FCC Approves Nexstar/Tribune 3-2 Over Democrats' Objections to Standing Shift

Voted on Friday as expected (see 1909040035), the order was released Monday in docket 19-30. “The FCC majority moved today to really eviscerate citizens’ input,” said former Commissioner and current adviser at Common Cause Mike Copps. “In a footnote, the agency overturns its past decisions making it possible for organizations to challenge media mergers in which multiple markets are at issue,” said Rosenworcel. “This is bureaucratic and cruel.”

The order approves Nexstar/Tribune without additional conditions, and has Nexstar retaining a top-four duopoly in the Indianapolis designated market area, as expected. The order gives the nod to the transferring another top-four combination in the Norfolk, Virginia, DMA to Scripps. “Application of the Local Television Ownership Rule’s Top-Four Prohibition to these preexisting combinations is not warranted, based on the unique facts and circumstances of the stations and markets at issue,” the order said. The already-announced divestitures to Scripps, Tegna and Circle City were approved, as Nexstar predicted. “Nexstar anticipates closing the Tribune transaction and the divestiture sales shortly,” said Nexstar Monday. “We’re very pleased with today’s decision by the FCC, which enables us to clear the last remaining regulatory hurdle,” said Tribune CEO Peter Kern.

Rosenworcel and Starks decried the size of the combined company and FCC retention of the UHF discount, but focused mostly on the ruling that objections by Common Cause formally applied to only the portion of the deal in the Chicago market, the sole market from which the group included a listener's testimonial. In a footnote, the order said the FCC previously left the matter of organizational standing unresolved, but it's now saying standing is limited to entities that show they're “parties of interest.”

“To the extent our previous decisions conferred organizational standing to file a petition to deny all of the individual station transfers or assignments in a multi-market transaction based on an affidavit of one member of the organization stating that it is a viewer or listener in one of the affected markets, we reject that view,” the order said. The footnote leaves the matter “unclear,” said Starks, but could be read as requiring an “onerous and unprecedented standard” that would have required Common Cause to produce “more than 30 affidavits for this transaction. Even very recently, the Commission conferred party in interest status more inclusively in our license transfer process.”

Using that standard could have consequences beyond the Media Bureau, said Free Press Senior Counsel Jessica Gonzalez in an interview. It’s “a good question” whether that standard applies outside media deals, Gonzalez said. For media transactions, the shift “may make little difference in practice,” said Multicultural Media Telecom and Internet Council Senior Adviser David Honig. That's since the FCC would still be “reviewing merger-wide allegations through the lens of the market for which the declaration was submitted.”

That could be true for large-scale deals, but the change could have big consequences for more locally concentrated issues, said Georgetown Law Institute for Public Representation Senior Counselor Andrew Schwartzman. The policy will deter objections from the public, Schwartzman said. The shift is “a message to the public,” he said: “We don’t care about what you think." The FCC didn't comment.

Rosenworcel’s objection “is a bit overwrought,” emailed Free State Foundation President Randolph May. The clarification of its standing policy “is consistent with the Supreme Court’s precedent,” May said. “An organization shouldn’t be able to claim standing to challenge transactions in multiple markets just because it has a member who has claimed an injury in one.” An objection to a deal that concentrates on one market can still affect approval of the entire transaction, said Fletcher Heald broadcast lawyer Dan Kirkpatrick.

Several communications attorneys drew a link between the standing policy and successful defense of the restored UHF discount in the U.S. Court of Appeals for the D.C. Circuit (see 1807250050). There, the court rejected objections of anti-consolidation groups because they didn’t sufficiently demonstrate standing through filings showing members were specifically harmed. The order doesn’t cite that case, but a broadcast attorney suggested that ruling led to the action. Standing rules for courts of appeals and the FCC are separate and aren't the same, said United Church of Christ, Office of Communication attorney Cheryl Leanza. The FCC isn’t supposed to “blind itself” to information on whether something is good or bad for the public interest, Schwartzman said.

Nexstar/Tribune is in the public interest because Nexstar demonstrated a commitment to providing news programing, investing in stations and furthering the advance of ATSC 3.0, the order said. The order rejects criticisms of Nexstar plans to give the newly acquired stations more access to state and national news bureaus. It's "bizarre to suggest that giving stations greater access to information from our nation’s capital or state capitals is somehow harmful,” the order said.

The ruling rebuffed retransmission consent-based objections from Dish Network and the American Television Alliance. “The transaction will not meaningfully change the bargaining leverage the Applicants currently possess in local markets,” the order said. Dish’s arguments “are insufficient to establish by analogy the existence of a national market" for retrans, the agency said. “We do not believe that an increase in retransmission consent rates, by itself, is necessarily a public interest harm.” Dish is a national MVPD, seeking to block Nexstar from expanding its own reach to a degree that still won’t equal the entire nation, the order said. “DISH certainly does not set forth a compelling argument that reducing the current disparity in geographic reach in this instance would result in rates that are anything other than the product of a competitive marketplace.”

Granting top-four combinations in Indianapolis and Norfolk isn’t seen a signal future top-four combos will be OK'd, Kirkpatrick said. The combinations are already commonly owned, and approvals are based on minimizing disruption in the markets, the order said. “Historically, the Commission has been reluctant to require divestiture when doing so would create disruption to the marketplace and hardship for owners.” Basing divestitures on possible disruption to station owners rather than requiring applicants to show public interest benefits “flips the burden of proof,” said Starks. “This is unprecedented and improper.”

Commissioner Mike O’Rielly defended the top-four mergers and disputed the need for the divestitures. He takes "significant issue with many of the station spin-offs required of Nexstar by the U.S. Department of Justice in its review,” he said. It’s “ironic” that the order spends “so much effort scrutinizing whether or not a station is a four or five (or six) in its market,” O’Rielly said. “Frankly, does this even make a difference when the high-tech giants are competing with the highly-regulated broadcasters for advertising dollars in nearly every local market across the country?”

The FCC's “doing its level best” to exclude the public interest, Leanza said. She doesn’t believe the footnotes necessarily foreclose advocacy groups from weighing in on local matters: “There’s still substantial basis for the members of the public interest community to participate,” said Leanza. She and other anticonsolidation groups wouldn’t comment on the specific likelihood of an appeal, though broadcast attorneys expect one. “I don’t think this is by any means over,” she said.