NABOB On Nexstar-Marshall Deal: Yes, But …

The National Association of Black Owned Broadcasters has asked the FCC to approve joint sales agreement waivers that would clear the way for Nexstar Broadcasting Group’s $58.5 million proposed sale of three Fox affiliates to minority-owned Marshall Broadcasting Group. But in its June 18 filing at the FCC, NABOB also said the agency should require Nexstar and the newly formed MBG to answer additional questions about their proposed deal.

Also, according to the filing, NABOB wants the FCC to subject approval of the deal to annual reporting requirements.

Among the additional questions that NABOB wants answered are whether the parties have a plan in place for the brokered stations to develop their own sales forces during the terms of the JSAs, and how payments to the brokering stations will affect the brokered stations.

In addition, NABOB wants the FCC to examine the terms for guarantees for any bank loans in the deal, and what happens if a brokered station defaults on its payments to the brokering station or the bank.

“In supporting the grant of the instant applications, NABOB does so with the hope that Nexstar and Marshall are entering into the JSA agreements with a plan for the stations to eventually become free-standing independent operations,” NABOB said in its FCC filing.

NABOB also said the fact that Nexstar does not have options to acquire the brokered stations — and that MBC will be acquiring all of the tangible assets of the stations —a re points in the deal’s favor.

“These factors distinguish the instant JSA transactions from many that NABOB has found deficient in the past,” NABOB said, noting that Pluria Marshall Jr., MBC’s owner, is also an experienced radio station and newspaper owner.

“If granted, these waivers will be the first granted by the commission under its new attribution rule,” NABOB added. “For that reason, NABOB believes that, if the commission grants the requested waivers, the commission must examine the instant applications closely and set forth in writing the basis upon which the commission grants such waivers, so that other prospective applicants will know and meet the standard applied in this transaction,” NABOB said.

The critical question for NABOB, for this deal and any others, according to the association’s FCC filing: “Is this transaction designed to produce a free-standing, independent broadcast operation at the conclusion of the JSA agreement?”

Under the deal at issue, MBG intends to fund the station acquisitions through borrowings which Nexstar has agreed to guarantee.

Under the terms of the agreements, MBG will acquire KMSS Shreveport, La. (DMA 82); KPEJ Odessa-Midland, Texas (DMA 150); and KLJB Quad Cities, Iowa (DMA 100).

The deal is important in part because it could offer the FCC its first opportunity to say what sorts of JSAs it believes will qualify for waivers in the wake of its March 31 decision putting the kibosh on new JSA deals.

Also under the ruling, existing JSAs would generally be required to unwind before June 19, 2016, two years after the new ban went into effect, unless the broadcasters involved can persuade the FCC that a particular arrangement genuinely serves the public interest and warrants a waiver.

The Nexstar/MBG transactions are subject to FCC approval, the consummation of Nexstar’s previously announced agreements to acquire the stock of privately-held Communications Corp. of America and White Knight Broadcasting and the stock of Grant Co., and are expected to be completed in 2014, according to Nexstar.

Subject to regulatory approval, MBG intends to assume the obligations of Mission Broadcasting Inc. as the acquirer of the stations under various asset purchase agreements currently in effect between Nexstar and Mission.

Marshall Broadcasting Group is a newly formed minority owned media entity owned 100% by Pluria Marshall Jr. Marshall is the president-CEO of Equal Access Media Inc., which owns several newspapers serving African-American and minority communities, including The Texas Freeman and Houston Informer newspapers, The Los Angeles Wave Newspaper Group and the Los Angeles Independent Publications Group.