The Federal Communications Commission has hit Nexstar Media Group and its business partner Mission Broadcasting with a $1.2 million fine and an order to sell WPIX-TV New York or other stations to come into compliance with longstanding station ownership limits.
The commission on Thursday issued a 42-page decision in its probe of Nexstar’s ties to Mission Broadcasting and whether their business agreement violated the FCC‘s reach limit on TV station ownership. The commission’s concluded that Nexstar’s near-total oversight of WPIX’s operations gave the station giant effective control of precious TV industry real estate — a full-power broadcast TV station in the nation’s largest market. The commission fined Mission $612,395 for its part in the activity.
The regulatory dust-up stems from Nexstar’s $4.1 billion acquisition of Tribune Media in 2019. The deal made Nexstar Media Group the nation’s largest owner of TV stations at nearly 200. Tribune’s 42 stations included strong outlets in the nation’s top three TV markets: WPIX-TV New York, KTLA-TV Los Angeles and WGN-TV Chicago. But the deal put Nexstar well over the FCC’s rule that no single entity can own stations reaching more than 39% of U.S. TV households. Nexstar had to divest more than 20 stations to stay under the station cap. WPIX was among the stations that were sold off, in part because the New York market alone accounts for for 6.5% of the total U.S. TV universe. Selling off WPIX to Mission in 2020 allowed Nexstar to keep more stations under its roof. With WPIX’s 6.5% reach added to Nexstar’s current portfolio, the company’s total U.S. footprint stands at about 45%, the commission said.
The detailed report asserts that the operating agreement between Nexstar and Mission is a thinly veiled way to get around the commission’s ownership cap and other rules.
The FCC gave Nexstar and Mission two options to remedy the violation within 12 months: Sell WPIX to an unaffiliated third party, or sell enough other Nexstar stations to bring the company in line with the 39% limit.
“Nexstar and Mission must undertake one of two options within twelve months of the issuance of any forfeiture order or payment of the forfeiture proposed in this [Notice of Apparent Liability], whichever comes first, whereby either (1) Mission divests WPIX to an unrelated third party, or (2) Mission formally sells WPIX to Nexstar and the Parties file an application seeking Commission consent to the assignment of license, with Nexstar divesting a sufficient number of other stations to reduce its national coverage footprint consistent with the National Ownership Cap.”
Perry Sook, Nexstar’s chairman and CEO, defended the company’s conduct and promised to appeal the commission’s decision.
“We are extremely disappointed in today’s action by the Federal Communication Commission regarding our relationship with WPIX-TV and we intend to dispute it vigorously,” Nexstar’s founder said. “We believe the FCC has been misled by the often distracting noise in the media ecosphere and that it has completely misjudged the facts. The facts are that Nexstar has always complied with FCC regulations and that its relationship with WPIX-TV under a Local Marketing Agreement (LMA) was approved by the FCC in 2020, when WPIX-TV was purchased by Mission Broadcasting, Inc. Nexstar believes that joint operating, shared service, and local marketing agreements like those in which it is engaged are vitally important to maintain a competitive media marketplace and to enable broadcasters to continue investing in local news, investigative journalism, and other services that they uniquely provide to the communities in which they are located.”
The FCC’s ruling on WPIX is another sign of the Biden administration’s hard line when it comes to mergers and acquisitions and media and tech regulation. It comes at a time of heightened tension for local broadcasters and all of the traditional TV landscape that is struggling with the industry’s transition to digital. DirecTV, which has battled Nexstar in the recent past over retransmission consent fee negotiations, was quick to applaud the FCC’s move. Nexstar’s presence in New York makes the company a more formidable negotiating partner with national MVPDs such as DirecTV.
“We applaud the FCC’s efforts to enforce the media ownership rules on relationships Nexstar has with sidecars like Mission Broadcasting,” DirecTV said in a statement.