The FCC has approved the merger of Nexstar and Tribune, essentially putting its public interest stamp on the Justice Department's settlement with broadcasters. The merger creates the country's largest local TV broadcast station ownership group.
The vote was 3-2 along party lines and came on day 214 (Monday, Sept. 16) of the FCC's informal 180-day shot clock for making merger decisions.
The Commission concluded that the proposed merger would provide "several public interest benefits to viewers of current Tribune and Nexstar stations. For example, viewers would benefit from their local stations having increased access to Nexstar’s Washington, D.C., news bureau and state news bureaus. Additionally, Nexstar demonstrated that it would invest savings resulting from the merger into its stations, including investments in ATSC 3.0, the next-generation television broadcast standard."
It also concluded that "in the Indianapolis and Norfolk markets, the transfer of preexisting combinations of two top-four ranked broadcast television stations to Nexstar and Scripps, respectively, would be in the public interest." Cable ops had opposed those top-four combos.
Broadcasters have argued they need to heavy up to keep up with more lightly regulated MVPD and over-the-top video delivery powerhouses and FCC chair Ajit Pai, who circulated the approval order earlier this month, has often pointed to the wealth of competition and broadcast regs dating from an earlier era in justifying broadcast deregulatory moves meant to allow them to own more stations.
Nexstar had told investors and the SEC it expected the deal to close by the end of this month. The Justice Department signed off on the deal July 31.
The spin-off markets are Davenport, Iowa; Des Moines, Iowa; Ft. Smith, Ark.; Grand Rapids, Mich.; Harrisburg, Pa.; Hartford, Conn.; Huntsville, Ala.; Indianapolis, Ind.; Memphis, Tenn.; Norfolk, Va.; Richmond, Va.; Salt Lake City, Utah; and Wilkes-Barre, Pa.
On Nov. 30 of last year, Nexstar struck the deal to buy Tribune stations for $7.1 billion. The merger had been approved by both boards.
The Tribune stations became available after the FCC designated Sinclair's attempt to buy them for hearing by an FCC judge, citing concerns about whether Sinclair had misrepresented the deal to the FCC.
Justice, in announcing its settlement with the companies, praised their "commitment to engage in good faith settlement talks from the outset of our investigation," a departure from the contentious time it said it had with Sinclair.
Per that settlement, Nexstar-Tribune is spinning off TV stations in 13 markets, a requirement that Justice based in part on its assertion that without those, the combined company "would likely charge cable and satellite companies higher retransmission consent fees to carry the combined company’s broadcast stations, resulting in higher monthly cable and satellite bills for millions of Americans," as well as higher spot prices in the divestiture markets.
Nexstar and Tribune had already told the FCC it would be spinning off stations in most of those markets anyway, but in Indianapolis it had asked to be allowed to retain Tribune's existing pair of top four stations.
Justice argued that “without the required divestitures, Nexstar’s merger with Tribune threatens significant competitive harm to cable and satellite TV subscribers and small businesses."
That includes information on market share of Google's Ads Data Hub, Ad Mob and Ad Sense and "each of the competitors in any market in which the company offers or sells" those services.
"On the merits of the item, it is clear that this transaction can be expected to be a win for viewers due to certain efficiencies and consumer opportunities to be gained," said commissioner Michael O'Rielly in approving the deal. "Nexstar has a history of increasing news content on the stations it acquires, especially by providing stations access to its state and local public affairs resources. I expect it will do the same here, consistent with commitments made in the transfer applications. Further, Nexstar has been a lead proponent of ATSC 3.0 and plans to increase investment to upgrade the purchased properties to ATSC 3.0 capabilities. This should not be overlooked, given the potential consumer benefits."
O'Rielly was not particularly happy with Justice's spin-offs, "Many of these stations, if not all, should have been allowed to transfer to Nexstar. Forcing so many to be spun off is more consistent with the bygone era of black and white television and a dilapidated, out-of-touch philosophy than the modern high-tech world in which we live," he said.
Commissioner Jessica Rosenworcel said in her dissent that the FCC had failed to do its public interest due diligence.
"In the transaction before us, Nexstar Broadcasting acquires Tribune Media Company and its 41 full-power television stations," she said. "Following a handful of divestitures, the newly combined licensee will hold 144 full-power station licenses in 115 markets nationwide. As a result, this new broadcast company—the largest in our nation’s history—will be able to broadcast to more than three in five of our nation’s television households. This is extraordinary reach. As a result, the FCC should make an effort to understand the consequences for localism, competition, and diversity. But we fail to do so here..."
"Today’s merger will create one of the largest broadcasters in history, reaching more than 60 percent of United States households," said the decision's other dissenter, Commissioner Geoffrey Starks. "In my mind, permitting that large a single broadcaster runs counter to our fundamental tenets of promoting competition, localism, and diversity. "
Former Democxratic FCC Chairman and now Common Cause adviser Michael Copps made no bones about his opposition to this FCC's call in a tweet.
Citing the FCC's continued cap on TV station group owners of 39% of the national audience, Adonis Hoffman, chairman Business in the Public Interest, which provides data and research services to broadcasters, said allowing the merger was Nexstar and Tribune's "only hope of survival, or they will go the way of the erstwhile powerful newspaper industry."