Do mega-media mergers help or hinder competition?

Randall Bloomquist

Submitted photo/InsideSources.com

The (Nexstar Media Group-Tegna) merger cleared reviews by the Federal Communications Commission and the Department of Justice. FCC Chairman Brendan Carr argued that traditional broadcasters face increasing competitive pressure from large technology and media companies.”

OPINION — Nexstar Media Group’s pending $6.2 billion acquisition of Tegna, a deal that would merge the nation’s largest and third-largest local-television station owners, has the support of President Trump and the approval of his Federal Communications Commission.

However, it is under fire from an unusually diverse collection of opponents, including liberal lawmakers, a group of state attorneys general, cable giant Comcast, DirecTV and, perhaps most surprisingly, the conservative news outlet Newsmax.

And now, Comcast is lobbying Republican attorneys general to join the opposition and coordinating directly with DirecTV and Newsmax.

Supporters of the Nexstar-Tegna deal say the broadcast-television business model has changed in recent years. Many people watch local TV content without ever turning on a television and the competition is not between TV stations but between broadcasters and streaming and technology giants like Google’s YouTube, Netflix and others.

“Broadcasters are united in calling on the FCC to level the playing field and give local stations a fair shot to compete, invest in journalism and continue providing our communities with trusted news and public-safety information,” National Association of Broadcasters President Curtis LeGeyt said last year.

Trump endorsed the transaction, arguing that a larger Nexstar would be better positioned to compete against national media companies such as Comcast-owned NBCUniversal and Disney-owned ABC.

The merger cleared reviews by the Federal Communications Commission and the Department of Justice. FCC Chairman Brendan Carr argued that traditional broadcasters face increasing competitive pressure from large technology and media companies.

In March, attorneys general from eight states sued to block the deal, arguing the acquisition would violate antitrust laws by increasing concentration in local television broadcasting. The lawsuit claims the merger would give Nexstar ownership of stations reaching 80% of American television households, making it the nation’s largest local television broadcaster. Five more states eventually joined the action.

The real issue, industry experts say, is the usual one: money.

Distributors such as Comcast and DirecTV pay retransmission consent fees to local television stations in exchange for the right to carry their programming. They fear a larger Nexstar would possess substantially greater leverage in those negotiations and could demand higher fees, eating into their profits.

Comcast is working hard to keep that from happening, including lobbying Republican attorneys general.

In a May 12 email obtained by InsideSources, Comcast Vice President of State Government Affairs for Utah and New Mexico Jennifer Somers requested a meeting with staff members in the office of Utah Attorney General Derek Brown, a Republican, to discuss the Nexstar-Tegna merger.

Somers told staffers in the email that Brown had approved the meeting and that representatives of Comcast, DirecTV and Newsmax would attend the Zoom gathering.

Somers did not respond to a request for an interview.

The attorneys general argue that such concentration would increase Nexstar’s market power in negotiations with cable, satellite and streaming television providers while reducing competition among local broadcasters. They also expressed concern about a reduction in local news voices.

Broadcasters argue that if local stations are going to survive, they need more scale.

Industry insider Jim Wilson, Madhive CEO and a board member at Audacy, calls himself “a big believer and a big fan of local media.”

However, he adds, “I think scale is necessary for survival. So now the combined Nexstar and Tegna will have an 80 percent footprint? Big Tech, Netflix, Amazon, Google and Meta have a hundred percent footprint. You really can’t think of local media versus local media. The real competition is not other local stations. It’s really a competition for eyeballs.”

The merger’s fate could have lasting consequences in an era when traditional broadcasters argue they need greater scale to survive, but critics insist bigger is not always better.

Randall Bloomquist is head of Bloomquist Media. He wrote this for InsideSources.com. Please submit comments at yourvalley.net/letters or email them to AzOpinions@iniusa.org. We are committed to publishing a wide variety of reader opinions, as long as they meet our Civility Guidelines.