Nexstar Media Group announced this morning it has entered into an agreement to acquire TEGNA in a cash transaction valued at $6.2 billion.
The deal, which comes as the Trump Administration led FCC plans on eliminating most ownership caps, will give the combined Nexstar 265 television stations covering 132 of the 210 television markets. Nexstar states it will have stations in 9 of the top 10 DMAs, 41 of the top 50 DMAs, 62 of the top 75 DMAs and 82 of the top 100 DMAs, covering, in total, 80% of U.S. television households. Nexstar and TEGNA overlap in 35 of the 51 markets where TEGNA currently operates in “providing improved synergy potential in these markets.”
Nexstar states that, “following completion of the transaction, the combined entity will be a leading local media company, well-positioned to compete in today’s fragmented and rapidly evolving marketplace. The new company will be better able to serve communities by ensuring the long-term vitality of local news and programming from trusted local sources and preserving the diversity of local voice and opinion. Nexstar will also be able to provide advertisers with an even greater variety of competitive local and national broadcast and digital advertising solutions to serve brands and consumers more effectively.”
The combined company will also have radio holdings in a pair of markets. Nexstar acquired News/Talk 720 WGN Chicago as part of its 2019 purchase of Tribune Broadcasting and has continued to operate it in tandem with WGN-TV. TEGNA also acquired Sports “97.1 The Fan” WBNS-FM and “ESPN 1460” WBNS Columbus OH in 2019 as part of its purchase of Dispatch Broadcasting’s television stations in Columbus and Indianapolis, the same year it sold KFMB AM/FM in San Diego. The Nexstar deal will now combined Nexstar’s “NBC 4” WCMH and TEGNA’s CBS affiliate WBNS-TV. In both cases, the radio stations have continued to operate much as they did under previous ownership with limited changes.
If there is one thing to guarantee post-closing, there will be significant cuts in the markets where both companies currently operate as Nexstar estimates annual net synergies of approximately $300 million from a combination of revenue synergies and net operating expense reductions. In Scranton/Wilkes-Barre PA, the combined entity will own the ABC, CBS and NBC affiliates in the market. In a market like Denver, Nexstar will own four stations as “CW 2” KWGN and “Fox 31” KDVR welcome NBC affiliate KUSA-TV 9 and independent KTVD 20 into the fold.
Nexstar Chairman/CEO Perry Sook said as much in the press release announcing the deal, “Nexstar has a stellar long-term record of growth through its deals, having completed many well-received transactions since 2011, including the 2019 acquisition of Tribune Media. The playbook we followed to make those transactions successful – improving and increasing local content, executing on identified synergies, and quickly de-leveraging our balance sheet with free cash flow post close – are the same opportunities and strategies we will use in connection with this transaction. With committed financing and a plan for significant synergy realization, we believe the combined entity will be poised for growth, leverage reduction, and the enhancement of shareholder value.”
This deal is a foreshadowing of what further deregulation will bring to both television and radio. While the talking point from the executive level continues to be about giving the companies reach to compete nationally against digital platforms, the loss will be in the amount of content options provided at the local level, which could send eyes and ears elsewhere.
This story first appeared on radioinsight.com