Top 30 Station Groups: Nexstar Still No. 1; Gray, Scripps, Allen Busy Buyers

The sale by Meredith Corp. of its television stations to Gray Television was the biggest splash in the pool of TV M&A over the past 12 months and affected this annual ranking of publicly traded TV station groups by total revenue.

The top spot remains the same from the list TVNewsCheck posted on June 10, 2020: Nexstar. But after that, out of the remaining nine spots in the top 10, six have changed. And looking further down, 15 of the top 20 have shifted.

The Meredith sale to Gray Television for $2.83 billion knocked Meredith off the chart and helped push Gray to No. 2.

The second big M&A headline came last September when E.W. Scripps bought Ion Media’s 71 stations in a $2.65 billion deal. It then spun off 23 of them to INYO Broadcast Holdings for $45 million to comply with FCC ownership regulations.

A third big deal — also involving Gray — came this February when it agreed to buy Quincy Media’s 11 stations for $925 million. Gray then divested stations in the six markets in which it already owned a station. Those deals helped move Gray up to the second slot in the ranking from No. 6 a year earlier.

Editor’s note: An earlier version of this story had Gray Television as No. 3 with total revenue of $2.89 billion. That total left out the retrans revenue of the Quincy stations which boosted it to $3.3 billion (comprising total retrans revenue of $1.3 billion and total ad revenue of $2 billion), moving Gray into No. 2 just ahead of Sinclair’s $3.2 billion (now No. 3). In addition, the total revenue figure for Sinclair was incorrect. It should be $2.78 billion, putting it in fourth place behind third-place Tegna’s $2.88 billion.

Also changing hands last year was Scripps-owned CW affiliate WPIX New York. Nexstar acquired the station through its partner company, Mission Broadcasting, for $75 million plus accrued interest.

BIA lists Cunningham Broadcasting and stations owned by Stephen Mumblow as distinct groups. But because they function essentially as subsidiaries — duopoly partners — of Sinclair, TVNewsCheck lumps their revenues together with Sinclair’s. The same holds true for Nexstar, which includes the revenue of Mission.

The biggest mover from last year’s list is Byron Allen’s Allen Media, which jumped up eight spots to No. 14 this year. Spinoffs from the Quincy sale boosted the coffers of Allen, which bought 10 stations for $380 million (those followed Allen’s earlier purchase of KITV Honolulu for $30 million in August 2020).

Of the 30 companies, 12 moved up, seven moved down, eight were unchanged and three were new to the list.

The ranking is based on ad revenue plus retrans revenue — total station revenue. The figures are estimates provided through an exclusive arrangement with BIA Advisory Services, an investment and research firm based in Chantilly, Va.

The Top 30 doesn’t include all commercial broadcasters, but it includes most that matter. The 30 account for 92% of all advertising revenue and 93.4% of total retrans revenue, according to BIA.

For the entire Top 30, total revenue topped $28 billion, comprising $16.8 billion in ad revenue plus $11.4 billion in retrans.

Although the estimates are for 2020, the station groups are credited for revenue from all stations they own or operate plus any they have announced they are acquiring as of today (July 8), even if the deals have not yet closed.

BIA tracks station group ownership and uses information from individual stations and markets, in addition to historical data, to generate its ad revenue estimates. Its retransmission consent estimates are not derived from stations, as they are generally not allowed to disclose these amounts. It arrives at those estimates by modeling publicly traded companies and checks all its estimates against whatever public information is available.

So, although the revenue estimates are not exact, they are close enough for ranking purposes.

The groups’ coverage figures and numbers of markets were also provided by BIA.

Newcomers to the list this year are Morris Multimedia at No. 22, InterMedia at 25, and INYO at 29.

The chart lists the aggregate coverage of stations in two ways. Total reach is the percentage of the 120 million TV homes the group actually reaches and the relevant one for all practical business purposes.

The FCC reach is for regulatory purposes. The FCC caps reach at 39%, but discounts the coverage of UHF stations by half. The discount is a vestige of a time when UHF stations were inferior to VHF stations. As a consequence, most groups’ actual coverage, what the charts calls Total Coverage, is greater than their regulatory coverage.

Only two groups — Nexstar and Scripps — are up against the regulatory cap. But as Nexstar demonstrated with its purchase of WPIX New York, it and other groups can circumvent the FCC cap by acquiring stations through related third parties. As noted above, Nexstar acquired control of WPIX through Mission.

With the Democrats now running the FCC, the agency is less likely to approve such transactions aimed at circumventing the 39% cap than it was last year when the Republicans were in charge.

With its purchase of Ion, Scripps’ actual reach ballooned to 73% with stations in 75 markets, but its regulatory UHF-discounted reach is at 39%, within FCC bounds.

It may be best to think of Scripps as two groups: The traditional local Scripps group (41 markets with actual reach of 25%) and the Scripps’ Ion group (41 markets with actual reach of 54%). (Overlap of stations in some markets accounts for why the markets of Scripps local and Scripps Ion add up to more than Scripps as a whole.)

Chart newcomer INYO Broadcast (No. 29) was created to own and run the 23 Ion stations in 21 markets that Scripps could not because of FCC ownership limits. It reaches 16% of homes and expands the reach of the Ion network to 70%. Other independently owned affiliates of Ion extend the coverage of Ion to 96%.

Offering an overview of the past 12 months, Mark Fratrik, BIA SVP and chief economist, said “it was challenging and there were some notable acquisitions which made some of the stronger groups even stronger.

“I think that is healthy for the industry as the industry faces so many more competitors, both video and other advertising platform competitors. I think it makes us stronger as it moves into the transition into ATSC 3.0.

“So while some may question the increased concentration, I actually think it makes us a much stronger industry better able to serve people in their local community and better able to serve, compete in an increasingly competitive advertising and programming marketplace.

“Meredith being sold was significant. Typically, [its stations] were in large markets and larger markets and Gray, not surprisingly, acquired them because they were a strong company with a good corporate staff that have incorporated a lot of other groups. So that was significant.”

Another important factor boosting revenue at some groups, Fratrik added, was the strong political advertising of 2020. “It was just remarkable. For political candidates obviously the advent of OTT and combining that with over-the-air worked well for a lot of groups.

“I think it continues to surprise people that over-the-air advertising still is a valuable platform for political candidates. And so I think that might bode well for possible acquisitions in particular states where their political activity will continue for the near future.

“And the other interesting thing about acquisitions [that] if they are financed with some loans is that interest rates are really still low and that really affects the ability of acquiring groups to borrow money at reasonable rates and make the deal more palatable. That as far as the eye can see there will remain low interest rates.

“I think obviously the [groups] that are hamstrung by the nationwide [ownership] cap have less leeway to acquire stations, but the other ones, I could imagine them acquiring some stations, maybe spinning off some of them like what Gray did with Quincy and what Scripps is doing with their acquisition of Ion. So I think there will be some more of that happening. How much more I am not sure. I don’t think it is going to be a record year of sales in 2021.”

In the chart below, there are two columns for station coverage. The first, Total Coverage, gives full weight to the households in the market. The second, FCC Coverage, discounts the coverage of UHF stations by half, as the FCC does.

TVNewsCheck’s Top 30 TV Station Groups

Data courtesy of BIA Advisory Services