Shares in local TV giant Tegna surged nearly 30% in mid-day trading Monday on news that leading station owner Nexstar is in advanced talks to acquire the company.
A source familiar with the discussions confirmed them to Deadline. The valuation remains unclear for the time being, but it will be well into the billions. Tegna in 2023 had an $8.6 billion offer (including debt) from private equity firm Standard General. At that time, under Democrats’ control, the FCC effectively blocked the transaction over concerns that it would prompt excessive layoffs and unfairly burden workers.
The Wall Street Journal had the first report of the potential merger on Friday evening.
Since Donald Trump has returned to the White House, his pick to lead the FCC, Brendan Carr, has echoed calls from station owners to eliminate the current cap on station ownership. After years of speculation, a lifting or ending of the cap appears to be likely. Owners have been prevented from controlling stations reaching more than 39% of the U.S. The anti-cap side recorded a victory last month when the U.S. Court of Appeals for the Eighth Circuit ruled against limiting a single owner from controlling affiliates of multiple Big Four broadcast networks in a single market.
Stations say they are being unfairly restrained in a marketplace where large tech firms now control vast swaths of TV and video distribution, which is a far cry from the pre-internet era when the ownership cap was conceived. If it moves forward, a Nexstar-Tegna deal would likely trigger even more consolidation in the local TV sector. Such a flurry would stand in contrast to the broader media and tech sectors. The bruising, months-long process of approving the Paramount-Skydance merger, along with legal settlements by Disney, Meta Platforms and others have left many players more tentative about M&A than they were in the go-go early days of Trump 2.0.
Along with objections from public interest groups, who see a loosening of regulations as promoting monopolistic behavior, smaller station groups have voiced concern about it giving Nexstar even more real estate. Carr has also floated a scenario of lifting the cap for owners of network affiliates who don’t also own broadcast networks (e.g., Tegna, Gray Media, Hearst, etc.) but preserving it for network owners like Fox Corp., Paramount and NBCUniversal.
The FCC is currently taking public comment on the ownership cap. Many station groups, network affiliates and other industry associations have filed comments, with the latest round of responses due on August 22. Nexstar CEO Perry Sook, who grew the company from a single Pennsylvania radio station to a behemoth owning more than 200 stations in 116 markets as well as assets like the CW broadcast network, has emphasized deregulation in recent months. The company last year established a government relations office in Washington, D.C., in order to facilitate the effort.
Word of the merger emerged after both Nexstar and Tegna reported second-quarter earnings late last week. Tegna CEO Mike Steib saluted the Eighth Circuit ruling on the company’s earnings call with Wall Street analysts on Friday. “We believe deregulation is coming and will create significant opportunities,” he said. “We are open to being a buyer or seller, depending on the opportunities, and are disciplined in our approach.”
Hanna Howard, portfolio manager at Gabelli Funds, noted that Nexstar has “historically been the largest consolidator in the broadcast space and has recently been vocal about its intentions to further participate” if the cap is eased or abolished. She said the FCC is “new” and “friendlier” under Carr (though try telling that to the major media companies), and added that Tegna had already received overtures from other parties after the Standard General deal collapsed.
Jim Goss of Barrington Research reiterated his “market perform” rating on Tegna shares. “We do not know the extent of the deregulatory moves that may be made by the FCC and the outcome of their examination of the reach cap,” he cautioned, “as well as the ultimate outcome of the litigation that has initially yielded the loosening of in-market ownership restrictions.”
