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Nexstar, the biggest owner of US TV stations, is trying to get even bigger, believing the Trump administration will allow it to do so.
On Tuesday, Nexstar announced a deal to acquire another broadcast station heavyweight, Tegna, in a $6.2 billion deal including debt. The deal will require government approval.
Public interest groups say TV mega-mergers strangle competition and ultimately reduce the amount of local news coverage that viewers depend on.
Investors tend to feel very differently. Shares in both companies rallied on the news Tuesday morning, and further consolidation is expected; the Wall Street Journal reported Monday night that Sinclair has also proposed a merger with Tegna.
Broadcast industry analysts said all the deal talk is premised on pending action by the Federal Communications Commission to loosen the government’s limits on broadcast station ownership.
Currently, through a regulation known as the national television ownership rule, companies are capped at reaching 39 percent of all US TV households. Station owners say the cap must be raised so that they can survive in the digital age, and they believe FCC chair Brendan Carr, a top Trump ally, agrees.
Carr recently called the station ownership caps “arcane” and “artificial” and opened an FCC proceeding to review the matter.
Tellingly, Nexstar CEO Perry A. Sook began his statement about the Tegna deal by saying “the initiatives being pursued by the Trump administration offer local broadcasters the opportunity to expand reach, level the playing field, and compete more effectively with the Big Tech and legacy Big Media companies that have unchecked reach and vast financial resources. We believe Tegna represents the best option for Nexstar to act on this opportunity.”
Tegna CEO Mike Steib similarly talked about his beliefs on an earnings call last week. “We believe deregulation is coming and will create significant opportunities,” he said.
On Tuesday, Carr referred questions about the deal to an FCC spokesperson, who said, “We look forward to reviewing the application when it is filed with the FCC and assessing the public interest equities.”
Craig Aaron, CEO of the public interest group Free Press, said in a recent blog post that “runaway consolidation” is “bad for local communities.”
“Of course, the companies leading the charge for more consolidation see local news only as a vehicle for serving political ads and spreading right-wing propaganda,” he argued. “For them, this is going as planned.”
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