Nexstar files suit against FCC over ownership rules

Nexstar Media Group is taking the FCC to court over its station ownership rules.

The Texas-based company is asking the Fifth Circuit Court of Appeals to overturn a set of rules that tightened ownership rules.

The FCC reviews ownership guidelines ever four years, but its 2018 effort was delayed to the point where the National Association of Broadcasters sued in September 2023. The result was that the FCC was given 90 days to issue its 2018 set of rules. 

The rules were officially released in December 2023 and were largely unfavorable to large station groups or others looking to control large blocks of stations.

A key provision in the update closed a loophole where a network-affiliated station could be transferred to a streaming or low-power signal to evade ownership rules.

In its filing, Nexstar says that the 2018 rules are ripe with legal errors, inconsistencies and faulty conclusions and ultimately violates the Administrative Procedure Act and the Telecommunications Act of 1996.

It goes on to claim the FCC is overstepping its authority to tighten ownership rules because there is no legitimate reason for the new rules’ limits.

Nexstar also took issue with a new multicasting rule that the FCC said it will use when considering local reach. The rule now allows the agency to consider “the combined audience share of all free-to-consumer, non-simulcast multicast programming airing on streams owned, operated, or controlled by that station as measured by Nielsen Media Research or by any comparable audience ratings service,” which could lead to issues with stations carrying a second major network affiliation on a digital subchannel.

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Nexstar also objects to the FCC’s decision to continue to limit a single company from owning stations that reach more the 38% of U.S. households. 

Nexstar is the largest owner of commercial TV stations in the country. It owns 160 stations outright and has control over an additional 40 through agreements it has with other station owners, often ones that it has ties to. While each station technically has a different owner on paper, the differences between the two corporations is often little more than a technicality. 

This structure lets Nexstar and other owners skirt FCC ownership rules because the linked stations have different owners but are typically operated by Nexstar under a shared services agreement or local marketing agreement. This essentially means that Nexstar is in a position to control both the business affairs and content of multiple stations in a single market.

Many TV station owners groups have been pushing for looser ownership rules, saying that the current guidelines are outdated, having been written before streaming and other news and information sources were launched. 

Many of these rules were designed to prevent a single owner or company from taking over all local broadcasting, including radio, and being able to control ad revenue and editorial voice across all outlets (there are also rules in place that limit local newspapers from owning stations, though the downfall of newspapers have largely made those rules less relevant). 

Over-the-air local stations have steadily become less independently owned and operated over the years as groups gobble up stations in markets large and small. In many cases, this allows the stations to consolidate backend operations, including administrative functions. Large groups can also pool their resources to create graphic design and master control hubs that serve multiple (or all) of its stations, reducing costs and removing jobs from a station’s hometown region.

Owning more than one station in the same market can have even more appeal because even jobs that can’t be “hubbed,” such as anchors or reporters, can be shared across both station’s airwaves, potentially allowing stations to collect more ad revenue using the same number of employees.