FCC Approves Nexstar-Tegna Deal Creating Local TV Giant (2)

The Federal Communications Commission has granted approval for Nexstar Media Group Inc. to complete its $3.5 billion acquisition of TV station operator Tegna Inc., waiving an anti-consolidation rule that would’ve prevented the combination.

The FCC’s current rules prevent any local station owner from broadcasting to more than 39% of US households, a decades-old safeguard intended to ensure diversity in media voices. Nexstar had said when it announced the deal that the combined companies would have 265 full-power TV stations in 44 states, reaching 80% of US TV households. The commission said Nexstar agreed to divest six stations.

The US Department of Justice also approved the transaction. Tegna shares jumped more than 9% in after-hours trading. Nexstar’s were unchanged.

“The FCC has been focused on empowering broadcast TV stations to serve their local communities, consistent with their public interest obligations,” FCC Chairman Brendan Carr said in a statement. “Today’s agency decision does exactly that as both the record and Nexstar’s enforceable commitments demonstrate.”

Local station owners have generally argued that by combining local newsrooms and advertising functions they can operate more efficiently. Critics have said such mergers result in job cuts and higher fees for cable and satellite-TV service as station groups look to get more money for their channels from distributors.

Nexstar committed to expanding its investment in local news and programming, and said it would offer cable-TV distributors extended contracts at existing rates for a period of time, according to the commission’s order. The hours of local programming run in acquired markets would increase for a minimum of two years, with local news expanded in nine places, such as Dallas, Houston and Phoenix.

In a separate statement, Nexstar Chief Executive Officer Perry Sook said the transaction would strengthen journalism in local communities and make the combined business a “stronger, more dynamic enterprise.”

A group of democratic attorneys general from states including California, New York and Colorado sued to block the transaction on Wednesday, arguing it would give the combined company too much control over television in dozens of markets around the US. Satellite television company DirecTV filed its own lawsuit challenging the deal.

FCC Commissioner Anna Gomez, the only Democrat on the panel, criticized the agency for approving the deal through its Media Bureau, instead of through a full-commission vote.

“A transaction of this magnitude, which includes new and novel issues before the FCC, demands open deliberation before the full commission, not a quiet sign-off meant to avoid public scrutiny,” she said in a statement. “Given the increasingly alarming pace of reckless media consolidation, the American public deserves to know how and why this decision was made.”

With the decision to suspend the cap in this instance, the agency circumvented a legal fight over whether it can unilaterally dispense with the anti-consolidation safeguard or whether Congress must be the one to act. Public-interest groups, labor groups and cable-TV channel operator Newsmax Inc. oppose relaxing the limits, which could set a precedent for future industry deals. Carr has been outspoken about his view that the agency’s media ownership controls are outdated and that broadcasters need more runway to merge and compete with Big Tech platforms.

President Donald Trump, who had previously expressed skepticism of the deal, did an about-face in early February and said he supported it.

The commission said the company’s combined 259 stations, after divestitures, represent just 15% of the 1,777 full-power stations in the country.

(Updates with commission’s terms in sixth paragraph.)

To contact the reporter on this story:
Kelcee Griffis in Washington at kgriffis4@bloomberg.net

To contact the editors responsible for this story:
Christopher Palmeri at cpalmeri1@bloomberg.net

Kelcee Griffis

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