Small-Market Angst

Perry Sook is feeling a bit left out these days. On June 2, as even a casual reader of this magazine must know, the FCC relaxed an assortment of its media-ownership rules, giving most broadcasters and newspaper publishers a chance to own more stations in more places. Most broadcasters, not all.

The FCC did little for small-market TV broadcasters like Sook, who could care less about the 35% cap and newspaper crossownership and the other facets of the rules that have dominated headlines here and elsewhere.

Sook is president and CEO of Nexstar Broadcasting Group, which is trying to build a big group from small stations. The Irving, Texas-based company owns 14 stations (and has purchases for two more pending) in markets as large as Wilkes Barre-Scranton, Pa. (No. 53), and as small as San Angelo, Texas (196). It also has its hand in the operation of second stations in half of the markets through joint sales agreements and other contractual arrangements.

Sook had wanted the FCC to OK ownership of two stations—duopolies—in any market with four or more stations. The FCC let him down. In effect, the agency affirmed its ban on small-market duopolies by prohibiting combinations among a market's four top-rated stations. Many of the markets that Sook operates in (or would like to operate in) have only four stations.

"They didn't go far enough," Sook says. "We would like to enjoy the full economic benefits of dual ownership just like broadcasters in the larger markets."

Sook thinks the FCC, in continuing to ban small-market duopolies, is defeating its own goal of encouraging more TV news and public-affairs programming. As his own company can attest, control of two stations by one company can lead to more news, more public affairs.

In Peoria-Bloomington, Ind. (market No. 117), Sook owns WMBD-TV and has a deal to produce news on the Fox affiliate, Sinclair's WYZZ-TV. The deal has resulted in the market's first 9 p.m. news, two more news crews on the street and a new public-affairs program. Nothing wrong with that.

According to Sook, some small-market stations cannot afford to produce news, even though they carry network affiliations. At the same time, other stations in the same market could improve their profit margins if allowed to own and program news on a second station.

Sook says that some folks at the FCC labor under the misconception that all network-affiliated TV stations now offer news and that permitting duopolies can only lead to fewer independently produced newscasts. The fact is, says Sook, many small markets have network-affiliated stations that don't bother with news. To prove it, he took a close look at all the markets from No. 51 (Jacksonville, Fla.) to No. 210 (Glendive, Mont.). Those 160 markets have an average of just 2.49 newscasts per market. There are plenty of markets below 150 with just three, two or one newscasts.

Give him the freedom to buy stations in some of those markets, Sook is saying, and he will begin broadcasting news on them. Others will do likewise. Over time, that average will creep upward. The FCC may lose independent owners in these markets, but it will end up with more newscasts. And what good is an independent owner if it doesn't offer news and provide a forum for the community?

To placate Sook and others, the FCC says it will consider waivers to the small-market duopoly ban under certain conditions. For instance, it would give points to broadcasters who promise to increase news and public-affairs programming or speed the transition to digital.

Sook is unimpressed. The policy leaves too much open for interpretation. "The waiver process would be as protracted as it is now."

What's needed are specific criteria and a presumption that, if the criteria are met, the waiver will be granted, Sook says. Only by removing some of the uncertainties from the process will broadcasters be able to line up the financing necessary to make duopoly deals, he maintains.

Sook is continuing his campaign for small-market duopoly relief with a petition for reconsideration, which will include his small-market news analysis and that 2.49 average.

He says he doesn't know whether it will do any good. "I'll just bring additional facts to light and hope to get a fair hearing."

Jessell may be reached at hjessell@reedbusiness.com