of ​the total number of U.S. TV households in a ‌move that could help spark industry consolidation.

The FCC voted 2-1 to lift the cap in favor of a new case-by-case approach. The commission’s sole Democrat, Anna Gomez, said the proposal was illegal and argued only 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% in 2004.

FCC Chair 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 “We should stop hamstringing this one segment of ​the broader market with outdated restrictions,” Carr said.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 said the new ​rule would consider applications on television company mergers that ‌would go above 39% 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.”

Carr argues that would allow local television owners to increase investment in local programming and give them more leverage against national networks.

In March, the ⁠FCC approved the $3.54 ‌billion sale of local television station owner Tegna ⁠to Nexstar despite objections from Democratic-led states.

The acquisition, ​if not ‌reversed by courts, will expand Nexstar’s presence to ​cover 80% ⁠of U.S. TV households. The FCC has said it was waiving the 39% rule in approving the deal.

Senate Commerce Committee Chair Ted Cruz, a Republican, said last month he is skeptical the FCC can hike the 39% cap without an act of Congress.

(Reporting by David ShepardsonEditing ​by Nick Zieminski)