FCC Lifts TV Ownership Cap

A "land rush" of "big-ticket deals" is about to sweep through the TV broadcasting industry in the wake of a Federal Communications Commission decision on August 5 to lift the limit on station ownership by any one broadcaster. Commissioners voted 4-1 for the change. Feeling the heat from satellite services and cable systems, broadcasters have been applying heavy pressure on the FCC to change the rules, established in the 1930s, that limit station ownership to one per company in any single geographic area. The rules were originally intended to ensure diversity of programming and editorial content.

Industry observers expect a wave of acquisitions and mergers, similar to what happened in the radio industry after the Telecommunications Act of 1996 liberalized ownership caps in that business. The new rules will allow ownership of two stations in cities where there are at least eight independently owned television stations or a sufficient number of "media voices"—a broad category including all radio and TV stations, newspapers, and cable systems. All of the nation's 50 largest cities meet this criterion.

No company will be allowed to own more than one of the four top-rated stations in any particular market. The new scenario stipulates that a broadcaster may operate one major and one minor station in each large market. Because many station functions are automated, a broadcaster could save considerable money by sharing staff and promotional efforts with two stations.

FCC Chairman William Kennard told the New York Times that "We are bringing some certainty and coherence to a situation plagued by confusion." He went on to say that the changes are "common-sense rules that recognize the dramatic changes that the media marketplace has undergone." Radio ownership will also be affected: A company with two TV stations in one market will now be limited to six radio stations in a city with at least 20 stations. A company with only one TV station may operate up to seven radio stations in the same market.