• by Wayne Friedman , Staff Writer, April 10, 2014

A hot mergers and acquisitions road for TV stations took on a pothole recently when the Federal Communications Commission Chairman Tom Wheeler talked up the idea of curbing development of joint advertising sales agreements (JSAs), which has flourish over the last few years.

Now just days after one media analyst from Wells Fargo cast some worries, there was a quick reversal, which rocketed three TV station group stocks in a higher direction on Wednesday: Sinclair Broadcast Group was up 6.4% to $29.11; Gray Television was 15% higher to $11.36; and Nexstar Broadcasting grew 7.9% to $40.27.

Back in March when news broke about the FCC’s plans, shares of Sinclair were down 8%; Nexstar were off 9%; and Gray Television shares lost 12%.

The Federal Communications Commission believes that each TV station license continues to be unique -- and specific. With that in mind, it has established new rules are that a broadcaster will be declared owner of a station if it sells 15% or more its advertising time.

It effectively curbs new moves for an owner of a TV station -- in the top four in local ratings -- from owning another top-four station in the same market. Broadcasters affected by the new rule will have two years to comply.

TV station proponents say local cable operators already do much of this ad sales activity -- making combined market advertising sales, especially when it comes to cable advertising “interconnects.” Why shouldn’t TV stations be allowed to do the same? (Plus, TV stations believe they should be allowed to negotiate en masse with cable operators when it comes to retransmission agreements.)

But this doesn’t mean TV stations are out of the JSA business entirely. That's why the stock market didn’t respond too radically; it's now recovered from when the news was first floated by the FCC.

In addition, TV station groups still possess a lot of upside — ownership and brand value of local TV news content that virtually few other local media entities want to challenge; possible higher upside from new digital technologies — local multicast TV digital signals, as well as mobile TV opportunities.

And maybe they’ll be more freedoms to come TV stations' way. FCC Chairman Wheeler told broadcasters at the recent NAB meeting they need to stop thinking like TV station owners and imagine a more Netflix-like future -- on the Internet.

advertisement

advertisement