The unusual story of the sale of TEGNA Inc. has seemingly (more on that below) come to an end after a four-year FCC review process, encompassing two attempted purchases, two administrative actions involving multiple rule waivers and novel questions of law, but no rulings by the Commissioners themselves. On Thursday, the FCC’s Media Bureau issued an order approving the transfer of control of the company to Nexstar Media and the deal was closed by the parties that same day.  Today, we look back at the unusual actions leading to the sale of TEGNA and at what last week’s approval may preview as to major changes ahead for the broadcast industry .

The unusual nature of the sale of TEGNA did not start with last week’s decision but instead began in 2022 when TEGNA first announced its plan to be acquired by Standard General.  After an application seeking approval for that sale was filed, objections were submitted from labor organizations, public interest groups, and representatives from the multichannel video provider community.  Despite divestiture plans to bring Standard General into compliance with the FCC’s television ownership rules, in 2023, the FCC’s Media Bureau, after a full year of consideration, decided that it could not reach a decision on the case, but that the case had to be reviewed by an FCC Administrative Law Judge to hold a hearing to decide two issues – neither of which had ever been the source for the rejection of a broadcast sale in the past. 

As we set out in our article after that designation for hearing, the Media Bureau wanted to know if it was in the public interest for this transaction to take place if it would cost jobs in the industry, and if it meant that private equity firms would have a significant stake in the company – despite innumerable mergers in the past that likely led to the loss of broadcast jobs, and innumerable broadcast companies in which significant equity was held by private equity firms.  Despite attempts by the buyer to get the Commissioners to rule on the propriety of the designation order so that an adverse decision could be appealed to the courts, and despite attempts to get the courts to intervene even though the full Commission had not acted (in almost all cases, a full Commission action is a prerequisite before the courts will get involved in reviewing an FCC staff action so that the Commissioners are first given the opportunity to correct any errant decision of FCC subordinates), time eventually ran out under the contract and TEGNA exercised its rights to terminate the deal while the case was stuck in regulatory limbo.

Less than two years later, TEGNA was back at the altar looking to marry up with Nexstar.  This time, there was no proposal to divest stations or to quell the objections that were filed against this deal from many of the same parties – labor organizations, public interest groups, and representatives of multichannel video providers.  While the administration had changed in Washington, there was again no decision from the full Commission – just a Media Bureau order, but this time approving the sale. 

That approval included a waiver of the FCC’s local television ownership rule (limiting one owner to holding no more than 2 stations in any market) to allow Nexstar to control 3 stations in 23 of its markets (though it did promise to divest one station in six of those markets within 2 years if, at that time, the FCC rules still prohibited such ownership).  The Bureau also waived the national ownership cap initially imposed by Congress, limiting one owner to having interests in television stations serving no more than 39% of the nation’s TV households – approving that waiver despite Nexstar’s ownership reach after its acquisition being 54.5% of TV households.

This approval was unusual in that the Commission usually rules on cases that present new and novel legal issues.  But, as with the first attempt to sell TEGNA to Standard General, it was the Media Bureau that made the decision in this case.

Of course, this did not sit well with those opposed to the deal.  The lone Democratic Commissioner on the FCC, Anna Gomez, quickly released a statement criticizing the decision, stating that the approved transfer violates the national TV ownership cap and was “approved behind closed doors with no open process, no full Commission vote, and no transparency for the consumers and communities who will bear the consequences.” Antitrust lawsuits seeking to block the deal were filed earlier in the day that the FCC approval was released, one filed by 8 state attorneys general, and another by a satellite television provider.  Following approval, an “emergency” request for judicial intervention was filed by several public interest groups (seeking to overcome the fact that the full Commission has never ruled on the case – as noted above, usually a prerequisite for judicial action).  Despite all these challenges, the deal has been closed and, unless and until the courts somehow overturn the decision, Nexstar will be continue to be the owner of all former TEGNA stations. 

Beyond the procedural issues raised by this saga, the decision has much broader ramifications for the broadcast industry.  The Bureau’s decision was premised on the significant changes to the media marketplace that have occurred in the almost 30 years since the local and national ownership caps were adopted.  As we have noted many times in articles on this blog (see, for instance, our article here), today’s broadcast marketplace is nothing like that which existed in 1996 when the local television ownership rules (as well as those for radio) were adopted.  In 1996, we were in an analog world, where each broadcast station could deliver only one stream of programming to its audience.   Broadcast stations were not able to multicast. Streaming media essentially did not exist.  Satellite delivered programming was in its infancy (and did not even exist for radio).  Owned media (video and audio) was all owned in a physical format, not the digital on-demand access to virtually all content that ever existed that is now available.  The flood of audio and video options now available a consumer in any part of the country simply were not present in 1996, meaning that each broadcast station had more power and influence in local programming and advertising markets. 

That simply is not the case today.  The Nexstar decision is one of the first to really recognize that these new sources of content are true competitors to broadcasting.  Already, digital media platforms siphon over 2/3 of the local advertising revenue from every  media market (the vast majority going to the big three tech giants), while no local media company – radio, TV, newspaper, or any other company – has more than 6% of the revenue in any market.  In audio, half of radio’s time spent listening has disappeared in the last dozen years, while that of digital audio sources has gone from half the time spent listening to radio to more than double it.  Over-the-air television is also losing audience to all of the on-demand and streaming competition that now exists, and it too suffers from the erosion of local advertising dollars as those dollars flow to out-of-market digital giants.

The recognition that the market has changed and that the 30-year old ownership rules are relics of another era – one that holds back local broadcasters from reaching their entire markets in which their digital competitors have full access – needs to be reflected in a broader change to the rules, not just one conducted through waivers (like this decision and the one that we noted recently where another television company was allowed to acquire a third TV station in Indianapolis).  As we wrote here and here, the Commission is considering changes in both the radio and television local ownership caps.  Comments and reply comments on the Commission’s Quadrennial Review of these local broadcast ownership rules were filed in December and January, respectively.  The issues have been fully presented to the Commission and proposed changes in the rules are ripe for action.  The Nexstar-TEGNA decision may well signal the direction in which this Commission will be moving at some point in the near future.  The broadcast industry is largely hoping that this relief comes quickly.