FCC Approves Nexstar-Media General Merger

The FCC's Media Bureau has approved the Nexstar-Media General merger. That came in an order published on the FCC website Wednesday.

Both broadcasters had asked the FCC to waive its rule preventing a decision on the deal while the spectrum auction was still in progress.

The commission agreed and at the same time approved the merger.

Citing the proposed spin-offs to make the merger comply with local and national ownership rules, the FCC concluded that the merger is OK, and it would waive the prohibition on completing the deal during the auction.

Among the public interest benefits the Media Bureau included Nexstar viewers' access to Media General's D.C. news bureau and the establishment of state news bureaus. It gave "minimal weight" to cost savings and efficiencies or assertions that the deal would result in lower programming costs or more diverse programming.

The FCC also gave little weight to their contention that the deal would make it a more attractive partner to MVPDs--a number of those MVPDs opposed the deal--and would have more "strategic alternatives:" outside of broadcasting. "Nexstar has provided insufficient information for us to verify this benefit," the bureau said.

But given the expanded news presence, the FCC concluded that the companies had "adequately" established the deal was in the public interest.

At the same time, the FCC denied the petition to deny the deal filed by the American Cable Association, Cox and Dish.

Cable and satellite operators had argued that the merger would result in a retransmission consent bargaining imbalance that would raise the threat of blackouts and higher retrans fees, "to the detriment of their outlets, consumers and the public interest. But the bureau concluded that given all the divestitures DOJ and FCC rules required, "the transaction will not significantly change whatever bargaining leverage the Applicants currently have in the affected markets.

But while the FCC said that there was not basis for finding undue leverage, it conceded that the marketplace was changing that did not foreclose the possibility "of looking at the rising retransmission fees, black outs and other related issues..."

It also rejected the argument that it should disallow after-acquired clauses, which allow new owners to apply their retrans rates to stations they acquire in markets where they already have a station and an MVPD retrans deal.

While DISH had argued that such clauses reset retrans fees at a higher rate without any increased value in programming, the FCC pointed out those clauses were negotiated outside of the merger transaction and said "there is not apparent reason for the Commission to step in and deny one party the benefit of the negotiated bargain absent evidence of anticompetitive practices of other wrongdoing not apparent here."

Related: ACA to FCC: Deny Nexstar-Media General Waiver

The Justice Department on Sept. 2 signaled that the deal was OK on antitrust grounds, with the provision that Nexstar must first divest a handful of stations. Justice vets deals for antitrust issues. The FCC's broader public interest review also concluded the deal was OK with those spin-offs.

The Justice Department's antitrust division said that without the divestitures, the $4.6 billion purchase would lead to higher spot advertising prices and retransmission consent fees.

The DOJ filed suit against the transaction and simultaneously filed the settlement, which is how such settlement deals work.

Per DOJ, Nexstar is selling WBAY Green Bay to Gray Television; WSLS Roanoke-Lynchburg to Graham Holdings; KADN and KLAF-LD Lafayette to Bayou City Broadcasting; WTHI Terre Haute to USA Television MidAmerica Holdings; WFFT Fort Wayne to USA Television; and KWQC Quad Cities to Gray.

In addition, to comply with the FCC's national audience reach cap (39%), Nexstar and Media General have also agreed to divest KREG-TV Denver (Nexstar), WCWJ Jacksonville (Nexstar), KIMT Rochester, Minn. (Media General), WLFI-TV Lafayette, Ind. (Media General); and KQTV St. Joseph, Mo. (Nexstar).

Nexstar and Media General sought a waiver of that Prohibited Communications Rule in hopes the deal approval would not have to wait until the end of the auction to get a decision. They pointed out that they were unable to file the transfer application before the Jan. 12 deadline for applying to the auction. On Jan. 27, Nexstar announced a deal, trumping the previous agreement between Media General and Meredith.

“We appreciate Chairman Tom Wheeler and the FCC Commissioners’ work, as well as the work of the FCC staff, in granting the approval of the Media General transaction," said Nexstar President Perry Sook following the decision. "Upon closing the transaction Nexstar will continue its initiatives across the combined entity to deliver superior, unique local content and services to viewers and businesses in each of the communities it serves. Over the last two decades we have grown Nexstar based on our commitment to deliver exceptional service to the local communities where we operate, expansion through accretive acquisitions, enhanced operating results of acquired stations and digital media properties, and an overarching focus on localism. To this day, this focus has been fundamental to our success and we intend to extend our legacy of delivering exceptional service in our markets and increased value to our shareholders when the highly accretive Media General transaction is complete.”

ACA say a silver lining in the timing of the announcement. “The American Cable Association is pleased that the Media and Wireless Telecommunications Bureaus allowed long-standing and on-going retransmission consent negotiations over agreements set to expire at the end of 2016 to conclude prior to approving Nexstar's deal,” said ACA President Matthew Polka.

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.