Commentary

Uncapping The 39% TV Station Ownership Cap: Who Gets Tapped?

• by Wayne Friedman , Staff Writer, Yesterday

TV station groups are getting ready to rumble.

Who gets slammed to the ground -- and who climbs on the ring ropes with arms in the air declaring victory? Follow the money.

The Federal Communications Commission is examining the long-time rule on limiting TV station ownership -- that owning TV stations cannot collectively exceed 39% of U.S. television households. The FCC has strongly signaled that it wants to remove the rule.

The purpose of the rule -- which started up in 2004 -- was to keep then-powerful TV station owners in check from becoming too big and powerful. But now the rise of many new digital-first companies -- especially social media companies -- is changing business dynamics.

Social-media giants like Facebook, Instagram, TikTok and SnapChat and broader entertainment companies like YouTube, Spotify and others have no such household limitations. What will the near-term effects be?

The biggest TV station groups Nexstar Media Group, Sinclair, Tegna, Gray Television and others, with the financial wherewithal, can grow to become ever faster and more competitive in pricing against digital competitors when it comes to local and regional ad time.

It is not only those independent TV station groups that would benefit, but broadcast TV network-owned station groups -- ABC, CBS, NBC and Fox.

That said, all this might be too little too late. The future internet/broadband world doesn’t need more TV station-antenna based signals as a foundational part of the TV ecosystem.

Who then gets hurt? Small and mid-sized TV station owners who would find it difficult to compete against major TV network-based companies or large TV station groups -- now ever stronger -- in pushing down ad prices to gain greater market share.

Does that mean a new wave of TV station ownership will hurt “localism” -- especially high-profile TV-station newscasts, where local/regional brands spend a lot of their media dollars?

Many would point to research that already shows over 60% of U.S. consumers already get some of their news content via social media -- a trend that seemingly keeps growing.

Small and midsized TV station owners would then be squeezed two ways -- digital-first companies that have better business outcome results and even bigger, stronger TV station groups.

GrowingTV companies would also have an easy path to create more national TV-type networks, which analysts say doesn’t sound too good for creating local broadcast journalism.

Still, the National Association of Broadcasters says new bigger TV-station companies would mean more advertising revenue, which could be reinvested in local TV news.

In other words, trickle-down economics coming to an already hard-pressed TV station near you.

Imagine how that news story ends