In a tip of the old bottlecap to Dos Equis, I say the Most Interesting Man in Broadcasting is Nexstar mastermind Perry Sook. Look at what he’s been doing just this summer: Engaging in a no-holds-barred struggle with Fox over retrans, working to find a new private equity partner to refinance his company and continuing to add stations to his burgeoning portfolio of small and middle-market stations. Cheers.
It’s beginning to wear a little thin, but I’ve mostly enjoyed Dos Equis’ Most Interesting Man in the World campaign, now in its fifth year. (His advice on self defense: “The right look should suffice.”) But it begs the question: If that bearded septuagenarian is the Most Interesting Man in the World, who, pray tell, is the Most Interesting Man in Broadcasting?
Here at TVNewsCheck, we’re all about answering tough and provocative questions like that and we are not going to dodge this one. The MIMIB is … Perry Sook.
The CEO of the Nexstar Broadcasting Group has had quite the summer, aggressively battling Fox over affiliation renewal and reverse compensation while trying to financially restructure his publicly traded company and continuing to implement his strategy of amassing small and medium-market stations.
Fox has been the biggest challenge. After nine months of trying to come up with a blanket agreement with its affiliates for sharing the retrans revenue those affiliates were getting from cable and satellite, Fox finally lost patience. It announced that it would only deal individually with affiliates, and that it would insist on a flat per sub, per month rate. In year one, it wanted 25 cents. Take it or leave it. No negotiation.
It was a hard stance, and affiliates protested loudly. But Fox was holding most of the cards and one by one the affiliates with expiring affiliation contracts accepted Fox’s terms, starting with big, bad Sinclair.
The exception was Sook. He stood his ground, and it cost him. Refusing to pay Fox’s price, he lost Fox affiliations in Fort Wayne, Ind.; Evansville, Ind.; and Springfield, Mo. No more NFL, no more American Idol, no more Glee.
But rather than stewing about the losses, Sook took action.
In Evansville, Sook bought the ABC affiliate, WEHT, from Gilmore Broadcasting for $18.5 million, and created a duopoly by spinning off the former Fox affiliate, WTVW, to Mission Broadcasting, the company he set up long ago to be his virtual duopoly partner in markets where FCC rules prohibit real duopolies.
In Fort Wayne and Springfield, Sook transformed the Fox affiliates into independent stations with heavier doses of local news and off-network shows in primetime. Fort Wayne’s WFFT declared its independence on Aug. 1, and said it would begin offering local HD news at the end of this month. Springfield’s KSFX re-introduced itself to viewers as KOZL — “Ozarks Local” — just last Thursday.
For good measure, the pugnacious Sook sued Granite, the rival that snatched the Fox affiliation in Fort Wayne, on antitrust ground. Sook alleges that Granite now dominates the market by holding the affiliations of Fox, NBC, ABC, CW and MNT.
In another Indiana market, Terre Haute, Sook beat Fox to the punch. He replaced Fox with ABC on WFXW and changed the call letters to WAWV. The switch took effect Sept. 1. ABC hadn’t had an affiliate in the market for 16 years.
Sook has eight more Fox affiliates, each parts of duopolies. During the second-quarter conference call with affiliates last month, Nexstar CFO Tom Carter hinted that Fox is actually negotiating with Sook on those stations and is close to a deal. My guess is Fox will come off its reverse comp rate card, Sook having amply demonstrated that he isn’t one to roll over.
It’s a lesson cable operators learned several years ago. In 2005, Sook took a hard line on retrans payments, telling operators to either pay him or drop his stations. Some operators tested Sook’s resolve by yanking signals and Sook lost millions. But it was they who blinked, agreeing to pay monthly fees for the privilege of carrying broadcast signals. Sook created a precedent that is now benefitting every station owner in the country.
This is all very interesting, but what makes it doubly so is that Sook is simultaneously trying to find a way to replace Nexstar majority shareholder, ABRY Partners, without losing his place as CEO. Having supplied the capital Sook needed to create the company in 1996, private equity ABRY now wants out. It would be tricky business, even without the distraction of Fox.
For Sook, a new private equity partner might also give him the resources he needs to amass more small and middle-market stations — his strategy since day one.
But it’s not like he has to stop buying. In fact, he just closed on his purchase of two CBS affiliates — WFRV Green Bay-Appleton, Wis., and WJMN Marquette, Mich. — from Liberty Media Corp. for $20 million.
No doubt he is smarting a bit from the loss of Four Points Media. Sinclair announced yesterday that it had bought the seven stations in four markets from private equity Cerberus Capital for $200 million, what Wells Fargo analyst Marci Ryvicker figured was 8-9x cash flow. Sook had the inside track on the stations. Under contract with Cerberus, he had been managing the stations for the past two years. But $200 million was apparently too rich for him.
Sook had a good thing going with Four Points’ flagship station in Salt Lake City, CBS affiliate KUTV. On Sook’s watch, the station firmly established itself as the market’s No. 1 news station, surpassing longtime leader KSL.
So, we will continue to keep a close eye on Sook to see how he fares with Fox, how the equity refinancing of the company goes and how quickly he can add more stations to his burgeoning portfolio. How could we not? The guy is a newsmaker. He is … the MIMIB.
And, for the record, Sook doesn’t always drink beer, but when he does, he prefers Stella Artois.