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FCC fines Nexstar $1.2 million over WPIX control

The agency said Nexstar walked back certain promises made when it sought approval to merge with Tribune, and exerted too much control over WPIX when its license was transferred to Mission.

The agency said Nexstar walked back certain promises made when it sought approval to merge with Tribune, and exerted too much control over WPIX when its license was transferred to Mission.

A suite in this Wichita Falls, Texas strip mall is listed as the corporate headquarters for Mission Broadcasting, the owner of 29 television stations that are controlled by Nexstar Media Group. (Photo via Google Street View)
A suite in this Wichita Falls, Texas strip mall is listed as the corporate headquarters for Mission Broadcasting, the owner of 29 television stations that are controlled by Nexstar Media Group. (Photo via Google Street View)

The Federal Communications Commission (FCC) has fined Nexstar Media Group and one of its affiliated businesses more than $1.2 million for operating a New York television station in violation of federal ownership rules.

The fine, issued on Wednesday, says, Nexstar and Mission “willfully and repeatedly violated several of the Commission’s rules” when it engaged in a series of transactions that saw WPIX (Channel 11, CW) exchange hands several times while Nexstar was working to secure approval for its merger with Tribune Media several years ago.

Under the law, a broadcaster is not allowed to own licensed television stations that reach more than 39 percent of the American viewing audience. Nexstar and Tribune were forced to divest several television stations — including WPIX — in order to put them under the threshold and secure regulatory approval for their merger.

Nexstar sold WPIX to the E. W. Scripps Company, which later sold the station to Mission, a company whose television assets are entirely controlled by Nexstar through shared services agreements.

While those agreements are not impermissible under the law, the FCC said Nexstar obtained “undisclosed cognizable interests in WPIX,” which made it a de facto owner of the station and put it over the critical 39 percent reach cap.

The FCC said it looked at various elements to determine whether Nexstar had a controlling interest in WPIX, including certain cross-debt relationships between it and Mission that are rooted in WPIX’s operations and Nexstar’s guarantee to fulfill “full payment of all obligations incurred” by Mission under certain debt-related agreements between the two.

The FCC also said Nexstar misled the agency when it affirmed it would not provide operational support to any divested station, including WPIX, if its merger with Tribune Media was approved. The FCC sided against public advocacy groups who shot warning flares about the merger, saying the promise was enough to guarantee that Nexstar would not exceed federal ownership caps.

About a year later, Nexstar transferred its option to purchase WPIX from Scripps to Mission, a move that the FCC also approved. Again, the move was predicated on the idea that Nexstar would have no direct involvement in operating WPIX, as affirmed by its prior commitment when it merged with Tribune, the agency said.

But, immediately after Mission took ownership of WPIX’s broadcast license, Nexstar made moves that signaled to the agency it — and not Mission — was pulling the strings at the station, in violation of its promise. Nexstar engaged in retransmission consent discussions with cable and satellite operators — two of which were forced to pull WPIX after refusing demands for higher fees — and Nexstar appointed some of its own executives to oversee certain operations at WPIX, including a former general manager at Nexstar-owned KRON (Channel 4) in San Francisco.

The FCC also noted that some of the programming aired on WPIX — including the prominence of the Nexstar logo in newscasts produced for WPIX — gave viewers the impression that Nexstar, and not Mission, owned the station. The agency also noted that Nexstar is involved in the hiring and management of personnel at WPIX, and that its claim that Mission was in charge of human resources there “rang hollow.”

After receiving numerous complaints from cable companies, satellite TV providers and other parties, the FCC began sending letters to Nexstar asking for more information about their arrangement with Mission concerning WPIX. The information supplied ultimately led them to believe Nexstar had violated its pre-merger guarantees to the FCC as well as the federal ownership cap.

“The [FCC] is prohibited from allowing a company to own or control broadcast stations that in total reach more than 39 percent of the national television audience,” Jessica Rosenworcel, the Chairperson of the FCC, said in a statement. “The record here reflects a situation where a company exceeds this threshold. Unless and until Congress changes this law, it is the responsibility of this agency to enforce it.”

In a concurrent statement, FCC Commissioner Brendan Carr said the information obtained from Nexstar and subsequently disclosed in the notice of financial liability proved that “Nexstar may be exercising too much control over WPIX.”

But he said the agency needed to exercise a degree of restraint when examining prior decisions made by other FCC commission bodies, saying future outcomes could “undermine reasonable reliance on prior FCC decisions.”

Carr said notices of apparent liability are not final decisions, and that Nexstar had the chance to appeal the matter. In a statement released on Thursday, a spokesperson for Nexstar strongly indicated the broadcaster will do just that.

“We are extremely disappointed in today’s action by the Federal Communication Commission regarding our relationship with WPIX-TV, and we intend to dispute it vigorously,” Perry Sook, the founder, Chairman and CEO of Nexstar, said. “We believe the FCC has been misled by the often distracting noise in the media ecosphere and that it has completely misjudged the facts.”

Sook said the facts show that Nexstar “has always complied with FCC regulations and that its relationship with WPIX-TV under a Local Marketing Agreement (LMA) was approved by the FCC in 2020, when WPIX-TV was purchased by Mission Broadcasting, Inc.”

“Nexstar believes that joint operating, shared service, and local marketing agreements like those in which it is engaged are vitally important to maintain a competitive media marketplace and to enable broadcasters to continue investing in local news, investigative journalism, and other services that they uniquely provide to the communities in which they are located,” he affirmed.

DirecTV, the satellite television provider that has taken Nexstar to court in the past over some of its local marketing agreements, signaled its approval of the FCC’s fine.

“We applaud the FCC’s efforts to enforce the media ownership rules on relationships Nexstar has with sidecars like Mission Broadcasting,” a spokesperson for DirecTV said.

Separately, a spokesperson for Comcast said they approved of the FCC’s “thorough examination” of the matter.

“The FCC found that Nexstar is in clear violation of FCC rules and orders, and controls WPIX,” the spokesperson said late Thursday. afternoon. “We’d like to thank the Commission for correctly attributing the ownership of WPIX to Nexstar and ending the fiction that the station was ever independent once Mission became its licensee.”

If upheld, the decision in the matter could have sweeping consequences for Nexstar and other broadcasters that engage in shared services agreements with third party license holders. Peer broadcasters like Sinclair, Gray Television and Raycom Media also use shared services agreements to provide sales and operational support to other companies that hold TV licenses for their local stations.

It could also have a significant implication on a pending transaction involving Detroit television station WADL (Channel 38), which is in the process of being acquired by Mission under the financial backing of Nexstar. The transaction involves using a similar local marketing arrangement that Nexstar and Mission had for WPIX, and the deal has been held up by a lack of action at the FCC while the WPIX matter was being considered.


Editor’s note: This story was updated from a prior version to include a comment from a Comcast spokesperson.

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About the Author:

Matthew Keys

Matthew Keys is a nationally-recognized, award-winning journalist who has covered the business of media, technology, radio and television for more than 11 years. He is the publisher of The Desk and contributes to Know Techie, Digital Content Next and StreamTV Insider. He previously worked for Thomson Reuters, the Walt Disney Company, McNaughton Newspapers and Tribune Broadcasting.
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