(CNN) The largest owner of US television stations, Nexstar, is attempting to expand further in the hopes that the Trump administration will permit them to do so.
Nexstar stated on Tuesday that it would pay $6.2 billion, including debt, to acquire Tegna, another major broadcast broadcaster. The government must approve the deal.
TV mega-mergers, according to public interest groups, stifle competition and eventually lessen the quantity of local news coverage that viewers rely on.
Investors can have rather opposite sentiments. Following the news Tuesday morning, shares of both businesses surged, and more consolidation is anticipated. On Monday night, the Wall Street Journal revealed that Sinclair had also suggested a combination with Tegna.
All of the chatter about the acquisition, according to observers in the broadcast industry, is predicated on the Federal Communications Commission taking action to relax the government’s restrictions on broadcast station ownership.
Companies are currently limited to reaching 39 percent of all US TV households under a rule called the national television ownership rule. In order to thrive in the digital era, station owners argue that the cap needs to be lifted, and they think that key Trump backer Brendan Carr, the chair of the FCC, concurs.
Carr has initiated an FCC proceeding to examine the station ownership limitations, calling them “artificial” and “arcane.”
Interestingly, Nexstar CEO Perry A. Sook opened his remarks regarding the Tegna deal by claiming that the Trump administration’s initiatives give local broadcasters the chance to reach a wider audience, level the playing field, and more successfully compete with Big Tech and legacy Big Media companies that have unrestricted reach and substantial financial resources. Tegna, in our opinion, is Nexstar’s greatest bet for seizing this chance.
In a similar vein, Tegna CEO Mike Steib discussed his beliefs during last week’s results call. He stated that we think deregulation is imminent and will bring about a lot of chances.
Carr directed inquiries over the transaction to an FCC representative on Tuesday, who stated, We anticipate examining the application upon its submission to the FCC and evaluating the public interest considerations.
Runaway consolidation is detrimental to local communities, according to a recent blog post by Craig Aaron, CEO of the public interest organization Free Press.
Naturally, he contended, the businesses pushing for more consolidation only view local journalism as a platform for distributing right-wing propaganda and running political advertisements. This is going according to plan for them.
