While top executives at broadcast TV station groups reported first-quarter revenue declines amid economic uncertainty and the impact of tariffs on the economy, they offered bullish sentiments regarding the prospects for significant deregulation in broadcast ownership rules and M&A activity.
“In my 45-plus years in the industry, I continue to believe that the prospect of meaningful broadcast ownership reform has never been better than it is today,” Perry Sook, chairman and CEO of Nexstar Media Group and chair of the NAB’s Joint Board of Directors, said in kicking off Nexstar’s first-quarter earnings call. “We are fortunate to have a strong FCC chair in Brendan Carr, who keenly understands the need for local broadcast deregulation and the relief that we and the industry need on both the national ownership cap and in-market local ownership rules.”
Carr recently fueled hopes for deregulation in a May 7 interview by calling ownership rules "archaic" and "artificial." That was his strongest public statement to date indicating that he would change those rules.
Once the fifth FCC commissioner is confirmed this summer, giving Carr and the Republicans a majority, Sook said: “We anticipate chairman Carr will begin to take action on his agenda. In addition to our deregulatory agenda to level the playing field and to enable consolidation, we are also seeking to obtain a firm transition date for ATSC 1.0 standards to ATSC 3.0 standards, which will support and advance our rollout of high-speed data transmission and other services to allow us to fully monetize ancillary uses of our spectrum.”
Sook stressed that Nexstar’s “strong financial position and balance sheet” makes it well-prepared to capitalize on deregulation through M&A. “Historically, this strategy has created tremendous shareholder value,” he said.
On Tegna's earnings call, President and CEO Mike Steib said: “73 members of Congress have signed a letter to FCC chairman, Brendan Carr, advocating for deregulation and broadcasting and the Chairman is expected to have a majority soon. We're staying close to all of this and our healthy balance sheet, consistent free cash flow generation and track record of disciplined capital allocation position us well to pursue the best opportunities for value creation.
“Chairman Carr has been clear with his agenda and support for local broadcasters and the important role that local broadcasters play for our communities and the role that local news plays for our democracy,” he added later in response to a question about deregulation. “He is expected to have his majority soon. And as I noted in my prepared remarks, he seems to have bipartisan Congressional support for supporting local and supporting local broadcasters.”
He added that this “will unlock M&A opportunities in the space that can be really accretive for buyers and sellers,” but he cautioned that “until we know the full landscape and until we know the prices, I can't sort of comment more precisely as it pertains to how we think about...about capital, capital allocation.”
“I'm as excited about the M&A opportunity in this space as you all are, and I'm sure it's frustrating not to hear us be able to be more specific in our responses,” he added. “You probably imagine it is for us as well. What I can tell you is we believe that the deregulatory moment is coming and it's coming at just the right time.”
During its Q1 earnings call Gray Media chairman and CEO Hilton Howell Jr. said: “We are energized by the possibility that the government may, at last, allow local broadcasters to compete on a more level playing field with all of our competitors.”
“Market consolidation,” he added later, is “inherently universally positive in terms of saving money, but it also gives us, because we are so focused on the delivery of local news, local content, local sports, you’ve got to give the audiences something to view it all. The consolidation allows us to compete with the really huge tech giants that are actually taking about 80% of the local ad market. And so consolidation is an all in all positive for the entirety of the broadcast business. And we're very excited about it."
