{"id":88822,"date":"2014-03-26T00:01:39","date_gmt":"2014-03-26T05:01:39","guid":{"rendered":"https:\/\/beta.pewresearch.org\/pewresearch-org\/2014\/03\/26\/a-surge-in-local-tv-acquisitions-puts-more-stations-in-the-hands-of-a-few\/"},"modified":"2024-04-14T04:15:41","modified_gmt":"2024-04-14T09:15:41","slug":"a-surge-in-local-tv-acquisitions-puts-more-stations-in-the-hands-of-a-few","status":"publish","type":"post","link":"https:\/\/beta.pewresearch.org\/pewresearch-org\/journalism\/2014\/03\/26\/a-surge-in-local-tv-acquisitions-puts-more-stations-in-the-hands-of-a-few\/","title":{"rendered":"A Surge in Local TV Acquisitions Puts More Stations in the\u00a0Hands of a Few"},"content":{"rendered":"
\"Top<\/a><\/figure>\n\n

Many of the 290 TV station purchases in 2013 occurred as group acquisitions by some of the largest owners, building their portfolios of stations even more.[10. numoffset=”10″ Broadcast groups weren’t the only ones buying stations. SNL\/Kagan reports that investment companies also snapped up stations with an eye toward selling their spectrum in an expected FCC auction in 2015. See: “Spectrum Aggregation Spurs TV Station Sales<\/a>.” TVTechnology.com. March 1, 2013.]\u00a0The Tribune Co. emerged from bankruptcy to make the richest single deal, spending $2.73 billion to acquire 19 stations from Local TV Holdings.[11. \u201cFCC Approves Tribune Co. Acquisition of Local TV<\/a>.\u201d Chicago Tribune. Dec. 20, 2013.]\u00a0Gannett completed a $2.2 billion transaction to buy 17 stations from Belo Corp., almost doubling Gannett’s TV holdings and giving it national reach.[12. Davidson, Paul. “Gannett Completes Its Belo Acquisition<\/a>.” USA Today. Dec. 24, 2013.]\u00a0Twelve stations changed hands when Media General merged with New Young Broadcasting.[13. \u201cMedia General and Young Broadcasting Announce Merger Agreement<\/a>.\u201d MediaGeneral.com. June 6, 2013.]<\/p>\n\n

Sinclair Broadcasting acquired more individual stations than any other buyer, snapping up outlets owned by locally based companies like Fisher Communications in Seattle and Allbritton Communications in Washington, D.C. The company already owned the most local stations of any group; if all pending sales go through, Sinclair will own or provide services to 167 television stations in 77 markets, reaching almost 40% of the U.S. population.[14. “Sinclair Broadcast Group Company Profile<\/a>.” SBGI.net. Retrieved March 11, 2014.]\u00a0Nexstar Broadcasting made moves to increase its portfolio to 108 stations in 56 markets. In 37 of those markets, it will own or provides services to more than one station.[15. “Nexstar Broadcasting Fourth Quarter Net Revenue Rises 18.9% to a Record $138.1 Million<\/a>.” Nexstar.TV. Retrieved March 11, 2014.]\u00a0Nexstar\u2019s chief executive, Perry Sook, predicted the \u201crolling M&A thunder” would continue throughout 2014, and it has.[16. Jessell, Harry. “Sook Forecasts More ‘Rolling M&A Thunder<\/a>.'” TVNewsCheck. May 9, 2013.]\u00a0In March, Media General announced plans to buy LIN Media’s<\/a> 43 stations for $1.6 billion.<\/p>\n\n

Other broadcast executives also expect the market to stay hot.\u00a0 Speaking at the UBS Media Conference in New York last December, Sinclair CEO David Smith predicted that the current rush of consolidation would last another year or two. And he made clear what his ultimate goal would be: \u201cI\u2019d like to have 80 percent of the country if I could get it. I\u2019d like to have 90 percent.\u201d[17. Under current regulations, individual broadcasters are prohibited from reaching more than 39% of the U.S. population. See “Regulation<\/a>.”]<\/p>\n\n

\"Value<\/a><\/figure>\n\n
\"\"<\/a><\/figure>\n\n

The buying binge continues despite federal limits on station ownership. The FCC currently prohibits<\/a> one company from owning more than one of the four top-rated TV stations in a single market.[18. Review of the Broadcast Ownership Rules<\/a>. FCC.gov. Accessed Jan. 7, 2014.]\u00a0But there is no rule prohibiting broadcasters from managing more than one station per\u00a0market.\u00a0 Many of the deals agreed to in 2013 took advantage of that loophole.\u00a0 Companies that made deals to buy groups with stations in markets where the rules would prohibit joint ownership arranged to spin off those stations to other owners but retained effective control through joint operating agreements.[19. The three most common types of agreements between broadcast stations are shared services agreements, joint sales agreements and local marketing agreements. See: Lovelady, Steve. \u201cTV Shared Services Agreements: Danger Ahead!<\/a>\u201d CommLawBlog.com. Nov. 27, 2011.]\u00a0“Essentially, side-car companies or license holding companies are formed to hold the license, but the primary or ultimate parent in the case is actually operating the station,” said Justin Nielsen of SNL\/Kagan.[20. Interview with author Deborah Potter. Sept. 30, 2013.]<\/p>\n\n

Broadcasters say these agreements are entirely within the boundaries set by the FCC. “I can walk right up to that line and look right at that line,” said Sinclair’s Smith. He calls the arrangements “necessary for survival,” given the increased competition broadcasters face from cable and the Internet.[21. Hagey, Keach. “Sinclair Draws Scrutiny Over Growth Tactic<\/a>.” Wall Street Journal. Oct. 21, 2013.]\u00a0Owning or providing services to multiple stations in a market provides “efficiencies and economies of scale,” said Tribune vice president Larry Wert.[22. Jessell, Harry. “For Tribune’s Wert, Bigger Is Much Better<\/a>.” TVNewsCheck. July 10, 2013.]<\/p>\n\n

The savings from large-scale consolidation can run into the millions of dollars. Gannett estimated its acquisition of Belo would net the company about $175 million a year within three years after the deal closed, mostly from reduced corporate costs and higher income from retransmission fees paid by cable and satellite systems that carry its local channels.[23. Launder, William and Drew Fitzgerald. “Gannett to Buy Belo, Expanding TV Portfolio<\/a>.” Wall Street Journal. June 13, 2013.]<\/p>","protected":false},"excerpt":{"rendered":"

Many of the 290 TV station purchases in 2013 occurred as group acquisitions by some of the largest owners, building their portfolios of stations even more.[10. numoffset=”10″ Broadcast groups weren’t the only ones buying stations. SNL\/Kagan reports that investment companies also snapped up stations with an eye toward selling their spectrum in an expected FCC 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