The mid-19th century was defined by the Gold Rush, as investment moved west to mine the precious metal. The early 20th century saw an oil boom, as demand for petroleum products skyrocketed and new pockets emerged across the country. Broadcast spectrum may not be as valuable as gold, or as versatile as oil, but there are early signs that starting in 2025 it will be the asset Wall Street is salivating over. This is called a broadcast land grab.
The incoming Trump administration has made it clear that deregulation will be at the top of its priority list, and the companies that own local TV stations – Nextar, Sinclair, Gray, EW Scripps and Tegna, among many others Besides – are practically worried. It can mean for them.
The demand for revenue for broadcast station owners after the election felt like the industry was breathing a collective sigh of relief. “We are very excited about the regulatory environment ahead,” Sinclair CEO Chris Ripley told analysts on Nov. 6. It feels like a cloud is lifting over the industry.
“I’m certainly of the personal opinion that the regulatory system needs to be re-evaluated,” Tegna CEO Mike Steib added on Nov. 7.
And, Nexstar CEO Perry Sock noted on a Nov. 7 earnings call, “Obviously, the number one legislative priority of Nexstar and our trade association, NAB, is ownership deregulation at both the national and local levels.”
And CEOs are likely to get what they want, at least at the FCC, where Chair Jessica Rosenworsell is set to exit next year in favor of a more business-friendly chairman, with incumbent GOP Commissioner Brandon Carr a likely contender. will appear as
Wall Street is already bracing for what’s to come, with Wells Fargo’s Steven Cahill responding to the election by upgrading Sinclair to “equal weight” from “underweight.” In a Nov. 7 note, Cahall wrote: “A Republican FCC from 2025 would likely improve the outlook for broadcasters by deregulating and allowing consolidation.”
As Cahill observes, however, there is still much to be done. While a relaxed Justice Department and Federal Trade Commission is likely to be a net positive for big business, broadcasters are focused on the FCC, where outdated rules have held back stability. There are some things the GOP-led FCC could do faster, such as relaxing duopoly rules that limit how many stations an owner can own in a market, or applying a “UHF discount.” , which allows station owners to expand by buying stations. UHF frequency. “The rules around local broadcasting are incredibly outdated,” says Alan Wolk, founder and lead analyst at industry research firm TVREV. “They made sense in an era when streaming wasn’t a thing.”
If you talk to any high-level station executive, it doesn’t take long for their ire to turn to big tech companies like Google and Meta, which have taken most of the advertising dollars from local and regional businesses that all used to be more loyal buyers than of broadcast TV commercials.
“Google generates 50 times more ad revenue than any other broadcaster in our markets, and TikTok has a larger share of youth news viewing than any single broadcaster and a foreign competitor,” Staib said. Owned.” “And even today, we’re not allowed to buy the Fox station in Waco, Texas.”
However, there would be other changes, which would require buy-in from Congress, aimed at helping broadcasters try to level the playing field with tech companies. At the top of that wish list is lifting — or even abolishing — the national ownership cap, which limits owners of broadcast TV stations to 39 percent of TV households.
If it is picked up, it is certain that the country will see its first national broadcaster in all (or almost all) local markets in relatively short order.
“Our industry’s real competition is the big tech companies that have unfunded access to every screen in America, from phones to desktops to living room TVs, but we still struggle to compete with these naysayers. The capacity is affected by the regulations which were last updated in 2004,” Sook said. “To preserve local journalism, the industry needs strong companies that can compete on a level playing field for both viewers and advertisers on every screen in America, not just some of them.”
The executive has also argued that the push could be bipartisan, given Republican views on deregulation and Democratic desire to help local news outlets.
In fact, in the broadcast industry, Nexstar is seen as the most likely station owner to try to make the play on a national scale, should Congress rewrite the rules and eliminate the cap.
Both Ripley and Steib have told Wall Street that Sinclair and Tegna could be buyers or sellers, depending on what’s best for shareholders (“We intend to participate in M&A,” Ripley said. said Steib, making similar remarks). But Irving, Texas-based Nextar is led by the ambitious Sook, who led the launch of the NewsNation cable channel and the acquisition of The CW, both national dramas from a local station owner.
If the FCC relaxes ownership rules and the station cap ends, a station land grab unlike any other in the country will take place. “I think in a lot of smaller markets, we’re going to see less broadcasting, or co-ownership, things like that, where a big company comes in,” Wolk says. “You’ve got your Sinclairs and Nextars and Tegnas, and then you’ve got a station that was founded by great-grandfather that’s been in the family for years. It’s a viable business, but, you know, How long?”
Nexstar, which has stations in nearly every TV market, may be able to fight for advertising dollars more effectively than a family TV station in Grand Forks, North Dakota, or Zanesville, Ohio.
But broadcast land grabs have also begun due to the growing conflict between local TV station owners and large national broadcasters.
Because of deals made years ago, national networks like ABC, CBS and NBC negotiate streaming deals for all of their affiliates (this is not the case for carriage on traditional pay-TV platforms like cable or satellite). , where station owners negotiate for themselves). And many of these national networks have their own streaming services that carry local TV (Disney owns Hulu, NBCUniversal owns Peacock, and Paramount+ owns Paramount, all of which have tiers that are local). operate the stations).
Some observers believe the back-burning dispute could come to the fore in the coming years, as network owners reassess their investments in content and station owners seek greater scale and autonomy.
“There is a problem. [station owners] On everyone’s mind is ‘what will happen to us if the networks stop giving us content?’ Which is a distinct possibility in the next couple of years,” says Wolk. “At what point does NBC say, ‘Why are we doing original programming for our O&Os and affiliates? We can just put him on the peacock and let him get it the next day or the day after.’ “
And at Paramount, incoming president Jeff Schell has told Wall Street that “if there’s going to be a change for CBS, we’re probably going to manage it a little more aggressively for cash flow … meaning going forward. making some difficult decisions during, which you have to make when your business falls.” While he was running NBCU, Schell expressed the possibility of giving up the 10 p.m. slot and handing it over to affiliates.
In a new regulatory environment and a new media environment, where TV is threatened by tech, the next four years could see some big changes in broadcast TV. But what form these changes take is still as elusive as a TV out of reach of the nearest broadcast tower.
Keep watching.
Credit : www.hollywoodreporter.com
