Broadcast Groups Use Duopolies To Position For Post-Cap Expansion

LocalProximity
Written By Tim Hanlon

Local broadcast television is edging toward one of the biggest consolidation waves in its history. But it’s not starting with blockbuster mergers garnering trade press headlines. Instead, it’s beginning in smaller, quieter moves that may prove even more consequential: The steady construction of co-owned station duopolies in markets across the country.

These deals are more than incremental portfolio adjustments. They’re strategic pilot projects — softening the ground for a far bigger play if, as many station groups clearly believe, the FCC soon loosens or even removes its decades-old ownership limits. The prevailing industry bet? That the 39% national cap will be scrapped, local restrictions relaxed, and a new era of M&A consolidation unleashed.

Gray’s Duopoly Blitz — And A “Triopoly” First?

No broadcaster has embraced the duopoly playbook more aggressively than Gray Media. In just the past few weeks, the company has unveiled a rapid-fire series of acquisitions and swaps that look less like opportunistic buys and more like a master plan:

Seen individually, these moves might pass as routine national portfolio adjustments. Viewed together, they reveal a coordinated strategy to deepen individual market control, lock in operational efficiencies, and be ready to scale up dramatically if the FCC removes existing ownership caps.

Duopolies: How The Rules Work — For Now

Under existing FCC policy, a broadcaster can own two stations in the same Designated Market Area (DMA) only if one isn’t in the market’s top four in ratings, or if enough independently owned stations remain after the deal. Historically, these constraints have kept outright local monopolies at bay.

But the guardrails are now wobbling.

In 2021, the Supreme Court gave the FCC more discretion to rewrite ownership limits. Since then, station group owners and industry trade organizations like the NAB have ferociously lobbied the Commission — now headed by a sympathetic Chairman in Brendan Carr — that the national ownership cap is obsolete.

In April, the Supreme Court overturned the FCC's "Top Four" rule, which prohibited a single station group from owning more than one of the “Top Four” TV stations (based on audience share) in a given market. In June, the Commission codified the new statutes.

That’s why companies are moving now — locking in acquisitions that will slot neatly into far larger holdings should the rules (inevitably?) change even further.

Is A Nexstar/Tegna Tie-Up Next?

The industry’s increased confidence in deregulation was reinforced late last week, when The Wall Street Journal reported that Nexstar Media Group — the nation’s largest TV station owner — was in advanced talks to acquire Tegna. If consummated, such a deal would merge Nexstar’s 200+ stations with Tegna’s 64, creating overlapping ownership in numerous markets.

According to analysis from TVND.com’s Kirk Varner, such a merger could yield multiple more duopolies, and even some additional “triopolies” in as many as 31 markets — scenarios that current broadcast regulation largely prohibits. The fact that negotiations are even happening at this scale (and spilling into public view, no less) suggests that group executives are more than confident they can secure the waivers or rule changes needed to make the proposed deals stick.

Consolidation Fever

Other groups are maneuvering into position, as well.

Sinclair has reportedly begun a “strategic review” of both its broadcast operations (the company owns or controls over 170 stations), and corporate holdings (Sinclair Digital sold streaming local news hub NewsOn to Zeam earlier this week), while signaling a similar interest in exploring sales or swaps to optimize under a more relaxed FCC.

Apollo Global Management has been shopping its Cox Media Group since March, and other private equity firms are weighing their options. Investment bankers are also back in the broadcast TV mix, advising groups on “regulatory-friendly” acquisitions now that can scale up quickly if the floodgates open.

But, of course, while Wall Street cheers the potential for efficiency and bargaining power, the public interest equation is less rosy. Consolidation often brings newsroom mergers, staff cuts, and homogenized content. When one company controls two or three major stations in a market, the diversity of local voices can shrink dramatically — no matter how many different network logos remain on screen. And most of the jettisoned newsroom jobs never come back.

Divining What’s Next

The current duopoly surge is not an endpoint — it’s a prelude. If ownership caps are, indeed, lifted as so many group owners presume, today’s two-station markets could easily morph into three-, four-, or even five-station fiefdoms controlled by a single owner, under certain circumstances. Gray’s currently positioned Lafayette (LA) triopoly may soon be less an anomaly than a blueprint.

The real question is whether the FCC — tasked with safeguarding both market vitality and the public interest — will defend media localism and opinion diversity, or instead yield to an unfettered free-market vision where scaled efficiencies drive the industry.

With many signs pointing to the latter, this initial gentle wave of broadcast station M&A won’t just be remembered as the start of a consolidation era — it will mark the moment when the identity of local television shifted, perhaps irreversibly, from a public trust to a concentrated commodity.

Local News To Peruse

Tim Hanlon

Tim Hanlon is the Founder & CEO of the Chicago-based Vertere Group, LLC – a boutique strategic consulting and advisory firm focused on helping today’s most forward-leaning media companies, brands, entrepreneurs, and investors benefit from rapidly changing technological advances in marketing, media and consumer communications.

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