David Oxenford

By: David Oxenford, Wilkinson Barker Knauer

In many of the comments filed by broadcasters and their representatives in the FCC’s “Delete, Delete, Delete” docket, high on the list of rules suggested for deletion were the local broadcast ownership restrictions.  Changes in these rules were also a subject high on the discussion list in Las Vegas at the recent NAB Convention.  With all of the interest in changes to these rules, we thought that we should spend a little time looking at the possible routes by which FCC action on changes to the ownership rules could occur.

First, it should be noted that the local ownership rules are different from the national cap on television ownership which, as we recently wrote, the NAB has asked the FCC to abolish.  A review of the 39% national audience cap was started in the Pai administration at the FCC (see our article here), and the NAB is seeking to revive and resolve that proceeding, arguing that national caps are no longer necessary given the competition from so many other national video services that are unrestrained by any ownership limitations.

The TV national caps are not part of the FCC’s Quadrennial Review process, where the FCC every four years is required to review its local ownership rules to determine if they remain in the public interest.  The local rules – the rules on how many commercial radio or TV stations one party can own in each market – create issues for many broadcasters across the country, both large and small.  The local rules generally limit TV owners to two stations in any market and, unless it can be shown to be in the public interest, no owner can acquire an attributable interest in two of the top 4 rated stations in any market.  For radio, in the largest market, no owner can own more than 8 stations (and only 5 can be in the same service – AM or FM).  In the smallest markets, no owner can own more than 5 stations (no more than 3 in the same service), and only then if the stations comprise no more than half the stations in the market.  Given recent declines in the radio advertising markets, and the competition from digital media, in many markets there are struggling stations ready to sell to any serous buyer – when the only likely buyer is another in-market operator who cannot buy because of ownership rule limitations.

To some extent, there is an outlet for increases in local TV ownership, in that the FCC can allow two of the top 4 stations to combine upon a public interest showing.  While the last FCC administration seemed reluctant to grant any such combinations, the new Carr administration appears to be much more likely to allow those combinations.  Since Carr took office, the Media Bureau has granted two such combinations – one based on the argument that the station to be acquired was a “failing station” that needed rescuing by a stronger local competitor – and a second based on a public interest showing about the market.  And both were granted very quickly by normal FCC standards – just three or four months after being filed.  Obviously, having clear rules on these combinations (or no rules at all) is preferable to relying on a subjective waiver standard or opaque public interest evaluations by the FCC. But at least there is a path to more local ownership whereas for radio ownership any such path is less clear – but that path is at least as essential if not more so than the path to local ownership deregulation in the TV industry.

We have written many times (see, for instance, our articles here and here) about the need for ownership deregulation for radio.  Radio relies on advertising dollars from local businesses but, in every rated market, big digital companies now have over two-thirds of that revenue – with the majority going to Google, Meta, and Amazon – taking money away from local media.  Similarly, radio competes for the listening audience with music services offered by many of these same tech companies, along with specialized digital audio competitors like Spotify, and thousands of independent audio creators who can reach audiences through podcasts and other digital platforms.  None of these competitors are subject to ownership limitations, but a broadcast radio operator can only own at most 8 stations even in markets where there are over 100 local radio stations.

The arguments for radio ownership deregulation have, of course, been made to the FCC many times.  In December 2023, the Rosenworcel FCC determined that consolidation by radio operators would not allow them to better compete against digital media and that the public needed to be protected against local broadcasters getting bigger (see our summary here).  That FCC decision is on appeal, and oral arguments in that case were held in March.  Even though Chairman Carr dissented from the 2023 decision, the FCC defended the decision at the March argument.  The judges did raise questions indicating that they took the concerns about digital competition seriously.  But questions from judges don’t necessarily indicate the results of any appeal.  Should these judges decide that the Commission did not adequately consider the effects of this competition, they could order the FCC to quickly reevaluate the 2023 decision, or even vacate the rules entirely as they had not been shown to still be in the public interest as required by the Quadrennial Review process.

Even without a court ruling, the FCC itself should be considering the local ownership rules this year as the 2022 Quadrennial Review is supposed to be finished so another can be started in 2026.  The FCC has only issued a broad Public Notice in the 2022 review, a notice issued right at the end of 2022 (see our article here).  The FCC has never issued a Notice of Proposed Rulemaking addressing any specific rules that it might want to change – such as the radio ownership rules.

Chairman Carr wrote the section of the Project 2025 Report from the Heritage Foundation that has formed the basis of many of the Trump administration’s FCC regulatory actions.  In it, his only real mention of broadcasting was to state that the ownership rules were outdated and should be repealed.  This is consistent with his dissenting statement in the 2023 FCC ownership decision.  With these statements of his opinion about the regulations, one would think that any 2022 Quadrennial Review Notice should propose substantial deregulatory actions. But no notice has yet been issued, perhaps because Carr still does not have a Republican majority at the FCC.  That will change assuming Olivia Trusty receives Senate confirmation as the third Republican Commissioner.

Whether through court action or that of the FCC, we would expect that substantial deregulation of the local broadcast ownership rules should occur if the Republican members of the FCC stay true to their positions expressed in earlier proceedings.  Given the timing for notices and comments either following an appeal or through the Quadrennial Review, and Federal Register announcements to establish effective dates, new rules are unlikely to be effective until late this year or more likely in 2026.  But broadcasters still should be considering the options that changes in the local ownership rules could provide – whether it be as a buyer or a seller of broadcast stations if, as we expect, the rules are relaxed in the not too distant future.

David Oxenford is MAB’s Washington Legal Counsel and provides members with answers to their legal questions with the MAB Legal Hotline. Access information here. (Members only access). There are no additional costs for the call; the advice is free as part of your MAB membership.