Nexstar-Tegna deal puts Trump move to eliminate broadcast ownership rules to the test

By Lukas I. Alpert

FCC head Brendan Carr says he wants to abolish decades-old ownership caps on how many TV stations one company can own - but opponents argue that's for Congress to decide

FCC Chair Brendan Carr has moved to change rules limiting TV-station ownership by companies. Opponents argue that the FCC doesn't have the authority to make such a change on its own.

For decades, the Federal Communications Commission has operated a strict cap on the number of households one company is allowed to reach through the television stations it owns.

But the deal announced Tuesday that would see Nexstar Media Group Inc. (NXST) acquire Tegna Inc. (TGNA) for $6.2 billion in cash would create a company that would blow past that cap - if the transaction is allowed by the FCC.

The merger will put to the test the Trump administration's stated ambition to abolish those long-standing rules. Opponents argue that those limits were set by Congress, and that only Congress can change them.

Either way, Nexstar is clearly banking on the Trump administration to pave the way for the deal to go through.

"The initiatives being pursued by the Trump administration offer local broadcasters the opportunity to expand reach, level the playing field and compete more effectively with the Big Tech and legacy Big Media companies that have unchecked reach and vast financial resources," Nexstar Chief Executive Perry Sook said in a statement.

Nexstar expects the deal to close by the end of 2026, it said.

Wall Street seems not entirely convinced that the deal will sail through. Nexstar shares rose 0.7% on Thursday, while Tegna shares gained 4.3% but trading below Nexstar's agreed-upon purchase price of $22 a share.

As it stands, FCC rules set a limit of 39% for the percentage of households one broadcast company is allowed to reach in the United States, as well as limits to the number of stations a company can own in a single market.

The FCC also allows for something called the ultra-high-frequency (UHF) discount, which lets stations that broadcast with historically less reliable UHF systems count only 50% of their audience. That means, in theory, a company operating only UHF stations could own channels that reach 78% of U.S. households.

Currently, Nexstar says it reaches 70% of U.S. households, if the UHF discount is removed, through the roughly 200 stations it owns in 116 markets. The company says that number will jump to 80% if it is allowed to acquire Tegna's 64 stations. Together, the new company would operate 265 stations in 44 states. Nexstar also operates the CW Network and NewsNation.

The Trump administration's head of the FCC, Brendan Carr, has called the agency's limits "arcane" and "artificial," and has argued that they put local station owners at a disadvantage compared with companies like Netflix Inc. (NFLX) and Alphabet Inc.'s (GOOGL) (GOOG) Google and YouTube, which operate under no such limitations. The National Association of Broadcasters has also argued that the rule should be changed.

In July, the FCC said it was seeking to update the ownership limit and opened a public-comment period.

What is at issue is whether the FCC is allowed to change the rules on its own. Congress has authorized the agency to conduct a review of its regulations every four years - but the one rule that most observers agree Congress has left out of the quadrennial review process is the 39% ownership cap.

"The law is clear: Congress fixed the maximum reach of broadcast-television license holders at 39% of TV households nationwide, and it specifically removed this national cap from the commission's congressionally mandated quadrennial review of all other broadcast ownership policies," said S. Derek Turner, a senior advisor to Free Press, a media and technology watchdog that opposes changing the rules, in comments submitted to the FCC earlier this month

Even the head of the FCC during Trump's first term, Michael O'Reilly, agreed with this argument when the issue was brought up in 2017. But Carr, who was on the commission then, has long argued that the FCC has the authority to act on its own on ownership rules.

Turner said making such a change amounted to "placing a 'for-sale' sign on the public's airwaves, and inviting media companies to monopolize the local news markets."

"Despite the commission and the broadcast industry lamenting the existence of Big Tech, all available evidence - including comments from broadcasters themselves - shows that local TV firms are not in the same relevant product market as online companies like Google, Meta (META) and Amazon (AMZN)," Turner argued. "Nor are local TV broadcasters in the same relevant product market as online video distributors like Netflix. None of those tech firms produce local news."

-Lukas I. Alpert

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

08-19-25 1940ET