Terrier Deal Fits Nexstar and Gray Road Map

FCC Media Bureau approval of Apollo Global Management-related Terrier Media’s buy of Cox Media Group and Northwest’s stations (see 1911220069) is another indication the FCC isn’t likely to approve deals with complications testing the limits of existing broadcast rules, attorneys, broadcasters and brokers said in interviews this week. “If it pushes the envelope, they’ll slow your deal up,” one broadcaster said.

After the agency blocked Sinclair/Tribune, transactions such as Nexstar/Tribune and Gray/Raycom without new joint sales agreements and top-four combinations were approved relatively quickly. Terrier’s deal didn’t get OK until it was amended to comply with the 3rd U.S. Circuit Court of Appeals' remand. Large deals “attract a great deal of scrutiny” but seem to eventually get approved if they follow “the road map,” said Patrick Communications media broker Gregory Guy. After it was changed to comply with the newspaper/broadcast cross-ownership rule, the Terrier agreement didn’t require waivers. The FCC didn't comment Tuesday.

There are some indications the agency might be open to waivers for combinations that wouldn’t normally comply with broadcast ownership rules, attorneys said. Terrier will turn in the licenses of some Missouri stations to avoid having a top-four combination there, continuing to offer those signals on multicast channels. The agency also granted after over a year Gray Television’s Sioux Falls, South Dakota, top-four combo (see 1909250064). Prevailing wisdom that deals with controversial aspects could get held up is correct, but it could be worth it for broadcasters with understanding sellers to give such combinations a shot, one broadcast lawyer said.

The FCC “doesn’t seem to like” the rules remanded by the 3rd Circuit, and that could be an indication of future waivers, said Common Cause Program Director-Media and Democracy Yosef Getachew. “They’re approving merger after merger,” he said. Common Cause has argued the Terrier deal doesn’t follow the intention of the media ownership rules because it came into compliance by reducing newspaper publication and shuttering stations (see 1911180066). “Those rules are intended to promote competition,” said Getachew.

“Although Apollo won’t technically violate the rules, the harm remains the same,” said the American Television Alliance Monday. “They will own two ‘top-four’ broadcasts in these markets, which will lead to higher prices for consumers. It's far past time for Congress to intervene on behalf of consumers."

The future of the ownership rules is murky, said Holland & Knight broadcast lawyer Charles Naftalin. Either the FCC “starts over” with the 2018 quadrennial review order or individual rule changes (see 1911210065) or “the Supreme Court bails you out,” he said. “Both of those are long-term processes.” Most broadcasters don’t see ownership deregulation as any kind of certainty, industry officials said. If the FCC does seek certiorari at the U.S. Supreme Court, it’s possible the agency or NAB could seek a stay of the 3rd Circuit’s remand, broadcast attorneys said. Without a stay, the 3rd Circuit’s mandate takes effect this week.

Uncertainty about the rules is one reason few TV deals are expected for now, said Guy. Large TV buyers such as Sinclair and Nexstar can’t participate in broadcast transactions at the moment because of FCC rules, while possible targets such as Tegna aren’t seen as interested in selling, industry analysts said. Standard Media Monday said it's buying for $59.2 million nine TV stations and 15 radio stations in six markets from Waypoint Media and Vision Communications, but that's a unique situation involving a network of low-power TV stations, said Guy.

The coming election is also a possible reason, said DuJuan McCoy Media CEO DuJuan McCoy. Broadcasters don’t want to sell now and miss the anticipated windfall of 2020 political advertising, he said.