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FCC Votes to Allow Some Broadcasters to Buy More TV Stations

April 20, 2017, 5:43 PM UTC
Pai, Chairman of U.S Federal Communications Commission, delivers his keynote speech at Mobile World Congress in Barcelona
Ajit Pai, Chairman of U.S Federal Communications Commission, delivers his keynote speech at Mobile World Congress in Barcelona, Spain, February 28, 2017. REUTERS/Eric Gaillard - RTS10RDB
Eric Gaillard REUTERS

The U.S. Federal Communications Commission voted 2-1 on Thursday to reverse a 2016 decision that limits the number of television stations some broadcasters can buy.

The decision could lead to a possible acquisition by Sinclair Broadcast Group of Tribune Media, some Democrats in Congress said.

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

Democratic FCC Commissioner Mignon Clyburn called the vote 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.”

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 But last year, the FCC under Democratic President Barack Obama said those rules were outdated after the 2009 conversion to digital broadcasting, which eliminated the differences in station signal strength. It revoked the rule in September.

There is a dispute over whether the FCC has the authority to amend the 39 percent ownership limit.

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The 2016 decision did not require any company to sell existing stations, but could bar new acquisitions. Twenty-First Century Fox Inc in September challenged the FCC rule in federal court.

Reuters reported in March that Sinclair had approached Tribune to discuss a potential combination, which would hinge on regulations being relaxed.

Pai said the FCC last year effectively tightened ownership rules and noted that companies previously under the national cap suddenly exceeded it. He said the FCC “did not examine whether the facts justified a more stringent cap.”

Pai, who was named by President Donald Trump to head the FCC in January, said it will begin a comprehensive review of the national cap later this year.

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That review could launch a new wave of consolidation in the broadcast television industry, analysts and companies said.

Clyburn cited comments from CBS chairman and CEO Leslie Moonves in February that Pai would be “very beneficial to our business.” Moonves said the company would like to acquire more stations if the cap is lifted.