FCC votes to lift broadcast ownership cap

The FCC on Thursday voted 2-1 to eliminate the national TV ownership cap rule that bars a single broadcaster from owning stations that reach more than 39% of U.S. TV households.

Why it matters: The party-line vote clears the way for local broadcasters to merge, giving single broadcast ownership groups far more reach than they previously could have.

• FCC chairman Brendan Carr has long argued that the cap was outdated and limits the ability of broadcasters to consolidate to compete with tech firms and streamers.

Zoom in: The FCC said in a statement that deals would be evaluated on a case-by-case basis that authorizes deals that satisfy the agency's public review standard.

• "This will empower the FCC to approve deals that promote the public interest while allowing the agency to reject any deals that do not meet that standard," it said.

What they're saying: In a statement, a Nexstar spokesperson said "For too long, local broadcasters were handcuffed from reaching the scale they needed to compete on a more level playing field."

• "Modernizing these rules will help ensure broadcasters can continue investing in local journalism and providing the free, trusted news and information that communities across America rely on every day."

Between the lines: Nexstar is the clearest example of a beneficiary of the raised cap.

• Its $6.2 billion takeover of rival Tegna is currently on pause as a federal judge considers an antitrust lawsuit filed by DirecTV and several state attorneys general.
• The FCC's Media Bureau approved Nexstar's application to transfer Tegna's broadcast licenses without a full, public commission vote in March.

Reality check: Thursday's vote to lift the cap doesn't resolve the antitrust lawsuit that put the deal on pause.

• That suit addresses issues outside of the FCC's cap vote.
• DirecTV says the deal would allow Nexstar to have pricing leverage over pay-TV distributors and those costs would be passed on to consumers.
• There's an ongoing debate over whether the FCC has the authority to lift the cap.

Context: FCC Commissioner Anna Gomez — the lone Democrat — voted in dissent, arguing Congress removed the FCC's authority to adjust the ownership cap after approving the current limit in 2004.

• The Biden-era FCC opposed lifting the cap, and the FCC killed Tegna's $5.4 billion attempt to combine with Standard General in 2023.

What's next: The vote will likely be met with legal resistance by consumer advocacy groups.

• Already, Free Press, a media advocacy non-profit, said it plans to appeal the vote.