WASHINGTON, Aug 6 (Reuters) - The U.S. Federal Communications Commission voted on Thursday to rescind the rule that bars local broadcast station owners from reaching more than 39% of U.S. TV households in a move that could spark industry consolidation.
The FCC voted 2-1 to lift the cap in favor of a case-by-case approach. The commission's sole Democrat, Anna Gomez, said the proposal was illegal and argued only Congress can lift the cap. Many critics argue the move will lead to excessive market power among station owners.
Under the rules, stations with weaker over-the-air signals can be partially counted against a company's ownership cap. The FCC has restricted ownership of local broadcast stations since 1941 and most recently raised the cap to 39% in 2004.
MOVE WOULD HELP BROADCASTERS SURVIVE: CHAIR
FCC Chair Brendan Carr said the move will help local broadcasters survive and pointed to the sharp decline in local newspapers. "We should stop hamstringing this one segment of the broader market with outdated restrictions," Carr said. "The FCC kept a rule on the books in the name of localism that contributed to the gutting of local newspapers ... I don’t want local broadcast TV to go the way of local newspapers."
The FCC said the new rule would consider applications for TV company mergers that exceed 39% on an individual basis to determine if they are in the public interest. The agency said it would "remove artificial restrictions on opportunities for broadcast television to attract capital and generate revenue."
Gomez said the decision is "an invitation to bring in a lot of transactions." She added lifting the cap hands "more control of the public airwaves to a small number of companies whose coverage pleases this administration ... It is putting its thumb on the scale in favor of content that this administration likes."
Carr says the change would allow local TV station owners to increase investment in local programming and give them more leverage against national networks, which he says have too much power.
In March, the FCC approved the $3.54 billion sale of local TV station owner Tegna to Nexstar despite objections from Democratic-led states.
The acquisition, if not reversed by courts, will expand Nexstar's presence to cover 80% of U.S. TV households. The FCC has said it was waiving the 39% rule in approving the deal.
Senate Commerce Committee Chair Ted Cruz, a Republican from Texas, said last month he is skeptical the FCC can hike the 39% cap without an act of Congress.
Senator Elizabeth Warren, a Massachusetts Democrat, said Carr "is trying to illegally rewrite the rules to make it easier for billionaires to line their own pockets while jacking up costs and controlling what Americans watch."
(Reporting by David Shepardson; Editing by Nick Zieminski and Rod Nickel)
