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U.S. TV Station Ownership Rules And Loopholes: An Explainer

Tim Hanlon

Dave Weatherall / @thattravelblog via Unsplash

The Federal Communications Commission (FCC) is responsible for regulating broadcast television station ownership in the United States. Its rules are designed to promote diverse viewpoints, localism, and competition among broadcasters. However, as technology and business models have evolved, these rules — originally crafted in an analog era — face increasing pressure, with industry players finding ways to navigate or even circumvent them. Here’s a rundown of the basics of broadcast ownership regulations and some of the ways companies manage to work around them.

Ownership Limits: The Basics

  • National Ownership Cap: The national cap limits the reach of any one television station owner to cover no more than 39% of U.S. television households, as defined by Nielsen DMA market geography designation. This rule is designed to prevent any single entity from exerting too much influence over the national TV media landscape, and ensure that no one player can dominate public discourse across the country. All of the major network O&O station divisions and most of the large independent affiliate group owners (e.g., Nexstar, Sinclair, TEGNA, Hearst, Gray, etc.) are either at or close to the 39% national cap limit.

  • Local Ownership Limit: At the local level, the FCC restricts the number of stations that one entity can own in a single market, generally known as the "duopoly rule." In most cases, a company may not own more than one of the top four-rated stations (usually ABC, CBS, NBC, or FOX affiliates as measured by Nielsen ratings methodology) in a single local market. This rule seeks to maintain competition and a variety of local voices within the same region.

  • Cross-Ownership Rules: These rules prevent companies from owning a TV station and a newspaper in the same market. Although the FCC has eased these restrictions in recent years, the principle is to avoid giving a single entity too much control over both broadcast and print media in one area. The fear here is that if a single entity controls too much local media, diverse viewpoints may be suppressed.

Common Loopholes and Workarounds

Over the years, media companies have found innovative (and sometimes legally questionable) ways to extend their reach and influence beyond these restrictions, exploiting regulatory gray areas to achieve large-scale ownership:

  • The “UHF Discount”: This is a loophole that dates back to the analog TV era (i.e., pre-2009), where UHF (Ultra High Frequency) stations were considered less valuable than VHF (Very High Frequency) stations due to comparatively weaker over-the-air broadcast range and signal strength. To encourage UHF station ownership, the FCC began in 1985 to allow owners to count each UHF station as reaching only half of its actual market area. When digital broadcasting leveled the playing field between UHF and VHF stations in 2009, this discount became obsolete. Astonishingly, the then-Republican-dominated FCC reinstated it in 2017, allowing major companies to effectively double their reach without violating the 39% national cap.

  • Shared Services Agreements (SSAs): Through SSAs, companies manage to run multiple stations in a single market without technically violating the FCC’s ownership rules. An SSA allows one station to provide resources — such as news programming, advertising sales, or even operational management — to another station. In some cases, a single company might effectively operate two or more competing stations in the same market, though technically, it actually only “owns” one. This arrangement allows consolidation without breaching local ownership rules. The most notable (and questionable) example is WPIX-TV/New York, which is technically owned by tiny Mission Broadcasting, but whose services (including The CW Network programming) are controlled by giant group station owner Nexstar.

  • Joint Sales Agreements (JSAs): Similar to SSAs, JSAs permit one station to sell advertising for another. This arrangement is often beneficial for smaller, less-resourced or financially struggling stations, as it allows them to leverage the assets and efficiencies of a larger station in the same market. But in practice, JSAs also allow big broadcasters to manage the revenue of multiple stations in the same market, granting them substantial — and sometimes outsized — control over local advertising markets without breaking ownership rules outright.

  • The Shell Company Strategy: Some companies create independent “shell” companies or invest in other entities to own stations on their behalf. These arrangements may involve complex ownership structures where the parent company controls the assets without directly holding the licenses. This practice allows larger groups to extend their market reach while technically staying within the FCC’s ownership limits. This tactic can be especially effective in the context of local markets, where ownership rules are more stringent. Sinclair’s suspiciously cozy relationship with the privately-held Cunningham Broadcasting is often cited by industry critics as a “shell” arrangement.

  • Affiliation Swaps and Network Sharing: Companies sometimes swap network affiliations between stations in different markets to skirt ownership restrictions, especially when Big Four network duopoly math changes. By swapping affiliations or sharing networks, a company can effectively control which network’s content airs on which station, allowing it to strategically manage programming and advertising revenue across multiple regions. This tactic provides broadcasters greater control over the content mix and can help concentrate influence across different markets without technically owning more stations.

Why Ownership Rules Matter - And Where They Fall Short

The FCC's TV station ownership rules were originally established to preserve localism, diversity, and competition across the U.S. media landscape and within local marketplaces. By limiting how many stations one entity can control, the idea is predicated on ensuring that no single voice monopolizes public discourse and that local communities have access to a variety of viewpoints. However, these regulations have increasingly struggled to keep pace with a radically shifting media industry landscape.

In the current digital age, the FCC’s analog-era rules have been challenged not only by industry strategies but by the rise of the internet, streaming services, and digital media platforms, which can freely broadcast content without FCC restrictions. Meanwhile, legacy broadcasters argue that increased consolidation is necessary to compete with these unregulated digital giants. Broadcasters contend that economies of scale are vital for them to survive and thrive, especially as ad revenues decline and production costs rise. 

As companies take advantage of regulatory loopholes, some critics argue that the FCC’s ownership regulations are in desperate need of an update. They worry that excessive consolidation in local TV markets may reduce the diversity of viewpoints and the level of local news coverage, leaving some communities underserved or with fewer voices representing them.

The Reality Check

U.S. broadcast ownership regulations are intended to protect competition, diversity, and localism, but these rules are showing their age. Loopholes such as the UHF discount, SSAs, and JSAs allow companies to expand their influence beyond what the FCC intended, prompting debate on whether current regulations truly serve the public interest. As the media landscape continues to evolve, it may be time for a refreshed regulatory approach that better addresses today’s media realities.

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