FCC says it granted ownership rule waivers to approve Nexstar-TEGNA deal

The front of the Federal Communications Commission building in Washington, D.C. (FCC public domain image)

Key Points

The FCC approved Nexstar’s acquisition of TEGNA by granting a waiver to exceed the 39 percent national ownership cap.
Regulators said the deal serves the public interest amid growing competition from large media and streaming companies.
The FCC dismissed concerns that the merger would raise consumer costs through higher retransmission fees.

The Federal Communications Commission (FCC) on Thursday said it approved requests from Nexstar Media Group to waive a statutory cap on the number of TV stations one company may own so that the broadcaster could move forward with its acquisition of TEGNA.

In an order released Thursday afternoon, the FCC acknowledged that, ordinarily, broadcasters are not allowed to own TV stations that reach more than 39 percent of the American viewing audience, and that Nexstar’s deal to acquire TEGNA put them over the limit.

But the agency said the public’s interest was served in approving the matter by granting waivers to its own ownership rules because broadcasters like Nexstar face increasing pressure from larger media companies that threaten their business.

Specifically, the FCC said competition from the parent companies on the Big Four networks — Comcast (NBC), Paramount (CBS), Fox Corporation and the Walt Disney Company (ABC) — were part of a “growing imbalance of power” that afflicted independent broadcasters like Nexstar.

Prior to its approval, Nexstar was already the largest operator of TV stations in the country, with more than 200 under its control. Some of those stations are owned by third party companies who hold the broadcast license on paper but otherwise allow Nexstar to operate everything else.

In its order, the FCC said the ownership cap was last updated by Congress more than two decades ago, and that it hasn’t kept pace with the ever-evolving media landscape, which now includes streaming services.

“There has been an explosion of distribution technologies and programming, which has given viewers more choice and has further strengthened the bargaining position of large Big Four national programming networks relative to their broadcast affiliate stations, like many of those owned by Nexstar and TEGNA,” the FCC wrote. “Grant of the relevant waiver, based on the record in this transaction, will most effectively further FCC media policy goals, help promote better service in local markets, and benefit consumers.”

While the deal was going through its usual regulatory scrutiny, numerous opponents charged that allowing Nexstar to acquire TEGNA would concentrate too much power within a single company, leading to higher distribution fees charged to cable and satellite companies. Those retransmission consent fees are passed along to cable and satellite subscribers in their bills over time.

The FCC said those concerns were overblown.

“We do not believe that an increase in retransmission consent rates, by itself, is necessarily a public interest harm,” the FCC said.

The agency agreed with Nexstar that cable and satellite bills often include fees for channels that the company doesn’t own, as well as maintaining perks like DVR service and providing regional sports programming. Nexstar asserted that its programming is available for free with an antenna, which helps offset programming-related disputes between broadcasters and pay TV companies over fees by allowing viewers to access programming through another, readily-available mean.

FCC says it granted ownership rule waivers to approve Nexstar-TEGNA deal

Key Points

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