Cable lobby groups have notified the Federal Communications Commission that they intend to 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 can own.
The cable groups argue that larger broadcast TV station groups will have the leverage to demand higher retransmission fees from TV providers, leading to "higher monthly TV bills for consumers." They stated that the FCC's 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 major providers such as Comcast and Charter, along with various other cable operators. Top cable companies have also expanded through mergers. Charter recently completed a purchase of Cox after the FCC rejected protests from advocacy groups that claimed the cable deal "would create unchecked gatekeeper power over Internet distribution" and enable the largest cable companies to increase 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, following an unusually long delay. This delay might be attributed to the FCC strengthening its legal arguments in anticipation of lawsuits, as the agency is asserting its authority to repeal a limit established by Congress over 20 years ago.
FCC Chairman Brendan Carr has stated that replacing a strict ownership limit with a "case-by-case review" of each proposed merger will allow the agency to approve deals that benefit the public interest while rejecting those that do not. Given Carr's history of threatening to revoke licenses from broadcasters disfavored by President Trump, case-by-case reviews could allow Carr to influence news coverage of the administration by permitting 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 maintain the TV ownership cap until litigation over the FCC's authority to repeal the rule is resolved.
The cable groups' filing asserted that the FCC's repeal of the TV ownership cap violates the 2004 action by US lawmakers. The decision by Congress to set the cap at a specific numerical threshold was unambiguous, the filing stated.
"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 primarily a procedural move, as the commission is unlikely to stay its own order. The cable groups indicated their intention to sue the commission in a US appeals court once the FCC order is published in the Federal Register. After filing the lawsuit, they can request the court to issue a preliminary injunction that would keep the TV ownership cap in place pending the outcome of the litigation.
The filing was submitted by cable industry groups representing providers in Colorado, Florida, Indiana, Michigan, Minnesota, Mississippi, Pennsylvania, Virginia, Washington, and the six New England states. These state and regional groups represent both large and small cable companies, including the nation's largest cable operators: Comcast, Charter, and Cox.
FCC says it can change or eliminate rule
The FCC order published last week stated that although Congress set the 39 percent limit, the law directed "the Commission to modify its rules rather than by enacting a fixed cap into law." The FCC contends that 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 specifies that 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 stated.
The cable groups' petition argued that the FCC cannot 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 noted.
"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 stated. The FCC order countered 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 does not apply to the regulation of broadcasters.
FCC may face multiple lawsuits
Cable lobby groups are not the only entities likely to sue the FCC. Following the August FCC vote, media advocacy group Free Press announced 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 the "UHF discount," which counts only half of the households reached by a UHF station toward the limit.
A federal judge ordered Nexstar and Tegna to halt the integration of their assets and operations while an antitrust lawsuit filed by DirecTV proceeds. The petition from cable groups mentioned that 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 argued that 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.
