Altice USA said it signed a multiyear extension of their distribution agreement with Gray Media that will keep Gray’s TV stations available to Altice USA’s Optimum TV subscribers.

One of the markets covered by the new deal is Phoenix, where Gray recently acquired rights to air basketball games played by the Phoenix Suns of the NBA and the Phoenix Mercury of the WNBA,

Financial terms were not disclosed.

In addition to Arizona, Optimum carries Gray stations in Connecticut, North Carolina, Texas, Louisiana, Kansas, Arkansas, West Virginia, California, Missouri, Arizona, New Mexico, Oklahoma, Kentucky, Mississippi, Nevada, and Ohio. 

Gray Television continued to add local sports to its stations, announcing that its WVUE will televise 10 New Orleans Pelicans basketball games this season.

The Atlanta Hawks last week announced that 10 of its NBA regular season games would be airing on Gray stations.

Pelicans games will be airing on WVUE’s main signal, which normally carries Fox network programming, and on one of its digital channels, which carries Bounce, the E.W. Scripps-owned digital broadcast network.

Gray will also televise Pelicans games on stations in Baton Rouge, Shreveport, Lake Charles, Monroe and Alexandria, Louisiana; Biloxi, Jackson, Hattiesburg and Meridian, Mississippi, and Mobile, Alabama.

Gray said it will seek stations in other markets to also air the games.

Also Read: Gray TV Talking To More Sports Teams and Leagues

The move comes as cable regional sports networks are losing viewers to cord-cutting and teams and leagues are turning to broadcast for greater reach.

“The Pelicans welcome the opportunity to partner with Gray Television in this 10-game deal that will provide over-the-air viewing access to Pelicans games for more than 3 million households and over seven million people across the Gulf South region,” New Orleans Pelicans president Dennis Lauscha said.

In addition to their over-the-air signals, Gray notes that its stations are also carried by major cable and satellite distributors.

Calling the Pelicans broadcasts will be play-by-play announcer Joel Meyers, former NBA star and color analyst Antonio Daniels and sideline reporter Jennifer Hale.

“We know people in this region are passionate about their sports. We are thrilled to partner with the Pelicans and make these games available for all fans,” said New Orleans resident and Pelicans fan Sandy Breland, who is also Gray’s chief operating officer.

Bankrupt Diamond Sports Group has sued the NBA's Phoenix Suns, as well as the WNBA's Phoenix Mercury, accusing the pro basketball franchises of breaching their local TV contracts by agreeing to five-year local TV partnership to show their games with Gray Television and Kiswe Mobile. 

“The Suns’ failure to comply with their contractual duties, and Diamond Arizona’s potential loss of approximately 70 games of NBA content provided by the Suns each season, puts Diamond Arizona’s business at significant peril, thereby directly threatening its ability to reorganize,” Diamond wrote in the emergency motion for a stay. 

Also read: Diamond Coughs Up Bally Sports Rights Payments to the Reds, Keeps Team From Launching Its Own RSN

“The Suns’ deliberate disregard of its contractual duties to Diamond Arizona is specifically the type of action the automatic stay is meant to protect against," Diamond's complaint added. 

Diamond is asking the Texas bankruptcy court overseeing its restructuring to void the Suns and Mercury's deals with Gray and Kiswe, as well as award it damages. 

The suit was first reported by The Athletic. 

Team reps have yet to comment. But responding to Diamond's public complaints last week last week, Suns and Mercury CEO  Josh Bartelstein said in a statement, “Diamond’s position is totally inaccurate. We are moving forward with this deal and could not be more excited about what it means for our fans and our future.”

Add Next TV to your Twitter feed today! Follow @ThisIsNextTV to keep up to date on the latest business and technology news of the video entertainment industry 

Diamond is the independent subsidiary set up by Sinclair Broadcast Group to manage 19 Bally Sports branded regional sports networks. Diamond's TV deal with the Suns and Mercury expires this year, and it claims it has, under contract, the right to match any outside local TV deal the teams make. 

Late last week, the teams announced a deal to show 70 Suns games across Gray TV local broadcast stations across Arizona, as well as stream their games direct-to-consumer via Kiswe Mobile. 

Also read: Phoenix Suns Could Have Big ATSC 3.0 Distribution Plans, and Other Teams, Including the Utah Jazz, Might Soon Follow

Diamond contends those five-year deals fail to generate the revenue it is offering the Suns and Mercury for a renewal on RSN Bally Sports Arizona. 

Diamond is currently try to trade equity in Diamond to its creditors in exchange for around $8 billion of debt relief. 

The New Year rang in with a bit of a whimper on the retransmission consent front, with the American Television Alliance estimating that blackouts in 2021 — those periods when stations go dark as deals expire — were about one-third their number in the previous year. But distributors won’t have much time to celebrate, as the traditional deal cycle suggests that 2022 could be another record year for broadcast service disruptions.  

According to the ATVA, a trade group that represents satellite and cable companies, there were about 105 blackouts in 2021, less than one-third the record 336 stations that pulled their signal in the prior year and less than half the 278 stations that were blacked out in 2019. 

The lack of heated disputes as the clock neared 12 on Dec. 31 was in line with what Kagan, a research arm of S&P Global Market Intelligence, had predicted nearly 11 months prior. Back in February, the researcher had estimated that retrans blackouts would be lessened simply because there were fewer deals set to expire. According to Kagan, about 22 retrans deals affecting 30.2 million subscribers were expected to expire in 2021. That compares to 2020, when retrans blackouts affected about 56 million homes. 

Kagan based its predictions on the usual three-year timeline from the last public retrans transaction announcement or from earnings calls and investor presentations. Typically, broadcasters and distributors don’t reveal when a deal is up until it is, citing non-disclosure agreements embedded in retrans contracts. 

With that in mind, 2022 could see a big resurgence in retrans battles, as more deals are expected to enter the expiration queue. 

AT&T, which spun off a minority stake in its DirecTV, AT&T TV and U-verse TV units to TPG in February, struck several big retrans agreements in 2019 that could come up for renewal this year. Included in that mix are Nexstar Media Group, Sinclair Broadcast Group, CBS, Hearst TV and others that involved more than 300 stations alone. While it is no guarantee that all of those stations will go dark for some period this year, it’s a good guess that many will.

Other distributors who reached large retrans deals in 2019 include Comcast (with Nexstar and Tegna), Charter Communications (Nexstar and Tegna), Verizon Communications (Tegna, Nexstar and Cox Media), Suddenlink Communications (Tegna) and Frontier Communications (Nexstar). Dish Network reached a retrans deal with Meredith (now part of Gray Television) and Cox Media Group in July 2019. It is unclear as to whether the Meredith stations will fall under Gray TV’s retrans schedule.    

Also: No Cigar 

While there were fewer actual blackouts in 2021, several disputes that began earlier continued into the New Year. The largest is Tegna’s dispute with Dish Network, involving stations in about 53 markets that went dark on Oct. 6. Both sides have accused the other of negotiating in bad faith, and there was no indication at press time that a resolution was near. 

Verizon Fios TV customers lost access to Tegna stations in about five markets on Jan. 4, after the parties couldn’t renew their retrans agreement, which was originally scheduled to expire on Dec. 31, 2021. 

Also: AT&T and TPG: There is No Why 

Many of the bigger retrans disputes in 2021 took place at the beginning of the year and were resolved in the subsequent weeks and months. Dish Network reached a long-term carriage deal with Sinclair Broadcast Group’s 144 stations in November, but the broadcaster failed to reach an agreement for its regional sports networks. The Sinclair stations never went dark to Dish customers during those negotiations — the original deal was set to expire in August — because of a series of short-term extensions offered by the broadcaster. 

Almost exactly one year ago, Cox Media Group resolved a 20-day retrans blackout of its stations to Suddenlink subscribers, and in February last year Cox Media settled a five-day blackout with AT&T, getting its stations back in front of DirecTV, U-verse TV and AT&T TV customers mere hours before the start of the Super Bowl.

Also: New Year Ushers End to Several Cable Networks 

On the streaming side, YouTubeTV avoided a prolonged blackout of Disney channels by hammering out a deal with the entertainment giant that brought back broadcaster ABC‘s owned stations and cable channels ESPN, FX, Disney Channel, National Geographic and Freeform after a 36-hour hiatus. YouTube had promised its subscribers a $15 one-time credit to their monthly bill if a Disney blackout occurred, a pledge the company said it would still honor.   

The Google-owned streaming service also reached a carriage deal with NBCUniversal in October, avoiding a blackout. 

In the meantime, YouTubeTV and Hulu Live+ TV are still locked in a carriage battle with Sinclair’s Bally Sports Network RSNs, which went dark to those streamers in October 2020. 

Regional sports channel MSG Network hammered out a deal with Verizon’s Fios service on October 6, while its ongoing fight with Comcast, which began earlier in the month, raged on. At press time, MSG was still off Comcast systems.   

Dish dropped RSNs Root Sports Network and AT&T Sports Network in September.  Three months later it dropped its final RSN -- New England Sports Network -- making Dish the only major MVPD without a regional sports network. 

In July, Dish and HBO ended their three-year carriage battle, while earlier that month ViacomCBS struck a carriage deal for its linear and streaming networks with Charter Communications. In June, Charter struck a separate carriage deal with Multicultural News Network while Verizon signed on Black News Channel that same month. 

In January 2021, CMG struck a retrans deal with Suddenlink, while Fios averted a blackout of Hearst TV channels by hammering out a deal at the beginning of last year. 

So it isn't all doom and gloom when distributors and broadcasters make their ways to the negotiating table, and it seems the likelihood of a deal getting done without a  disruption in service is increasing. At the same time, the threat of a blackout is sometimes a broadcaster's only negotiating leverage, and most aren't afraid to use it.   

Broadcasters and distributors have been playing the blackout game for years. And though the decline in pay TV subscribership and the increase of direct-to-consumer offerings that include broadcast fare could eventually eliminate the need for these disputes — or maybe someone will invent an antenna-like device that will allow consumers to capture broadcast signals over the air for free — chances are that’s going to take a few years to fully play out. Until then, consumers, distributors and programmers will just have to deal with their retrans agita. ■

Twenty years ago, when Collin Gaston was in sales, he asked a general manager, “What do you spend your time on?” The answer she gave, that 85% of her energy was devoted to her employees, provided a glimpse of his future.

Gaston, general manager of WBRC, Gray Television’s Fox affiliate in Birmingham, Alabama, for the last seven years, said: “That lesson has been codified for me time and time again: Focus your attention and resources on your people and they will have a fulfilling work life and your business will prosper.”

That concept took on a new, deeper meaning in 2020, with George Floyd’s murder as an inflection point. “I needed to make sure we did not just move through the news cycle,” Gaston said. “We had to stop and look at ourselves and ask, ‘How can we be better?’ ”

Having worked in Montgomery and Birmingham, Gaston had always been acutely aware of the civil rights movement and the way Blacks had suffered in this country, but it felt like something was happening out there so he set about changing things in-house. WBRC hired a diversity consultant and created a Diversity Council. A series of programs throughout 2020 and 2021 encouraged employees to examine difficult issues like unconscious bias. 

“Before 2020, that was an issue we didn’t talk about at all,” Gaston said, adding that he also wanted everyone’s voices to be heard and for other people to understand why Black employees might have a different opinion on an array of topics. Workshops and programs also dealt with dynamics between men and women and older and younger employees.  

“It’s no longer an acceptable excuse to say, ‘I didn’t know,’ ” Gaston said. “Creating dialogue on race is complicated and emotional, but this is some of the most important work we’ve been doing.” ■

The Broadcasters Foundation of America has named Hilton H. Howell Jr., chairman and CEO of Gray Television and Atlantic American Corporation, to receive the 2022 Golden Mike Award. The award will be presented during a black-tie gala on Monday, March 14, 2022, at the Plaza Hotel in New York City, marking the return of the foundation’s biggest fundraiser, which did not take place in 2021 due to the COVID-19 pandemic. The Broadcasters Foundation is the only charity devoted exclusively to providing financial assistance to colleagues in broadcasting who are in dire need. Even with the loss of major fundraising events during COVID, more than $1.8 million in monthly and one-time emergency grants will be awarded this year.

“It’s been a challenging year-and-a-half, and we are thrilled to honor Hilton and once again present the Golden Mike Award live and in-person,” Broadcasters Foundation chairman Scott Herman said in a statement. “Looking ahead, our goal remains to provide financial aid for every broadcaster who qualifies.”

“The Broadcasters Foundation is often a lifeline for our colleagues,” said Howell, who also serves on the foundation’s board of directors. “I am honored to be recognized by the Broadcasters Foundation and ask everyone in our business who has made a good living from broadcasting, to consider donating any amount to help our colleagues who have been hit by shattering circumstances.”

Howell is a highly respected broadcaster with over 25 years of experience in broadcasting. He began his career practicing law and spent several years in the insurance industry. He is a former member of the board of directors for the National Association of Broadcasters (NAB), the Advisory Council of the Center for Leadership and Ethics for the University of Texas at Austin and the Advisory Board of Curant Health Care. He is also a member of YPO/WPO, the premier leadership organization of chief executives in the world, and a former member on the NBC Affiliate Board.

Having been appointed by Governor Zell Miller to serve on the board of the Georgia Department of Human Resources and serving as chairman of the Board of Regents of the University System of Georgia, Howell is an active member of the Atlanta community.

The Broadcasters Foundation of America Golden Mike Award dinner attracts a who’s who of broadcast media executives and celebrities. The presenters and performers for this year’s event will be announced shortly. Previous recipients include Dave Lougee, Perry Sook, Emily Barr, David Barrett, Michael Bloomberg, Bob Pittman, Gordon Smith and Jeff Smulyan. For more information, contact the Broadcasters Foundation at 212-373-8250 or email info@thebfoa.org. ■

Rejecting a pair of informal objections, the FCC has approved Gray Television's $2.8 billion-plus purchase of Meredith's TV stations.

The deal is for 16 full-power stations in 12 markets.

Also: Gray TV Buying Meredith Stations in Deal Worth $27 Billion

Gray had to divest WJRT Flint-Saginaw, Michigan, where Meredith also owned a station that would have created a duopoly that violated FCC local ownership rules.

The deal gives Gray a 25% national audience reach, well below the FCC's 39% maximum.

The FCC rejected a complaint from and individual who "express[ed] concern about “consolidation” of the news industry and a “decline in media integrity.” The FCC said that "[m]erely making anecdotal and vague observations about the media industry while rhetorically questioning whether the Transaction would favor the “self-serving interests” of an applicant is not enough to satisfy even the first step of the Commission’s two-part test under the public interest standard."

The FCC rejected the other informal complaint by over-the-air antenna seller Mr. Antenna that Meredith and refused to sell it ad time on KVVU-TV Henderson, Nevada, to advertise its over-the-air antennas, saying: "The arguments raised by Mr. Antenna rest on his allegation that Meredith has a corporate policy against advertisements that promote cord-cutting and that such a policy would continue under Gray’s ownership. Upon review of the record, we cannot conclude, as Mr. Antenna suggests, that such a policy exists, or ever existed, at Gray or Meredith."

The Meredith stations Gray is getting are WGCL and WPCH, Atlanta, Georgia; KPHO/KTVK, Phoenix, Arizona; KPTV/KPDX, Portland, Oregon; KMOV, St. Louis, Missouri; WSMV, Nashville, Tennessee; WFSB, Hartford-New Haven, Connecticut; KCTV/KSMO, Kansas City, Missouri; WHNS, Greenville-Spartanburg, South Carolina; KVVU, Las Vegas, Nevada; WALA, Mobile, Alabama; WNEM, Flint-Saginaw, Michigan; and WGGB/WSHM-LD, Springfield, Massachusetts.

Jon Lafayette contributed to this report.

The American Television Alliance said the FCC was right to propose fining Gray Television a half-million dollars for violating, as the FCC alleged, the commission's local ownership rules.

The commission, for the first time, has proposed fining an affiliation purchase for resulting in what it said was a violation of its prohibition on owning two of the top-four rated TV stations in a market.

Also Read: FCC Proposes Fining Gray Half Million Dollars

ATVA, whose members include cable and satellite MVPDs that negotiate retrans deals with broadcasters, said so, too.

“We agree with the FCC that Gray’s manipulation of the local ownership rules was an egregious ‘evasion’ that warrants this fine,” said ATVA spokesperson Jessica Kendust. She said the proposal should be just the beginning of a closer look at a variety of loopholes she says broadcasters use to evade FCC ownership rules.

“Gray’s attempt to cure its violation in Anchorage by then moving the CBS programming from its full power station to the low power station and another feed on its NBC station is just another workaround broadcasters employ to exploit the system,” said Kendust. “We urge the FCC to close these additional loopholes.”

The FCC prohibition on owning two of the top four stations only applies to full powers.

ATVA has long argued that the FCC's rules allow broadcasters to skirt ownership restrictions and unfairly bundle retrans negotiations.

Gray had not returned a request for comment at press time on the FCC's proposed fine. It still has the opportunity to challenge the fine, which remains proposed until it exercises that option, and the FCC either reverses or upholds the fine, or Gray chooses to pay rather than challenge it.

The FCC has denied Gray Television's retransmission consent complaint against Frontier Communications, saying Frontier did not violate the agency’s good-faith standards, its totality of circumstances test or its notice requirements.

Gray had alleged that Frontier had failed to negotiate a new contract in good faith, as FCC rules require, and had also violated customer notice requirements about a potential blackout.

According to the FCC good-faith standard, “broadcasters and MVPDs must actively participate in retransmission consent negotiations, with the intent of reaching agreement, though failure to reach agreement is not itself a violation of the rules or statute.“

Also Read: Frontier Could Emerge from Chapter 11 in Weeks

As to the notice requirements, “cable operators [must] notify subscribers of any changes in rates or services at least 30 days in advance of the change, unless the change results from circumstances outside of the cable operator’s control (including failed retransmission consent or program carriage negotiations during the last 30 days of a contract).”

The FCC's Media Bureau concluded Frontier had done both of those things. "We agree with Frontier that it complied with the obligation to negotiate retransmission consent in good faith, including its per se obligation to negotiate retransmission consent, its per se obligation to designate a representative with authority to make binding representations on retransmission consent, and compliance with the totality of the circumstances test," the bureau said in denying the complaint. "We also find that Frontier fulfilled its customer notice obligations."

Frontier had said it had a business reason for not accepting Gray offers, which was that the carriage was not as valuable as it had been. The FCC agreed that was legitimate. "We find that a party is permitted to adjust its bargaining position as negotiations proceed and doing so is not bad faith. In this case, Frontier ascertained information causing it to conclude that a station was less valuable to it than previously thought," the bureau said.

Also Read: Frontier Says Gray TV Impasse Is About Value of Signal

The FCC also concluded that it was not misleading for Frontier to assert that over-the-top access to Gray TV's programming continued to be available over the station's own web site and mobile applications.

Gray had formally complained to the FCC that Frontier was not negotiating in good faith and did not give its customers "as soon as possible" notice of a potential blackout, both of which are required under FCC rules.

The complaint asserted that Frontier appeared never to have intended to carry the stations after the contract expired Dec. 18. "Instead, it just strung Gray along for weeks making us believe progress was being made until informing Gray with less than an hour to go that Frontier’s negotiator actually had no authority to enter into an agreement on the terms she had most recently offered to us and in fact she could not agree to terms along the lines of any of the proposals she had made over the last several weeks."

If the lead negotiator had no power to negotiate, Frontier could hardly be negotiating in good faith, which would violate FCC rules.

Frontier begged to differ.

“The simple fact is that Frontier and Gray disagree over the value of Gray’s stations,” the cable company said in its reply to the FCC complaint. “After 25 days of negotiation and three offers put forth by Frontier, any of which Gray could have accepted, Gray now cries foul because Frontier did not agree with the financial terms that Gray wanted to force on Frontier and its customers.”

While Gray asserted that Frontier “removed Gray’s stations from its online channel guides several weeks before the agreement was due to expire,” and possibly even before negotiations on a new carriage deal began, Frontier said that was not the case and that it did not update its “customer-facing” channel guides until after the agreement had expired."

Mediacom Communications dodged a big retrans bullet on Monday, reaching a carriage agreement with Gray Television that involved stations in more than 35 markets across the country. Terms of the deal were not disclosed. 

Mediacom is the fifth largest cable operator in the country with about 663,000 video and 1.4 million broadband customers. 

Also Read: Retrans Season Starts With a Bang

While its Mediacom pact was negotiated without a service disruption, Gray TV is locked in a separate retrans spat involving one station -- ABC-affiliate WWSB in Sarasota, Florida -- that went dark to Frontier Communications customers on Dec. 18. Gray TV has filed a complaint with the Federal Communications Commission claiming Frontier failed to negotiate in good faith, adding that it had offered to keep the station active to Frontier customers while negotiations continued. Frontier declined that offer.

Gray Television’s total non-political (core) ad revenue last month was about $82 million; during the same month, political ads generated $175 in advertising, said Pat LaPlatney, President & Co-CEO of Gray Television, Inc. Overall, at Gray TV stations in 95 markets – even through a longer-than-ever political process which began in early 2019 – 53% of total political revenue came between October 1 and November 3 (Election Day), LaPlatney explained during the monthly webcast of the Media Institute, a Washington think tank, on Monday (November 23).

His summary confirmed earlier reports on the extraordinary reliance on broadcast political advertising this year, even with the impact of early voting in many states.

“Gray Television has never seen spending start earlier than we did for the 2020 cycle,” he added, citing ad buys in Maine for Senator Susan Collins’ reelection effort “a full year before the general election.” He also pointed to the first order (“albeit a small one”) from Democratic primary hopeful Tom Steyer in February 2019.

In remarks that large shared research data from Kantar Media’s Campaign Media Analysis Group (CMAG), which monitors political advertising, LaPlatney summarized the trends of the political arena.

He also confirmed that “sports events were a heavy focus, with many [political] advertisers triple spotting during college and NFL football games.”  He noted that many campaign advertisers ran two spots within a half-hour local newscast and many waived the separation requirements to keep their commercials from being run adjacent to rivals’ political messages.

Related:   Stations, Networks Eye Boom in Political Ad Spending

He pointed out that “the Bloomberg Effect” shattered records and created “unprecedented spending levels” during a six- or seven-week period, reaching levels that most political advertisers barely hit during the entire cycle.

From this year’s experience, LaPlatney said he believes broadcast TV will continue to play a major role in campaign advertising – even with the growing presence of digital platforms.  He also cited the continuing TV commercials in the pending Georgia races for U.S. Senate seats. 

“Campaigns turned much more to broadcast television,” he said.  ““You’ll see the pie continue to grow. Digital will grow; the broadcast share will be similar to where it ended up this cycle – at about 50%” in the next presidential election year.

“These records will be broken in 2024,” he predicted, but he admitted, “It hard for me to put that into context.”   

In response to questions about the role of NextGen TV (also known as ATSC 3.0), LaPlatney said he expects it to have “a significant effect,” citing the IP-based format for its ability to provide better targeting and click-to-donate options.

“There will be markets where ATSC 3.0 will matter,” he said – and it will increase during the next four year.

LaPlatney said that Gray TV is “fully committed” to the 3.0 rollout, but because many of its stations are in smaller markets, it may be a while before the service debuts throughout its footprint.  He said that its stations in Charlotte and Cleveland will launch NextGen TV transmissions in 2021 and he’s looking forward to “the competitive advantages we never had before.”

A new Gray TV-backed study concludes that media consolidation increases news output.

One of the knocks on broadcast mergers is that consolidation in ownership leads to consolidated newsrooms and a reduction in investment in news.

But a study from economist Mark Fratrik of Gray's 93 TV markets found that in markets where stations were permitted to join forces, as was the case with Gray's 2018 purchase of Raycom Stations, their news output increased "far more" than markets without consolidation.

That study buttresses Gray's long-standing arguments that the FCC should deregulate local station ownership limits, including allowing small-market combos. 

The study also follows an op ed for Multichannel News written by FCC Chairman Michael O'Rielly back in July asserting that the FCC's small-market consolidation policies that he supports can lead to greater news coverage and using Gray TV stations as an example.

The study included the following takeaways:

1. "In markets where a consolidation of local broadcast stations occurred, total news output increased at those stations by almost 28%, while in other markets without any consolidation, the total news output grew less than 18% over the same period. 

2. "In small markets (those ranked between 101-210 by population according to Nielsen Media Research) the rate that news output increased with consolidation was more than double that of small markets without any consolidation. 

3. "In very small markets, if Gray TV obtained an additional pre-existing Big Four affiliation, local news output increased nearly 40%. 

4. "Google earns more local advertising revenue than all commercial television stations in the United States combined, and Facebook is getting closer every year.

5. "BIA Kelsey, a leading advertising analyst, now forecasts that 2020 local broadcast advertising nationwide will be down nearly 13% compared to 2018, the last year impacted by political spending."

Gray TV has filed an amicus brief at the Supreme Court backing the FCC's appeal of a federal court's smackdown of its broadcast deregulation decision.

The Solicitor General of the United States, on behalf of the FCC, last month asked the Supreme Court to review a U.S. Third Circuit Court of Appeals decision overturning most of its media ownership deregulation. The FCC hammered the circuit for what the commission suggested was serial obstruction of what a majority of FCC commissioners had concluded was in the public interest.

Related: Media Companies Seek Review of Broadcast Dereg Decision

The FCC has concluded that allowing broadcasters more ownership flexibility in a market crowded with competing content providers serves that public interest, and told the Supreme Court that the Third Circuit's obstruction of that effort "[has] saddled broadcast markets nationwide with outdated rules that the FCC has repeatedly concluded—and that the panel has acknowledged—are preventing struggling traditional outlets from entering transactions that would allow them to retain economic vitality."

Gray is definitely on the same page.

"With Americans able to consume media from so many new sources unavailable in past eras, television audiences in small and mid-sized markets have fragmented while the costs of producing local news have exploded, saddling television stations with more expenses and less income," Gray told the Supreme Court. "But the FCC’s long-outdated ownership rules, adopted at a different time to regulate a different broadcast market, prevent these new business models from achieving their full promise."

Gray told the court it was imperative that it hear the FCC appeal, reverse the Third Circuit, and allow the FCC's "media modernization" to proceed.

Back in September, a three-judge panel of the Third Circuit threw out the FCC's fall 2017 decision to: 1) eliminate the newspaper-broadcast and the radio-TV cross-ownership rules; 2) allow dual station ownership in markets with fewer than eight independent voices after that duopoly created an opportunity for ownership of two of the top four stations in a market on a case-by-case basis (the FCC was not calling it a waiver); 3) eliminate attribution of joint sales agreements as ownership; 4) create a diversity incubator program; and 5) create some diversity mechanisms to address the court's long-standing concern.

The court said the agency "did not adequately consider the effect its sweeping rule changes will have on ownership of broadcast media by women and racial minorities," something the court had said in a previous media ownership ruling that the FCC had to do next time around.

Broadcasters and the FCC sought en banc review of that panel decision, which means the whole Third Circuit would review the panel decision, but the court denied that appeal, sending them to the Supreme Court to make their case.

Gray Television reported positive net income in the first quarter, reversing a year ago loss, but warned that the COVID-19 pandemic was having a negative impact on its operations.

Net income was $40 million, or 40 cents a share, compared to a net loss of $31 million, or 31 cents a share a year ago.

Revenue rose 3% to $534 million.

Local ad revenue was down 6% to $199 million. Retransmission revenue rose 4% to $213 million.

Gray said it did not access any stimulus or relief grants or loans from any government during the first quarter and that COVID-19 and efforts to slow its spread has had an adverse impact on its financial and operational result starting in early March and continuing into the present.

The company withdrew its guidance for investors on its expectations for 2020, but said it anticipates political advertising revenue of between $250 million and $275 million. Gray also said it expects to be cash flow positive.

New York -- Despite the number of available stations dwindling as the industry continues to consolidate, a panel of top broadcast executives at the NAB Show New York said there was still room for more deals.

Nexstar Media, which completed its $7.2 billion purchase of Tribune Media Group in September, making it the largest station group in the country with nearly 200 stations, sees some opportunities to add scale. Chairman and CEO Perry Sook said that M&A prospects are limited by federal ownership regulations, but he added that other station groups are expected to seek additional scale.

Sook noted that the available pool of stations is shrinking: In 2001 there were 36 companies in local TV that had a national reach of 2% or greater. Now that has dwindled to about a dozen companies.

“There are fewer companies left to buy,” Sook said. He added that “M&A is not as easy as hitting button and buying a stock. I don’t know what’s on the horizon, but I predict there will be M&A.”

Meredith Local Media Group president Patrick McCreery said that he expects that outside money, particularly from private equity groups, will continue to flow into the sector, beefing up the M&A opportunities.

“It [the broadcast business] isn’t new and it isn’t sexy,” McCreery said. “But it is profitable.”

The executives seemed to take exception with analysts that have predicted that one of the more consistent growth engines in the business -- retransmission consent revenue -- was on the decline.

At the TVB Forward conference last month Wolfe Research managing director Marci Ryvicker predicted that retrans revenue would slow to around 7% growth after 2024, flattening out in later years. Other analysts have also predicted a slowdown, especially as cable operators continue to lose video subscribers.

Sook said that he still sees double-digit percentage growth on the retrans front, with McCreery and Gray TV president and co-CEO Patrick LaPlatney in agreement.

Driving that optimism is the belief that broadcasters account for about 35% of TV viewership while capturing just 18% of the revenue. And though achieving total parity -- which Ryvicker predicted would mean a consumer’s retrans bill would rise to $28 per month -- isn’t necessarily in the cards, the panelists believe there is room to get closer.

“The numbers are rough, but we think there is some runway there,” LaPlatney said.

Sizing Up Cannabis Ad Prospects

On the advertising front, the panelists said the nascent move toward impressions-based advertising, which would make it easier for advertisers to buy a broadcaster's full audience across all platforms, would result in a 5% to 10% increase in ad revenue easily. Even before that, though, they said there is still life in traditional broadcaster ad categories.

While auto ads have declined along with car sales, execs said that other segments have picked up, including legal and professional services. McCreery said that professional services were on par with auto for the first time ever at Meredith stations in calendar Q1 and Q2. Broadcasters are expected to take a smaller bite of political ads in this cycle, though, as digital grows. Some predict broadcast’s share will drop from 66% to 57% of total political ad revenue this year. Station execs said they were taking action to try to address the decline. McCreery said at Meredith, which also has a publishing unit, direct mail ads could factor into to taking the edge off some of the political declines. 

Sook said growth in TV ad revenue is usually fueled by the emergence of a new segment, something he says he hasn’t seen yet. But McCreery said there is a potential windfall in the cannabis category. “None of us want to touch it with a ten-foot pole right now because of the legislation, but that’s a pot of money I’d like to get my hands into,” McCreery said.

There are legal hurdles, though, as McCreery acknowledged. Cannabis sales outside of medical purposes are only legal in a handful of states and are illegal at the federal level. Sook said Nexstar has been approached about running ads in the past, and has declined.

“We’ve been approached, and we’ve said we’re a federally regulated entity just like the banks and until it’s deemed OK to do business with these folks, we’ve got more at risk than that,” Sook said.

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Gray TV said it has completed its $3.6 billion purchase of Raycom Media, creating a new station group powerhouse with TV properties in 91 markets across the country.

Gray agreed to purchase Raycom in June, in a deal they said would create the largest owner of top-rated TV stations in the country. According to Gray, it now owns the first or second highest rated TV station in 85 markets, according to Comscore’s audience measurement data between December 2017 and November 2018.

In total, Gray owns and/or operates television stations and digital properties in 91 markets across the country, including 150 affiliates of the Big 4 networks.

Back in June, Gray said it would divest of nine TV stations in overlap markets in Knoxville, Tenn.; Waco, Texas; Albany, Ga.; Toledo, Ohio; Tallahassee, Fla.; Augusta, Ga.; Panama City. Fla.; and Dothan, Ga. to comply with Federal Communications Commission local ownership rules. Those stations were sold to Tegna, Scripps and Lockwood Broadcasting.

After the close Gray chairman and CEO Hilton Howell became the combined company’s executive chairman and CEO, and former Raycom president and CEO Pat LaPlatney became Gray’s president and co-CEO. Former Raycom president and CEO Paul McTear, joined Gray’s Board of Directors. Gray’s chief operating officer, Local Media Bob Smith will continue to oversee station operations and Jim Ryan will continue his role as chief financial officer

Nick Waller continues as chief administrative officer and former Gray general counsel Rob Folliard becomes vice president, Government Relations and Distribution. In other management news, Greg McCastle serves as SVP, Sales Strategy and Development; and former Raycom executive Dave Burke is Gray’s new SVP and Chief Technology Officer. Dianne Wilson, also formerly of Raycom, is Gray’s new Vice President, Employee Relations, and will work closely with Jan Goldstein who continues as Gray’s Vice President, Human Resources. Greg Conklin continues in his role as Gray’s Vice President, Programming.

Also at closing, Gray promoted Mike Braun to SVP, Gray Digital Media; Becky Meyer to SVP, National Sales; Mike Jones to VP, Political Sales; and Karen Youger to VP, Sales Operations, overseeing Traffic, the Programming Hub, and Matrix.

Gray television’s proposed $3.6 billion purchase of Raycom Media is the latest in what is becoming a long line of mergers in broadcast TV. Though both parties have touted advertising and viewership synergies, for pay TV distributors the deal’s impact means mostly one thing: more retransmission-consent fees to pay.

The Gray-Raycom merger is just the latest in what has been a string of broadcast station group takeovers. The largest, Sinclair Broadcast Group’s pending $3.9 billion purchase of Tribune Media to create a 215-station behemoth covering 72% of the country, is still being hotly debated as it winds through the regulatory process.

The Gray deal, which would vault the companies from the No. 6 and No. 7 spots among broadcast station groups to the third position, behind Sinclair and Nexstar Broadcasting, would create a third retransmission consent powerhouse.

More Stations, More Clout

Presenting to investors and analysts, Gray estimated gross retransmission-consent revenue for the combined company would be about $573 million annually.

About half of that money goes back to the respective network affiliates. But it’s all money that distributors have to pay.

In short, more stations means more retrans clout.

The American Cable Association, which represents about 700 small and midsized independent cable operators across the country, estimated in February that retrans fees could rise 88% by 2020. As broadcasters continue to consolidate, that can only get worse.

“As ACA and others have repeatedly observed, broadcast consolidation increases a broadcaster’s leverage in retransmission-consent negotiations,” the ACA said in a filing with the Federal Communications Commission earlier this year against the Sinclair-Tribune merger. “This, in turn, leads to higher rates paid by MVPD subscribers and other harms to the public.”

On a call with analysts, Gray TV chief legal and development officer Kevin Letek said any Raycom retrans contracts would fall to the higher Gray TV rate card after the deal closes — meaning some markets could see a step-up in fees right away.

“[W]e have after-acquire clauses, so any operator that has a contract with Gray today will have the Raycom stations fall into them,” Letek said.

The deal will also serve to consolidate more retrans clout within the top three station groups.

In 2017, Nexstar reported retrans revenue of $995.8 million, a 152% increase from the year before. Tribune netted retrans fees of $412.3 million for 2017, a 23% increase. Sinclair, which does not break out retrans fees separately, was estimated by Wells Fargo to have taken in about $1 billion in retrans fees in 2017.

Combined, the three mega-broadcasters would control about $2.5 billion in retrans revenue. That’s almost 30% of the total estimated haul of $9.4 billion for that year, according to S&P Global Market Intelligence.

Though retrans fees were expected to level off in the next few years after a decade of exponential increases, for some broadcasters the key to keeping retrans increases healthy has been to amass more stations in more markets.

With Raycom, Gray TV will increase its owned and operated stations to 142 in 92 markets, covering 24% of the TV homes in the U.S. Many of those markets will be small — like Ottumwa, Iowa, and Fairbanks, Alaska — but the combined company will have a few top DMAs like Tampa-Sarasota, Fla.; Cleveland; and Charlotte, N.C.

From a retrans and advertising standpoint, the deal puts tremendous power in Gray’s hands: it will own the No. 1 or No. 2 TV station in about 85 of those 92 markets after the deal closes.

For cable operators, that usually means tough retrans negotiations.

“I don’t see any way these mergers lead to lower consumer prices,” Mediacom SVP of government and public relations Tom Larsen said. “Broadcast TV is quickly becoming a luxury that more and more Americans can no longer afford.”

Gray already has some of the highest per-subscriber retrans fees among publicly traded station groups: about $2.23 per subscriber per month in Q1 2018, according to S&P Global Market Intelligence head of research Robin Flynn.

Gray estimates its retrans haul will rise about $15 million in the first year alone after the deal closes, as Raycom stations step up to its rates.

“Overall, that increase (and any other future station consolidation with similar economics) will boost industry retrans revenues, which we had previously estimated would reach $10.2 billion in 2018 and $10.8 billion in 2019, versus $9.4 billion in 2017,” Flynn said.

That’s just the tip of the iceberg. Sinclair’s purchase of Tribune Media would further distance the station group from its peers, giving it more than 200 owned and operated stations covering 72% of total TV homes.

Higher Prices to Consumers?

Sinclair has said it would divest of some stations — mainly those where it has a marketing agreement but little or no ownership — but it’s still expected to dominate the scene.

Much of the outrage over the Sinclair-Tribune merger has concentrated on its ultra-conservative programming and its unprecedented reach. Some critics, though, have pointed to its retrans dominance as potentially harmful to consumers.

In coming out against the Sinclair merger, the American Civil Liberties Union said the deal “would give Sinclair sufficient market power to drive smaller broadcasters out of business, hitting rural consumers especially hard.” After that, “Sinclair will step up its ‘take it or leave it’ retransmission offers to small cable stations, which will result in higher prices passed on to consumers and a crowding out of stations that do not or cannot afford to submit to strong-arm negotiating tactics.”

Broadcaster Gray TV said it has reached a deal to acquire the TV and radio assets of Schurz Communications in a deal valued at about $442.5 million. The transaction comes on the heels of Media General’s $2.4 billion agreement to acquire Meredith Corp.

The deal is the latest in what could be a new push for consolidation in the broadcast market. Gray TV has about 76 stations in 45 markets in the South, Southwest, Midwest and West. With the addition of Schurz, Gray will grow to about 86 stations in 49 markets in 28 states, adding properties in Wichita, Kans., (KWCH-TV, CBS); Roanoke-Lynchburg, Va., (WDBJ-TV, CBS); Springfield, Mo., (KYTV, NBC); South Bend Ind. (WSBT, CBS); Rapid City, S.D., (KOTA, ABC); and Anchorage, Ak., (KTUU, NBC). WDBJ in Roanoke-Lynchburg, Va., is where two journalists – Alison Parker and Adam Ward – were murdered on air by a former employee in August.

The sale comes as some analysts believe that a new consolidation wave could sweep the broadcast business, as stations look to increase their leverage with content providers.

In a statement Gray said it would divest two stations – KAKE-TV in Wichita, WNDU in South Bend – to comply with Federal Communications Commission regulations. In addition, Gray said it would combine its existing operations in Georgia and South Dakota with Schurz’ stations in those markets. It plans to offer Schurz’s Augusta, Ga., station WAGTV in the upcoming FCC spectrum auction.   

"Today is a momentous day in Gray's 118-year history," said Gray CEO Hilton H. Howell, Jr., in a statement. "Through the Schurz transaction, we will significantly expand the quality of our portfolio of leading television stations. We welcome more dedicated reporters, account executives, and technologists to our growing family. Quite simply, Gray's existing stations will make the Schurz stations stronger, while the Schurz stations will make our existing stations better."

Schurz, based in Mishawaka, Ind., owns TV and radio stations, newspapers and four cable systems in Arizona, Florida and Maryland with about 90,000 subscribers.  Gray said Schurz’s non-broadcast assets would not be included in the sale. The company was created in 1872 when Alfred B. Miller and Elmer Crockett founded the South Bend Tribune, and their descendants still own the firm today.

"In a rapidly consolidating industry where size and scale matter more than ever before, we have come to the realization that Gray Television would be the best steward to ensure our stations succeed over the long-term," explained Todd Schurz, President and CEO of Schurz. "Gray knows how to operate top stations in small and medium-sized markets, and they have an entrepreneurial and decentralized culture," he continued. "Moreover, Gray shares our commitment to local communities, staffs, journalistic ideals, and the broadcasting industry. Being part of a larger company with these important credentials will create more opportunities for employees and the communities that we all love."

Cox Communications customers in Florida, Nebraska and Kansas could miss some of the National Football League playoffs this weekend if a blackout of four television stations owned by Gray TV holds through the weekend.

Gray stations WECP (CBS) in Panama, Fla., WOWT (NBC) in Omaha, Neb., KAKE (ABC) in Wichita, Kan., and WIBW (CBS) in Topeka went dark to Cox customers on Jan. 6 after the parties failed to reach a retransmission consent agreement.

The deal originally was scheduled to expire on Jan.1, but Gray, sensing that an agreement was near, extended the carriage pact to Jan. 6.  But as the new deadline approached, both sides were far apart on price.

“We have been diligently negotiating with Cox Communications to reach a fair deal,” Gray TV said in a statement. “Unfortunately, Cox Communications has refused to reach a fair deal with us.”

Gray TV added that the terms it was seeking from Cox were “fundamentally the same terms that have allowed us to reach deals with distributors nationwide.” Gray added that it has never had a major blackout with a provider.

Cox claims that Gray is asking for price increases as much as 400% for what it characterizes as programming that is already available free-to-air. Cox said in a statement that it is actively negotiating to get the channels back at a reasonable price.  

If a deal isn’t reached soon, Cox customers in those areas could miss the AFC Divisional Playoffs, with the first round pitting the Baltimore Ravens against the New England Patriots on NBC at 4:30 p.m. Jan. 10, followed by the Indianapolis Colts vs. the Denver Broncos at 7 p.m. on CBS Jan. 11.

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