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FCC media rule rollback could usher in TV station buying spree

[October 28, 2017] By David Shepardson

WASHINGTON (Reuters) - The Republican-led Federal Communications Commission is moving to quickly undo roadblocks to increased consolidation among media companies, potentially unleashing an onslaught of deals among TV, radio and newspaper owners as they seek to better compete with online media.

FCC Chairman Ajit Pai on Wednesday disclosed his plans to ask the media and communications regulator on Nov. 16 to eliminate the 42-year-old ban on cross-ownership of a newspaper and TV station in a major market.

The changes would also make it easier for media companies to buy additional TV stations in the same market, or for local stations to jointly sell advertising time.

The move, along with other expected FCC media rule changes, could usher in a new era of media consolidation that could help struggling newspapers and TV stations, but limit the diversity of media voices.

FCC's Pai has cited rising competition for advertising from websites like Alphabet Inc's Google and Facebook Inc as a reason for easing the media ownership rules as well as helping struggling newspapers.

Big media firms including Tegna Inc and Nexstar Media Group Inc, have cited the potential rule change as motivating them to look for expansion opportunities.

In the near future, the decision could also allow Sinclair Broadcast Group’s, which is seeking approval for its proposed $3.9 billion acquisition of Tribune Media Co, to avoid some divestitures in order to get the deal approved.

Eliminating "outdated regulations that unnecessarily hobble local broadcast stations will benefit consumers in communities across the country," said the National Association of Broadcasters Friday.

Advocacy group Free Press criticized Pai's proposal, saying it "ignores how decades of runaway media consolidation have significantly harmed local news and independent voices."

Anne Bentley, a spokeswoman for Tegna, a TV broadcaster formerly known as Gannett before it spun off the newspapers in 2015, said the company "expects to be a strategic and disciplined consolidator at this pivotal time of positive regulatory change."

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A couple of people ride the subway as they read newspapers as the train pulls into the Times Square stop in Manhattan, New York, U.S. February 17, 2017. REUTERS/Carlo Allegri

Nexstar Chief Executive Officer Perry Sook said in a statement Thursday the changes would allow local broadcasters to "make additional investments in localized programming content, our people, news resources and reporting capabilities."

Roger Entner, an analyst at Recon Analytics, told Reuters the rollback of the rules means "we will see more consolidation on the local level, where TV stations or TV groups will buy local newspapers."

CBS Corp Chief Executive Les Moonves said in February he believed Pai's deregulatory plans "will be very beneficial to our business." With rule changes, CBS "would strategically want to buy some more."

In April, the FCC voted to reverse a 2016 decision that limits the number of television stations some broadcasters could buy.

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.

Pai said in late March that he also planned 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.

(Reporting by David Shepardson; Editing by Chris Sanders and Diane Craft)

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