TV Station M&A May Quicken as U.S. Is Said Poised to Ease Rules

(Bloomberg) -- The U.S. Federal Communications Commission plans to ease TV ownership limits in local markets in September, according to three people briefed on the agency’s plans that could help unleash dealmaking long sought by broadcasters.

Rules up for a vote include one that would permit ownership of two of the four most-viewed stations in a market, said the three industry officials who spoke on condition of anonymity because the agency’s proposal haven’t been made public. The easing is backed by the FCC’s Republican chairman.

Broadcasters eager to consider merger deals have chafed under the ownership restrictions. The rules were written to guarantee a diversity of voices for local communities, and broadcasters say they’re outdated in an era of media abundance featuring cable and internet programming.

All of the larger TV station owners are eager for the relaxation of ownership rules so they can purchase their peers, John Janedis, an analyst with Jefferies, said in an interview.

“The reality is everyone is talking to everybody,” Janedis said. “There are a lot of buyers out there.”

Companies interested in deals could include Nexstar Media Group Inc., Tegna Inc., the E.W. Scripps Co. and possibly Meredith Corp., Janedis said.

The National Association of Broadcasters, a trade group, asked the FCC to reconsider its decision last year to retain most restrictions. The agency was led by Democrats then; now under Republican Chairman Ajit Pai, appointed by President Donald Trump, the agency plans to act on the request, according to the industry sources.

Neil Grace, an FCC spokesman, declined to comment.

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The local rules are separate from the national audience cap that limits companies to owning stations that reach 39 percent of the U.S. audience. That rule could force Sinclair Broadcast Group Inc. to sell some stations in return for approval of its proposed purchase of Tribune Media Co. The $3.9 billion deal is before the FCC for approval.

Pai and his fellow Republican Commissioner Michael O’Rielly , who together form the majority at the FCC left short-handed following the U.S. election, were critical last year when the FCC affirmed the ownership restrictions. Pai said the agency should loosen the local-TV limits, and O’Rielly said it “defies belief” to say the rule is needed, given “literally hundreds of competitive pay TV channels and essentially unlimited competitive internet content.”

The local-TV rule allows a company to own two stations if at least one of the stations is not ranked among the top four stations locally, and at least eight independently owned TV stations would remain in the market after the proposed combination.

Read More on Media Regulation Rules to Be Examined by FCC

Representatives of pay-TV companies wary of the negotiating clout that combined stations could have last week told the FCC of “concerns” if the top-four restriction were relaxed or eliminated, according to a filing at the agency. Broadcasters are raising fees they charge to cable and satellite companies in return for permission to carry their signals. Companies represented at the July 11 meeting with FCC staff included cable provider Charter Communications Inc., satellite-TV company Dish Network Corp., and DirecTV owner AT&T Inc., according to the filing.

Other rules targeted by broadcasters and to be considered by the FCC include the ban on common ownership of a daily newspaper and nearby broadcast station, according to the industry sources.

To contact the reporters on this story: Todd Shields in Washington at tshields3@bloomberg.net, Lucas Shaw in Los Angeles at lshaw31@bloomberg.net.

To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net, Elizabeth Wasserman