MediaTalk | Season 4 | Ep. 32 - Spectrum, Stations, and Servers: Three Policy Shifts Reshaping TMT in 2026

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Mike Reynolds: Hi, I'm Mike Reynolds, a senior reporter covering the media industry with the S&P Global Market Intelligence Tech, Media, and Telecom News team. Welcome to "MediaTalk," a podcast hosted by S&P Global Market Intelligence, wherein the news and research staff explore issues in the ever-evolving media landscape. Today we're joined by one of our regular guests, Stefan Modrich, my TMT News colleague. Stefan covers tech policy. How are things in DC today, Stefan?

Stefan Modrich: They're good, Mike. They're busy even for August.

Reynolds: Okay. All right. Today we'd like to assess a few things with Stefan in this "MediaTalk" installment, a couple involving the FCC. The first is around the spectrum auction rules that should trigger wireless benefits down the road. The second is a repeal of the longstanding broadcast station ownership cap. That ruling could open the door to a wave of consolidation in that media realm. Our third topic is one that is generating a ton of copy, investment, and thought: artificial or otherwise, data centers. Ready, Stefan?

Modrich: Let's do it, Mike.

Reynolds: All right. Let's start with the FCC. I voted last month on rules to auction 160 megahertz of the upper C-band spectrum. What was at stake here with this auction, and what will the spectrum be used for?

Modrich: Essentially what the FCC did here is they set the rules for auctioning this 160 MHz of the upper C-band spectrum by July of next year. And so the reason this is valuable is because this is the mid-band spectrum and it gives carriers this pretty good combination of both coverage and capacity, and it's particularly useful for things like 5G and then the fixed wireless. So when you combine that with an existing like lower C-band, you're talking about about 440 MHz contiguous block of licensed spectrum. So this is not just like another spectrum auction. It's been considered a pretty meaningful addition to the country's overall capacity.

Reynolds: And this is the first spectrum auction in quite some time, right?

Modrich: Yeah. There hasn't been one for several years. Although there's a fairly long transition because the existing satellite users have to clear the spectrum. And so under the current FCC timetable, service could begin in the top 75 markets by December 2030, and then the remaining markets as late as July of 2031. So the auction happens much sooner than the spectrum actually becomes available for that commercial widespread use. The licensing and auction rules would largely mirror the framework used in the lower C-band auction, and that raised more than $81 billion.

Reynolds: Okay. All right, so again, things in place, action next year. And then in terms of actual consumer use and the like, we'll get into the early part of next decade. So a lot to watch here in the years to come. In the meantime, I guess last week or so there was finally some big news in terms of the long-standing broadcast ownership cap. Has repealed this, Stefan. Can you take us through that a little bit?

Modrich: So this has been a rule for several decades. A broadcaster generally could not own stations that would reach more than 39% of US TV households. So the FCC's rationale for eliminating that has been that Brandon Carr has said he believes it's no longer in the public interest. So in getting rid of that ceiling and replacing it instead with this case-by-case review, it doesn't mean that broadcasters automatically can buy anything that they want. A transaction would still go through the FCC's public interest review. The local ownership restrictions do still matter, and there is still antitrust law that's applicable there. But now it just means that exceeding the 39% threshold is no longer automatically disqualifying.

Reynolds: There's also, again, this gets complicated, the UHF discount is 78%. Does that matter or is 39 the trump number here, so to speak?

Modrich: Yeah, there definitely will be some exceptions at the margins there. But I think broadly speaking that 39% as the threshold was the more significant change there.

Reynolds: So Chairman Carr and Commissioner Olivia Trusty, they voted for this to repeal again in the general context that the broadcasters at a bit of a disadvantage relative to national media and the tech giants and the like. But on the other side, FCC Commissioner Anna Gomez, she dissented and I think she cited that this is Congress's domain. What's up on that front?

Modrich: Sure. That is the core of the legal fight here. So what Carr and Trustee are saying is that the FCC retains the authority to change its own ownership rule, and then in Gomez's dissent, she's arguing that because Congress effectively locked the 39% level into law in 2004, she's contending that means only Congress can change it. This is definitely not something that I would feel comfortable saying is 100% settled. There's almost definitely going to be court challenges to this, and that authority question is going to be at the heart of it.

Reynolds: Congress is in recess at the moment. Do you think that something gets addressed when they reconvene in September, or will it be more a case when there is a big transaction that needs to have that kind of review that you described before?

Modrich: It could be, especially if we have a wave election here and the Democrats retake the House. I think you could definitely see an effort in that regard. And then with the Senate tending to be more moderate on those issues, it's definitely a possibility. Although I certainly wouldn't bank on it, I think it's more likely that we see court challenges first.

Reynolds: Okay. During last week's second quarter earnings call, Nexstar CEO Perry Sook was asked if the repeal of the ownership cap would aid Nexstar, which is in its legal process against DirecTV and I now think 13 states' attorney generals that have stalled its integration of its $6.2 billion acquisition of Tegna. Sook said on balance that this could be a marginal benefit because it makes the unknown known from a regulatory perspective relative to the cap. But at the same time, he talked about this more being an antitrust issue. And again, Stefan, when this, going back to your reporting back in March, the FCC, the DOJ approved this merger, right away Nexstar consummated, and then shortly thereafter, DirecTV and others came out again on antitrust matters.

Modrich: Yeah, and that's a really important distinction that you've highlighted there because the ownership cap is just one obstacle that has been removed by this vote, but it does not eliminate the separate antitrust questions that are around the Nexstar and Tegna transaction. So it is important to keep in mind going forward that those remain two different issues. The one being whether the FCC allows the ownership structure, and then the second is whether the deal actually complies with the competition law. Even without the cap, these mergers can still face substantial scrutiny.

Reynolds: Yeah, and in terms of this, again, at this juncture, the trial date for this lawsuit challenging Nexstar's acquisition is set for July 6th next summer. So again, I'm sure a lot will change over the months ahead. All right. Sook also said during the earnings call that, again, they want to take care of business. They want to get the Tegna thing integrated and all the rest before they look to some other M&A possibilities. I think that the general narrative here is that with the ownership repeal, it's going to open the doors to more M&A. Do you think that's going to be the case?

Modrich: That definitely appears to be the goal of the Trump administration and the Carr-led FCC. At least that's what it appears has been their kind of rationale behind a lot of these moves. And how the broadcasters are themselves viewing the changes, like the common argument across the board, Nexstar, Sinclair, Gray, Scripps, is that the greater scale lets local TV compete more effectively against the bigger digital platforms and the streaming companies. Obviously there can be some company-specific differences, but across the board it seems like the industry is united on that front.

Reynolds: Yeah. Again, it's interesting because all of the three companies you just mentioned have all been very active in terms of smaller deals, building up their big four relationships in markets, swapping stations. Been a ton of activity already. I would imagine that's probably going to continue and then perhaps maybe there's some bigger deals ahead. Sinclair in particular in their comments discussed the opportunities that perhaps the cap de-risks some of the implications that would be involved in doing some larger deals. Anyway, so we will see how that transpires. In the meantime, I think what's perhaps the most interesting story here involves the data centers. New York, they made the headlines last month. Kathy Hochul put a moratorium in on the building of data centers and we'll get to that more in a minute, but this is a nationwide situation, right? A lot of people are looking at this and voters too, Stefan?

Modrich: Yeah, that's exactly right. And I think we've seen this debate move pretty rapidly from one of just local economic development into kind of national politics. For years, we've seen the conversation kind of center around investment, jobs, tax revenue, and then now we're seeing these more complicated questions about electricity, grid infrastructure, water, land use, noise, and then arguably the most important, who pays for everything. And so now we're seeing voters increasingly speak out on this pretty resoundingly. And so to give a couple of pretty timely examples, the first actually occurred Tuesday the 11th was another primary day. And in a small town outside of Green Bay, Wis. — Wrightstown, Wis. — they voted pretty resoundingly. Their local municipal government had already unanimously adopted a one-year moratorium on data center projects. There was a non-binding advisory question over basically over whether the village should support or facilitate any public utilities or infrastructure for a large scale data center. So they rejected it pretty soundly, more than 87% opposed it.

Reynolds: Wow, okay.

Modrich: A thousand votes to less than 100. So the opposition there appears pretty baked in, and then closer to home here in the DMV [D.C, Maryland, Virginia] the DC area. Montgomery County, Md. also had approved an extended moratorium for of 18 months. So they're clearly assessing the widespread growth and the rapid build-out and local governments are trying to get a handle on it and assess how much control they can assert over the process.

Reynolds: Yeah, I think, again, going back to Wisconsin, I think there was a recent poll that suggested that three-fourths of the respondents indicated that the cost of data centers outweighed the benefits and that included majorities across party lines. At the same time, only 5% called it their single most important issue. Your take on this, Stefan. This is, again, this is happening throughout the country, and again, are candidates running on this, or is this part of the rhetoric in terms of, yes, I'm going to be elected because I favor or I favor or disfavor data center construction?

Modrich: Yeah, so to your point, as much as this issue has attracted a lot of headlines and it's been a topic of discussion, it has translated into campaign messaging. In the Democratic gubernatorial primary, Francesca Hong, who was the front runner for a lot of that campaign and an upstart outsider candidate, she had made a statewide moratorium one of her key positions. She was the only candidate in the field supporting one, and then she did ultimately lose very narrowly, one of the closest races we've seen in a while at that level in primary to David Crowley, a more moderate candidate. It's hard to say whether data centers were really the key that swung that race. But just the fact that was happening at all, and we've seen this kind of across the country that some of these outsider candidates who are riding these wave election cycles that they're making this a core part of their platform at all shows how far this has moved into the public consciousness.

Reynolds: Let's go back to New York. Drew a lot of attention given it's still the fourth most populous state. A lot of companies want to get their data centers going here. But there's a moratorium set into next July. I would imagine that there will be findings along the way that'll draw a lot of attention as well.

Modrich: Yeah. That's right. And I think what's notable about New York's plan here is that it's not a permanent ban. But it is aimed at preventing like some of these local governments from being overwhelmed by some of these bigger surges in development. And even though we are seeing at the local level that these communities are mobilizing to make their voices heard on these issues, it also at least in New York's case, it does seem like that this is reflective of some of the broader political sentiments around the growth of the data centers and a lot of the conditions that are attached to having to build one. So the having to source your own power, and then the rate payer exceptions to protect customers of electricity utilities, these are all things that there is actually some rare bipartisan agreement on.

Reynolds: Okay. All right. To that end, there was a policy report that was released in late July. New York, you mentioned Montgomery County, developments in Wisconsin. I think there's over 50 local data set of moratoriums nationwide and 15 states have considered statewide things. Can you talk to that? And again, I guess if we take it a little further, is there anything on the national front that might oversee all of this?

Modrich: Sure. Another recent example was in the suburb of Portland, Oregon. That has been a tech hub for that region. And they also voted to reject data centers and to establish a temporary moratorium there. So I think what we can definitely say that this is not in any way a permanent ban. The fact that the conditions that are being set at the local level, like these decisions are being made with respect to the availability of resources, whether that be land, water, electricity, and then the cost, are all unique considerations that are perhaps best managed at the ground level where who are actually affected and may live close to these facilities already, they may have concerns about noise or what have you. And so I think some of the takeaways from that report and from our reporting and lots of other reporting is that the local control aspect here has been key and a lot of these companies have at least on paper have been pretty receptive and wanting to be partners in the community. So I wouldn't necessarily say it's a binary framing of people against data centers because they do generate a substantial amount of tax revenue. I know in Loudoun County that the quality schools and the parks in that region, the data centers have contributed to that, I think perhaps more than any other industry. So those are all kind of things to keep in mind when we're discussing this.

Reynolds: Okay. Be no shortage of stories in the years to come here. Interesting. All right, we're getting toward the end. Okay, as I mentioned, Congress is on its summer hiatus. What are some of the things that you're going to be keeping an eye on and working on during these summer's dog days?

Modrich: Sure. On the FCC side, I would definitely keep an eye out for legal challenges to the ownership cap decision.

Reynolds: Okay.

Modrich: And then the next steps for the spectrum auction. And then on the data centers, watch whether the rate payer issue does gain traction in Congress and whether more state and federal candidates start adopting the kind of positions we're already seeing in these Rust Belt states in Wisconsin, Michigan, and Ohio. And the big question I think for me is whether the political backlash actually translates into policy. Are you going to see changes to utility regulation, like the tax incentives, zoning requirements or the moratoriums? Or does it just remain a campaign issue?

Reynolds: Midterm election season heating up. Does Congress, does a lot get done in this kind of environment or are things on hiatus in terms of big legislative issues as we get to see what the next Congress will shape up as in as we get into 2027?

Modrich: One key issue that we have discussed on here before, and that's the Kids' Online Safety Act.

Reynolds: Okay.

Modrich: Yeah. And so while otherwise quiet, the Senate did bring back KOSA to the floor. It's been one of the most controversial bills of the last legislative session. But it has been reintroduced after passing out of committee and the age verification measures in that bill have been reigniting a lot of these free speech debates and privacy questions about whether the intention of online safety for kids, whether that does collide with privacy and free speech rights. So that debate will continue to be had. It's anyone's guess which way that will go ultimately, I think. But it will definitely remain one of the most hot-button tech policy issues of our time.

Reynolds: Cool. All right. That concludes this episode of "MediaTalk." As always, I want to thanks Stefan, TMT's Washington and State watcher for joining us and sharing some of his regulatory acumen. You can keep up with all of Stefan's stories on CapIQ Pro. Appreciate you being here, sir.

Modrich: Thank you, Mike.

Reynolds: All right. And this is Mike Reynolds. Thanks to all of you for listening. We'll catch up soon on the next installment of "MediaTalk."