Appeals Court Won’t Stop FCC From Changing TV Ownership Rules

Jun 15, 2017

A federal appeals court on Thursday declined to issue an emergency order blocking the U.S. Federal Communications Commission from changing its local television ownership rules, which could have blocked Sinclair Broadcast Group from buying assets of Tribune Media, one of the largest U.S. television station operators.

The court declined to block the FCC's vote in April to reverse a 2016 order limiting the number of television stations some broadcasters can buy. Critics said in a court filing that failing to block the FCC rule "will usher in a wave of media consolidation."

Andrew Jay Schwartzman, a Georgetown University law professor representing a coalition of groups that had sued, said the decision was "extremely disappointing. But the case is far from over, and we feel that we have a strong case once it is fully briefed and argued."

Shares in Tribune (trco) rose 6% to $41.36 on the news, while Sinclair (sbgi) was up nearly 4% to $36.15.

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As part of the $3.9 billion deal, Sinclair may still have to sell certain of its stations, such as those in St. Louis and Salt Lake City, in order to comply with FCC regulations, the company has said.

Under rules adopted in 1985, stations with weaker over-the-air signals could be partially counted against a broadcaster's ownership cap. But last year, the FCC, under Democratic President Barack Obama, said those rules were outdated after the 2009 conversion to digital broadcasting, which eliminated the differences in signal strength. It revoked the rule in September.

In April, the FCC voted to undo the Obama change.

FCC Chairman Ajit Pai also said he plans to take a new look at the current overall limit on companies owning stations serving no more than 39% of U.S. television households.

FCC Commissioner Mignon Clyburn, a Democrat, called the vote in April a "huge gift for large broadcasters with ambitious dreams of more consolidation." She said it "will have an immediate impact on the purchase and sale of television stations."

Meredith Corp spokesman Art Slusark said in April the vote "may open up the opportunity for more acquisition opportunities."

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