Only three weeks ago, we published an article on the FCC’s request for public comment to update the record in the 2018 proceeding looking at whether to change the 39% national cap on the ownership of television stations. That request for comments was published in the Federal Register July 8, setting the deadline for comments. Comments are due August 4, 2025 and reply comments are to be filed by August 22. Although we published our look at the issues in this proceeding only a few weeks ago, we thought that we would republish it for those who may have missed it. Here is what we said on June 26:

Last week, the FCC released a Public Notice requesting comments to refresh the record compiled in 2018 in a proceeding that proposed to review the TV national ownership cap.  That cap limits any company from having attributable interests in full-power TV stations that reach more than 39% of the nationwide TV audience.  That 2018 proceeding was begun (with a late December 2017 Notice of Proposed Rulemaking)  to assess whether the FCC should raise the cap, and also to explore whether it has the power to do so (see our article here).  This week’s Public Notice, released by the FCC’s Media Bureau, not only seeks information about the questions raised in 2018, but it also poses a number of new issues reflecting the concerns of the current Commission.

The Public Notice is not seeking comment on the local broadcast ownership rules that govern how many TV (and radio) stations one owner can have in any market.  Those issues are separately considered in the FCC’s Congressionally-mandated Quadrennial Reviews, where every four years the FCC must justify that the local ownership rules remain necessary in the public interest as a result of competition.  The Commission should be considering the local rules this year, as it is in the fourth and final year of the Quadrennial Review cycle for 2022, and also possibly because of the results of the pending appeal of the 2018 Quadrennial Review (see our article here) – a decision in that appeal could be released at any time.  The 39% national TV ownership cap was adopted by Congress and is not specifically subject to the Quadrennial review – hence the questions that were raised in the 2018 proceeding about the FCC’s authority to review these rules.

As that proceeding has been pending for so long, the NAB recently asked that the Commission once again take up the issue, as competitive pressures on local television stations have only increased in the seven years since comments were last filed.  There is no question that broadcast television now faces video competition from subscription streaming companies like Netflix that were beginning to compete for programming in 2018, but also from other online and over-the-top video providers who all now compete for audience and advertising revenue.  These digital competitors have no limits on how many homes they can reach, but TV owners are still limited by the 39% cap.

It should be noted that, even though the cap is at 39%, a number of television broadcasters are able to reach substantially more of the nationwide audience than that limit because of the “UHF discount.” When the cap was initially adopted, prior to the digital transition of over-the-air television, VHF stations (those operating on channels 2 through 13) were considered technically superior with greater and more robust coverage area.  Thus, for computing compliance with the 39% cap, UHF stations were counted for only half of the audience in their markets.  In digital, the reverse is true – UHF stations are considered to provide superior over-the-air reception.  Past FCC’s have tried to repeal the discount, but the last Republican administration decided to maintain that discount, a decision upheld in court (see our article here).

Both in the Notice of Proposed Rulemaking in the 2018 proceeding and in last week’s Public Notice, there seems to be a real recognition that circumstances have changed, and that the 39% cap should be abolished.  The 2018 proceeding asked many basic questions about whether and how the cap should be changed, and how any changes would affect localism, network/affiliate relations, and programing innovation.  The Public Notice last week reiterates those issues, and it highlights a few that have taken on new significance with the current administration.  The Public Notice asks whether changes in the national cap would affect broadcaster’s ability to negotiate for programming in competition with the digital streaming companies; whether there have been developments in the relationship between national broadcast networks and their local affiliate TV station groups that impact the cap; and whether the FCC’s prior conclusion that a national cap preserves a market balance between the networks and local affiliates remains valid.  The Bureau further asks that, if the FCC retained the cap, whether common ownership of stations that are unaffiliated with major national broadcast networks (i.e., ABC, CBS, NBC and FOX) should be excluded and whether the UHF discount should be retained.

Comment dates will be set by Federal Register publication, but the comment periods are relatively short (25 days after publication, with replies due 45 days after publication).  It is interesting that this Public Notice was published only days after Olivia Trusty was confirmed to her seat on the Commission – and before she was even sworn in as a commissioner.  While released by the Media Bureau (hence not technically requiring a vote of the full Commission), the release immediately after her confirmation, and the short comment period, may indicate a readiness of the Chairman to quickly move forward on media ownership issues now that a Republican majority (and an FCC quorum) is in place.  We are sure that the broadcast industry will be watching to see what the next ownership issue to be tackled by the Commission will be.