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Group asks FCC to deny WADL acquisition by Mission

The American Television Alliance says the purchase would give operational control of the station to Nexstar, in violation of federal ownership rules.

The American Television Alliance says the purchase would give operational control of the station to Nexstar, in violation of federal ownership rules.

The television studio and administrative offices of WADL-TV in Detroit, Michigan. (Photo via Google Street View)
The television studio and administrative offices of WADL-TV in Detroit, Michigan. (Photo via Google Street View)

A consortium of pay television providers is asking the Federal Communications Commission (FCC) to deny Mission Broadcasting’s acquisition of a Detroit-area independent station.

On Tuesday, the American Television Alliance (ATVA) said the purchase was almost certainly intended to provide Nexstar Media Group control of WADL (Channel 38). In doing so, the ATVA says Nexstar would be in violation of federal rules that limit the number of broadcast television stations a company may own at any given time.

Those rules limit the reach of a company’s broadcast station group to 39 percent of the country. Nexstar is the largest owner of broadcast stations, with more than 172 licensed to the company in 116 television markets.

Nexstar also owns a majority stake in the CW Network, having bought out much of Paramount Global and Warner Bros Discovery last year. Earlier this year, Paramount Global said it will pull the CW Network affiliations from eight of its owned-and-operated stations, including WKBD (Channel 50) in Detroit.

Last month, Mission said it had agreed to buy WADL from Adell Broadcasting for $75 million. The Desk reported that the move was likely intended to provide a new home for CW Network programming once WKBD drops its affiliation in September.

Nexstar is prohibited from purchasing WADL directly, because doing so would put its reach about the limit of 38 percent, the ATVA said. But Mission, if viewed as an independent broadcast owner, can purchase the station, since it total station ownership is well under that threshold.

But the ATVA said the FCC shouldn’t be fooled by Mission’s proposed acquisition of WADL, because the deal really gives Nexstar total control of the station. To date, all of Mission’s stations are operated by Nexstar under shared services agreements, which allows Nexstar to operate everything from a local station’s ad sales team to its news department, and even negotiate carriage of Mission-owned stations on cable and satellite platforms.

The ATVA said that last point is particularly problematic, because Nexstar will almost certainly package WADL with dozens of ABC, NBC, CBS and Fox affiliates when it comes time to negotiate new carriage of those stations on cable, satellite and streaming video platforms. In turn, viewers will pay more to watch WADL, the ATVA said.

That is a big problem for the ATVA, whose members include Dish Network, DirecTV, Charter Communications, Verizon and Altice US. (ACA Connects and NTCA — The Rural Broadband Association are also members, representing medium-size and rural pay TV platforms). For several years, those companies have been forced to pass along higher programming fees to customers, which ultimately results in higher bills. In turn, customers have increasingly ditched expensive video packages for cheaper, online-only options.

Earlier this year, one ATVA member — DirecTV — outright sued Nexstar, alleging its operational control of Mission and one other company amounted to an illegal conspiracy to sidestep federal ownership rules and raise retransmission fees. That matter is still pending in court.

The ATVA points to a few other things to show that Mission is a mere proxy for Nexstar, including the fact that Nexstar lists all Mission-owned stations on its website. Specific to WADL, the ATVA said Nexstar appears to be financing Mission’s purchase of the station, and could execute an option to buy WADL outright in the future for little to no cash.

“In addition, Mission cannot sell the station to any third parties without Nexstar’s consent, due to restrictions on sales or issuances of stock,” the ATVA wrote. “In other words, Mission and its owners have no independent ability to monetize their investment in the station.”

A spokesperson for Nexstar did not return an email request seeking comment.

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About the Author:

Matthew Keys

Matthew Keys is the publisher of The Desk and reports on the business and policy matters involving the broadcast television, streaming video and radio industries. He previously worked for Thomson Reuters, Disney-ABC, Tribune Broadcasting and McNaughton Newspapers. Matthew is based in Northern California, has won numerous awards in the field of journalism, and is a member of IRE (Investigative Reporters and Editors).