MW Here's why Nexstar's CEO thinks the FCC should change the rules to allow a merger with Tegna
By Lukas I. Alpert
The Trump administration has signaled it's ready to waive rules limiting the number of households a local TV company can reach. Opponents say this is a matter for Congress.
FCC Chairman Brendan Carr has long advocated for changes to rules that limit the number of stations a local television company can own. Opponents say this is an issue only Congress can address, while expressing concerns about concessions the Trump administration might demand in exchange for such a waiver. (Photo by John Lamparski/Getty Images)
Nexstar Media Group Inc. Chief Executive Perry Sook says the only way local television companies can compete with technology giants is if the government throws out the rulebook.
For decades, companies like Nexstar $(NXST)$ have operated with a strict cap on the number of households they can reach through the over-the-air television stations they own.
But Brendan Carr, chairman of the Federal Communications Commission, has said he believes those rules are antiquated and should be changed to better reflect the current competitive landscape in media.
Sook agrees, saying his company's pending $6.2 billion acquisition of rival Tegna Inc. (TGNA) - which would blow past that household limit - should be approved by the FCC without reservation.
"Nexstar's acquisition of Tegna is vitally important to the future of local television and local journalism. We are grateful that the Trump administration and the FCC recognize that the current television ownership regulations are outdated and do not reflect the competitive media landscape as it has evolved over the past 25+ years," Sook said in a statement announcing that Nexstar had formally filed a request for a waiver of the rules.
"Like the Trump administration, we are focused on achieving deregulation, and we continue to advocate for the elimination of the antiquated constraints on local television ownership as the best solution to level the competitive playing field for all media," he added.
Nexstar shares have rallied 16.8% in 2025, as of recent morning trading on Wednesday, while Tegna's stock has gained 8.8% and the S&P 500 index SPX has advanced 13.6%.
The possible Nexstar-Tegna deal and the raising of potential changes to the rules, has triggered other TV companies to seek mergers. On Monday, Sinclair Inc. $(SBGI)$ disclosed that it had taken an 8.2% stake in E.W. Scripps Co. $(SSP)$ and had been engaged in talks about acquiring its smaller rival.
The FCC has opened a process to consider changing the ownership limits, but there are big questions about whether the FCC is allowed to change the ownership cap rule on its own. Many observers believe that only Congress can do it.
What's at issue is something called the 39% rule, which is the limit set by current FCC rules for the percentage of households one broadcast company is allowed to reach in the United States. There are also limits to the number of stations a company can own in a single market, which would affect the Nexstar-Tegna deal as well.
The rule is complicated, as 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. In theory, it means a company operating only UHF stations could own channels that reach 78% of U.S. households.
Nexstar says it currently 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 figure would jump to 80% if it were allowed to acquire Tegna's 64 stations. Even with the UHF discount applied, the combined company would still reach 60% of U.S. households.
Together, the new company would operate 265 stations in 44 states. Nexstar also operates the CW Network and NewsNation.
Carr has argued that the rule puts local station owners at a disadvantage compared with companies like Netflix Inc. $(NFLX)$ and Alphabet Inc.'s $(GOOG)$ $(GOOGL)$ Google and YouTube, which operate under no such limitations.
The National Association of Broadcasters has long argued that the rule should be changed.
The FCC is authorized by Congress to conduct a review of its regulations every four years and may make changes. But the 39% rule is not included in these regulatory changes, and most observers agree that Congress - not the FCC - should have the ultimate say.
Opponents have also raised concerns about possible political concessions companies like Nexstar might be asked to make for such a deal to be allowed, pointing to the company's willingness in September to pull late-night show host Jimmy Kimmel's program off its ABC affiliates under pressure from Carr and the White House.
"Nexstar has been licking its chops at the prospect of this merger-friendly FCC willing to bend the rules to create a massive broadcast conglomerate. In exchange, the Brendan Carr FCC expects the new entity to grant favorable coverage to President Trump," said Matt Wood, vice president of policy for Free Press, a media and technology watchdog that opposes changing the rules.
"With its decision in September to suspend 'Jimmy Kimmel Live!' from its lineup, Nexstar signaled its eagerness to concede editorial independence to gain the administration's approval of this multibillion-dollar deal," Wood added.
-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
November 19, 2025 10:33 ET (15:33 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.
Comments