DOJ Gives Nod to Nexstar/Media General
Nexstar's proposed $4.6 billion purchase of Media General got approval Friday from DOJ, in a consent decree approving the deal and Nexstar's plan to divest seven stations to comply with FCC ownership rules. “This is a positive step for the transaction's approval,” a Nexstar spokesman told us. The agreement still needs FCC approval. The commission has said the Nexstar deal came too late to be approved while the incentive auction is ongoing. The broadcaster could press for early approval, attorneys told us. That possibility is considered to be more likely as the low returns from the stage one forward auction make a 2017 end to the incentive auction seem more probable (see 1608310070). Nexstar initially predicted its transaction would close in Q3 or Q4.
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Nexstar/Media General “as originally structured” would have given Nexstar “the power to impose higher prices on local and national advertisers and to demand higher retransmission fees from cable and satellite companies in six markets,” said Renata Hesse, Antitrust Division acting assistant attorney general, in a news release. Nexstar announced many of the divestitures in May (see 1606030033) and June (see 1605270060) and the initial transaction announcement said divesting stations would be necessary to obtain regulatory approval. The American Cable Association and some public interest groups filed in opposition to the deal or requesting conditions.
The divestitures involved are WTHI-TV Terre Haute, Indiana, to USA Television MidAmerica Holdings; WFFT-TV Fort Wayne, Indiana, to USA Television; WSLS-TV Roanoke, Virginia, being sold to Graham Media; KADN-TV Lafayette, Louisiana, and low-power TV station KLAF-LD Lafayette being sold to Bayou City Broadcasting; and WBAY-TV Green Bay, Wisconsin, and KWQC-TV Davenport, Iowa, being sold to Gray Television. “Today’s settlement will protect advertisers, [multichannel video programming distributors] and consumers -- who ultimately would have borne many of these increased costs -- by ensuring that Nexstar does not obtain undue bargaining leverage when negotiating broadcast television spot advertising prices and retransmission fees,” DOJ said.
Though DOJ approval is sometimes a precursor to an imminent FCC decision on a deal, a broadcast attorney told us that's not always the case. The Media Bureau didn't comment on the status of the deal review process, and the Nexstar/Media General transaction page said Friday the deal is on Day 198, 18 days beyond the target 180-day timeline. Though broadcast attorneys have said the 180-day timeline is largely seen as nonbinding, it's also understood the bureau doesn't like to run afoul of it, they said.
When Nexstar filed the transaction application, it also requested a waiver from rules blocking the approval of broadcast transactions during the incentive auction. Broadcast attorneys told us Nexstar is likely to press the FCC on the subject of that waiver if the incentive auction starts to stretch on too long. The Nexstar spokesman said Nexstar hasn't done so. With stage one now over, and several stages seen likely, Nexstar has better fuel for arguments that it should be allowed to move forward with the deal, broadcast attorneys said. Other auction watchers believe the FCC is unlikely to approve such a request no matter how long the auction stretches, since it would make the auction process more complicated.