FCC Weakens Limits on Owning Newspapers, TV Stations

Ajit Pai FCC Chairman - Getty - H 2017
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Critics say dumping these rules encourages consolidation, which hurts media diversity.

President Donald Trump's FCC has undone some rules that for more than four decades have restricted media companies from controlling too many assets in local markets.

After a Thursday vote, the regulatory body made it legal for one company to own newspapers and TV stations in a single market, which has been illegal since 1975, and it made it easier to own two broadcast television stations in a market, as well. It also made it easier for competitors to cooperate with each other.

Media businesses say the loosening of rules was necessary in the digital era, with newspapers grappling with falling readership and ad sales while broadcasters see more competition from Google, Apple, Facebook, Netflix and others. 

Critics, on the other hand, reject the notion of further consolidation, arguing that diversity is vital to consumers. An advocacy group called Free Press, for example, said Thursday that it will challenge the FCC's rule changes in court.

Fitch Ratings, on the other hand, praised the new rules as "a positive driver in the newspaper sector" and added that the "loosening of the local television ownership rules is a positive for the proposed Sinclair-Tribune combination." Fitch also predicted "a wave of intra-market activity through acquisitions, divestitures or station swaps."

The new rules, though, did not address caps regarding the national ownership of media outlets.

Specifically, the FCC's order eliminated the "Eight-Voices Test" that required at least eight independently owned TV stations in a market before an entity would be allowed to own two. It also made certain exceptions to a rule prohibiting the ownership of two of the top four stations in a market.

"For too long, the Commission has failed to acknowledge the pace of change in the media marketplace by maintaining analog broadcast ownership rules that do not reflect today's digital age," the FCC, led by chairman Ajit Pai, said in a statement after voting in favor of the new rules.

The FCC, made up of three Republican appointees and two Democratic appointees, also adopted rules to let TV broadcasters use the "next generation" transmission standard known as ATSC 3.0.

According to the FCC, ATSC 3.0 "will let broadcasters provide consumers with more vivid pictures and sound, including ultra high definition television and superior reception, mobile viewing capabilities, advanced emergency alerts, better accessibility features, localized content and interactive educational children's content."

There are several hoops that companies must jump through before using the standard, though. Broadcasters, for example, must partner with another local station to simulcast their programing in the current DTV standard, and they must provide consumers with on-air notifications to alert them of changes.