Broadcasters Signal Deals in Anticipation of Ownership Deregulation
TV broadcasters are positioning for a wave of deals in anticipation of changes to FCC limits on broadcast ownership, according to broadcasters, media brokers and recent announcements from station groups. Sinclair Broadcast announced in a release Monday that it's evaluating “all value-enhancing opportunities,” and Nexstar and Tegna are reportedly negotiating a possible deal. The rumors are likely an indication of pent-up demand but could also be aimed at mollifying shareholders, said broadcasters and media brokers.
Sign up for a free preview to unlock the rest of this article
Communications Daily is required reading for senior executives at top telecom corporations, law firms, lobbying organizations, associations and government agencies (including the FCC). Join them today!
Sinclair has telegraphed an openness to selling stations for more than a year (see 2405100050), but Monday’s announcement appeared to go further, a broadcast executive told us. The release said Sinclair’s board authorized a “comprehensive strategic review for its broadcast business.” The board also unanimously voted to allow the company “to pursue transformational opportunities without predetermined limitations on transaction structures.” Broadcasters and media brokers told us the release signals that the company is willing to offload all its broadcast assets.
Meanwhile, Nexstar is in “advanced talks” to purchase Tegna’s stations, the Wall Street Journal reported Friday. On the same day, Gray announced a deal to purchase stations in 10 markets from Allen Media, less than a week after revealing station deals with Block Communications and SagamoreHill Broadcasting (see 2508010047).
It isn’t surprising that broadcasters are already negotiating deals that would depend on the FCC relaxing the national-ownership cap, before any rule changes are in place, broadcasters and media brokers told us. Statements from FCC Chairman Brendan Carr (see 2506260044) and the Media Bureau’s recent willingness to grant waivers of the top-four prohibition (see 2505150056) are seen as near guarantees that the agency will do away with ownership limits, broadcasters told us.
The WSJ report and Gray’s latest deal announcement came just days after the first comment period in the FCC’s ongoing national-cap proceeding; reply comments are due Aug. 22. MVPD groups, labor unions, public interest groups and conservative entities Newsmax and the Conservative Political Action Conference have filed in opposition to changes to national-ownership limits (see 2508050051). Any FCC change to the ownership cap is certain to draw legal challenges, attorneys told us.
TV station group dealmaking was on hold during the previous administration after then-FCC Chairwoman Jessica Rosenworcel blocked Standard General’s proposed purchase of Tegna in 2023 (see 2302240068), broadcasters told us. That and worsening financial conditions for broadcasters have led to a buildup of demand for transactions, a broadcaster said.
The rumored Nexstar/Tegna transaction and Sinclair’s announcement could lead to deals but could also be aimed at pleasing shareholders, a media broker told us. Companies want to appear as if they're in the dealmaking mix, the broker said, pointing to an increase in Tegna’s stock in the wake of the WSJ report.
While there's a wave of dealmaking, there are some indications that transactions aren’t happening on the scale many broadcast executives anticipated. The FCC’s willingness to grant top-four waivers was expected to trigger numerous station swaps, but that hasn’t materialized. It could be because such swaps involve complicated negotiations, and the range of deal possibilities is so broad that companies are reluctant to commit, one broadcaster told us: “There are a lot of moving targets.”