Nexstar Seen Likely to Pursue Incentive Auction Waiver for Media General Deal
Nexstar's planned $4.6 billion buy of Media General is on hold until the completion of the TV incentive auction, industry lawyers said in interviews Tuesday. With the auction likely proceeding to at least a second stage, it’s likely Nexstar will push the FCC to approve a waiver request (see 1606130052) that would allow the deal to be approved before the end of the auction, broadcast attorneys said. It's unclear whether the FCC would be amenable to such a request, these attorneys said. Nexstar and the agency declined to comment.
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Nexstar/Media General’s 180-day transaction clock on the FCC’s website was at 152 days Tuesday, and the forward portion of the incentive auction doesn’t start until August. Since that bidding process isn’t expected to generate the $86 billion needed to close the auction on the first round, it’s widely believed there will be subsequent auction stages. Broadcast attorneys told us that if there’s a third stage, the process is expected to last into 2017. Nexstar/ Media General has a January “walk-away” deadline after which the parties can exit the agreement, though the contract has provisions to extend that date to April. The FCC generally tries not to let the deal approval process run afoul of termination deadlines, some broadcast attorneys told us, though another said an agreement as large and complex as Nexstar’s mightn't get such consideration.
When it filed the deal application, Nexstar also asked for a waiver that would allow the deal to be approved before the incentive auction. The FCC orders governing the auction included a requirement for agreements to be filed by Jan. 12, 2016, to be approved before the auction, and Nexstar/Media General didn’t make that deadline. A company spokeswoman said Nexstar was unlikely to pressure the FCC to act on the waiver unless the auction ran long. Broadcast attorneys told us Tuesday that multiple auction stages likely would give the company ammunition to argue the waiver should be granted.
The FCC would be unlikely to grant such a waiver, Georgetown Law Institute for Public Representation Senior Counselor Andrew Schwartzman told us. “This is the most complicated auction in the history of man; I can’t imagine the FCC would want to make it more complicated.” Schwartzman represents several public interest groups that have filed in opposition to the deal. Some broadcast attorneys thought differently, and said the uncertainty created by a multiple-stage auction would be a powerful motivator for the agency to relent.
Nexstar likely would wait until it was official that the incentive auction would go to a second stage -- likely September or October, attorneys told us. In the meantime, other proceedings could affect the deal, such as the media ownership proceeding. Nexstar’s filings indicated it's seeking to keep several joint sales agreements that could clash with the draft rules (see 1606130052). Though the commission also is considering a proposal that would eliminate the UHF discount, that rulemaking wouldn’t affect Nexstar’s deal, said their response to a Media Bureau information request. If Nexstar divests the stations it has committed to divesting and the UHF discount is eliminated, the station group would reach 38.9 percent of households, just under the 39 percent cap, the filings said.