FCC rules Nexstar-WPIX deal violates ownership rules, company says it will ‘vigorously’ fight decision

The FCC has ordered Nexstar Media Group’s closely-linked partner Mission Broadcasting to sell WPIX in New York City after deciding the station’s previous sale violated federal TV ownership rules.

In the March 21, 2024, ruling, Nexstar was also ordered to pay a $1.2 million fine. The FCC notes that Nexstar surpassed a cap on TV station ownership during a series of deals that resulted in WPIX falling under Nexstar’s control.

The FCC has long maintained that a single owner could not own stations that reach more than 39% of U.S. households. 

Nexstar first acquired WPIX as part of a 2018 deal to acquire Tribune Media’s TV stations. It then sold WPIX to the E.W. Scripps Company for $75 million in September 2019 as part of $1.32 billion of divestitures.

That sale, however, granted Nexstar the right to buy the station back in the window between March 31, 2020, and Dec. 31, 2021. That option was then transferred to Mission, which ultimately exercised it and bought WPIX in 2020.

The FCC signed off on the Tribune transaction with some divestiture requirements. 

Since then, Mission has retained ownership of the station but has a local marketing agreement with Nexstar to run it. The FCC also approved the LMA.

Nexstar and other media companies have engaged in similar tactics in other markets for years to reduce costs by consolidating at least some of the operations of multiple stations while still retaining separate owners on paper.

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In at least some of these cases, the structure of the deals between two owners may be in the form of a shared services agreement, joint sales agreement, LMA or other legal structures. These agreements typically dictate what departments and operations can be shared between the stations (for example, a SSA may bar stations from combining advertising sales or accounting operations).

These types of arrangements are appealing to station owners because they can reduce costs through consolidation and also combine negotiations, seemingly for more leverage, during retransmission agreements with pay TV providers. 

Mission owns one or more stations with some form of a shared services agreement with a Nexstar station in the same market in all regions it operates in — except New York City in the case of WPIX.

While it’s likely that Nexstar and Mission realize at least some cost savings as a result of the WPIX LMA thanks to models such as service hubs, it wouldn’t have any direct operational savings related to having another station in the same market.

At least some lawmakers, activists and industry watchers have expressed concern over this practice as essentially a loophole in the law aimed at bypassing regulations meant to ensure diverse ownership and voices in local media.

For its part, Nexstar fired back.

“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. We believe the FCC has been misled by the often distracting noise in the media ecosphere and that it has completely misjudged the facts,” said Nexstar CEO Perry Sook in a statement, who also said the company abides by FCC regulations and the LMA at WPIX was approved by the FCC. 

“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,” Sook added.

Nexstar did not elaborate on the fact that it does not own another station in the NYC market, meaning it’s not directly sharing costs with another local station in the same city. 

FCC chair Jessica Rosenworcel defended the ruling by citing the 39% ownership rule.

“The record here reflects a situation where a company exceeds this threshold. Unless and until Congress changes this law, it is the responsibility of this agency to enforce it,” she said in a statement.

Republican commissioner Brendan Carr, however, took a slightly different view.

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“It is concerning to me that the FCC cites as evidence of control those features of the relationship that the FCC previously signed off on. We need to be careful that we do not undermine reasonable reliance on prior FCC decisions,” he wrote. 

Should the FCC prevail, Mission does have some options.

It could opt to sell WPIX outright outside of its relationship with Nexstar. Alternatively, it could sell the station to Nexstar, but that would require the company to sell off other stations to get under the 39% mark.