To grease FCC approval of its merger with Media General, Nexstar says it will spin off stations to comply with the agency's local and national ownership limits. But it asks to keep joint sales agreements in six markets, despite the FCC's denying a JSA transfer in the Gray-Schurz deal just last week. Nexstar and Media General argue that the six JSAs are "incidental" to the deal.
Nexstar Wants To Keep Media General JSAs
In winning FCC approval of its $4.6 billion merger with Media General, Nexstar Broadcast Group may have more trouble than it thought when it announced the deal late last month.
In the filing seeking the FCC blessing, Nexstar and Media General ask for “a temporary waiver” that would allow Nexstar to maintain Media General joint sales agreements in six markets until 2025.
The markets: Albany, N.Y.; Augusta, Ga.; Springfield, Ohio; Lansing, Mich.; Topeka, Kan.; and Youngstown, Ohio.
However, last week, in granting approval of Gray Television’s purchase of Schurz Communications radio and TV stations, the FCC denied the transfer of the single JSA in Wichita-Hutchinson, Kan., setting a precedent that Nexstar and Media General may not be able to get around.
Nexstar and Media General argue the FCC should OK the JSAs just as it did when Media General merged with LIN Television in 2014.
In that deal, they say, the FCC said that “[w]hen evaluating the transaction as a whole, it is clear that these agreements are only an incidental aspect of a large multi-station, multi-market transaction.”
The Nexstar-Media General merger involves “a substantially larger number,” making the six JSAs once again incidental to the whole deal, the companies say. “Granting a temporary waiver to allow the legacy JSAs incident to this transaction to continue to Sept. 30, 2025, will serve the public interest and is consistent with Congress’s directive,” they say.
The FCC has targeted JSAs and the related shared services agreements that allow a station group to operate second stations in markets where the local ownership limits say it may own only one.
On March 31, 2014, the FCC voted to bar the new formation of JSAs. Agency Democrats at the time alleged that the sharing arrangements — in which one station sells the advertising for both stations in the same market — were shams aimed at getting around agency regulations that bar broadcasters from owning more than a single TV station in many markets.
Under the FCC’s ruling, JSAs that were in effect as of the date of the ruling were generally supposed to unwind at the end of this year.
But thanks to a rider that Congress included in a massive federal funding bill late last year — “Congress’s directive to which Nexstar and Media General refer to in their filing — JSAs that were in effect on March 31, 2014, have been protected through Sept. 30, 2025.
The JSA rider itself did not specifically address whether grandfathering protection would allow the transfer of JSAs. But in the Gray decision, the FCC has made clear that it’s not likely to approve JSA transfers that come before it in broader transfer applications.
As Nexstar said it would when it announced the deal, the parties told the FCC said it would spin off a station in each of the eight “overlap” markets where both Nexstar and Media General own stations to comply with the local ownership limits.
The eight markets: Davenport, Iowa-Rock Island, Ill.; Forth Wayne, Ind.; Green Bay-Appleton, Wis.; Lafayette, La.; Roanoke-Lynchburg, Va.; Terre Haute, Ind.; Albuquerque, N.M.; and Norfolk-Portsmouth-Newsport News, Va.
The parties said it may not be necessary to spin off stations in Albuquerque and Norfolk because one of the Media General stations in each of the markets has in the past fallen to fifth place in the ratings making divestiture unnecessary under the rules. (The rules forbid ownership of two top-four rated stations in markets of any size.)
“To avoid delaying the filing of the applications for these two markets while more current information is obtained from the February Sweeps, the applicants are filing those applications now and proposing divestitures to achieve compliance.
“The applicants will amend the applications if the current ratings information obtained indicates they have returned to fifth place in the market, such that divestiture is not needed.”
The parties also said they would spin off stations “as necessary” to comply with the FCC effective national ownership cap — coverage of 39% of U.S. TV homes. They gave no indication which markets might be jettisoned.
“The proposed transaction will increase the merged company’s operational efficiencies and capabilities in serving the public, ensure continuance of existing service to the public, and maintain current levels of competition and diversity in local television markets while creating opportunities for new entrants in a number of those markets,” the parties say.
“For those reasons, the transaction also strongly serves the public interest, and the applicants urge the commission to promptly process and grant the associated applications.”