As much of the media business shifts focus to building global platforms, the CEO of the company that is about to become the largest owner of TV stations in the country is passionately preaching the gospel of local.
Perry Sook, president and CEO of Texas-based Nexstar Media Group, is a seasoned broadcast TV executive who steered Nexstar’s $4.1 billion acquisition of Tribune Media. That deal, if approved by regulators, will bring together more than 200 stations under the roof of the company Sook founded in 1996 with a single station in Scranton, Pa.
“If you’ve ever watched ‘The Office,’ everything they said about Scranton and Wilkes-Barre (Pennsylvania) is true,” jokes Sook, who is a native of the Keystone state.
Nexstar pounced on Tribune after the latter’s previous sale agreement with Sinclair Broadcast Group collapsed amid regulatory opposition and acrimony between Sinclair and Tribune executives. (Nexstar had also been in the hunt in the first go-round for Tribune Media).
Sinclair’s deal raised hackles among media watchdog groups because of its size and the company’s history of promoting conservative commentary and politically charged perspectives in its newscasts. Sinclair has also been criticized for consolidating and centralizing management of its 170-plus TV stations.
Nexstar’s acquisition, unveiled Dec. 3, is also sure to be opposed by advocates looking to curb media consolidation in general. But it’s not likely to draw the same political and PR fire as Sinclair’s efforts to absorb Tribune. Nexstar’s profile in the TV biz will rise significantly if it completes the Tribune deal. The bulk of Nexstar’s holdings are network-affiliated stations in the small and mid-sized TV markets. Tribune will vault the company into the nation’s three largest markets — New York, Los Angeles, and Chicago — for the first time.
Sook maintains that Nexstar’s strategy is to stay laser-focused on local needs — a function that is vital at a time when the biggest traditional media companies are adjusting to the new competitive pressures from the FAANG digital giants. Wall Street has been generally positive on the Nexstar-Tribune nuptials, sending the stock up 12% on deal rumors in late November, although share prices have fallen along with the broader market in recent weeks.
Nexstar has grown rapidly through acquisitions in the last five years. Sook aims to take advantage of scale at the state level by allowing multiple stations to share a single news bureau in the state capital and in Washington, D.C., as well as to channel resources to other key coverage areas. But beyond pooling regional resources where it makes sense, Nexstar has no network ambitions and no plan for a broad-based streaming platform.
“We have no aspirations to be a national anything,” Sook says. “Our company goes from Burlington, Vermont to Honolulu and each of those communities have different needs and different tastes. We do three things that are vitally important: We produce local news content. We deliver entertainment and information. And we help local businesses sell stuff. Those are our reasons to exist.”
Sook recognizes the challenges facing local TV stations, which remain highly dependent on local advertising dollars that are subject to the cyclical economic tides. Competition from alternative cable and streaming outlets has dented ratings across all of broadcast TV. But well-managed local stations with strong news operations still enjoy healthy profit margins, Sook maintains. So Nexstar wants to be the undisputed king of local media.
“I want to build a moat around the local aspect of what we do,” he says. The TV stations Nexstar owns have deep roots in their market, he stresses. Sook cited AOL’s failed experiment in trying to build a network of local news sites dubbed Patch as evidence of the value of locally based media outlets with well-honed infrastructure and newsgathering operations. “Patch proved you can’t put 60 people in a room and write really neat content. It’s prohibitively expensive to startup (competitors) against us.”
Sook has worked in local media for his entire career. He got his start as a radio DJ in Punxsutawney, Pa., and later briefly worked as a news anchor in Clarksburg, West Virginia. But he was drawn to the sales side of the business. He worked for Cox Broadcasting and the national advertising sales rep firm Telerep before becoming a broadcast entrepreneur in his own right. “I always wanted to run things,” he says.
Nexstar went public in 2003 with about $65 million in earnings; this year the company will deliver more than $1 billion. In 2012, amid a wave of buying and selling among broadcasters, Sook saw the company at a grow-or-die crossroads. He decided to grow. Prior to Tribune the company’s biggest acquisition was Media General, which closed in 2017. Sook now owns about 8% of the company. “I’m the least diversified person I know,” he quips.
Nexstar has a reputation in the industry for being frugal when it comes to salaries and in enforcing operational discipline. Sook proudly emphasizes that stations Nexstar has acquired during the past five years have generally added about 30% more locally generated programming than they had before. And Nexstar has been investing in news infrastructure.
“Our local content has become more rarefied air with diminution of newspapers and news talk radio,” Sook says. “A lot of time we’re one of maybe three or four places people can go to get enterprise reporting. The more local we can be, the better we can be.”
Nexstar is bracing for what will surely be a long regulatory review of the Tribune acquisition. Sinclair’s handling of the process between May 2017 and August 2018 provides a roadmap of what not to do. Sook says Nexstar stands ready to make necessary divestitures to comply with FCC ownership rules — an area where Sinclair’s brazen maneuvering wound up derailing the entire deal.
Sook does get animated when comparing the regulatory environment for local TV stations with the lack of marketplace restrictions on its most fearsome competitors for advertising dollars: Facebook and Google. He argues that local TV stations owners should be allowed to grow in the current environment because they are so heavily regulated. To remain competitive, Sook maintains, station owners have to achieve economies of scale.
“My market cap is about $4 billion. That’s coffee money for Facebook and Google,” Sook says. “I think it’s in the nation’s interest to have regulated entity in a position to compete against unregulated entities that have unfettered access to local households.”