FCC plan could supercharge broadcast M&A

The Federal Communications Commission will vote on a proposal next month to eliminate a cap that limits broadcast companies owning local television stations that reach more than 39% of U.S. households.

FCC Chairman Brendan Carr, who first announced the proposal last week in an article in Breitbart, said the proposal gets rid of an "outdated" system.

"Previously, the cap operated as a blanket prohibition on any and all deals that would combine stations in excess of the 39% limit -- regardless of whether it was a good deal or a bad one for the country," he wrote.

"Our new proposal would allow the FCC to approve deals that exceed the 39% cap, but only if doing so would promote the public interest," Carr added. "Repealing the national cap will provide essential relief for local broadcasters by restoring a healthy counterbalance to the growing leverage of national programmers."

Gary Weitman, executive vice president and chief communications officer of local TV station giant Nexstar Media Group Inc., which is trying to complete an acquisition of Tegna Inc., said the proposal was long overdue, "bringing broadcast regulation into the modern media marketplace."

"No one would suggest limiting the reach of YouTube, Amazon, or CNN, yet local broadcasters are still forced to compete under rules written for a different century," he said. "Modernizing these outdated regulations will help ensure broadcasters can continue investing in local journalism and providing the free, trusted news and information that communities across America rely on every day."

Questions about the FCC plan

Aside from the merits of Carr's proposal, is it legal?

And if so, what implications might the new rule have over an antitrust suit by state attorneys general and DirecTV LLC pending before the 9th U.S. Circuit Court of Appeals over Nexstar's proposed acquisition of Tegna?

Legal observers are divided. The Telecommunications Act of 1996, approved by Congress, established a 35% limit on local TV station ownership. Legislators considered increasing that number to 45% but eventually settled in 2004 on 39%.

The question, lawyers say, is whether that percentage can only be changed by Congress or if it can be adjusted - or eliminated - by the FCC.

Harry First, professor emeritus at New York University School of Law, said he does not believe Congress needs to be involved.

The FCC, in a fact sheet published Thursday, said the Consolidated Appropriations Act of 2004, by adopting the language of the 1996 statute, "included no language ... taking away the Commission's rulemaking authority with regard to the cap," noting that Congress could have "enshrined the 39 percent level."

"Nonetheless, there is no language in the CAA requiring the Commission to maintain the national cap at 39% indefinitely or for any period of time," the FCC fact sheet added.

One dissenter is Eugene I. Kimmelman, a deputy associate attorney general in charge of antitrust and tax divisions at the Justice Department during the Biden administration.

"It is highly unlikely that the FCC has the authority to lift the national ownership cap, since it was enacted into law by Congress years ago and remains the law of the land," he said.

But if a challenge to the rule made its way to the Supreme Court, dominated by justices appointed by Republican presidents, would they strike it down as an unlawful expansion of the administrative state? Legal experts were uncertain.

Impact on Nexstar case?

The FCC waived the cap to allow the Nexstar-Tegna deal to be approved. The antitrust complaint by DirecTV LLC and a bipartisan group of 13 state attorneys general does not focus on the 39% rule but on what they say would be the combined companies' dominance in "Big Four" TV network affiliates - ABC, NBC, CBS, and Fox - in multiple key markets.

The merged company will control more than 60% of the retransmission market share of those network affiliates in the San Diego and Sacramento markets, as well as others across the country, according to an amended complaint.

Tom Wheeler, who served as FCC chairman during the Obama administration, said that by adopting a rule instead of a waiver, Carr is setting up the commission for a possible appeal.

"The significance of the order is that it is going to get out from hiding behind an informal bureau waiver to an actual appealable decision by the agency," said Wheeler, who is a visiting fellow at the Brookings Institute.

Lawyers for the states have not cited the proposed FCC rule in their complaint, although it has not been approved yet.

Chief Judge Troy L. Nunley of the Eastern District of California, an appointee of President Barack Obama, granted a preliminary injunction to block further integration of the two companies - a ruling Nexstar and Tegna have appealed to the 9th Circuit. DirecTV LLC et al. v. Nexstar Media Group Inc. et al., 26-2490 (9th Circ., filed April 22, 2026).

Mark A. Lemley, a Stanford Law School professor and partner with Lex Lumina LLP, does not believe the FCC proposal, even if approved, will affect the states' antitrust suit - at least at this early stage.

"I don't think the FCC's move has any real bearing on the state antitrust case," he said. "The fact that the FCC is OK with undue concentration if they like the ideology of the companies that are merging doesn't mean antitrust law will be, and certainly not state antitrust law."

Promoting 'friendly' mergers?

Several legal experts agree that Carr's proposal, if adopted, is an invitation for a merger wave by local TV station owners. The only condition is the "public interest," which critics say effectively will mean that acquisitions supported by the Trump administration will be approved and others will not.

Carr is a loyal Trump ally who has sought to punish the president's critics, such as ABC, while backing allies such as Nexstar and Sinclair Inc., media companies that have been supportive of Trump and Republican policies.

"It's part of the signal [from the FCC] that we're not going to stand in the way of consolidations that are proposed by firms that we view as friendly," First said.

"It's all guns blazing these days," he added. "There are other merger prospects they can salivate over."

Wheeler, the former Obama appointee, made a similar argument, saying Carr's FCC can cite the public interest when they oppose a deal.

"As designed, it gives Carr and Trump the discretionary power to rule in favor of friends but to fall back on the law as an excuse to not approve the transactions of those who Trump dislikes," he said. "It thus becomes a way to bludgeon broadcasters to suck up to Trump in their coverage."

The proposal is scheduled for a vote on Aug. 6. With Republican appointees having a majority on the commission, it is expected to pass easily.