Nexstar Responds To Cox Merger Challenge

Nexstar Broadcasting Group today responded to what it called “gross mischaracterizations issued by Cox Communications” related to ongoing retrans negotiations that led Cox to ask the FCC to block Nexstar’s proposed merger with Media General.

A Nexstar release Thursday afternoon said: “While it is not Nexstar’s policy to debate publicly with any of its commercial partners, the egregious mischaracterizations included in today’s Cox release warrant a response to ensure that viewers, legislators and regulators, the investment community and the public at-large get the accurate facts on what is in most cases a straight-forward business negotiation. Nexstar intends to pursue any and all methods of recourse to cause Cox to cease and desist making future mischaracterizations.

“As noted in Nexstar’s press release of Jan. 25, 2016, Cox management is willing to hold subscribers in nine markets at risk of losing network and local community programming at 11:59 p.m. local time on Jan. 29, 2016, as Cox has yet to reach a new distribution agreement allowing the cable television provider the right to continue to air Nexstar’s highly rated programming. Cox mistakenly claims in today’s release that ‘cable TV/satellite customers forced to pay more with Nexstar merger’ (referring to yesterday’s announced agreement that Nexstar has agreed to acquire Media General). In fact, the reason that Cox unilaterally raises the rates to its subscribers is related to the gross misallocation by Cox of its programming fee payments to programming with marginal viewership relative to the network and local community programming that Nexstar provides.”

Nexstar said that across the U.S., broadcast stations and station groups, including Nexstar, generate approximately 35% of household viewing, yet local broadcasters in aggregate received on average about 12% of the total distribution revenue from cable, satellite and telecom providers such as Cox. “Inexplicably, Cox (through charges to its subscribers) pays The Walt Disney Co. nearly $8 per household per month for carriage of ESPN and Turner Broadcasting more than $1.65 per household per month for TNT. Unfortunately Cox management fails to consider reasonable business logic and reliable viewership data in determining what’s best for their viewers and instead chooses to finger point at the very source of its programming and content with the highest viewership. With Nexstar’s commitment to local viewers’ information and entertainment needs, local businesses and their marketing effectiveness, local stations need to be fairly compensated for the value of their programming.”

Nexstar continued: “Tactically, Cox’s misguided plea to consumers to oppose the announced transaction with Media General serves to further highlight the irrational thinking of Cox’s management as Nexstar’s merger with Media General is in full compliance with the FCC’s rules regarding ownership of television stations, including the national cap, which was statutorily set by Congress.”

Nexstar said it has a long-term record of completing hundreds of agreements with cable and satellite providers for the carriage of its programming and “is proud it has had no material service interruptions related to distribution agreements since 2005.” However, it continued, “despite four months of negotiations, Cox by its own admission never offered a rate close to current market rates and reflecting the bad faith nature of its negotiating stance, even Cox’s most recent offer does not offer contain a market rate offer to Nexstar. To be explicitly clear, Nexstar has offered Cox the same rates it offered to other large distribution partners with whom it successfully completed negotiations with in December.”

Nexstar said it “remains hopeful that a resolution can be reached before the Jan. 29 deadline, but should Cox fail to come to terms with Nexstar, Nexstar intends to actively educate consumers in affected markets on how they can continue to receive their favorite network programming, in-depth local news, other content and programming relevant to their communities, and critical updates in times of emergencies. Cox’s attempts to disparage Nexstar will not be tolerated and their misguided efforts to fool their viewers as well as legislators and regulators, the investment community and the public at-large warranted a response.”