Notice & Comment

Can the FCC Lift the National Audience Reach Cap?, by Joel Thayer

We all instinctually acknowledge the importance of rebalancing the scales to promote unbiased and more local news. This is especially true in today’s markets where we see national affiliates and large tech companies increasingly exert their influence over media coverage.

The question is how to do it.

One option the FCC is considering is to lift the so-called “national audience reach” cap. Current FCC rules do not allow any broadcaster to reach more than 39% of Americans, discounting the coverage of certain stations by half (the “UHF discount”). The FCC last adjusted that cap in 2004 (although it eliminated and then reinstated the UHF discount in the 2010s)—and the argument goes that adjusting or eliminating the cap now would free up broadcasters to compete in today’s increasingly digital world. After all, if cable operators and cable programmers and the national TV networks and satellite TV broadcasters and YouTubeTV and Big Tech streamers can all reap the economies of scale from a national presence, why not broadcasters?

But that raises a legal dispute: Some claim the FCC has no ability to adjust or eliminate the national audience reach cap in a Loper Bright world. Looking at the actual statutory text and its history, however, shows that the FCC clearly has that authority.

Start with the origin of the cap: The Communications Act does not set a limit of any sort on broadcast ownership. Instead, the FCC created the cap in 1941 under the statute’s flexible “public interest” standard. And the FCC has repeatedly revised that cap since its inception.

So why is there any doubt? Two statutes are most pertinent. First, in section 202(c)(1)(B) of the Telecommunications Act of 1996, Congress directed the FCC to “modify its rules . . . by increasing the national audience reach limitation for television stations to 35 percent.” Then, in section 629 of the Consolidated Appropriations Act of 2004 (the “CAA”), Congress struck out “35 percent” from the Telecommunications Act and replaced it with “39 percent.”

By the face of the statute, it is clear that Congress was merely instructing the Commission to adjust an existing regulatory framework, not to freeze it in place indefinitely. After all, Congress did not adopt a cap but instead directed the FCC to “modify its rules.” And when Congress intended to cap ownership of a particular medium without allowing later FCC modification, it has done so explicitly (as it did with cable ownership restrictions in the 1984 Cable Act).

The courts agree. The D.C. Circuit Court of Appeals reviewed the Telecommunications Act section twice in 2002. In Fox Television Stations v. NAB, the court held that Congress had not “enshrined [a particular] cap in the statute itself.” And in Fox Television Stations v. FCC, the court explained that the 1996 Act “did nothing to preclude the Commission from considering certain arguments in favor of repealing the cap . . . .”

Given the statutory text and this history, arguments against FCC authority to change the cap have an uphill battle. And so opponents take a nuanced approach: First, they claim, Congress passed the CAA in direct response to an FCC decision that would have increased the cap to 45%. Second, they note that the CAA also removed the mandate to review the national ownership cap every four years from the Telecommunications Act.

It’s not clear why opponents think these arguments move the needle. For one, the CAA employed the same language used in the Telecommunications Act to set a new cap of 39%—i.e., the exact same language that the courts had already held allowed the FCC to adjust or repeal the cap on its own. As in the Telecommunications Act, Congress’s direction in the CAA is a “one off.” As Tom Johnson, former FCC General Counsel, points out:

Congress repeatedly used “modify its rules” or a similar formulation because it was not mandating that these ownership limits be set in stone. Rather, these were one-time adjustments that Congress intended the FCC would continually revisit over time—and indeed, that the FCC would modify or repeal these rules over time as the media marketplace became more competitive.

For another, removing the mandate for the Commission to review the national audience reach cap as part of the FCC’s quadrennial review of media ownership regulations did only that—remove the requirement to review the national cap on a set timeline. The CAA did not amend the statute in any way to foreclose on the FCC’s discretion to revisit the cap later.

To put it simply: A basic textual analysis does not support the CAA as either amending the Act to address national ownership or as establishing a 39 percent statutory cap.

This is the bipartisan view of the FCC itself. In 2016, the Obama FCC concluded that the “CAA simply directed the Commission to revise its rules to reflect a 39 percent national audience reach cap and removed the requirement to review the national ownership cap from the Commission’s quadrennial review requirement.” Leaving nothing to the imagination, the FCC explained that the CAA “did not impose a statutory national audience reach cap or prohibit the Commission from evaluating the elements of this rule.”

The Commission, therefore, has clear authority to repeal or modify the 39 percent cap under the original Section 202(c)(1)(B) of the Act so long as the FCC believes doing so is in the public interest. This bodes well for the FCC because, as the Fifth Circuit recently clarified in National Religious Broadcasters v. FCC, “[t]he FCC undoubtedly has broad authority to act in the public interest.”

In sum, if the agency wishes to lift or eliminate the cap, then it is free to do so.

Joel Thayer is the President of the Digital Progress Institute.