A $75 million transaction announced in May 2023 that would have put a UHF station serving the Motor City in the hands of a licensee that, in turn, would have given Nexstar Media Group operational control of the facility, is officially dead.
While WADL-38 in Mt. Clemens, Mich. will no longer be sold to Mission Broadcasting, many are now wondering what the future holds in the nation’s 13th-largest market for The CW Network — which had been poised to shift to the Detroit-market station following its sale.
With the clock ticking on a deal that in late April 2024 received FCC approval — albeit with a host of conditions many believed would not be honored by the buyer — the seller, Adell Broadcasting, made it clear it would not participate in any appeal of the Commission’s decision.
This gave Mission Broadcasting, led by President Dennis Thatcher, two realistic options: Buy the station with the conditions set forth in the FCC’s approval of the deal, or pull the plug on the transaction. Mission chose the latter, notifying Adell, which also owns The Word Network, via e-mail and a FedEx letter dispatched late Wednesday from Thatcher. A copy was also sent to Coe Ramsey, legal counsel for Adell, at Brooks Pierce.
In the letter, Thatcher officially noted to Adell that it was terminating the purchase agreement set forth by the companies one year ago. Why? “The Memorandum Opinion and Order issued by the FCC’s Media Bureau on April 23, 2024, with respect to the FCC Application constitutes a Law that prohibits the consummation of the transactions contemplated by the Purchase Agreement in accordance with its terms.”
While one may state that is the opinion of Mission Broadcasting and not a fact, the key words in that statement are in accordance with its terms.
In order for Mission to complete its acquisition of WADL-38, Mission was prohibited from relying on Nexstar’s assistance with financing. “Mission’s financial dependence on Nexstar, and the potential for misuse and influence resulting from that dependence,” are key concerns expressed in the conditional deal approval from the FCC. As such, financial separation is an absolute must. And, market observers noted in conversations with RBR+TVBR, that all but prevented Mission from moving forward.
The terms also erased a provision giving Nexstar the right of first refusal to acquire WADL-38 at a later date — assuming a Republican was elected President, shifting leadership of the Commission to Brendan Carr or a future Chair.
But, the biggest issue that likely torpedoed the deal has everything to do with The CW Network, reborn under Nexstar Media Group and in need of a Detroit home come August 31.
In the FCC conditional approval of the deal between Adell and Mission, “No more than 15% of the total programming time aired on the station, including through any affiliation with The CW Network, NewsNation, or any other programming source that is majority-owned or controlled by Nexstar or its affiliates,” is permitted.
This prohibited Nexstar from entering into a shared services agreement with Mission to run WADL-38 as an affiliate of The CW, which would have mirrored an arrangement under scrutiny at the Commission involving Mission-owned and Nexstar-run WPIX-11 in New York.
Speaking Thursday morning to RBR+TVBR, Kevin Adell, who heads Adell Broadcasting, confirmed that Mission is not obligated to any termination fee, per the terms of the original asset purchase agreement. That said, Adell shares, “There’s $250,000 in escrow that I’m not signing a release for.”
It is being held by Brooks Pierce on Adell Broadcasting’s behalf.
This could set up a battle, as Mission states in its letter to Adell that the deposit and any accrued interest “is to be disbursed to Mission.”
He also says he’s not surprised at all that he received the letter from Thatcher.
“Whatever Mission sent yesterday to the FCC or myself is irrelevant, as Mission was never going to do a deal with Mission Broadcasting after the fines and forfeiture came out,” Adell said. “I believe they didn’t do an appeal because of the eventual administrative hearing, which would be a [big] risk.”
He affirmed his earlier statement that Adell would not participate in any appeal of the FCC’s conditional approval of his deal with Mission.
A NETWORK IN LIMBO
On April 19, The E.W. Scripps Co. announced that it be dropping The CW from seven markets; it later confirmed that Nexstar-owned stations in the markets where it owns stations would be picking up the network.
In Detroit, the pending departure of The CW from WMYD-20 on August 31 brings many unanswered questions — with all eyes on Nexstar and its founder and head, Perry Sook.
Scripps grabbed The CW affiliation on a short-term basis — only because Nexstar did not pay Adell after WADL-38 briefly assumed The CW in 2023 as part of a plan that would, in Nexstar’s eyes, have been a smooth transition in ownership without disruption to local viewers of where to find The CW.
Instead, The CW has been on three channels since the start of last year, with WKBD-50 in Detroit opting to discontinue its ties to the network as part of a bigger effort across CBS News & Stations to use its secondary stations in markets where it also owned a CBS network property as a local news hub aligned with its growing digital all-news channels.
With The CW set to depart WMYD in 14 weeks, many market observers believe Sook has just one chess move left that makes sense for The CW: engage directly with Adell on an affiliation agreement for The CW by entering into an LMA with the company directly.
Such an LMA agreement would come on Kevin Adell’s firm terms: Nexstar would need to pay 80% of the $75 million purchase price — a $60 million check — to Adell.
Is WADL-38 the only potential home left for The CW? Yes … unless it opts for a digital multicast channel, which some note is undesirable in Detroit as consumption of “diginets” in the market is low, resulting in sales challenges as cord-cutting increases are being seen across the nation.
A glance at the Detroit over-the-air channel guide shows WJBK-2, the FOX O&O, with five digital multinets; WHNE-LD 3 is the NewsNet home and boasts three diginets; Graham Media Group flagship WDIV-4 has three diginets, too; and Get After It Media, run by Joel Wertman, controls WHPS-15 and its seven choices of digital multicast networks.
The other full-power broadcast TV stations in Detroit are owned by Scripps, CBS parent Paramount Global, and non-commercial entities; Canadian stations have been ruled out.
What does this mean for The CW?
Adell offers a solution. It’s now up to Nexstar on how it wishes to proceed.
