PORTLAND, Ore. —In the wake of reports that Nexstar Media Group and Tegna are in advanced merger talks, respected advertising and media analyst Brian Wieser’s Madison & Wall Substack has issued an analysis arguing that consolidation won’t be a quick fix for ad woes facing station groups.
Wieser made the comments after The Wall Street Journal reported Aug. 9 that Nexstar is in advanced negotiations to acquire Tegna.
Madison & Wall estimates the deal would create the 18th largest seller of advertising in the world, with about $3.4 billion in ad revenue.
The proposed deal comes at as broadcasters hope the Federal Communications Commission will eliminate broadcast ownership requirements.. That has prompted a number of proposed acquisitions that would require changes in FCC rules, including Gray Media's plans to acquire stations from AMG and Block Communications.
If the Nexstar-Tegna deal is announced and completed, the scale of the much-larger new company wouldn't change Madison & Wall’s ongoing view of the challenges facing the TV station business, which has been hurt by the shift of ad dollars to digital. “[L]egacy advertisers of all sizes continually shift resources away from television and towards digital platforms,” the analysis noted.
For example, Madison & Wall said “auto retailers … according to data from their trade association (NADA) allocated 23.7% of advertising budgets to television in 2015, but only 10.9% last year. Over that same time period, internet advertising rose from 27.8% to 73.1% of the average dealership’s budget.”
In addition, the Madison & Wall analysis stressed that local broadcasters face ongoing competition from self-serve ad platforms such as The Trade Desk, Amazon and others, which simplify the digital ad-buying process.
Overcoming those obstacles, the Madison & Wall report said, will require more investments in reversing those trends than “we have seen in the past from any company in the local broadcast sector.”
