April 25, 2017 / 9:32 PM / 5 months ago

U.S. FCC to launch 'comprehensive review' of media regulations

FILE PHOTO: Ajit Pai, Chairman of U.S Federal Communications Commission, delivers his keynote speech at Mobile World Congress in Barcelona, Spain, February 28, 2017. REUTERS/Eric Gaillard

WASHINGTON (Reuters) - FCC Chairman Ajit Pai said on Tuesday the top U.S. telecommunications regulator would launch a “comprehensive review” of media regulations and overhaul rules that restrict consolidation among media companies, potentially opening the door to a wave of deals among broadcasters and newspapers.

At a speech to broadcasters in Las Vegas, the Federal Communications Commission chief said the commission would vote on May 18 to start the review. He noted that close to 1,000 pages of media regulations were on the books.

He vowed to “aggressively” modernize the FCC’s rules and “cut unnecessary red tape and give broadcasters more flexibility,” adding the review would cover rules pertaining to traditional broadcasters, cable and satellite carriers.

“We need to see which rules are still necessary and which should be relaxed or repealed,” Pai said.

Pai also touted the FCC’s plans to overhaul the government‘s’ media ownership rules, saying many of the rules did not match the modern marketplace, “including one dating back to 1975.” Pai said the ownership review would be a “much more fact-based discussion” than prior reviews, adding it was “critical” for media ownership rules “to match the modern marketplace.”

Revising or ending a cross-ownership ban could be a big win for newspaper companies and broadcasters. Many Democrats strongly oppose relaxing the rules, saying it would lead to major companies controlling a growing number of media outlets.

In 2016, the FCC under Democratic President Barack Obama voted to retain nearly all rules limiting cross-ownership of newspapers, radio and TV stations in the same market. Struggling newspaper companies had pushed for the FCC to relax the restrictions. The rules also bar companies from owning more than two TV stations in the same market and limits the number of radio stations that can be owned in one market.

The National Association of Broadcasters has asked the FCC to reconsider the decision, saying: “Broadcasters must be permitted to achieve economies of scale and scope.”

CROSS-OWNERSHIP

The FCC’s barriers to media consolidation go back to 1975, when the commission banned cross-ownership of a newspaper and broadcast station in the same market unless it granted a waiver, but allowed existing ownership structures to remain in place.

Pai, named chairman by Republican President Donald Trump in January, said last year the FCC should have repealed the ban on ownership of a broadcast station and newspaper in the same market, citing the closing of 400 U.S. newspapers, or about a quarter of daily titles, since 1975 as advertising revenue has sharply declined.

“It makes no sense for the government to be discouraging investment in the newspaper industry,” Pai said last year.

Last week, the FCC voted to reverse a 2016 decision limiting how many television stations some broadcasters can buy. The decision could lead to a possible acquisition by Sinclair Broadcast Group Inc (SBGI.O) of Tribune Media Co (TRCO.N), some Democrats in Congress said.

Pai said last Thursday he planned to take a new look at the existing overall limit on companies owning stations serving no more than 39 percent of U.S. television households.

The American Cable Association praised Pai’s plan and said it was time for the FCC “to comb through cable and broadcasting regulations in search of rules that are out of step with current market conditions.”

Last year, the FCC left in place rules barring mergers among the top four national television broadcast networks: Walt Disney Co’s (DIS.N) ABC, CBS Corp’s (CBS.N) CBS, Comcast Corp’s (CMCSA.O) NBC and Twenty-First Century Fox Inc’s (FOXA.O) Fox.

Pai also said the FCC planned to vote to eliminate the “main studio rule” requiring radio and television broadcast stations to maintain a main studio in or near the community of their license.

Reporting by David Shepardson, Editing by David Gregorio and Peter Cooney

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