Streaming giants such as Amazon Prime Video, Netflix, and YouTube dominate Americans’ living rooms today because they can reach virtually everywhere without the regulatory shackles that are decimating traditional broadcasters. Now, the Federal Communications Commission is considering updating a quarter-century-old rule to give consumers more choice on entertainment and news, while revitalizing local broadcast TV.
The rule in question is the national audience reach cap, a regulatory fossil that prohibits ownership of TV stations that together reach more than 39% of American households. The cap was first implemented in 1941, years before the transistor was invented and decades before cable television, high-speed internet, and paid streaming services, all of which are ubiquitous today.
The cap was conceived to prevent monopoly in an era with relatively few choices. Today, the rule is not only unnecessary to foster consumer choice but sadly does exactly the opposite. It’s more likely to hinder competition by protecting a handful of established and entrenched special interests, who coincidentally tend to have the same ideological bent.
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When the ownership cap was enacted, broadcast TV dominated the market, but now streaming services capture nearly 46% of total TV usage. YouTube alone is 12.8%, almost 70% of broadcast’s ever-shrinking 18.5% market share. Technology has left bureaucracy in the dust, but regulators still act like the marketplace for video entertainment and news is archaic, low-definition signals broadcast locally over public airwaves.
Technological developments have also reduced the previously unbeatable economies of scale held by the Big Four networks. For example, small, independent podcasters can now profitably host their own shows on streaming platforms, which consumers can access anytime, day or night. Additionally, the accuracy of view counts on alternative media has made it easy for advertisers to determine customer reach and confidently fund those smaller media producers.
This is important because the traditional relationships between advertisers, show hosts, and broadcasters are not radically different than when the ownership cap was implemented. Inflation-adjusted ad revenues for local TV stations have plummeted 43% from 2000 to 2024, while digital video ads are projected to hit $72.4 billion in 2025, over four times broadcast’s haul.
Alphabet, Amazon, and Meta each have annual U.S. ad revenue exceeding the combined annual digital ad revenues of every TV and radio station in the country. In 2023, those three Big Tech behemoths generated a whopping $164 billion in ad revenue.
Their profitability and popularity with consumers are largely due to these platforms being free to innovate and scale globally, not chained down by the same kind of outdated regulation strangling TV broadcasters. Conversely, the inability to scale up is strangling broadcasters.
Fragmented station ownership cannot pool resources to finance original programming or live sports rights the way Netflix or Amazon can — just look at how Amazon was able to secure the rights to Thursday Night Football because of greater efficiency at economies of scale. And most streaming platforms now fund countless original series of their own.
Eliminating the ownership cap will empower local stations to innovate, fueled by pooled investment dollars that will put them on an even playing field with Big Tech companies that are already competing freely.
Critics warn that repeal would erode diversity and local journalism, but evidence suggests the opposite. As station groups consolidated from 140 to 62 between 2011 and 2023, local news telecasts surged 41.7% and weekly news hours jumped 49.7%.
In fact, the FCC concluded in 1984 and 2003 that no ownership cap was needed for competition or viewpoint diversity, something even more evident today amidst the plethora of streaming available.
Newsmax CEO Chris Ruddy is one of the critics advocating the cap to stay because he mistakenly thinks it protects fellow conservative voices, but that’s precisely who is most throttled by the regulation.
The regulation doesn’t protect locally produced content but strangles it instead by effectively penalizing those who are most successful. Repeal would bolster local journalism, foster innovation, and unleash broadcasters to compete on a level playing field.
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From a legal perspective, the FCC has been given broad rulemaking authority on this issue by Congress, which didn’t codify the 39% limit in either the 1996 or 2004 laws. Given the precedent of the Loper Bright Supreme Court decision, the plain reading of the statutes indicates the FCC can maintain, modify, or repeal the ownership rule.
The 39% cap is a relic in our digital age, as anachronistic as capping Ford Motor Company’s sales based on car market data from the Model-T era. The world has moved on, and the FCC should too. The bureaucrats need to get with the times and let consumers choose for themselves what news and entertainment they want.
Stephen Moore is a cofounder of Unleash Prosperity, a senior Visiting Fellow of Economics at the Heritage Foundation, and former senior economic adviser to President Donald Trump.
