Nexstar/Media General Waiver Granted; Deal Approved
The FCC approved Nexstar’s request for a waiver allowing it to buy Media General for $4.6 billion despite the ongoing incentive auction, and approved the deal, said an order released Wednesday by the Media Bureau and Wireless Bureau. The moves were expected (see 1701030054). The Media Bureau and Wireless Bureau granted the waiver allowing the deal to proceed because of the unusual circumstances that Media General was still enmeshed in negotiations with unsuccessful prospective buyer Meredith when it reached the deal with Nexstar, a situation that caused the deal to be filed too late to be approved before the auction. Nexstar certified it will be bound by Media General’s decisions over its stations in the incentive auction, the order said. Stocks of both companies rose Wednesday.
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DOJ already approved the takeover (see 1609020046), and the transaction includes seven divestitures intended to appease government concerns about multiple ownership. The divestitures include low-power TV station KLAF-LD Lafayette, Louisiana, being sold to minority-owned Bayou City Broadcasting. The order said the deal is good for the public interest because it will allow Nexstar viewers access to Media General’s state and Washington, D.C., news bureaus. “Other than customary closing matters, Nexstar and Media General have completed all of the steps and satisfied all of the merger agreement conditions necessary to finalize the planned transaction,” Nexstar said in a news release.
The order also contains a provision on the confidentiality rules for the incentive auction. Though commonly owned stations are allowed to discuss bidding strategies under the auction rules, Nexstar and Media General’s deal missed the deadline for that exception, the order said. Licensees that couldn’t previously discuss bidding strategies before the auction began are still barred from doing so, the order said. That’s a provision that will likely be difficult to enforce, a broadcast attorney told us.
Nexstar included the waiver in its initial application filing, and stepped up lobbying efforts as the incentive auction continued to drag into multiple stages. Industry observers speculated that concern about the deal’s effects on retransmission consent negotiations or other matters may have made the agency reluctant to grant the waiver. “Maybe it was the number of retrans negotiations that were up at year end,” Wells Fargo analyst Marci Ryvicker emailed investors. “Maybe it was just the FCC still digesting [President-elect Donald] Trump's win. Maybe Chairman Wheeler is ceding defeat honorably. The important thing is that the waiver has been granted and there are no surprises."
“The American Cable Association is pleased that the Media and Wireless Telecommunications Bureaus allowed long-standing and on-going retransmission consent negotiations over agreements set to expire at the end of 2016 to conclude prior to approving Nexstar's deal,” ACA President Matthew Polka said in an email. Nexstar closed up 7.5 percent to $65 while Media General gained 4.1 percent to $19.28.
It’s unlikely this deal will lead to further waivers allowing mergers and acquisitions during the auction, Ryvicker said. “We still do not anticipate any large M&A to resume until AFTER THE AUCTION CONCLUDES." That’s not fair to many smaller broadcasters that are unable to make deals and don’t have access to Nexstar’s lobbying muscle, a broadcast attorney pointed out.