Many FCC-watchers expect deregulatory minded FCC Chairman Ajit Pai will raise the station ownership limits, and station groups like Sinclair, Nexstar, Gray and Tegna are good bets to be buying. But what about the Big Four networks? With the possible exception of CBS, I don't see them as ready to pounce on the shopping opportunity that Pai may hand them.
By Harry A. Jessell
TVNewsCheck, March 17, 2017 3:51 PM EDT
Everybody in and around broadcasting believes that there will be another wave of consolidation over this year and next triggered by FCC Chairman Ajit Pai loosening the ownership restrictions. I've talked about it several times here since Donald Trump's election.
But who will be the buyers? And who will be the sellers?
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Atop the seller column is Tribune. A year ago, the troubled company began a top-to-bottom "strategic review." So far, that has led to the spinoff of real estate and some non-broadcast assets like Gracenote.
Now, the expectation is that it will take advantage of the Trump-inspired deregulation to start selling its vast collection of TV assets that include news-producing stations in seven of the top eight markets, although none are Big Four affiliates.
On the buy side, most of the talk has focused on Sinclair, Nexstar and Gray. They led the last round of consolidation that ran from 2011 until the FCC shut down the station trading market early last year so it could conduct the incentive auction.
The only thing holding back Sinclair and Nexstar right now are the ownership rules that have effectively limited them to a household reach of 39%. Speculation is running high that Sinclair will make a play for as many of the Tribune stations as the rules and its finances allow.
Gray has plenty of headroom under the rules, but targets top stations in smaller markets.
In a note to her clients this week, Wells Fargo analyst Marci Ryvicker also includes Tegna on the list of possible buyers.
But what about the Big Four networks?
With the possible exception of CBS, I don't see them as ready to pounce on the shopping opportunity that Pai may hand them.
When ABC passed on buying Allbritton's WJLA Washington and its other ABC affiliates in 2013, it effectively declared to the world that it wasn't interested in expanding in broadcasting anymore. Unlike CBS, NBC and Fox, ABC has had plenty of room under the FCC cap to grow if it wanted to. It just doesn't want to.
NBC has shown few signs that it wants to buy.
It did push into Boston in January, stripping Ed Ansin's WHDH of its affiliation. But it did so out of whole cloth. Because there was no full-power station available in the market (the combative Ansin surely wasn't going to sell), NBC created an O&O by stitching together its regional cable channel with a couple of low-power stations. It's going to be a while before we can gauge the wisdom of the move.
21st Century Fox CEO James Murdoch told analysts last month that Fox was not interested in more stations. "We really like the shape of our station business right now."
But he also gave the company a little wiggle room. "There always may be affiliation swaps or other little bits and pieces around the edges."
I wonder if that is enough wiggle room for Fox Televisions Stations President Jack Abernethy to try for some of Tribune's large-market Fox affiliates. Those in Seattle and Milwaukee would be particularly appealing.
Over the past few years, Abernethy has gone after markets with teams in the NFL's National Football Conference so that he can take full advantage of the Fox network rights to those teams' Sunday games. Seattle and Milwaukee (Green Bay Packers) are two of the three AFC markets he doesn't have.
So maybe Fox picks up "little bits and pieces around the edges."
That leaves CBS.
When I interviewed CEO Les Moonves just before NAB last year, he reconfirmed his interest in expanding the CBS station portfolio.
"I think the station business is a terrific business," he said. "We believe in it. We like running our owned-and-operated stations that are doing extremely well. If there wasn’t a limit by the FCC, we would own more stations.
"Frankly, it’s sort of ironic that a number of our station owners who were against us getting bigger are now sort of running up against some of the same [regulatory] walls as we did."
I once thought such pronouncements were Moonves' way of telling analysts he loves his TV stations and that they should, too.
But I have heard them so often now that I am beginning to think Moonves actually means it.
If we presume that he does, the question becomes what stations.
As much as Moonves talks about his love of TV stations, he talks about his love of the NFL and how vital it is to the well-being of his network. CBS holds the rights to the Sunday games of the NFL's American Football Conference as well as Thursday night games.
