The head of the Federal Communications Commission on Tuesday proposed that the U.S. agency vote next month to reconsider rules preventing a company from owning stations serving more than 39 percent of households with a television, a move that could speed consolidation in the industry.
FCC Chairman Ajit Pai, in a notice to the four other members of the commission, asked that an initial vote be cast to begin a process to decide if the existing ownership cap should be eliminated or raised, the agency said.
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Big media firms including Tegna Inc, CBS Corp (NYSE:CBS) and Nexstar Media Group Inc (NASDAQ:NXST) have suggested that changing the rule wold allow them to expand. In an earnings call in February, CBS Chief Executive Les Moonves said "we would strategically want to buy some more stations" if the cap were lifted.
In his notice, Pai, a Republican, said he wants to "seek public input on whether to modify, retain, or eliminate the 39 percent national cap."
He said "a comprehensive review of the rule is warranted in light of considerable marketplace changes, such as technological developments and increased video programming options for consumers, since the cap was last modified in 2004" by Congress.
There is debate about whether the FCC has the legal authority to set the cap, designed to ensure that one company does not acquire an overwhelming ownership of the broadcast market, above the current 39 percent.
In April, the FCC voted 2-1 to reverse a 2016 decision limiting the number of television stations some broadcasters could buy.
Under rules adopted in 1985, stations with weaker over-the-air signals could be partially counted against a company's ownership cap.
But the FCC under Democratic President Barack Obama said last year that the rules were outdated after a 2009 conversion to digital broadcasting, which eliminated differences in station signal strength. It revoked the rules in September 2016.
"This is really about helping large media companies grow even bigger," Democratic FCC Commissioner Mignon Clyburn said in reference to Pai's push to roll back many media ownership rules.
Pai said the FCC will reconsider the agency's April decision as part of a comprehensive review.
Sinclair Broadcast Group Inc (NASDAQ:SBGI), the largest U.S. television broadcast group, announced plans in May to acquire Tribune's 42 TV stations as well as cable network WGN America, in a $3.9 billion deal extending its reach to 72 percent of U.S. households.
The deal has been criticized by Democrats, Dish Network Corp (NASDAQ:DISH) and some conservative media outlets.
Sinclair would have to divest stations in Seattle, St. Louis, Salt Lake City and Oklahoma City as part of the Tribune acquisition under the current rules. It hopes FCC rule changes will allow it to avoid such sales.