Nexstar has set $1.3 billion in station sale agreements with Tegna and E.W. Scripps Co. as part of its divestiture plan as it acquires Tribune Media. The list of stations to be sold include CW affiliates in New York, Phoenix and Miami.
Tegna has agreed to buy 11 TV stations — mostly Fox and ABC affiliates — serving eight medium-sized and small markets for $740 million. Scripps is paying $580 million for eight stations, including three top 20 markets: WPIX-TV New York, KASW-TV Phoenix and WSFL-TV Miami.
The deals are contingent on Nexstar closing its $4.1 billion acquisition of Tribune Media, which will make Nexstar the nation’s largest TV station owner by far. Nexstar projects the Tribune deal will close by year’s end, although it is still winding through the regulatory review process at the FCC and Justice Department.
“The proposed divestitures announced today mark an important step in fulfilling Nexstar’s commitment to regulatory bodies to divest certain television stations in order to comply with the FCC local and national television ownership rules and to obtain FCC and Department of Justice approval of the proposed Nexstar / Tribune Media transaction,” said Perry Sook, Nexstar’s chairman, president and CEO.
One big question hanging over the transaction is whether Nexstar and Fox will haggle over station sales and Fox affiliation renewal deals.
Nexstar and Tribune-owned stations both have numerous Fox affiliation pacts coming up for renewal this year. Fox is believed to have set its sights on buying three Fox affiliates from Nexstar — in Seattle, Denver and Cleveland — because those are lucrative NFL markets. If Nexstar balks at selling, Fox could play hardball in affiliation renewal negotiations.
The newly christened Fox Corp. — the surviving entity after Disney’s acquisition of 21st Century Fox — is relying on gains in the reverse compensation fees that Fox Broadcasting Co. affiliates pay the network in exchange for programming. Fox Corp. has every incentive to push for tough terms at a moment when Nexstar can ill afford to lose network affiliations after spending so much to acquire Tribune’s 42 TV stations.
A source close to the situation said there are no station sale talks between Nexstar and Fox at present. Nexstar is still working on a deal to divest two stations in Indianapolis.
Nexstar has to sell a number of stations in order to stay under the national ownership cap of 39% of U.S. TV households. The Tribune deal would put Nexstar well over that limit, even with the reach discounts applied to UHF stations. New York’s WPIX is one of the few VHF stations included in the deal, which means that selling the outlet allows Nexstar to reduce its reach footprint by 6.4% in one fell swoop. At the same time, a VHF TV station in the nation’s largest TV market is a rare asset, so there is some surprise that Nexstar is willing to part with WPIX.
The stations set for sale to Tegna are:
- WTIC/WCCT FOX/CW affiliates in Hartford-New Haven, CT
- WPMT FOX affiliate in Harrisburg-Lancaster-Lebanon-York, PA
- WATN/WLMT ABC/CW affiliates in Memphis, TN
- WNEP ABC affiliate in Wilkes Barre-Scranton, PA
- WOI/KCWI ABC/CW affiliates in Des Moines-Ames, IA
- WZDX FOX affiliate in Huntsville-Decatur-Florence, AL
- WQAD ABC affiliate in Davenport, IA and Rock Island-Moline, IL
- KFSM CBS affiliate in Ft. Smith-Fayetteville-Springdale-Rogers, AR
The stations set for sale to Scripps are:
- WPIX CW affiliate in New York
- KASW CW affiliate in Phoenix
- WSFL CW affiliate in Miami
- KSTU Fox affiliate in Salt Lake City
- WTKR/WGNT CBS/CW affiliates in Norfolk-Portsmouth-Newport News, VA
- WXMI Fox affiliate in Grand Rapids- Kalamazoo-Battle Creek, MI
- WTVR CBS affiliate in Richmond-Petersburg, VA
Tegna noted that some of the stations are in political hot-spot states like Pennsylvania and Illinois. That’s advantageous as broadcasters become more dependent on revenue from political and issue-oriented advertising.
“These stations are an excellent strategic and financial fit and bring additional geographic diversity to our portfolio of leading stations,” Tegna president-CEO Dave Lougee said. “They add four additional key markets to our strong political footprint as the 2020 presidential election gets underway. We continue to invest in growth and remain well positioned to capitalize on consolidation opportunities that are both strategic and financially prudent.”