Nexstar/Media General Still Seen Likely to Be Approved
Nexstar's $4.6 billion buy of Media General still is seen as likely to be approved despite the coming regime change at the FCC, said numerous broadcast attorneys in interviews. The question isn't if, but when, they said. Nexstar pushed for the commission to grant a waiver that would allow the deal to go through ( see 1607190058) despite the ongoing incentive auction. A company spokeswoman told us the TV station owner maintains its previous guidance to investors that the deal will be done by year-end.
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If the waiver isn't granted, waiting for the auction could push the deal into next year, said broadcast attorneys. If the transaction isn't done before the makeup of the FCC changes, there could be delay, they said. The American Cable Association argued (see 1611290055) the full commission must approve the waiver, which could be problematic if the commission's interim makeup results in a party-line tie. Despite those possible obstacles, several industry lawyers said they expect the combination to be approved under either the new or current FCC. “I think it's likely to be approved either way,” said Holland & Knight broadcast attorney Charles Naftalin, who isn't connected to the deal.
Nexstar's arguments in favor of the waiver become more persuasive the longer the incentive auction stretches on, broadcast attorneys said. The reverse portion of the auction's third stage ends Thursday, and the forward portion is to begin Monday (see 1611280055). Several auction watchers said they expect the incentive auction to stretch into a fourth stage (see 1610200058), adding fuel to Nexstar's argument that waiting for the auction to end is taking too long. Nexstar and other broadcasters involved in the deal told the FCC the wait is straining their resources and affecting their bottom line. Though a pay-TV official said some Nexstar officials indicated the waiver is expected soon, officials in the FCC said they can't confirm any action is being planned. FCC Chairman Tom Wheeler said in January he expected the auction to be over when the deal is approved. Industry lawyers see Nexstar's assurance of a 2016 approval as an indication the company received favorable signs from the Media Bureau (see 1601280070). The deal would put Nexstar right against the 39 percent broadcast ownership cap, the company said.
DOJ already OK'ed Nexstar's plan to buy Media General (see 1609020046), and the broadcaster announced seven divestitures intended to appease government concerns at the same time it announced the deal. 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. The National Association of Black Owned Broadcasters also endorsed the deal because of the minority-owned Bayou City Broadcasting's involvement (see 1609230068) The deal was listed Wednesday at Day 287 on the FCC's 180-day merger and acquisitions time line, which is supposed to provide a loose upper limit to how long a transaction can sit under review.
Nexstar/Media General has a January “walk-away” deadline after which the parties can exit the agreement, according to the contract information filed with the FCC, though the contract has provisions that would allow the companies to extend that date to April if necessary. That clause could provide another reason for the Media Bureau to act soon. ACA said the Media Bureau doesn't have the authority to grant the waiver request since it concerns an auction rule. The Wireless Bureau should oversee the matter, ACA said.
Granting the waiver to Nexstar is unfair to numerous other broadcasters that are also unable to sell their stations due to the incentive auction, said Fletcher Heald broadcast attorney Peter Tannenwald. “Why should they get the waiver?” Tannenwald said. Nexstar is likely to get more attention from the FCC because it's bigger, but there are smaller companies in “very dire straits” that should receive similar relief, he said.