The Federal Communications Commission removed the market-share cap on television broadcasters in an expected 2-1 vote on Thursday, potentially opening the door to bigger mergers.
The commission rule previously prohibited any media company from owning TV stations that reach more than 39% of households in the United States. The FCC will now review proposed acquisitions of TV stations on a case-by-case basis.
The FCC’s Media Bureau previously waived the 39% cap for Nexstar Media Group’s $6.2 billion acquisition of Tegna, which is stuck in court.
During its Thursday meeting, the agency said the TV ownership cap became outdated and hindered the ability of broadcasters to compete for viewers and advertising dollars against digital platforms such as YouTube that are not subject to the same restrictions. FCC Chairman Brendan Carr supported the move to eliminate the cap for broadcasters.
“Repealing the national cap will provide essential relief for local broadcasters by restoring a healthy counterbalance to the growing leverage of national programmers,” Carr said.
The effort will likely face legal trouble as critics insist Congress is the only federal body that is authorized to lift the cap. Congress established the 39% cap in 2004 through the Consolidated Appropriations Act after the FCC moved to raise the limit to 45%.
The FCC argues that it has the authority to lift the cap under the Communications Act because the policy is a commission rule, not a statutory requirement.
“Congress never envisioned that local broadcast TV stations would become nothing more than undifferentiated pass-throughs of national programming produced in Hollywood and New York,” Carr said.
FCC Commissioner Anna Gomez, the sole Democrat on the panel, disagreed with repealing the cap and argued that only Congress can remove or otherwise change it.
“Eliminating the national broadcast ownership cap does not free local broadcasters from economic pressure, it just changes who’s doing the squeezing,” she said Thursday on X, accompanying a statement. “Trading a squeeze from Big Tech for a squeeze from Big Media does nothing to protect the communities this cap was designed to serve.”
Gomez pointed to a federal judge’s decision to halt the Nexstar-Tegna merger, which she says suggests that the FCC acted unlawfully in removing the 39% cap.
If the deal closes, the combined entity would reach approximately 80% of U.S. TV households while DirecTV, YouTube, Amazon Prime Video, and other TV providers reach 100% of the nation. Prior to its acquisition of Tegna, Nexstar said this figure was 70%.
Nexstar CEO Perry Sook welcomed the FCC vote during his company’s latest quarterly earnings call Thursday, saying the cap’s repeal “will remove a certain level of uncertainty in future [mergers and acquisitions].” He also expressed optimism about the FCC’s defense of its decision should the agency be brought to court.
“We believe that they are on very firm legal footing to make this declaration,” the executive said. “We support and applaud [Carr] for his leadership in this issue, to allow broadcasting to compete on the same playing field in the domestic U.S. with every other purveyor of advertising, and every other purveyor of video that we compete with that has access to 100% of U.S. households.”
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A bipartisan 13-state coalition, led by California, and DirecTV are suing Nexstar and Tegna for allegedly violating federal antitrust law. A federal judge paused the merger with a preliminary injunction in April, prompting Nexstar to appeal the court’s decision.
Sook added that the decision won’t have a “ton of effect” on the media company’s defense against the antitrust lawsuit. He noted a settlement is possible before the case heads to trial next year.