The FCC has voted to approve Nexstar’s $4.1 billion takeover of Tribune Media, paving the way for Nexstar to become the nation’s largest owner of television stations with more than 200 outlets serving a wide swath of the country.
FCC commissioners voted 3-2 to approve the merger agreement that was reached in December. Nexstar’s pact to buy Tribune came a few months after Tribune’s deal with Sinclair Broadcast Group fell apart over regulatory concerns. The FCC’s greenlight hinged on Nexstar’s previously announced plan to divest 21 stations in markets where Tribune assets would put the company over regulatory ownership limits.
Nexstar, based in Irving, Texas, has set agreements with Tegna, Scripps and Circle City Broadcasting to sell off stations. Nexstar is to acquire a total of 42 stations from Tribune, although some of those will be sold off to comply with the FCC’s local and national ownership limits.
Nexstar said Monday the FCC approval means that the transaction and divestitures will close “shortly,” according to a company statement.
Also on Monday, Nexstar announced that has struck new affiliation deals with Fox Corp. for the 39 Fox affiliates owned by Nexstar and Tribune. Nexstar and Fox are still expected to engage in some station swaps as part of that agreement. With the Tribune purchase, Nexstar will own Fox affiliates covering 39% of U.S. TV households, or about 17.5 million viewers. Fox is using its leverage with Nexstar — which can ill afford to lose the Fox affiliation for its stations — to acquire Nexstar stations in NFL markets such as Seattle, New Orleans and Milwaukee.
The Nexstar-Tribune deal stirred opposition from media watchdog groups and others concerned about the consolidation of media ownership. But it did not spark the heated opposition that helped torpedo the Sinclair-Tribune transaction, which was ultimately scuttled by the FCC after Sinclair took an aggressive stance toward divestitures.
Commissioner Michael O’Rielly echoed the arguments of many broadcasters who complain that the local TV marketplace is heavily regulated while tech giants are able to operate with free rein in areas that compete directly with local stations.
“Any opportunities to enable broadcasters to compete more effectively should therefore be encouraged and embraced,” O’Rielly said in a statement discussing his decision to approve the merger. “It is ironic that we nonetheless spend so much effort scrutinizing whether or not a station is a four or five (or six) in its market, and whether that should even be a factor. Frankly, does this even make a difference when the high-tech giants are competing with the highly-regulated broadcasters for advertising dollars in nearly every local market across the country and with dramatically different economies of scale?”
Commissioner Jessica Rosenworcel, who voted against the deal, said the consolidation raises concerns about the loss of local control and public interest obligations at a time when many communities are also losing vital news and information sources as newspapers shutter.
“We live in a world of infinite content. But there is still something special about local broadcasting. There is something unique about a signal in the air with the responsibility to serve community at its core,” Rosenworcel said. “It’s one of the reasons why broadcasting remains a dominant force in local news. It’s also why broadcasting has special status under the law — and at the FCC we have long-standing duties to ensure that the use of our airwaves is consistent with the values of localism, competition, and diversity.”
Clearing the FCC hurdle means that Tribune Media is in its waning days as a standalone company. Tribune has been unwinding itself over the last two years after enduring a four-year bankruptcy process that ended in December 2012.
“We’re very pleased with today’s decision by the FCC, which enables us to clear the last remaining regulatory hurdle in our path. We look forward to closing our transaction with Nexstar very soon,” said Tribune CEO Peter Kern.