Top 30: Broadcasting’s Ever-Changing Profile

So what do the following have in common?

Belo, LIN, Media General, Clear Channel, Young, Allbritton, Local TV, Journal, Freedom, McGraw-Hill, Granite, Barrington, Fisher, Landmark, Sunbelt, Pappas, Schurz, Montecito and CCA.

That’s right. They were all among the Top 50 station groups that we published in 2007, but which have since disappeared (or, as in the case of Media General, will soon disappear) in the waves of consolidation that have swept over the TV station business in the past decade.

More evidence of how much the industry has consolidated is to be found at the very bottom of the Top 30 we published on Wednesday. There you’ll find a group that is not even a group — Intermedia Partners, principal owner of a single station, WAPA San Juan. (I guess the fact that our Top 50 morphed into the Top 30 along the way is also telling.)

For our Top 30, we rank the groups by spot revenue estimates from the prior year supplied by our partner in the project, BIA/Kelsey. If we used household coverage as we once did, we would give a distorted picture of who’s who in commercial broadcasting. Ion Media, which operates more as a cable network, would be at the top of the list and religious groups like Trinity and Daystar would be near the top.

The story of this year’s Top 30 is Nexstar Broadcasting. By undercutting Meredith to grab Media General for $4.6 billion, Nexstar bulked up on stations and revenue and jumped from No. 13 to No. 3, behind only Fox and CBS. (Nexstar-Media General has yet to close, but, adopting BIA/Kelsey’s practice, we assume all announced deals will.)

Nexstar’s rise and another big deal — Gray’s purchase of the Schurz’s stations — caused most groups of the chart to move up or down a rung or two. Gray itself rose two spots, taking over Nexstar’s old position at No. 13.

Despite all those vanished station groups listed above, it’s worth noting that the top 20 groups have been fairly stable over the past decade. Only four groups have departed that subset — LIN, Media General, Clear Channel and Belo.

Given that the TV broadcasting is some 70 years old and the propensity of industries to consolidate over time, the community of station owners should be much smaller than it is.

But the FCC has continually interfered with this natural process of contraction with its national and local ownership limits. The FCC has gradually loosened the rules over the years, permitting the consolidation we have seen so far in a sporadic fashion. But it hasn’t given up regulating ownership — far from it. It continues to govern the pace of consolidation.

Broadcasters enjoyed a rare legal victory last week in its on-going struggle for more freedom to wheel and deal when a federal appeals court vacated the FCC’s ban of joint sales agreements and told the FCC to take another look at it in the context of the congressionally mandated — and long-overdue — review of all its ownership rules.

FCC Chairman Tom Wheeler has promised to move that review forward with some proposals for the other commissioners to consider by the end of this month. But broadcasters are not expecting any relief. In fact, some fear that Wheeler will not only proposed restoring the JSA ban, but also extend the ban to include shared services agreements. Goodbye to all those sidecar deals.

If the FCC keeps the national ownership cap (coverage of 39% of TV homes) in place as expected, the most aggressive consolidators — Nexstar and Sinclair — will not be able to get bigger, and, if the local limits are preserved or expanded as expected, mergers between smaller groups will be curtailed.

But not entirely.

The urge to merge is strong. The prevailing wisdom is that you have to have scale to deal effectively with MVPDs and the networks as well as technology and programming suppliers.

And there are plenty of permissible combinations among the mid-size and small groups. And broadcasters have proved adept at working around the ownership limits to get a deal done.

Broadcasters and industry watchers expect another round of consolidation after the lineup of stations is reduced and reset in the incentive auction and subsequent repacking of the TV band.

It’s not clear who will be buyers and who will be sellers.

Graham Media was seen as a seller. It has attractive stations, but only five of them, not enough to play in the land of giants.

But last week it stepped up not as a seller, but as a buyer — of two stations that Nexstar is being forced to spin off from its Media General merger to comply with ownership limits.

For $120 million, including assumption of debt, Graham will be getting WCWJ, the CW affiliate in Jacksonville, Fla., which it will operate in tandem with its news-heavy independent there, WJXT. It will also be moving into a sixth market, Roanoke-Lynchburg, Va., with NBC affiliate WSLS.

So, expect our Top 30 next year to present a new profile of broadcasting’s ownership class. Some groups will move up, some will move down and some will move out.

What do Block, Bonten, Waterman, Manship, Morris, Bonneville, Morgan Murphy, Cowles and Northwest have in common?

Right again. They didn’t quite make the Top 30 this year, but they are ready to step in should others fall from the ranks.

Harry A. Jessell is editor of TVNewsCheck. He can be contacted at 973-701-1067 or [email protected]. You can read earlier columns here.