Nexstar Waiver a Possibility With New Year
Nexstar maintained through December that a waiver that would allow it to complete its $4.6 billion purchase of Media General despite the ongoing incentive auction (see 1611300064) was expected to be granted in 2016. It wasn't issued. Broadcast attorneys and pay-TV officials told us the waiver’s delay could be blamed on a range of explanations from retransmission consent negotiations to the progress of the incentive auction, and some believe the waiver request could soon be granted. There have been a number of carriage blackouts around New Year's day (see 1701030046).
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If the waiver wasn’t granted in 2016 because of FCC concerns about its implications on retrans deals -- as a cable lawyer and a pay-TV executive said -- the request is likely to be granted soon, since Nexstar is seen as having reached agreements on retrans with pay-TV companies such as Dish and Mediacom. The American Cable Association and Dish lobbied the FCC with arguments (see 1612060062) the takeover would give Nexstar too much leverage in end-of-year retrans negotiations. The deal would have triggered “after acquired” clauses in the retrans agreements with Media General stations and allowed Nexstar to wield the threat of much larger blackouts, said pay-TV officials. Though such clauses would be triggered whenever the merger happens, the deal's happening in the midst of active negotiations would give them a more pronounced effect, pay-TV officials said. FCC concern about the deal’s effects on those negotiations was likely a factor in holding off on the waiver, the officials said. With those deals now compliant, the commission is likely to grant the waiver, the officials said. Nexstar and the FCC declined to comment.
If the waiver was held up because of the transition to new leadership at the FCC and the congressional directive not to take controversial actions, the item could be approved after Chairman Tom Wheeler leaves the commission Jan. 20, attorneys said. The FCC is taking few actions in the lead-up to the new administration, so inaction on this item doesn’t have a larger significance, said a broadcast attorney. Under new leadership, the commission could then take the item up, attorneys said. An FCC official said Wheeler hasn't shared any information on the deal with Republican FCC offices, so it’s not clear that it would be seen as controversial.
The progress of the incentive auction could provide another reason for the commission not to grant the waiver, a broadcast attorney pointed out. The auction is in Stage 4, which many analysts and auction followers have predicted could be the auction’s final stage. FCC officials may be hoping the issue takes care of itself, since a completed auction would eliminate the need for a waiver, the attorney said. If the auction doesn’t end on Stage 4 (see 1612120063), Nexstar will have more fuel for its arguments in favor of waiver, but it’s difficult to know how they will be received since Stage 4’s end will take place after the FCC’s leadership transition, the attorney said.