By Kyle Daly
Nov. 16 — The Federal Communications Commission is likely to change course and prioritize lifting newspaper and television station ownership restrictions when it comes under Republican control in 2017, agency watchers said.
Industry analysts who track the FCC expect Republicans to relax rules once they assume control of the agency in President-elect Donald Trump’s administration. That would include loosening restrictions on how many broadcast properties one company can own in any given market and lifting the ban on media companies owning newspapers and broadcast TV stations in the same market, a practice known as cross-ownership.
The FCC declined to ease those restrictions in its most recent review of media ownership rules in August. Another restriction — an ownership cap preventing one entity from owning enough stations to reach more than 39 percent of all U.S. households — is up to Congress to change.
“A pro-business Republican administration led by Donald Trump is expected to push for more deregulation,” Geetha Ranganathan, a Bloomberg Intelligence senior analyst, wrote in a Nov. 10 note. “For broadcasters, this may translate to relaxation of the 39-percent ownership cap and elimination of the broadcast-newspaper cross-ownership ban.”
Fewer media ownership restrictions could spark a wave of broadcast and newspaper consolidations. Major broadcasters such as CBS Corp., Sinclair Broadcast Group Inc. and Tegna Inc. could also find themselves with fresh cash to spend on acquisitions and other investments after the FCC finishes auctioning broadcast spectrum licenses to wireless companies.
Sinclair, Nexstar Broadcasting Group Inc., Tegna and Tribune Media Co. have historically been among the more active station groups when it comes to mergers and acquisitions, Ranganathan said.
Broadcast analyst Mark Fratrik, vice president and chief economist for BIA/Kelsey, a business consulting and analysis firm, told Bloomberg BNA that while media ownership is “obviously not the highest” of Trump’s priorities, the chance of ownership rules being relaxed in a Republican administration is much greater than if Democrats had retained control of the White House.
“There are two very free market-oriented Republican commissioners already on the commission,” Fratrik said, referring to Michael O’Rielly and Ajit Pai. “They are poised and ready to lead the charge with a third vote.”
O’Rielly told Bloomberg BNA that he can’t say with any certainty whether tackling media ownership rules will be a top priority until after Trump is inaugurated and he nominates an FCC chairman to set the commission’s agenda. However, O’Rielly said he remains unhappy with the FCC’s 3-2 party-line vote in August to approve a rules package that generally left existing ownership limits intact.
Gordon Smith, president of the National Association of Broadcasters, a leading trade group, said he hopes the FCC will take a fresh look at ownership limits in a Republican administration. The ban on cross-ownership, in particular, “belongs in the ‘I Love Lucy’ era,” Smith said Nov. 15 at an event sponsored by the Media Institute, a nonprofit research foundation specializing in communications policy issues.
Overall, though, broadcasters aren’t yet sure what to expect from Trump, an industry source told Bloomberg BNA on background. The president-elect signaled distaste for media consolidation during his campaign, pledging to have regulators block the proposed merger between AT&T Inc. and Time Warner Inc. But his administration could also hew more closely to traditional Republican orthodoxy on antitrust and oppose significant regulation of mergers.
The Trump transition team has been quiet about who Trump may favor to head the commission. The telecommunications policy community favors Pai, the senior of the two current GOP commissioners, to serve as interim chairman, at least. Pai, who voted with O’Rielly in August, maintains that existing rules are obsolete in a world dominated by online media outlets.
Trump’s prickly relationship with the media during the contentious presidential election season also could impact the FCC’s approach to media ownership in his administration — but in another way.
As a candidate, Trump was a vocal media critic and failed to get any major newspaper endorsements, with two exceptions. He was backed by the New York Observer, which is owned by his son-in-law, Jared Kushner, and the Las Vegas Review-Journal, owned by supporter Sheldon Adelson.
Most pre-election newspaper surveys predicted Trump would lose, something that a Republican FCC could interpret as evidence of the disconnect between newspapers and their readers, broadcast attorneys told Bloomberg BNA. So, the thinking goes, newspapers could use an infusion of cash and resources from broadcast buyouts to bolster ties to their readers.
Broadcasters have already challenged the FCC’s latest rules in court on the same basis that Republicans are expected to if they seek to institute new, more relaxed rules.
The NAB Nov. 14 filed a petition for review with the U.S. Court of Appeals for the District of Columbia Circuit ( National Association of Broadcasters v. FCC , D.C. Cir., No. 16-01394, petition filed 11/14/16 ). It argues that the FCC failed to carry out its duty, under federal law, to review broadcast ownership rules every four years and adjust them in response to market changes as needed.
The Multicultural Media, Telecom and Internet Council Inc. and National Association of Black-Owned Broadcasters filed their own challenge to the same rules Nov. 15 in the D.C. Circuit ( Multicultural Media, Telecom and Internet Council, Inc. v. FCC , D.C. Cir., No. 16-01398, petition filed 11/15/16 ). The groups said the rules should have extended certain telecommunications industry diversity requirements to broadcasters. It’s unclear whether the NAB and MMTC cases will be consolidated into one if they move forward.
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