On December 3, 2018, RBR+TVBR offered readers a detailed look at where Nexstar Media Group would likely need to divest stations in order to complete its merger with Tribune Broadcasting.
Today, TEGNA and The E.W. Scripps Co. are picking up some 19 Nexstar stations, collectively, that it needed to sell. Three markets noted then weren’t involved in Wednesday’s transactions. Does this mean there’s more to come?
As first noted by RBR+TVBR some four months ago, Nexstar’s current station roster illustrates how the company presently looks, and where it is strongest. This includes its home state of Texas, the South, New York and New England, and a sizable portion of the Midwest. That said, Nexstar enjoys ownership of stations in Portland, Ore.; Las Vegas; San Francisco; Phoenix; Fresno; and Bakersfield.
With Tribune, it gets so much more. This explains the divestment of 11 Nexstar stations across eight markets to TEGNA for $740 milllion and the sale of eight television stations in seven markets to Scripps for $580 million.
Prior to the deals, Nexstar’s ownership of stations in the Norfolk market led many to speculate as to which TV station would be disposed of. Nexstar sees Shared Services partner Dreamcatcher Communications operate Tribune’s WTKR-3 and WGNT-27. Nexstar already owns NBC affiliate WAVY-10 and WVBT-43, the FOX affiliate.
In the end, Nexstar sold to Scripps both WTKR, the CBS affiliate, and WGNT, the CW affiliate, in Norfolk, and will remain the owner of WAVY-10 and WVBT-13.
The other top market that was eyed for divestiture is Indianapolis.
But, no stations were sold there to either TEGNA or Scripps.
This leads Volker Mörbitz, a research analyst with S&P Global Market Intelligence’s Kagan arm, to believe Nexstar isn’t done with its spin-offs.
In Indianapolis, Nexstar already owns The CW Network affiliate WISH-8 and MyNetwork TV affiliate WNDY-23. Tribune’s assets in the markets are comprised of FOX affiliate WXIN-59 and CBS affiliate WTTV-4.
What Nexstar will do is the subject of speculation already.
That’s because Nexstar still has to contend with overlap issues in both Portland, Ore., and the sprawling Washington, D.C. DMA, Mörbitz says.
In the National Capital Region, Tribune owns WDCW-50. Nexstar has a market presence through Hagerstown, Md.-based WDVM-25. In Portland, Tribune owns KRCM-32, The CW Network affiliate, and Nexstar owns CBS affiliate KOIN-6.
Are spin-offs not happening in those markets, with Nexstar going for duopolies?
Perhaps, as it is dealing with its national audience reach cap through a deal that sees it sell WPIX-11 in New York — for now. WPIX is being sold separately from the other Nexstar stations, for $75 million. Why? Scripps has granted Nexstar the option to buy back WPIX, with an option exercisable from March 31, 2020, through the end of 2021.
This suggests that it believes “modernization” of FCC regulations regarding ownership reach are on the way, and with loosening of local rules could negate any need to sell in the Nation’s Capital or in Oregon’s Rose City.
It also explains why WPIX’s sale is a huge bargain for Scripps.
“They basically gave the station away for free,” Mörbitz tells RBR+TVBR. “In our estimates, WPIX has a 2019-2020 average revenue of $166 million. Selling that station for $75 million makes it 1.5x revenue.”
Meanwhile, questions remain with the future of stations in Portland; Washington, D.C.; and Indianapolis. Could Meredith Corp. be involved?
Interestingly, KASW-TV, the CW affiliate in Phoenix, was sold to Nexstar in October 2014 by Meredith, which has a strong presence in the Valley of the Sun in CBS affiliate KPHO-5 and news-focused unaffiliated KTVK-3.
Could Nexstar be poised to take these stations, via a swap?
WDVM would bring Meredith into DMA No. 6. But, what else could Nexstar give up to gain Phoenix? With Meredith operating in Saginaw, Mich., perhaps Nexstar’s stations in Grand Rapids and Lansing are of interest. Stations owned by Nexstar in Joplin and Springfield, Mo., could also be attractive to Meredith, given that company’s existing presence in nearby Kansas City and St. Louis and the need for Nexstar to integrate K.C. and St. Louis properties from Tribune into its family to better compete against Meredith.
But, what about Portland, where Meredith has two stations in its FOX-affiliated KPTV-12 and “FOX 12 PLUS” KPDX-TV?
The answers could come soon.
