Nexstar Media Group, which has grown in just 22 years from a single Pennsylvania radio station into a local TV giant, has reportedly struck a deal to acquire Tribune Media for about $4.1 billion.
The acquisition, first reported by Reuters, would vault Nexstar ahead of Sinclair Broadcast Group to make it the top local TV station owner in the U.S. A formal announcement is expected Monday.
When contacted by Deadline, a Tribune spokesman declined comment, describing the Reuters report as “speculation.” Nexstar did not immediately respond to requests for comment.
Nextar outbid private equity firm Apollo Global Management with an all-cash offer that values Tribune at around $46.50 per share, according to Reuters. Tribune shares ended trading on Friday at $40.26.
Chicago-based Tribune has 42 local TV stations — notably in major markets like New York, LA and Chicago — reaching about 50 million households, or 39% of the country. It also owns WGN America, a cable network carried in some 77 million homes, and a stake in the Food Network, along with various digital assets like Cars.com.
After emerging from bankruptcy in late 2012, Tribune spun off its newspaper assets in 2014. Peter Liguori, a well-established TV executive known for his role in creating FX, ran the company until 2017, passing the baton to current CEO Peter Kern.
Last summer, Sinclairs long-pending deal to acquire Tribune for $3.9 billion unraveled in the face of heightened regulatory scrutiny from the FCC. Sinclair and Tribune then filed dueling lawsuits over the mergers meltdown, with Tribune seeking $1 billion in damages.
Texas-based Nexstar owns, operates, programs or provides sales and other services to 171 television stations around the country, making it currently the No. 2 group. Although its market capitalization is $3.8 billion, less than the value of the Tribune offer, it has arranged for debt financing through several banks, Reuters said.
The massive scope of Sinclairs 2017 deal to acquire Tribune prompted debate in the regulatory and TV sectors about the longtime limit on ownership of stations. The merger proposal came just months into the presidency of Donald Trump, who has close ties to Sinclair and has vowed to deregulate many industry sectors.
Against that backdrop, most observers thought the deal was as good as done and the company did not exactly assume a cautious stance as it wound its way through Washington. Sinclair chairman and former CEO David Smith, pugnacious son of the companys founder, Julian Sinclair Smith, made his feelings about regulators clear in November 2017. During a Sinclair earnings call, he told Wall Street analysts that the Dept. of Justice, which joins with the FCC in determining the fate of media mergers, “sooner or later is going to have to get in alignment with the marketplace” and “pay attention to whats happening in the real world.” The DOJ was still reviewing the Sinclair-Tribune deal at the point when the FCC lowered the boom.
Currently set at 39% of U.S. households, the cap has been under review by the FCC, with many station groups arguing that it should not exist at all given that local TV is competing with tech giants for viewers attention. During a panel at the NAB Show New York in October, Nexstar CEO Perry Sook griped that the likes of Facebook, Google and Amazon “are unfettered, with no restrictions to reach 100% of the country.”
Many observers have expected the cap to be relaxed to about 50% of households, but the Republican majority on the FCC leaves open the possibility the regulatory body could roll back the cap entirely. Moderate voices both inside and outside the station sector fear the elimination of the cap could prompt the same kind of consolidation that effectively killed the radio business as free-enterprise-minded regulators allowed Clear Channel to roll up station after station in the 1990s and 2000s.
Nexstar may not face quite the same backlash as Sinclair, given that it keeps a lower profile, but the size of its combined portfolio (it is already at the 39% cap before adding Tribune stations) is likely to draw significant scrutiny. Nevertheless, Democrats reclaiming of the majority in the House of Representatives puts an important potential check on the push to do away with the cap.
While it was overshadowed by the Sinclair-Tribune merger, another recent tie-up combined Gray Television and Raycom Media, both large groups. Fox, whose profitable station portfolio will be one of the linchpins of the remaining company after most of the rest of it is sold off to Disney in a pending deal, is also seen as being an active dealmaker on the station front in 2019. It had a deal in place to acquire a set of stations from Sinclair in order to help the company dispose of enough stations to appease regulators, but that went by the boards along with its Tribune merger.
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