TV mergers
Cable lobby to sue Trump FCC over repeal of national TV ownership cap
Cable industry to sue, says FCC can’t repeal TV ownership limit set by Congress.
Credit:
Getty Images | Kevin Dietsch
Credit:
Getty Images | Kevin Dietsch
Cable lobby groups notified the Federal Communications Commission that they will sue the agency to block its controversial repeal of the National Television Ownership Rule, which limits the number of broadcast TV stations a single company may own.
The cable groups said that larger broadcast TV station groups will have leverage to demand higher retransmission fees from TV providers, resulting in “higher monthly TV bills for consumers.” They said the FCC repeal order “arbitrarily and capriciously ignores the harms that will surely follow from allowing broadcast station groups to exceed the National Cap.”
The cable lobby groups represent top providers Comcast, Charter, and various other cable operators. Top cable companies have also expanded through mergers. Charter completed a purchase of Cox in August after the FCC rejected protests by advocacy groups that said the cable deal “would create unchecked gatekeeper power over Internet distribution” and make it easier for the biggest cable companies to raise prices.
The FCC voted to eliminate the TV ownership rule on August 6, and finally published the repeal order on its website on October 1 after an unusually long delay. The delay may be explained by the FCC shoring up its legal arguments in anticipation of lawsuits because the agency is claiming authority to repeal a limit set by Congress over 20 years ago.
FCC Chairman Brendan Carr has said that replacing a strict ownership limit with a “case-by-case review” of each proposed merger will let the agency approve deals that promote the public interest while rejecting deals that do not. Given Carr’s history of threatening to revoke licenses from broadcasters disfavored by President Trump, case-by-case reviews would let Carr influence news coverage of the administration by allowing favored broadcast companies to expand.
Cable lobby petition
The TV ownership rule prohibits any single broadcast station owner from reaching more than 39 percent of all TV households in the US. Congress directed the FCC to set the cap at 39 percent in 2004. On Friday, cable lobby groups submitted a petition asking the FCC to keep the TV ownership cap in place until litigation over the FCC’s authority to repeal the rule is over.
The cable groups’ filing said the FCC repeal of the TV ownership cap violates the 2004 action by US lawmakers. The decision by Congress to set the cap at a precise numerical threshold was unambiguous, the filing said.
“Congress established the National Cap at 39 percent in the 2004 CAA [Consolidated Appropriations Act] in direct response to the FCC’s attempt to aggressively raise the Cap to 45 percent and made repeated references to the 39 percent Cap in the statute,” the petition said.
The petition to the FCC is mainly a procedural step as the commission isn’t likely to stay its own order. The cable groups said they intend to sue the commission in a US appeals court once the FCC order is published in the Federal Register. After the lawsuit is filed, they can ask the court to issue a preliminary injunction that would keep the TV ownership cap in place pending the outcome of litigation.
The filing was submitted by cable industry groups that represent providers in Colorado, Florida, Indiana, Michigan, Minnesota, Mississippi, Pennsylvania, Virginia, Washington, and the six New England states. The state and regional groups represent large and small cable companies, including the nation’s biggest cable operators Comcast, Charter, and Cox.
FCC says it can change or eliminate rule
The FCC order published last week said that although Congress chose the 39 percent limit, the law set the limit by “directing the Commission to modify its rules rather than by enacting a fixed cap into law.” The FCC argues it “has the authority and obligation to reexamine the national cap rule in response to changing circumstances and to modify or repeal it if it no longer serves the public interest.”
While the 2004 law states the FCC cannot repeal or modify the cap during its quadrennial reviews of media rules, the FCC argues it can eliminate the cap if it does so outside the quadrennial review process. The law “simply separates the Commission’s decisions to review the national cap from the statutorily mandated review of other media ownership rules that are to occur every four years,” the FCC said.
The cable groups’ petition said the FCC can’t change the cap because the 2004 law “references the 39 percent Cap as statutory, not regulatory.” A provision requiring divestiture of stations “specified that someone exceeding ‘the 39 percent national audience reach limitation in paragraph (1)(B)’ of ‘section 202(c)’ of ‘[t]he Telecommunications Act of 1996’ ‘shall have not more than 2 years to divest,’” the petition said.
“Likewise, Congress singled out the Commission’s only mechanism for setting aside statutory requirements—the Commission’s forbearance authority under 47 U.S.C. § 160—and made clear that it ‘shall not apply to any person or entity that exceeds the 39 percent national audience reach limitation,’” the cable lobby petition said. The FCC order argued that the agency’s “ability to forbear from enforcement of its rules is distinct from its power to alter or eliminate those rules,” and that the FCC forbearance authority doesn’t apply to regulation of broadcasters.
FCC may face multiple lawsuits
Cable lobby groups aren’t the only ones likely to sue the FCC. After the August FCC vote, media advocacy group Free Press said it plans to join with allies “to appeal this unlawful decision in court.”
“Changing this limit requires congressional action, but Carr doesn’t care,” Free Press General Counsel Matt Wood said at the time. “He’ll do whatever it takes to clear the way for Trump-aligned billionaires to swallow up stations wherever and whenever they please. The result would be just one or two dominant broadcasters in every market, deep job cuts for journalists, and an influx of bargain-basement content disguised as local news.”
Even before repealing the TV ownership cap, the Carr FCC waived the rule when it approved the Nexstar Media Group purchase of Tegna. The Nexstar/Tegna combination would reach 80 percent of TV households in the US, or 54.5 percent when applying what’s known as the “UHF discount” in which only half of the households reached by a UHF station are counted toward the limit.
A federal judge ordered Nexstar and Tegna to stop integrating their assets and operations while an antitrust lawsuit filed by DirecTV proceeds. The petition from cable groups said the judge “found that the Nexstar/Tegna transaction would result in higher retransmission consent fees, causing harm to consumers, and issued a preliminary injunction that keeps the companies separate to this day.” The groups said the harms from the Nexstar/Tegna deal are “merely a preview of the further massive broadcast industry consolidation and higher consumer prices that will follow if this Order [to repeal the national limit] is not stayed.”
Disclosure: The Advance/Newhouse Partnership, which owns 14 percent of Charter, is part of Advance Publications, which owns Ars Technica parent Condé Nast.
