The owner of an independent television station in Detroit says his $75 million deal to sell the station is likely not going to materialize after it drew strong opposition at the Federal Communications Commission (FCC).
In a phone interview with The Desk on Thursday, WADL-TV (Channel 38) owner Kevin Adell said he is ready to accept that a pending deal to sell the station to Mission Broadcasting was “dead on arrival” when he sought regulatory approval from the FCC last May.
The deal would have seen Mission acquire the station from Adell using funds provided by Nexstar Media Group, according to documents submitted to the FCC last year. Once the deal closed, Mission would have transferred operational control of the station to Nexstar through a shared services agreement, a partnership that is similar to one Nexstar has with other Mission-owned broadcast stations.
Groups representing the pay television industry opposed the deal, saying it would allow Nexstar to sidestep federal ownership rules that limit the reach of a single broadcaster while simultaneously giving it greater leverage to charge cable and satellite operators more money to carry Detroit’s CW Network affiliate.
For months, Adell said he was led to believe the FCC was likely going to approve the deal after it resolved certain other matters, including dual complaints filed by Comcast and Hawaiian Telcom over retransmission negotiations concerning other Nexstar-owned and controlled broadcast stations.
He was reassured last month after meeting with FCC Chairperson Jessica Rosenworcel, who encouraged Adell and Mission to extend a termination date from late March to late June in order to give the FCC more time to act on those other issues.
Adell inferred that once those other issues were resolved, the agency would green-light the application to transfer WADL’s broadcast license to Mission. But his perspective changed last week after a meeting with FCC Commissioner Geoffrey Starks, who imparted to him that the deal with WADL was likely not going to get the FCC’s blessing.
“Starks was the one who told me, go home, it’s highly unlikely it’s going to get approved,” Adell said in a phone interview with The Desk on Thursday.
According to Adell, Starks said the application needed to be re-worked, so that it addressed certain concerns the FCC had with other stations licensed to Mission that are operated through shared services agreements with Nexstar. But Starks wouldn’t specify the precise points that needed to be amended, according to Adell, saying that advice would be improper and illegal.
A representative from Starks’ office has not yet returned a request for comment.
“I wish the Chairwoman would have been more forthcoming, right from the beginning,” Adell complained on Thursday. “She led us on to believe that she was working on this thing.”
After meeting with Starks, Adell said it became clear that the FCC was not going to decide the matter in his favor before the June 30 deadline, when the deal with Mission is set to expire. He likened the situation to one where the FCC delayed a decision over Standard General’s proposal to acquire local broadcaster TEGNA, which saw the FCC send the matter to an administrative law judge for a review. Citing regulatory delays, Standard General and TEGNA ended merger talks last May.
“I just don’t see a path forward with the FCC,” Adell stated. “I’ve been to five meetings, and the last one was very clear.”
Adell said he is not pursuing additional meetings with the FCC, but he believes a consortium of minority groups who are working on behalf of WADL’s investors may continue to do so. Those supporters include the Detroit chapter of the NAACP and Rainbow Push Coalition leader Rev. Jesse Jackson, who have attended Adell’s meetings with the FCC over the past several months.
Meanwhile, Adell is exploring other options for WADL, including the possibility of having the station operated by Nexstar through a direct shared services agreement. That type of arrangement wouldn’t require FCC approval, since Adell would continue to own the station and its license outright, but it might not escape regulatory scrutiny in the future, either.
Late last month, the FCC fined Nexstar $1.6 million over its shared services agreement with Mission concerning New York broadcaster WPIX-TV (Channel 11). In that matter, the FCC said Nexstar exerted too much operational control over WPIX, making it a de facto owner of the station and putting it over the federal ownership cap. (Nexstar plans to appeal the fine.)
Adell said he was not too concerned about the FCC taking similar action if he moves forward with a shared services agreement with Nexstar, because he would structure the agreement so it did not involve financial loans or equity in the station. In that respect, it would be fundamentally different from the arrangement Nexstar had with Mission concerning WPIX, and was less likely to invite regulatory scrutiny from the FCC.
The shared services agreement is just one of several options being considered by Adell for WADL’s future. Adell said he is also looking at ways to onboard more sports programming, which could attract a higher audience and ad revenue to the station, and may consider selling the station to another party.
Adell is also reserving the right to sue the E. W. Scripps Company, whose independent station in Detroit became the home of the CW Network last November. Adell claims the agreement between Scripps and Nexstar for the CW Network affiliation was an attempt to interfere in his pending sale of WADL to Mission, which was predicated on WADL becoming the new home of the CW Network in Detroit. If he does sue Scripps — as he has threatened to do in the past — the lawsuit likely wouldn’t land in federal court until after the June 30 deadline to sell the station to Mission, Adell said on Thursday.
What Adell won’t do is pull the FCC application to transfer WADL’s license to Mission, even if he believes the writing is on the wall.
“I’m not going to do that, I would be crazy to do that,” Adell said. “I would rather walk to California with no water than do that.”
