Battle Lines Over TV Station Ownership Caps: What Comes Next?

LocalProximity
Written By Tim Hanlon

The battle over whether to eliminate national broadcast TV ownership caps has taken on the feel of a regulatory prizefight — one that pits industry giants and their chief Washington trade group against an unlikely alliance of progressive activists, labor unions, and even right-wing self-professed “free speech” champions.

The stakes? Nothing less than the future structure of the US television business.

The Broadcasters’ Case: Scale Or Fade Away

The National Association of Broadcasters (NAB) has gone all-in on the argument that the FCC’s 39% national reach cap is a relic of another era. In recent filings, the NAB painted the picture of an industry under existential threat. Per Nielsen, over-the-air broadcast accounted for less than 19% of overall US TV usage in July, while streaming commanding nearly half, with YouTube alone pulling in a 13.4% share. Meanwhile, inflation-adjusted ad revenues for broadcasters have fallen more than 40% since 2000.

For the NAB and major groups like Sinclair and Nexstar, the message is blunt: without the ability to bulk up, broadcasters won’t have the scale to invest in local journalism, fund the expensive NextGen TV rollout, or fend off the dual assault from Big Tech and cable operators. To them, the cap is less a safeguard than a straitjacket.

The Opposition: Strange Bedfellows

Yet opposition is fierce — and oddly bipartisan.

Free Press, Common Cause, the Communications Workers of America Union (CWA), and other reliably progressive public-interest groups argue that broadcasters remain plenty profitable, and that consolidation historically leads to fewer local voices, layoffs, and a narrowing of perspectives.

Then there’s Chris Ruddy, the CEO of far-right-leaning Newsmax, who has emerged as a vocal, unexpected opponent. In a detailed filing, Ruddy warned that eliminating the cap would recreate the radio industry’s post-Telecom Act consolidation mess — an era of over-leveraged debt and homogenized programming. Ruddy, like Free Press, insists that bigger groups would simply wield retransmission consent leverage to extract higher carriage fees, costs that would be passed along to consumers.  The beet-red Conservative Political Action Conference (CPAC) Foundation’s Center for Regulatory Freedom goes even further – saying such concentration would “reduce the diversity of voices and accelerate the homogenization of political discourse.”

More interestingly, however, these ideologically opposed voices are also united in a separate, more acute argument: that the FCC itself does not have the legal authority to make such changes - only Congress does. In other words, the TV station ownership cap is enshrined in legislative statute; only Congress can alter it - not the FCC. Any attempt to repeal it by commission vote would almost certainly be challenged in court, they warn.

When the divergent likes of Free Press and CPAC are aligned on something, you know the issue has scrambled the traditional Washington playbook.

The Regulatory Chessboard

That leaves the FCC in a tricky spot.

Republican Commissioner Brendan Carr has long championed deregulation and is sympathetic to broadcasters’ cries for help. But even with a GOP-controlled FCC, the legal hurdles are real. The statutory language tying the ownership cap to Congress is not vague. Acting unilaterally would invite legal challenges that could tie up the commission in court for years.

At the same time, major pending deals — most notably Nexstar’s recently proposed merger with Tegna — hang in the balance. Together, they would blow past the 39% cap, reaching an estimated 80% of U.S. households. Unless the cap falls (or is creatively recalculated using the Commission’s farcically outdated off-again, on-again “UHF discount” - see below), the merger either dies or must be structured with creative divestitures.

Scenarios: Where This Could Land

  • FCC Acts, Courts Intervene: One possible outcome is that the FCC moves boldly, asserting its authority to eliminate the cap despite the statutory language. This would immediately satisfy the NAB and could clear the way for large-scale mergers like Nexstar–Tegna or other rumored acquisitions.

    But the celebration would be short-lived. Free Press, Newsmax, and other opponents have already telegraphed their intent to sue, and the courts could issue a stay almost immediately. That would freeze any merger activity midstream and inject months — if not years — of uncertainty into the industry.

    For broadcasters, that means burning time and money on legal battles instead of expansion, while competitors in the streaming world face no such regulatory drag. For investors, the prospect of litigation makes betting on consolidation a high-risk gamble.

  • Congress Gets Pulled In: Another path would involve Congress itself stepping in to rewrite or repeal the ownership cap. Broadcasters could frame this as a modernization issue, pointing out that streaming giants face no such limits on audience reach. Hearings would likely highlight the decline of local TV ad revenue, the rise of Big Tech, and the competitive disadvantages traditional media face. But getting legislation through would be a steep climb.

    Lawmakers from both parties are wary of being painted as cheerleaders for media consolidation, particularly at a moment when populist anger at “big corporations” runs hot. Rural representatives may also resist, fearing consolidation would further hollow out local news coverage in smaller markets.

    Still, if lobbying pressure and campaign contributions mount (and from both poles of the political spectrum), Congress could be persuaded to tweak the law — though any action would likely be narrowly tailored and painfully slow.

  • Incremental Change via the UHF Discount: A more expeditious path may be regulatory tinkering rather than wholesale repeal. Enter the “UHF discount” — a quirk of now-indefensible FCC math that lets broadcasters count an Ultra High Frequency station as reaching only 50% of its actual audience footprint when calculating compliance with the national cap. The rule dates back to the analog era, when UHF channels (14 and above) had weaker signals and smaller reach than VHF. (The point became moot when the US television industry transitioned to digital transmission in 2009.)

    In today’s digital environment, that technical handicap no longer exists, but the discount, incredibly, still lives on. Expanding or reinstating the UHF discount would effectively allow broadcasters to control many more stations while still appearing, on paper, to stay under the 39% cap. In practice, it could let a group like Nexstar or Sinclair swell its national reach well beyond 50% without triggering a statutory change.

    For the FCC, this would be a way to throw broadcasters a lifeline without directly defying Congress’ authority. Critics, however, see it as a back-door repeal that ignores the modern digital reality — where UHF signals are actually stronger and more reliable than those on the VHF band.

  • Cap Remains, Consolidation Stalls: The final scenario is the simplest: the cap survives intact. Either the FCC refrains from acting, or its efforts are struck down in court, leaving the statutory 39% ceiling in place. That would effectively block mega-mergers like Nexstar–Tegna and force broadcasters to operate within their current limits. Consolidation would not disappear altogether — station swaps and smaller market-by-market acquisitions would continue — but the sweeping national deals the NAB envisions would remain out of reach.

    For broadcasters, that outcome locks in the status quo: reliance on retransmission consent fees, political ad revenue, and continued corporate belt-tightening, while continuing to cede audience share to streaming services and other digital media. For viewers, it could preserve a slightly more diverse ownership landscape in local markets, though critics warn the financial squeeze could still weaken local journalism. In short, the cap’s survival would preserve today’s uneasy balance but do little to solve the industry’s long-term competitive challenges.

The Bottom Line

This isn’t just another esoteric regulatory fight. It’s a referendum on what local television should be in the streaming age.

Should broadcasters be allowed to bulk up to compete with tech platforms, even if it means fewer owners controlling the bulk of local stations? Or should ownership caps remain a bulwark against consolidation, even if that risks leaving broadcasters weaker in the face of digital disruption?

With the NAB turning up the volume and an unlikely coalition lining up against it, the FCC’s decision-making will shape not only industry balance sheets but also the societal role of local television for years to come.

Tim Hanlon

Tim Hanlon is the Founder & CEO of the Chicago-based Vertere Group, LLC – a boutique strategic consulting and advisory firm focused on helping today’s most forward-leaning media companies, brands, entrepreneurs, and investors benefit from rapidly changing technological advances in marketing, media and consumer communications.

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