One of radio’s iconic radio stations is now one very big step closer to having its first new owner since signing-on nearly a century ago. Chicago’s WGN (720) is part of the massive $4.1 billion buyout of Tribune Media by Nexstar Media Group, a deal that the Federal Communications Commission on Monday announced it has approved by a party-line 3-2 vote. It removes the last big hurdle before a closing. The Dept. of Justice gave its blessing in July.
“We're very pleased with today's decision by the FCC, which enables us to clear the last remaining regulatory hurdle in our path," said Tribune CEO Peter Kern in a statement. "We look forward to closing our transaction with Nexstar very soon.”
Nexstar has not explicitly said it intends to keep WGN as its sole radio station. However, the combination with sister WGN-TV has long proven to be one of the strengths of the local Chicago operation that until 2014 also included the Chicago Tribune newspaper. When asked about radio earlier this year, Nexstar CEO Perry Sook told Crain’s Chicago Business he “doesn’t have an allergic reaction to radio,” but the executive who once worked in radio doesn’t see his company building out a radio portfolio either.
As it creates the largest U.S. TV station group, Nexstar will spin off 21 television stations in order to clear the FCC’s ownership limits, which cap a local television group at a 39% national audience cap. Tegna will buy stations in Hartford, Harrisburg, Memphis, Wilkes Barre-Scranton, Des Moines, Huntsville, Davenport and Ft. Smith, AR in a deal valued at $740 million. Scripps plans to acquire stations in New York City, Phoenix, Miami, Salt Lake City, Norfolk, Richmond and Grand Rapids for $580 million. And for $42.5 million, Nexstar will sell two Indianapolis stations to Circle City Broadcasting, a newly-formed minority-led broadcaster controlled and owned by DuJuan McCoy.
In Indianapolis and Norfolk the FCC is allowing Sinclair to own two of the markets’ top four affiliates, concluding it would be in the public interest. The Commission also said that the investment that Nexstar has shown in local news coverage, including building a Washington news bureau and state news bureaus around the country, has further justified the decision to allow Nexstar to own local TV stations in 18 of the top 25 markets and 37 of the top 50. It will also help advance the rollout of ATSC 3.0 since Nexstar has been a lead proponent of the next-gen television technology. “This should not be overlooked, given the potential consumer benefits,” said Commissioner Michael O’Rielly.
Starks Says Deal Violates Law
The Commission’s two Democrats, Jessica Rosenworcel and Geoffrey Starks, both voted against allowing Nexstar to buy Tribune. Rosenworcel said Nexstar will have “extraordinary reach” with 144 full-power TV stations in 115 markets nationwide, reaching more than three in five of the nation’s television households. She thinks that will undercut the agency’s goal of promoting localism, competition, and diversity. “We live in a world of infinite content. But there is still something special about local broadcasting,” she said. “There is something unique about a signal in the air with the responsibility to serve community at its core.”
Starks agreed and said he couldn’t support a deal that relied on the use of the UHF discount, a rule that the Commission reinstated in 2017. The UHF discount allows a broadcaster to count only half a station’s coverage area when calculating its ownership cap for stations above channel 14. Starks said that “loophole” goes against the law enacted by Congress that created the 39% national ownership cap. “I believe that this transaction, as structured, is against the law,” said Starks. “We are beholden to Congress, and I cannot support an action that I believe runs counter to our authority.”
But O’Rielly said he would have allowed Nexstar to hold onto even more of the stations that it’s spinning-off to secure DOJ approval. He says the FCC is at risk of sending broadcast outlets the way of newspapers if doesn’t confront marketplace realities. “Today’s media landscape has created significant challenges for broadcasters, who are forced to compete against Silicon Valley behemoths for advertising dollars,” he said. “Any opportunities to enable broadcasters to compete more effectively should therefore be encouraged and embraced.”
Nexstar said in statement that with the approval by the FCC and DOJ, the company “anticipates closing the Tribune transaction and the divestiture sales shortly.”