Key Points
- Nexstar this week will begin filing applications with the FCC to take over TEGNA’s local TV stations.
- The applications will require the FCC to unwind onerous rules that limit that effectively limit the number of stations one company may own outright.
- Nexstar CEO Perry Sook reiterated that broadcast TV consolidation needs to happen to effectively compete against streaming platforms.
Nexstar Media Group is moving forward with a plan to acquire peer broadcaster TEGNA by readying applications that will be filed with the Federal Communications Commission (FCC) as soon as this week.
The filings will be the next significant step in acquiring TEGNA’s portfolio of local stations and digital assets, after TEGNA’s shareholders voted overwhelmingly on Monday to approve Nexstar’s $6.3 billion bid for the company.
The request for approval from FCC regulators is an aggressive bet by Nexstar and its founder-CEO Perry Sook that the federal agency will unwind current broadcast television ownership rules that would normally prohibit a merger of that size.
The current rules prohibit a single company from holding direct ownership of TV stations that reach more than 39 percent of the American viewing audience. FCC Chairman Brendan Carr has indicated a willingness to re-examine those rules, but has not outright supported a lifting of them, and it isn’t clear if he will.
Broadcasters view the Trump administration as the most-favorable for massive consolidation in their part of the media industry, which they justify by pointing to the scale of streaming services backed by “Big Tech” firms like Google (YouTube), Netflix and Amazon (Prime Video).
Independent broadcasters, like Nexstar and TEGNA, own or operate the largest number of local TV stations affiliated with one of the Big Four networks — ABC, CBS, Fox and NBC. Nexstar also owns a majority stake in the CW Network.
“A broadcasting giant is probably an oxymoron in today’s environment compared to big tech that can reach every screen on every device in every home, in every car, in any suit coat pocket in America,” Sook said in an interview with the Wall Street Journal.
There are no rules that prohibit a local TV station group from also developing and launching their own streaming services. Some have, mainly to serve as a repository for their local news and community-oriented programming. But the adoption of those services pales in comparison to larger streaming platforms; many also distribute news clips and live streams via YouTube in order to reach TV viewers who have tuned out of traditional broadcast signals in recent years.
It isn’t clear what will happen once large broadcast TV station groups grow even larger, if their plans are green-lit by the Trump administration. But Sook has offered some hints during conference calls with investors following Nexstar’s quarterly earnings reports, affirming that the company believes it can continue to charge higher fees to cable and satellite companies for its local TV portfolio and cable news outlet NewsNation.
Amassing a larger number of TV stations is likely to give Nexstar greater leverage when it renegotiates those deals with cable and satellite providers in the coming years. The company has forced platforms to pull their channels when their demands for higher fees have been rejected: Two years ago, DIRECTV subscribers lost access to Nexstar-owned or operated channels for nearly two months after Nexstar demanded more money for its stations. The situation played out again last month when Verizon Fios initially rejected Nexstar’s demands for more money. Both situations were settled without financial terms being disclosed.
