The Federal Communications Commission (FCC) has approved the purchase of a Detroit-area television station to Mission Broadcasting, The Desk has learned.
On Tuesday, the FCC said the sale of WADL-TV (Channel 38) is allowed to move forward, assuming both sides agree to four conditions concerning certain elements of the purchase.
Those conditions call for Mission to financially separate itself from Nexstar Media Group, the independent broadcast outlet that was putting up $75 million for Mission to acquire WADL from Adell Broadcasting, according to a copy of the FCC’s order obtained by The Desk on Tuesday.
“Any financing utilized by Mission in connection with either the acquisition of WADL or Mission’s operation of the Station, including with regard to day-to-day operations, capital improvements, programming acquisition, or technical upgrades to the Station, may not involve Nexstar, its affiliates,…or any related person or entity in any manner, including through the provision of such financing directly or indirectly, the guarantee of any loan or debt instrument sought or held by Mission, or the provision of collateral to secure a loan or debt instrument sought or held by Mission.”
Additionally, the FCC said the sale is allowed to move forward if Mission is allowed to claim 70 percent of WADL’s ad inventory revenue for itself, limit Nexstar’s annual performance bonuses to $155,500 and restructure certain purchase options involving Nexstar should Mission enter into a shared services agreement with the broadcaster to operate WADL when the sale closes. It also prohibits Mission from extending Nexstar an option to purchase the station at some point if both sides enter into a shared service agreement.
Document: Read the FCC’s order granting Mission Broadcasting’s purchase of WADL [Pro Access]
The conditions are meant to satisfy regulatory concerns over a shared services agreement Mission and Nexstar entered into years ago that allowed the latter to operate New York television station WPIX (Channel 11). Last month, the FCC proposed a $1.2 million fine against Nexstar and a lesser financial penalty against Mission after finding Nexstar exerted too much operational control over the station, making it a de facto owner and putting it over a federal ownership cap. Nexstar is appealing the fine.
While the FCC did not directly address the federal ownership cap as a concern involving the WADL sale, the agency did say it did not want Mission and Nexstar to repeat history if it enters into a shared services agreement once the WADL sale closes.
The conditions imposed on Mission, Nexstar and Adell Broadcasting are intended to ensure Mission remains the sole benefactor of the transaction, even if it later agrees to a shared services agreement with Nexstar.
It was not clear if Mission, Nexstar and Adell were moving forward with the purchase based on the FCC’s conditions. Adell Broadcasting owner Kevin Adell declined to comment on the specifics of the deal, but did tell The Desk that “I haven’t been this happy since my Bar Mitzvah!”
The order is the first substantial step by the federal agency after Mission and Adell filed their initial application last May. Transactions involving the divestiture or swapping of broadcast licenses must be approved by the FCC, and are subject to regulatory scrutiny.
The application was opposed by numerous pay television industry groups that claimed the sale of WADL to Mission would substantially benefit Nexstar, and would allow the broadcaster to demand more money for the channel. Their concerns were heightened after The Desk reported the sale of the station was largely premised on WADL becoming the new home of the CW Network in Detroit. The FCC cited The Desk‘s story in its order approving the sale with conditions; Nexstar owns a controlling 75 percent share in the CW Network.
Mission and Adell tried to assuage the concerns of opponents by opting to have WADL adopt “must-carry” status, which would force cable and satellite companies to distribute the channel while prohibiting the station’s owner from seeking retransmission consent fees. The companies agreed to operate WADL as a must-carry station through 2026.
