On February 18, FCC Chairman Brendan Carr told reporters that he supports the proposed acquisition of TEGNA Inc. by Nexstar Media Inc. – and, specifically, that the Commission is "going to be moving forward." Because the combined entity would own stations reaching approximately 80 percent of U.S. households (according to the applicants, 54.5 percent after the UHF discount is applied), approval of this $3.54 billion transaction would require a waiver of, or substantial revisions to, the current 39 percent national television ownership cap (the cap).
However, as Free State Foundation President Randolph May and I argued in comments filed last August regarding potential changes to the cap, it would be inappropriately shortsighted to assess the primary justification asserted by the broadcast industry for regulatory relief – that is, the need for greater scale and scope in order to compete for advertising dollars with national online distribution platforms – in a vacuum.
The reason: it is inevitable that any regulatory relief provided regarding the cap (whether in general or specifically in the context of the instant transaction) intended to level the playing field between broadcasters and Big Tech (Amazon, Alphabet, Apple, and so on) will further skew the already lopsided retransmission consent negotiating positions of broadcasters and facilities-based multichannel video programming distributors (MVPDs): cable operators and direct broadcast satellite (DBS) operators.
As DIRECTV, LLC described in great detail in its petition to deny, "[a]mple evidence corroborates Applicants' own statements that the local consolidation proposed here will lead to higher retransmission consent rates." In addition – and echoing the fear recently expressed by Emily Barr, the former CEO of Graham Media Group, which owns multiple television stations in four states, that relief from the cap "is more about driving up stock prices for the few companies that survive consolidation" than it is about greater localism – DIRECTV warned that the transaction "would (notwithstanding Applicants' claims) almost certainly decrease the amount and quality of local news."Accordingly, when assessing the claimed benefits of the proposed combination of Nexstar and TEGNA, the Commission should simultaneously evaluate – and take steps to mitigate – the impact that substantially larger station groups would have on the already asymmetric, heavily regulated relationships between local television stations and traditional MVPDs. As Mr. May and I wrote:
[I]f the FCC concludes that it should – and can, in a post-Chevron appellate environment – modify the national television ownership cap, at the same time it should (1) urge Congress to modernize the Communications Act, and, in the interim, (2) identify additional ways to eliminate unwarranted rules targeting facilities-based MVPDs.
To that list of remedial measures, at this time, I would add that greater consolidation on the broadcaster side certainly should factor heavily into the agency's consideration of pending, as well as future, transactions involving facilities-based MVPDs. As the Free State Foundation noted in its comments on the proposed combination of Charter Communications, Inc. and Cox Enterprises, Inc. currently before the Commission, "given that the FCC is considering allowing greater concentration in local broadcast television station ownership to facilitate competition vis-à-vis Big Tech platforms with global reach – a one-sided deregulatory step that inevitably would further skew retransmission consent negotiations – it would seem appropriate to afford the applicants similar relief here."
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