The Federal Communications Commission’s (FCC) 39% broadcast-ownership cap is a rule for a three-network world trying to govern a streaming one. Retiring it makes sense. Retiring it by itself does not.
For four decades, the FCC has barred any company from owning television stations that collectively reach more than 39% of U.S. television households. The rule reflects an older theory of broadcast regulation—one that treats the airwaves as a scarce public resource and promotes competition, localism, and viewpoint diversity through bright-line ownership limits rather than case-by-case review.
That theory once had an intuitive logic. When the modern cap emerged, most Americans got their news and entertainment from stations affiliated with the “Big Three” networks. Limiting any owner’s national footprint could plausibly prevent too much editorial influence from accumulating in too few hands.
That media world has vanished. Broadcasters now compete not only with one another, but also with streaming services, virtual multichannel video programming distributors (vMVPDs), podcasts, and social platforms whose national and global reach dwarfs anything a station group could assemble under the 39% cap. The rule now binds the competitors least able to bear it while leaving their largest rivals untouched.
The FCC has signaled that it intends to repeal the cap and review broadcast consolidation case by case. As a matter of competition policy, that move is overdue. As a matter of law, it is messier. Congress wrote the 39% figure into an appropriations statute, raising the question of whether the FCC may erase it on its own.
The policy debate also cannot stop at ownership. Broadcast regulation operates as an interconnected system. Its other parts include retransmission consent, which governs the terms and fees under which distributors carry broadcast signals; must-carry rules, which can require carriage of qualifying local stations; and FCC standards requiring the parties to negotiate in good faith. Together, these rules divide bargaining power among many of the same companies.
Removing the cap would give larger station groups more leverage over the cable, satellite, and streaming distributors that carry their signals. The retransmission regime was not designed to offset that added power. Repealing the cap while leaving the carriage rules untouched would therefore do less to eliminate a distortion than to move it elsewhere.
The better course is comprehensive reform. Because ownership limits, retransmission consent, and bargaining standards all fall within the FCC’s jurisdiction, the agency should consider them together. Otherwise, repeal may simply reshuffle bargaining power among industry players while consumers keep paying the bill.
How 39% Became Broadcast’s Magic Number
The national television ownership rule measures concentration by audience reach, not station count. A broadcaster may not hold an attributable interest—a stake large enough to count as ownership under FCC rules—in stations that collectively reach more than 39% of U.S. television households.
The rule grew out of broadcasting’s traditional “scarcity rationale.” Because the electromagnetic spectrum could accommodate only a limited number of signals, regulators treated licensees as stewards of a public resource with a duty to serve the public interest. The FCC therefore pursued competition, localism, and viewpoint diversity through fixed ownership limits rather than reviewing each transaction on its particular facts.
The theory was straightforward. Preventing any company from building a nationwide footprint would preserve a decentralized system of locally accountable stations and keep editorial influence from accumulating in too few hands. That concern carried more weight in the 1980s, when most Americans relied on stations affiliated with the “Big Three” networks for news and entertainment.
The 39% cap is only the latest entry in a much longer regulatory ledger. The FCC first imposed national ownership limits in the 1940s, initially by restricting how many stations one company could own. It later shifted to the audience-reach measure used today.
With the Telecommunications Act of 1996, Congress directed the FCC to raise the cap to 35%. When the agency tried to increase it in 2003 to 45%, Congress again stepped in. The Consolidated Appropriations Act of 2004 changed the figure to 39%, where it has remained.
That history now sits at the center of the legal dispute over whether the FCC may repeal the cap without further action from Congress. Whatever the answer, the number rests on the same premise that has long animated the rule: Limiting a broadcaster’s national reach will protect a diverse, locally oriented media system.
A Broadcast Cap in a Streaming World
In today’s media economy, that premise points in the wrong direction. Local broadcasters compete for audiences and advertising dollars with streaming services, vMVPDs, podcasts, and social platforms whose national and global scale dwarfs anything a station group could assemble under a 39% ceiling. A rule intended to prevent broadcasters from becoming too powerful now risks keeping them too small to compete effectively.
The FCC has often resisted this conclusion by treating another service as a competitor only if it substitutes for broadcasting in every part of the business. Cable and streaming services, for example, may be treated as complements rather than competitors because they do not bid for network affiliations or retransmission-consent fees.
That reasoning is circular. Cable operators do not bid for retransmission-consent fees because federal law puts them on the paying side of that transaction. The regulatory system creates the difference, then cites the same difference as proof that broadcasters and distributors occupy separate markets and deserve different treatment.
Consumer behavior tells a different story. By Nielsen’s measure, streaming now accounts for roughly 48.6% of television viewing time, compared with 21.5% for broadcast. Over-the-air radio’s share of audio listening likewise fell from 46% to 34% between 2018 and 2025 as streaming and podcasts gained ground. A market defined narrowly as “local broadcast television” no longer reflects how audiences choose content or advertisers spend money.
Against that backdrop, lifting the ownership cap would be pro-competitive. Broadcasters can promote localism and viewpoint diversity only if they remain strong enough to offer a meaningful alternative to digital platforms. YouTube and Netflix may reach the entire country. Broadcasters remain frozen at 39% of television households.
Removing that asymmetry would let station groups build some of the scale their digital rivals already enjoy. Scale can make broadcasters more effective competitors, not less. Larger groups can spread the fixed costs of investigative teams, weather forecasting, and production infrastructure across more stations, reducing the average cost of producing local journalism that national platforms cannot easily replicate.
Greater scale could also strengthen broadcasters when they acquire programming and negotiate carriage on the streaming services and vMVPDs that increasingly connect them with viewers. It could help finance the “must-have” local content that distinguishes stations in advertising markets dominated by technology companies.
On those terms, consolidation may preserve localism and viewpoint diversity rather than threaten them. The greatest danger to local broadcasting may not be excessive concentration in midsize markets. It may be the financial collapse of stations that outdated rules prevent from adapting. A cap that keeps broadcasters too small to compete efficiently starves them of investment and cedes more ground to the digital giants the rules leave untouched.
The cap also exposes a deeper problem: the public-interest standard through which the FCC regulates broadcasters. The Communications Act directs the agency to act in the “public interest, convenience, and necessity,” but gives those words no concrete definition.
As Eric Fruits has observed in revisiting Stephen Breyer’s classic critique, such vague standards are a familiar regulatory pathology. They give agencies sweeping discretion while preserving the appearance of rule-bound decision-making. Because no objective test can measure the “public interest,” different commissions can use the same words to justify sharply different results.
The 8th U.S. Circuit Court of Appeals’ decision in Zimmer Radio shows how that vagueness feeds back into the ownership rules. The court interpreted the statutory term “competition” through the public-interest standard, treating it as a broad grant of authority with few meaningful limits. It then deferred to an FCC market definition that excluded broadcasters’ digital rivals.
The FCC’s use of the public-interest standard to promote localism and viewpoint diversity may also threaten broadcasters’ First Amendment rights. A standard with few limiting principles allows the agency to regulate content, condition license grants, and demand concessions from merging parties without tying those demands to any harm caused by the transaction.
Broadcasting’s reduced First Amendment protection rests largely on the spectrum-scarcity rationale of Red Lion, which upheld content obligations that would almost certainly fail if imposed on a newspaper. That rationale has crumbled in an era of digital abundance. The result is an increasingly hard-to-defend system in which the same speech receives full constitutional protection in print, on cable, and online, yet remains subject to special FCC oversight when transmitted by a broadcast station.
Repealing the cap would not cure every defect in the public-interest standard. But it would, at least, allow the FCC to assess consolidation across the broader media market rather than inside an increasingly artificial broadcast silo.
Can the FCC Kill Congress’ Cap?
The policy case for repeal, however strong, faces a threshold objection: Congress mandated the 39% figure. Congress placed no limit on the raw number of television stations a company may own nationwide, but it imposed a firm ceiling on their combined audience reach. Whatever the cap’s merits, an agency ordinarily must apply the law Congress enacted until Congress changes it.
Two features of the Consolidated Appropriations Act of 2004 bolster that reading. First, Congress excluded the national cap from the quadrennial-review process, under which the FCC reexamines its other ownership rules every four years. That omission suggests Congress reserved this particular number for itself rather than leaving it to periodic agency reconsideration.
Second, Congress expressly barred the FCC from using its Section 10 forbearance authority to avoid applying the cap. Forbearance allows the agency, in certain circumstances, to stop enforcing regulatory requirements it finds unnecessary. Section 10 applies by its terms to telecommunications carriers and services under Title II of the Communications Act, while broadcast licensing falls under Title III. The cross-reference may therefore reflect imprecise drafting or an abundance of legislative caution. Either way, opponents of repeal argue that Congress’ message was plain: The FCC could not simply set the cap aside.
Recent Supreme Court doctrine makes the agency’s position more precarious. In Loper Bright Enterprises v. Raimondo, the Court retired Chevron deference, under which judges often accepted a reasonable agency interpretation of an ambiguous statute. Courts must now decide for themselves what the statute means, and a reviewing court may reject the FCC’s interpretation outright.
The major-questions doctrine may present another obstacle. Under that doctrine, courts expect clear authorization before an agency makes a decision of vast economic or political significance. Opponents of repeal could argue that eliminating a nationwide ownership limit qualifies and that Congress never clearly gave the FCC that power. On this view, the cure for an obsolete cap is legislation, not an agency decision to stop enforcing it.
The FCC nevertheless has a serious argument that Congress never stripped it of authority to revisit the cap. The agency created the national ownership limit under the Communications Act’s broad grant of regulatory authority and revised it repeatedly before Congress intervened.
When Congress set a 35% cap in the Telecommunications Act of 1996, it directed the FCC to “modify its rules” accordingly. In 2002, the D.C. Circuit held that this language preserved the agency’s discretion to alter or eliminate the cap. The court reasoned that Congress could have written the number directly into the statute had it wished to freeze the limit in place.
Two years later, presumably aware of that ruling, Congress raised the figure from 35% to 39% while retaining the same “modify its rules” language. It also declined to enact competing House and Senate bills that would have expressly codified the cap. Preserving language that a federal court had already interpreted as leaving the FCC room to act looks less like a withdrawal of authority than a ratification of it.
The other statutory provisions do not necessarily foreclose that reading. Excluding the cap from mandatory quadrennial review does not automatically eliminate the FCC’s independent authority to reconsider it. Nor does a prohibition on forbearance necessarily prevent the agency from repealing the rule through notice-and-comment rulemaking—the standard process in which an agency proposes a rule, receives public comments, and explains its final decision. Declining to enforce a rule and lawfully rescinding it are not the same thing.
The demise of Chevron may even cut in the FCC’s favor. Loper Bright requires courts to determine the statute’s best reading, but it also recognizes that Congress may delegate policy choices to agencies. A reviewing court could conclude that Congress directed the FCC to modify its ownership rules while leaving the agency discretion over what those rules should become.
The FCC would receive no automatic deference on the statute’s meaning. But a court could still find that Congress gave the agency authority to make the choice. The end of deference is not the end of delegation.
Pull One Lever, Move the Whole Machine
Lifting the cap cannot be treated as a stand-alone reform. The ownership rules, Title VI’s retransmission-consent and must-carry regime, and the FCC’s good-faith bargaining standards all govern the same firms and shape leverage across the same market. Changing one part while leaving the others untouched does not eliminate a distortion so much as relocate it.
The link between ownership and retransmission consent is bargaining power. Retransmission fees have grown to rival advertising as a source of broadcaster revenue, and a station group’s leverage rises with the size of its footprint. Removing the cap would therefore give consolidated broadcasters more leverage over the cable, satellite, and vMVPD distributors that carry their signals.
The retransmission-consent regime was not designed with that leverage in mind. When Congress created it, cable operators were widely viewed as local monopolists. Today, larger station groups can use their scale to demand higher carriage fees. Distributors may respond by passing those costs to subscribers or dropping smaller, independent networks to contain expenses.
The regime’s original rationale has also weakened on its own terms. Congress adopted mandatory carriage in the 1992 Cable Act to address the “cable bottleneck”—the fear that monopoly cable systems would refuse to carry local stations. But as the D.C. Circuit recognized in Comcast Corp. v. FCC in 2009, cable operators no longer possess the bottleneck power that animated Congress in 1992. Broadcasters can now reach viewers through their own websites, apps, and streaming services.
Once the bottleneck disappears, the case for compulsory carriage—and for the elaborate machinery of fee negotiations and blackouts layered on top of it—becomes much weaker. Repealing the ownership cap would not create that mismatch, but it would magnify it by removing one constraint on broadcasters while preserving a carriage regime built for another era.
Revisiting retransmission consent could take several forms. The cleanest option would be to phase out both retransmission consent and must-carry, treat broadcasters like other content owners, and let copyright law and voluntary contracts govern distribution. As Geoffrey Manne argued in congressional testimony in 2013, that approach would also end the regulatory asymmetry between broadcasters and their streaming competitors.
Short of repeal, the FCC could tighten its good-faith bargaining rules to prevent parties from using scale merely to delay negotiations, posture, or bundle unrelated demands. It could also limit automatic fee-escalation clauses that allow each acquisition to ratchet up rates across an entire portfolio.
The agency might also consider final-offer, or “baseball-style,” arbitration for disputes during high-value programming windows. Each side would submit its best offer, and an arbitrator would select one rather than splitting the difference. Because an unreasonable proposal risks losing outright, the process discourages extreme demands and reduces the chance that viewers become collateral damage in blackout brinkmanship.
The broader point is simple: Broadcast regulation will shift bargaining power somewhere. The relevant question is not which industry gains leverage, but whether consumers receive lower prices, better programming, or more reliable service.
Repealing the cap by itself may simply transfer revenue from distributors to larger broadcasters without producing any consumer benefit. Because ownership rules, carriage rules, and bargaining standards all fall within the FCC’s jurisdiction and govern the same products and firms, this is one of the rare cases in which comprehensive reform is not just desirable, but achievable.
Don’t Stop at 39%
The national ownership cap was built for a media market that no longer exists, and the FCC is right to seek its retirement. But the case for repeal is also a warning against half-measures.
Whatever a court ultimately decides about the Commission’s authority, the broader lesson is clear: Broadcast regulation is a system, not a stack of unrelated rules. Ownership limits, retransmission consent, and bargaining standards all shape leverage among the same firms. Pull one lever, and the others move.
If the FCC repeals the cap but leaves the carriage rules untouched, it will not have deregulated so much as redistributed bargaining power. Larger broadcasters will gain leverage that the retransmission regime was never designed to check, with no guarantee of lower prices, better programming, or more reliable service for consumers.
The Commission should not merely lift the cap. It should finish the job.
