FCC head proposes review of U.S. TV station ownership cap

By David Shepardson

WASHINGTON (Reuters) - The head of the U.S. Federal Communications Commission on Tuesday asked the agency to review rules capping television station ownership, a move that could speed consolidation in the industry.

FCC Chairman Ajit Pai, asked the four other members of the commission to vote to kick off a process to decide if the nation-wide cap, set at 39 percent of television-owning households, should be eliminated or raised, the agency said.

Big media firms like Tegna Inc, CBS Corp, Nexstar Media Group Inc and Twenty-First Century Fox Inc have pushed for the change that would allow them to expand.

In an earnings call in February, CBS Chief Executive Les Moonves said "we would strategically want to buy some more stations" if the cap were lifted.

In his notice, Pai, a Republican, said he wants to "seek public input on whether to modify, retain, or eliminate the 39 percent national cap."

He said "a comprehensive review of the rule is warranted in light of considerable marketplace changes, such as technological developments and increased video programming options for consumers, since the cap was last modified in 2004" by U.S. Congress.

There is debate about whether the FCC has the legal authority to set the cap, designed to ensure that one company does not acquire an overwhelming ownership of the broadcast market, above the current 39 percent.

Craig Aaron, president and CEO of consumer advocacy group Free Press, said Pai has "teed up for elimination the last remaining firewall against completely unchecked media consolidation ... The result will be one or two dominant broadcasters in every market."

In April, the FCC voted 2-1 to reverse a 2016 decision limiting 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 company's ownership cap.

But the FCC under Democratic former President Barack Obama said last year that the rules were outdated after a 2009 conversion to digital broadcasting, which eliminated differences in station signal strength. It revoked the rules in September 2016.

FCC Democratic Commissioner Jessical Rosenworcel said that Congress has made clear the FCC cannot go above the current cap. "This proposal is a giveaway to the largest station group at the expense of diversity, localism, and competition," she said.

Pai said the FCC will reconsider the agency's April decision as part of a comprehensive review.

Sinclair Broadcast Group Inc, the largest U.S. television broadcast group, announced plans in May to acquire Tribune Media Co in a $3.9 billion deal extending its reach to 72 percent of U.S. households.

Sinclair would have to divest some stations as part of that acquisition under current rules. It hopes FCC rule changes will allow it to avoid such sales.

(Reporting by David Shepardson; Editing by Paul Simao and Meredith Mazzilli)