Broadcast Execs Eye Deregulation, M&A in Earnings Calls
TV broadcast executives during Q4 earnings calls last week were bullish on merger and acquisition opportunities under the new White House and FCC leadership, but several also mentioned “softness” in some advertising categories, possibly connected to tariffs. Concern with tariffs is “putting a natural chilling effect upon advertising in the automobile sector” but should eventually “settle out,” said Gray Media co-CEO Hilton Howell.
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The companies also said they see positive signs for ATSC 3.0 and improvements in the balance between networks and affiliates. “I feel the prospect is as good as it has been in my career to see meaningful ownership regulatory reform come to the broadcast industry,” said Nexstar CEO Perry Sook.
The leaders of Tegna, Sinclair and Gray expressed similar hopes for ownership rollbacks and station transactions. “We are hopeful that many of the woefully outdated FCC regulations that have hampered growth in the broadcast industry over the recent decades will be revisited, if not eliminated in the coming months,” said Sinclair CEO Chris Ripley. He said the opportunities for stations to make deals have increased with the change in administrations, even under the current rules, before further deregulation. “This administration will follow the rules as drafted, but that was not the case with the prior administration,” he said. Many broadcasters saw the previous FCC’s blocking of the Standard General/Tegna deal (see 2404250059) and Mission Broadcasting’s purchase of WADL Mount Clemens, Michigan (see 2405230052) as contrary to the text and precedent of the FCC’s rules.
If rules against top four duopolies were to ease, several of the broadcasters said they would likely look to swap stations with other companies to improve their portfolios. Such deals “can be done with low to no cash” but generate synergies, Ripley said. Sinclair would also consider buying stations it operates under joint sales agreements and at large-scale mergers with other broadcasters if deregulation occurs.
Gray would look at swaps “because it's hard, particularly in smaller markets, to make a decent buck with the expenses of having significant local news,” Howell said.
“No one can, with a straight face, defend the current rules in the current environment,” Sook said, adding that in 2025 he has spent four days on Capitol Hill lobbying lawmakers. “I think there's a real understanding that preserving local journalism at the local market level is in the country's national interest,” he said. Tegna CEO Michael Steib said his company would be open to buying or selling stations for the “right opportunity.”
Several broadcasters said they were seeing lower ad revenue, particularly in the automobile category, at the end of Q4. “Some dealers and manufacturers are pausing or reducing their advertising campaigns,” said Gray co-CEO Pat LaPlatney. “Tariffs and continued high interest rates may impact near-term demand for newly used cars,” he added.
Sinclair saw “modest softness in several macroeconomic-sensitive categories late in the quarter,” said CFO Lucy Rutishauser. Tegna CFO Julie Heskett also noted automotive ads “continue to be challenged.” Howell said automakers “don’t know what the costs of goods sold are going to be” due to possible tariffs. “So many parts come from Mexico and Canada and other places around the world,” he said. Auto ads should rebound once there's more certainty, Howell said. “As President Trump has said, there may be some initial pain, but this too will pass.”
The TV companies said they were seeing a shift toward affiliates in the balance between stations and their networks. Gray saw its first decrease in network affiliation fees when it signed a recent deal with ABC, Howell said. “That agreement and the upcoming renewals this year with the other broadcast networks provide opportunities for us to rebalance the economics of those deals in light of the ... subscriber erosion” in multichannel video programming distributors and loss of exclusive programming that have occurred since the last renewal cycle, he said. ABC was the target of a letter late last year from FCC Chairman and then-Commissioner Brendan Carr on its relationship with affiliates (see 2412270039), just days before Gray announced the deal with ABC. “The FCC has shown some interest in the network affiliate relationship,” said Gray Chief Legal and Development Officer Kevin Latek.
The relationship between affiliates and networks is “symbiotic,” said Nexstar COO Michael Biard. The broadcast affiliate model “provides significant advantages to the networks” by letting them reach broadcast and MVPD audiences, “which they cannot do on their own,” he said.
Sook and Ripley see the FCC being receptive to NAB’s recent petition calling for a 2030 sunset of ATSC 1.0 and total shift to 3.0. That will free up a great deal of broadcast spectrum to be used for 3.0 content and datacasting, Ripley said, pegging 2030 as the moment when “the real volume of new revenue” will flow to broadcasting from the new standard. “Regulatory clarity” on the timeline for a nationwide switch to 3.0 is “essential” but also “time sensitive,” Sook said. “Our competitors are continuing to advance.”