Analysis: FCC wants to relax one of broadcast media's biggest rules

Even as the Federal Communications Commission released a proposal Tuesday to give Internet providers more control over what their customers can see and use online, another equally major proposal by the agency could relax key rules for the media industry.

The FCC said Tuesday that it will revisit key regulations determining how many TV stations a single company can own. Revising or rolling back these rules may lead to more consolidation in broadcast media, analysts say - which could help financially struggling stations survive, but also perhaps end up reducing the number of independent voices on the air.

The FCC proposal takes aim at two related policies. The first is a cap on the number of U.S. households that a given broadcaster can reach. The second is what is known as the UHF discount, which is essentially an accounting method used to calculate how close a broadcaster may be to hitting the cap. Both are intended to ensure that no single TV broadcaster gets too big.

The national cap says that companies owning multiple TV stations may only reach 39 percent of all U.S. households. Tuesday's proposal by the FCC explores whether to raise the cap, and even contemplates getting rid of it completely. Doing away with the cap would make it legal for one TV broadcaster to beam its programming into many more homes.

"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," said FCC Chairman Ajit Pai in a statement.

The FCC proposal would also revisit the UHF discount, a policy that today effectively increases the number of stations a company may own by making certain stations count less toward the cap. Stations that transmit signals over UHF channels currently contribute only half as much to reaching the cap as stations broadcasting on VHF channels.

The proposal is in its early stages, with a vote on it unlikely to occur before next year. But one major beneficiary of the policy change may be Sinclair, the conservative broadcaster whose $3.9 billion bid to acquire Tribune Media would allow it to reach nearly 3 out of 4 households in the United States. The proposal could also help other broadcast media entities that might want to merge in the future. Sinclair didn't immediately respond to a request for comment, and the National Association of Broadcasters declined to comment.

The FCC's proposed changes come after a series of votes to relax other media rules. Earlier this month, for instance, the agency voted to lift restrictions that prevented a single media company from owning both a daily newspaper and a TV station in the same market, as well as rules limiting mergers involving multiple TV stations in the same market.

Under the current national cap, Sinclair would likely need to sell off stations in certain markets in order for the combined company to comply with the cap. But lifting the cap, or amending the UHF discount in certain ways, may allow Sinclair to keep more of those stations.

With more stations, broadcast TV companies would be able to build much larger footprints, ones that could even have nationwide reach, analysts say. That could put them on more even footing with other platforms, perhaps such as Facebook, which has users all across the country.

The question is whether that newfound reach would put smaller TV broadcast companies at too much of a disadvantage - a question that is being asked across all types of media today, said Blair Levin, a former Federal Communications Commission chief of staff.

"What you see in a number of different sectors is a desire for scale," said Levin. "We want people to achieve certain efficiencies [of scale], but we get very nervous when those efficiencies turn into the ability to stifle competition."