The Federal Communications Commission yesterday approved Nexstar Media Group’s $6.2 billion purchase of Tegna, granting a waiver that lets the broadcast giant go way past the national limit on station ownership.
Nexstar said it closed the acquisition late in the day yesterday, immediately after receiving the FCC approval. The deal was also approved by the US Department of Justice, but a group of state attorneys general are challenging the merger in court in an attempt to unwind it.
Opponents say the FCC lacks authority to grant the waiver and that only Congress can change the 39 percent ownership limit. While the FCC says Nexstar will own fewer than 15 percent of TV stations, the cap in the FCC’s National Television Ownership Rule is calculated by the percentage of US households reached by a single entity’s stations. The Nexstar/Tegna combination will reach 80 percent of TV households in the US, or 54.5 percent when applying what’s known as the “UHF discount.”
The US approval has been expected at least since February 7, when President Trump endorsed the merger on Truth Social. “We need more competition against THE ENEMY, the Fake News National TV Networks,” Trump wrote. “Letting Good Deals get done like Nexstar – Tegna will help knock out the Fake News because there will be more competition, and at a higher and more sophisticated level… GET THAT DEAL DONE!”
FCC Chairman Brendan Carr quickly shared Trump’s post on X and wrote, “President Trump is exactly right. The national networks like Comcast & Disney have amassed too much power. For years, they’ve been pushing this Hollywood & New York programming all over the country with no real checks. Let’s get it done and bring real competition to them.”
Nexstar backed Carr in Kimmel fight
Nexstar previously ingratiated itself with Carr by temporarily pulling Jimmy Kimmel’s show from its 28 ABC affiliates after Carr threatened broadcasters with license revocations for airing Kimmel. By approving Nexstar’s expansion, Carr is gaining an even bigger media-industry ally in his quest to obtain more favorable news coverage for Trump. Carr is trying to achieve that by giving TV station owners more influence over national networks that provide shows to affiliated stations.
“We are grateful to President Trump, Chairman Carr, and the DOJ for recognizing the dynamic forces shaping the media landscape and enabling this transaction to move forward,” Nexstar CEO Perry Sook said.
In a press release, the Carr FCC said the merger will “enable these broadcast TV stations to counter the growing power that national programmers have amassed in recent years.” Nexstar and Tegna combined have 265 full-power TV stations and eventually will be down to 259 after completing promised divestitures of six stations.
Nexstar conducted layoffs at various local TV stations last month. The FCC asserted that the merger “will empower these broadcasters to better serve their communities by investing in local news and reporting.”
39 percent limit and the UHF discount
The FCC’s National Television Ownership Rule prohibits a commercial television licensee from having a cognizable interest in TV stations with an aggregate national audience reach above 39 percent of households. Nexstar stations already reached 70 percent of US TV households and is up to 80 percent with Tegna stations in tow.
Despite reaching 70 percent of households, Nexstar technically complied with the 39 percent rule because of the “UHF Discount,” in which only half of the households reached by a UHF station are counted. The rule was created because of technical limitations that restricted the reach of UHF stations compared to broadcasters using VHF spectrum.
The FCC eliminated the UHF discount near the end of Obama’s presidency, in October 2016, concluding that “UHF stations no longer suffer from weaker signals and smaller audience reach” after the transition to digital television. A few months into Trump’s first term, the FCC reversed that decision and reinstated the UHF discount. The FCC’s April 2017 decision didn’t dispute the previous administration’s technical basis for eliminating the discount but said it shouldn’t have taken the action without considering whether the cap should be raised to offset the regulatory impact of eliminating the UHF discount.
When applying the UHF discount, Nexstar was at 39 percent prior to the merger and is now at 54.5 percent. In the merger-approval order issued by its Media Bureau, the Carr FCC found that it has authority to waive the rule and said that considering waivers on a case-by-case basis “gives us the opportunity to analyze whether a particular transaction would benefit the public, such as through increased investment in local news coverage and other programming of local interest.”
The FCC also waived its Local Television Ownership Rule to let Nexstar own more than two full-power TV stations in 23 market areas, subject to six station divestitures Nexstar committed to make in Denver, Colorado; Indianapolis, Indiana; New Haven, Connecticut; Portsmouth, Virginia; Slidell, Louisiana; and Rogers, Arkansas.
The merger was challenged in a lawsuit filed this week by attorneys general from California, Colorado, Connecticut, Illinois, New York, North Carolina, Oregon, and Virginia. The merger “would create the largest broadcast station group in the United States, putting more broadcast programming in the hands of fewer people, removing control from the communities they report to, cutting local jobs, and significantly impacting the delivery of news and other media content to Americans nationwide,” California Attorney General Rob Bonta’s office said.
Nexstar and Tegna together own 221 Big Four stations, or about half of the stations affiliated with FOX, NBC, ABC, or CBS, the states said. The state AGs today asked a federal judge in California to issue a temporary restraining order to prohibit Nexstar and Tegna from integrating or commingling the companies’ assets and to require Nexstar “to hold separate the acquired Tegna assets pending further proceedings.”
Only Congress can lift 39 percent cap, opponents say
In 2004, Congress amended the Telecommunications Act of 1996 to require the FCC to raise the national audience reach limit from 35 to 39 percent. The 2004 law change also said the FCC cannot use its forbearance authority under Section 10 of the Communications Act to forbear from applying telecom regulations to entities that exceed the 39 percent limit.
“Congress specifically barred the Commission from granting waivers of this limit,” the United Church of Christ Media Justice Ministry, Public Knowledge, Free Press, and the Communications Workers of America told the FCC. “The Commission simply lacks the authority to grant the National Cap waivers that Applicants seek. If Congress intended for the Commission to retain its normal authority to determine when waiver of a Commission rule is in the public interest, it would not have amended Section 202 of the Telecommunications Act of 1996 to specifically bar the agency from granting waivers to the 39 percent cap Congress likewise dictated.”
The Carr FCC argued that the prohibition on forbearing from rules only applies to telecom providers, not TV station owners, and that it has separate authority to grant waivers. Section 10 of the Communications Act “applies to ‘telecommunications carriers,’ and ‘telecommunications services,’ not broadcasters. In any event, the Commission’s forbearance and waiver authority are distinct,” the FCC said.
While Congress directed the FCC to set a 39 percent cap, the Carr FCC said that Congress instructed it to set that cap “through its rulemaking authority, which necessarily leaves the agency with the discretion to modify or waive its rules.”
US Rep. Doris Matsui (D-Calif.) disputed the FCC’s claim of authority to approve the merger.
“Congress established the 39 percent national television ownership cap and only Congress has the authority to change it,” Matsui said. “Yet here we are watching an agency charged with enforcing the law tear it up on behalf of Donald Trump and FCC Chair Brendan Carr. This approval is an outrageous abuse of authority. It throws out limits designed to protect local journalism and viewpoint diversity. It hands Nexstar Media Group, a single conglomerate, unprecedented control over what millions of Americans see and hear.”
FCC didn’t hold public vote on deal
FCC Commissioner Anna Gomez, the only Democrat on the commission, criticized Carr for not putting the merger to a vote at a public meeting. The deal was approved at the bureau level.
“The FCC has once again chosen bureaucratic cover over public accountability,” Gomez said. “This merger was approved behind closed doors with no open process, no full commission vote, and no transparency for the consumers and communities who will bear the consequences. 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.”
Media and telecom advocacy groups criticized the FCC. “Consumers will pay the price. Nexstar’s own executives told Wall Street that about 45 percent of the $300 million in expected ‘synergies’ will come from retransmission consent revenue. That is: Nexstar plans to jack up the fees it charges cable and satellite providers, and those costs will be paid for by viewers,” said John Bergmayer, legal director at Public Knowledge.
“In every market where Nexstar already operates multiple stations, it has consolidated news operations, merged newsrooms, and cut staff,” Bergmayer also said.
Matt Wood, general counsel and VP of policy at Free Press, said that “Nexstar knew it had a willing accomplice in Brendan Carr, Donald Trump’s chief media attack dog and censor. The company worked behind the scenes to gain FCC approval without a hitch, and without even a vote from the full commission.” Wood argued that the deal enables a shift in broadcast media “away from local control and independence toward total control by massive national conglomerates whose owners are more beholden to Trump’s political agenda than they are to the needs of their communities.”
