Scale Vs. Survival: What The Nexstar-TEGNA Mega-Merger Means For Local Media

Some weeks, a relative dearth of local media news gives us the opportunity to dig into a niche (but interesting) topic on this podcast.

And some weeks, a deal closes that creates the largest broadcast station group in the U.S.

Yes indeed, this episode of In the Vicinity is all about Nexstar’s acquisition of TEGNA. Now that the deal is officially closed, Tim Hanlon and Jim Wilson can dive headfirst into one of the most consequential developments in years. It’s a deal that didn’t just move fast — it took off with a sonic boom, triggering lawsuits, regulatory questions and a new round of existential debate about the future of local television.

At the center of the discussion is a fundamental tension: Is consolidation the last, best hope to preserve local media—or the beginning of a more concentrated, less competitive landscape?

Listen to the full podcast below or get it on Apple Podcasts and Spotify.

Tim Hanlon: Alright, that old-time radio jingle can only mean one thing. It's In The Vicinity. Yes, that's where you are. And welcome to the proceedings. My name is Tim Hanlon. I am the founder and CEO of the Vertere Group here in Chicago, where we consultatively advise and help and talk off ledges, various media companies in the midst of transitional and transformational change, especially when all things digital are on the table.

It is a challenging time for sure. And we are here weekly with my cohort, Jim Wilson, who is the CEO of Madhive, the founder of Premion back in the day and board director at GSTV and Audacy. We're here each week to talk about all things local media, and there is nothing more urgent and pertinent, I think this week than the topic that we're ripping up the script for to get to, to tackle at least initially as we know the facts to be today.

And things are fast moving, but you cannot avoid the massive story of Nexstar being green lit to officially purchase and absorb TEGNA to create the largest broadcast TV station ownership group in the United States, blasting through multiple rules that apparently don't matter anymore. We'll get to that and the interesting timing of all of it.

And the belief that in certain circles, many circles actually, that this ain't over till it's over. In that you've got states around the country. Nine of them, I think, attorneys general as well as DirecTV, if I'm not mistaken, as well. All suing and looking for a temporary restraining order as we record this to stop this merger, both temporarily as well as over time.

So controversial, still unexpected? Not really. If you really read the tea leaves and know where sort of the political and regulatory winds were blowing and the various machinations that were going on, both in front of and behind the scenes. Jim and I are going to just tackle some of the initial issues and maybe hot takes on what we think is going to happen in the near term.

There are station spinoffs that have been discussed. There are financial implications, all kinds of things. And this is probably going to be the beginning of multiple conversations and twists and turns in the story. But that's going to be our focus this week and much more diaspora from it to come.

But make no mistake, this is an interesting and challenging time for a lot of people in the local media business, the local television part of it specifically, and absolutely. These two specific companies, although local television is pretty much under a lot of stress right now. And even if you're not a member of either of these two companies you'll be wanting to pay attention and be part of the dialogue.

So let's get to it, shall we? Here's our conversation that we had. Just a couple of days back. Please, as always, enjoy.

There's really not much else to be talking about this week then, what's dropped over the last couple of days as we record this. I think a lot of what transpired in, I guess it was a period of time between 24 and 48 hours, the middle of until late last week was this just flurry of activity around Nexstar’s proposed and now apparently, at least at this moment, approved, we'll get into that, merger or acquisition of TEGNA. Did this surprise you, either just generally, or maybe with the velocity that had happened over the last couple of days? 

Jim Wilson: First of all, I wanna say nothing like being on a cross country flight, one hour into the flight when the press releases start getting dropped, and all of a sudden on wifi, you're getting texts from everyone with the approval. So am I surprised about the approval? No, I think we've talked about it a lot or a few times over the last couple of weeks on all the consolidation that's happening across media and why this makes sense.

And I think in light of the fact that the states are coming together to oppose it could have accelerated the approval. I'm obviously not a part of that, but it seems to me that the timing of the approval the day after the states file a suit to try to block it, is interesting timing, which could have just been a coincidence, but I think we were all expecting it to get an answer, and it seemed like the winds were all blowing toward an approval especially with statements from [FCC chair Brendan] Carr and [President Donald] Trump and others who were endorsing. And again, I have contended that I think that this deal actually is better for local media. That really without it, we're going to accelerate the decline of local media. With it I think we are preserving local media. 

Tim Hanlon: Alright let's presume that this is essentially a done deal. I don't think that's the case. We'll talk about some of the possibilities and the asterisks. Still of this to come as we discussed this, but remind our audience and or maybe underline some of the benefits that you see from this front. Because I think the biggest two issues really are from a programming perspective in terms of preserving and or deepening the resources around local news and on the advertising side of things where greater scale, greater opportunity to offer more of a national kind of footprint, if you will but with local flavoring and that kind of stuff, remind us some of the, I don't know, expected synergies and some of the rationale that favors this happening as has been officially agreed to? 

Jim Wilson: Yeah. Look, it's interesting because there's a lot of commentary out there around, if this deal is approved, we're going to start seeing a decline in local journalism. We're going to start seeing. Newsrooms closing, we're going to start seeing consolidation of reporting, et cetera, and that, but that's already happening.

A number of broadcasters are not in a healthy state right now. And I'm a big believer and a big fan of local media, and I think scale is necessary for survival. So now the combined nexstar and TEGNA will have an 80% footprint.

Big tech, Netflix, Amazon, Google and Meta have a hundred percent footprint. So you know, you really can't think of local media versus local media. I think you have to think of local media as a form of media, and you want local media to be healthy. We all want local media to be healthy.

Local media with scale attracts more advertising dollars. And larger audiences. And so does that necessarily mean that there's going to be a climb in local journalism? That's their differentiator. Their different differentiator is local journalism. And so I think scale matters. I think investment dollars are going out of local journalism.

I think by consolidating in the broadcast space, I would assume that more dollars are going into local journalism. And again, I say, the real competition is not other local stations. It's really a competition for eyeballs. So I think ultimately, I know there are concerns around the effects on consumers, and I am going to hope that there are guardrails put around that perhaps the outcome of the state led complaints who maybe could put some guardrails around it.

But, I think that the companies involved here have already talked about some of those guardrails.

Tim Hanlon: Okay. Let's close the loop on the consumer side because the arguments certainly are against this in that respect, as has been evidenced by local TV stations removing and or lessening their commitments to newsrooms.

We've seen a hubbing by certain station groups where two different cities that are miles apart, that are essentially centralized and the elimination of two or competing, if you will, duplicative meteorologists per se or sports people and whatever. I think that the rub against that though is the notion that economies of scale are only going to become more easy and or capable, which will antithetically go against more resources at the local level. Where a regional weather report or a regional sportscast or some kind of other hubbing, at least from a content perspective. And maybe let's also segue into the advertising thing. I grew up as a baby media buyer and planner in the Leo Burnett media department and that's how old I am.

Back when there was such a thing. Then it became Starcom and all that stuff where, station reps have in certain markets because of this deal, and maybe after this deal with others getting wider eyes, two stations, three stations, maybe an LMA or a JSA kind of thing where you have more than one TV station, if you will, or one media property being represented by one entity.

So are we reducing competition now versus maybe what exists in a more competitive way prior to amalgamations like this?

Jim Wilson: There will be less, there will be fewer players in the market. There's no doubt about that. And in some cases there probably needs to be fewer players in the market. I think when it was an over-the-air business, having more players in the market made sense.

I think people are just going to have to accept that the media is changing. I think the way that we have been consuming media over the last 20 years across the board has been changing. And so it's been changing at the national level. It's changing with a proposed Paramount-Warner Brothers merger.

Netflix has changed the way we view things. Charter and Cox coming together is going to also have its own opportunities and synergies. And as I've said before, why wouldn't we let local media get reshaped and companies like Nexstar that are thinking about that, in my mind they're thinking about what's the future of local media and how do we preserve local media and we preserve local media by having a healthy local media landscape. And again, I've said if there's one, I don't know if there's going to be just one player in the market, but if there is one player in the market, the beauty of the media market is other voices can break through at any time in that market because we have other platforms that either, look, like I said, there's TikTok local now, you can find local content on YouTube. And so when the market becomes inefficient, then other opportunities are going to happen. But I think at the end of the day, what we really wanna do, most of all, is being part of the local media market and just watching it over the last 10 years, I have not seen a significant shift in these businesses to becoming digital platforms.

While their linear business has been declining, and as a result of it, many of these companies have become unhealthy, and if they're unhealthy, they're cutting newsrooms. So it's already happening. And so what we wanna do is make sure that they are healthy and that they can get the dollars through scale, perhaps through advertising dollars.

Of course, that's the business that I'm in and have the scale to have more dollars coming in to promote local media. If they don't do it, someone else will, and then they're going to lose a lot of value and they're going to lose their positioning in the market because someone needs to be in the business of generating digital content.

In the $182 billion local media market, it's a significant market, and having an unhealthy broadcaster segment is not good for local media. 

Tim Hanlon: Okay, fair enough. But do you think that consolidation like this will result in more investment in quote unquote, digital transformation. I hate that term because that's like a decade old in my mind.

Jim Wilson: I know. But it has to. 

Tim Hanlon: No, I get it. But I'm saying, do you think that centralizing all these stations across an 82% nationwide footprint, which strains credulity when we talk about the legalities of it? We'll get to that in a minute, but I guess my point is, do you think a merger like this and maybe others can now be used as a template to follow either hostilely or favorably with each other? Do you think that's going to hasten a pivot to more digital first kinds of thinking, which you and I both agree, should have happened like yesterday? 

Jim Wilson: I do, because they'll have the resources to do it. I think that right now they don't have the resources to do it.

I think that they're basically, as I've said I think once or twice before, they are public companies managing linear declines that are very profitable by the way. And, stemming that decline as much as they can. And as a result, they don't have the resources to invest on the digital side of the business.

And so again, there are some companies that have developed more digital owned and operated than others, but for the most part, there certainly is not a significant amount of digital owned and operated inventory coming out of the broadcasters that could sufficiently replace the decline in linear revenue.

And so my hope, obviously, is that this consolidation is going to drive more investment in digital and more investment in. Again, I've said it right. Broadcasters are in the business of creating content in the form of news, sports, and entertainment for local markets and promoting local communities and their advertisers.

And so it's just changing how that happens and it has to happen. And so we're living in rules that are, I understand why regulation is needed, but the fact of the matter is the competitive landscape has changed so dramatically against the broadcasters. That this now creates an opportunity, and I do believe that we live in a free market economy where equilibriums happen and when equilibrium is knocked off, something is going to come in and take its place.

If there is a dearth of local media, something else is going to come in and fill that void and some, right now, some of that is big tech, and I think BIA says that broadcasters are only 10% of the local media market.

Tim Hanlon: It seems unheard of if you had this conversation 10 years ago, even five years ago.

Jim Wilson: 10% of the local media market. 

Tim Hanlon: Yeah. But again, though, that's looking at the market. 

Jim Wilson: Advertising market. Advertising market. 

Tim Hanlon: Sure. But you're also looking at it from a broader perspective, which is also part of the issue. Because again, they're not TV stations selling advertising for linear.

They need to be, as we've talked about, digital centric, digital first multi-touch point. But, alright, let's talk about economics and free market economy because, the reality is this is a, depending on the numbers, you look at a 6.2 billion-ish kind of deal. It's gone up and down based on market values and all that kind of stuff.

But my understanding is that that significant amount of debt and or bond funding that Nexstar is extending, I think it's more than $5 billion is going to be wrapped up in bonds and other financial owings, shall we say to fund this deal. And not unlike a lot of other borrowers or people that put money, get money today and have to pay it back over time later, that increased power concentration in advertising, especially political advertising, which I wanna get your point of view on, and arguably stronger leverage, I guess in the retrans battles.

Against the MVPD crowd, right? It's hard for me to think that those scaled economic improvements will go to more aggressively transforming into more digital centric properties than maybe first and foremost paying off that. Or those bonds. So this is a financial question and I'm not trying to drag you into CFO land, but the reality is that even though broadcasters are still managing decline in the their traditional business, the numbers are still the same in that they're still going to have to be servicing financial obligations before or maybe simultaneous with the need to invest in transformative issues operationally.

Jim Wilson: I'm not a CFO, but I know that there's some really smart CFOs play on tv. I know that there's some pretty, those, some pretty smart CFOs 

Tim Hanlon: back in the day. Yeah. 

Jim Wilson: I did start out in finance and accounting by the way. But there are some very smart CFOs sitting in the middle of this. But look, I think.

There will be cost optimizations. There is in any merger. I've bought a lot of companies and so there are always cost optimizations in any consolidation or acquisition. People don't like to hear that, but this is a changing market and as the market changes in any market changes, there's going to be consolidation.

There are going to be synergies in the Paramount-Warner Brothers merger and probably in Charter and Cox. Let's just get that off the table because that helps service a lot of that debt. I think the second part is having the scale to get the advertising dollars especially in a good timing politically, but the scale and the advertising dollars. And then there's retrans and I'm not an expert at retrans. I know that there's some arguments out there now that with this scale size, there's going to be a knockoff of the equilibrium and the balance between broadcasters and the cable companies, but my guess is that in any good business dealings, they're going to figure out how to come together and make that work again, while these two companies are consolidating, Charter and Cox, and I know that probably doesn't necessarily address the retrans issue completely.

Tim Hanlon: Some would argue it's a fungo bat. It's like a fun bat. You just got one grip, above and now it's the broadcasters. The broadcaster is going to say, oh, now we've got more, we can argue and negotiate toe-to-toe with these cable operators that are themselves also. But at some point there's not going to be any bat left as you go up that fungo.

And how many more grabs of the bat there are? I think that's the circular argument we have here about, is it going to be one MVPD left and one broadcast group left? Ultimately, probably not, but there's only so much juice you can squeeze from this. I don't know, orange grapefruit.

Jim Wilson: Yeah. Yeah. And really, think about it, you gotta think of the long term here too. There have been rumors out there that CBS or ABC may sell off. Or Paramount, Warner Brothers Discovery, whatever it's going to be called, may sell off CBS. Disney may end up selling off ABC. We don't even know if these affiliates are going to be around in five to 10 years.

Syndication is changing. Are shows premiering on NBC first or are they premiering on Peacock first and going to NBC? All that's going to change and think about the fact, yes, retrans is an issue, but the fact of the matter is it may not be in three to five years because the market's changing so much.

And the other aspect of it is who's the viewing audience for broadcast television? What is that demo? Because it's a much older demo, and so it's not being replaced, that's for sure. My kids don't know what broadcast television is. They don't, they're teenagers. They watch at best if they're watching a big screen, they're watching streaming, but they're watching most of their entertainment on a smaller device.

I was out in LA this week talking to some friends who make TV shows and make movies and how they're now shooting content on iPhones. And it's no longer landscape. It's basically your iPhone in the vertical format. They're shooting in a vertical format. And so that's how the world is changing and local media needs to be able to change like that too. So I guess comparing it to the past completely is where it becomes a problem. I think what we all have to recognize is consumer habits are changing and consumers have all sorts of options, and younger demos don't even know what broadcast is. And so these broadcasters must be given the chance to get into a financial position where they can create content for the digital world that competes against bigger formats, other places where people are viewing content so that local media can continue to survive. Sir, I'm not saying thrive at this point. I'm saying survive. 

Tim Hanlon: So we're going to wanna dance around some of the regulatory things.

So look clearly at the NAB and these broadcast groups and others too are making those cases, those arguments. And I don't think anybody is going to disagree with you, whatever side of this particular merger you're on, so to speak. That a rethink of what essentially is still a broadcast centric rubric, if you will, or even in cable and network operator centric delivery of media regulation. A lot of these rules and things that the FCC has interpreted and that Congress has actually specifically codified is rooted in the broadcasting act of 1934 and the Communications Act of 1994, and we're now talking about exactly a new world that arguably is overdue for regulatory stuff.

So there's no question if you're in that framing. But it's also interesting too, in that some of them were obliterated, so to speak, or ignored or sidestepped. So I don't wanna get into the politics of that, but I think we are going to have some interesting threads of litigation there because it wasn't brought in front of a full FCC commission for a vote.

There's been squinting about the UHF discount, which basically means you can do more stations. But they're not counted as largely as they are, which is a whole construct that doesn't really mean anything. 20 years since that loophole was created. My point is there was a lot of push and pressure on either uncertainties or just outright ignorance of some of these rules and stuff.

One of the interesting things in my mind is there was some adherence to spinning off some stations, right? So part of the mixture here is that Nexstar is going to have to spin off some of these stations to ensure that this deal happens, which is interesting given how many things were compromised in making this deal happen, but quaint in some respects.

But Denver, Indianapolis, New Haven, New Orleans, Louisiana, Norfolk, Virginia, and Fayetteville, Arkansas. At least on as we record this all up for divestiture. So that's interesting. Number one, they recognize that too much concentration, maybe in Indy and in Denver and New Haven, Hartford doesn't make much sense.

But I guess the question goes to what you just described, right? Where do those stations go? And maybe what happens to the network owned and operated stations now that they see deals like this happening too? And does this mean the end of the affiliate business because maybe this is the beginning of the end of that.

Jim Wilson: There's been a lot of commentary out there and speculation about the end of that, the affiliate business. And so again, I think the local media companies are really planning for the future here and a future where they need to be in the content creation business and that maybe there is at a minimum fewer hours of programming coming to them from the affiliates.

Tim Hanlon: You mean from the networks and the syndicators coming to the affiliates.

Jim Wilson: Yeah. 

Tim Hanlon: So they're more on the hook for their own programming is what you're saying.

And maybe that's not just news because you can do 24/7 news in Slidell, Louisiana? Maybe it can, I don't know. 

Jim Wilson: Yeah. I'm going to make one side comment and I'm going to go back to something else. I don't feel like we got as much transparency. When the standard general TEGNA deal got blown up or disapproved, we didn't get a lot of transparency there either. I'm not privy to politics and I'm certainly not going to get involved in politics and how this was handled. All I know is that more content is needed and back to that I started Premion 10 years ago, and the idea was, I think I've told you this, basically every broadcaster was still selling, obviously focused on their linear business, which was declining, and they were attempting to sell digital products in the market. But then Google came along and took that market away from them. So they were basically selling some online video and display.

And Google came into the market and took that market away from them. And so we created and packaged up a CTV product for sellers to sell in the market because it was a nice companion piece to the declining linear business. It was offsetting some of the declines and it was working. So what we were doing is we were taking affiliate programming and local programming and packaging it with streaming services.

And so in some ways we were still selling television, but we were selling a mismatch. We were selling local programming and some affiliate programming along with at the time. Hulu and Roku and Discovery and things like ESPN and things like that. 

Tim Hanlon: Audience extension, if you will. 

Jim Wilson: With a local bias audience extension.

And the good thing about that was it trained the local sellers on how to sell it. But the fact of the matter is 10 years later. A lot of our clients are still predominantly selling reach extension versus monetizing owned and operated inventory, and we need more owned and operated inventory. We need the broadcasters or local media companies to be able to invest and create more local media inventory. That is how they are going to get their advertising dollars going forward, or their revenue going forward because they're looking at the threats of as you've discussed, perhaps a weaker future of affiliates. And again, we're also working against the backdrop of consolidating streaming services and other tech platforms like TikTok, et cetera, that are significant in scale and footprint, and any one of them can put local content to work at any point in time.

Tim Hanlon: I guess the last sort of major question I'll ask and there'll be other threads to pull on this, I think we could devote a whole conversation to the syndication issue and the affiliate role of this. I wanna talk about CBS radio going away. We'll do that in another conversation, which also happened today.

It's a sad day having been a CBS News employee back in the day. But on the streaming side let's go back to your original thought about how this, a deal like this, could at least conceivably create more opportunities and investment scenarios for committing or redoubling efforts to become more digitally centric or certainly more of a panoply of offerings than just a linear TV presentation. It's semi ironic to me because Nexstar has not necessarily been accorded the most honors with innovation when it comes to going straight into streaming and experimenting aggressively. I would argue they're probably a laggard versus some of the other station groups.

I can't really speak to TEGNA as much, but I guess the question is, do you see this heft now, assuming nothing happens, and the scale and these revenues and all that kind of stuff, do you see that this could lead to more aggressive involvement in things like streaming? That maybe, I don't know, network sizes, but also more elegantly and maybe more specifically localizes stuff because of more of a commitment to IP delivery than linear television. 

Jim Wilson: Yeah, I don't have any insight into Nexstar's strategy at all. All I know is that the consolidation here I think creates an opportunity and, look, I think that the survival of local media companies is found that upon their ability to transition to digital content, it just is. And so I can't imagine a world where companies are merging just so they continue to manage a linear business. Only they have got to shift to a digital business. And so whether you think they're at the forefront or a laggard, I don't really have an opinion on that, but I think that all of these broadcasters, local or local media companies need to grow. And the way they're going to grow is by creating digital content. And they could be digital content that they distribute through a number of channels. There's even a world where, again, I have no view into anyone's strategies, but you can think about a lot of different opportunities when you get to a certain scale.

And there could be new walled gardens that are created. And so again, with all the consolidation that's happening in the entire media space. Affording local media, the ability to consolidate, I think is the right thing to do so we can preserve and grow local media. 

Tim Hanlon: So I'll help thread the needle because I'm not as sanguine as you might be or I'm the Nexstar quote unquote strategy.

Because with all due respect, a lot of the business model of Nexstar has been predicated on and to Perry Sook, CEO and founder's credit, he is perceived as the sort of the king of retrans. He's the guy who essentially took the legalities that came out of 1994’s Communications Act, the act that essentially put the retrans regime into place and perfecting it right, almost to playing it like a fiddle, so to speak. And I think that's actually hampered the strategic conviction around streaming because the more restrictive you can make it and make it only deliverable in a pay TV environment, the more you could essentially extract in a retrans payment thing, which is clearly now much bigger pot of business than advertising is, but I think maybe there's a, there's the silver lining to this, which is weird because I've been completely antagonistic to all this from the very beginning, not just this conversation. By the way, I'm online. I do think that this may be a really good opportunity both for this new entity as well as others in the broadcast space to much more aggressively embrace streaming as an equal delivery environment. Maybe even a primary one, but at least equal because it is not that yet. It is still very much an afterthought and or a nominal simulcast. Don't tell anybody because we want you to pay for it on television. And the content creation is relatively lacking too. Repeats of news.

And it's not necessarily going to fill up a 24/7 streaming channel. So my hope would be that there would be an embrace of, hey, there's a whole bunch of people out there who either now get us only streaming and they don't know a TV station from an antenna, or could be because it's stream first. And we're not going to worry as much about squeezing more outta the pay thing. Maybe we can charge a small fee for a broadcast bundle of all stations. Maybe there could be a communal delivery of that. And there have been startups that have tried and died, but largely because they've been shot at by the linear broadcast television cabal, which in many respects, this kind of brings up a very valid point about maybe the time for that traditional model preservation is now passed and we need to think about the new and next ones. 

Jim Wilson: And I think that's what this is about. I think if you say that Perry was brilliant on retrans, one could say once brilliant, always brilliant.

There needs to be another evolution. There needs to be another step. And so this consolidation really creates that opportunity. And I don't know, Perry and I've met some of the next executives in the past and a very talented group of people and you've also got a combination of both companies.

Mike Steib, who runs TEGNA, is a digital native and he has been extremely successful in his career as a digital native person. And so there's more to see, more to come here. And as it unfolds, I think we'll be able to talk more about it. Right now, what we know is it's been approved by the FCC and there are lots of questions and we're going to see it all play out.

Tim Hanlon: As they say, may you live in interesting times. I think we are absolutely smack dab in the middle of those interesting times, and I look forward to getting into various nooks and crannies of the more interesting things to come in the weeks ahead. So thanks as always, Jim. And we live for another day and another week, and I'm sure we'll have differing opinions.

It's based on the news in the next couple of days. So let's see what transpires. Let's hope we can all live through it for another week. 

Jim Wilson: I can't wait to see what happens.

Tim Hanlon: Alright, my thanks to Jim, of course, and many more issues to come out of this conversation, this situation and. The various twists and turns probably still left in this story as this combination lurches its way forward in the months ahead. So we will revisit certain topics, I'm sure as they become a little bit more clear.

Of course, not only my thanks to Jim, but the good folks at Madhive in particular, Nicole Lewis and Stephanie Nerby. Thanks of course, to the TVRev team under whose auspices we're lucky enough to do this each and every week. Melissa Horrigan, Jason Damata, Jessika Walsten. Thank you very much, and of course, Jerry Payne our audio excellence engineer, putting all the various pieces together.

We appreciate that as well. Take care of yourselves. We'll see you next week here In The Vicinity.