Nexstar Withdrew JSA Waiver Request to Get Marshall Deal OK
A Nexstar deal involving a joint sales agreement with Marshall Broadcasting was approved Friday only after the companies rearranged the financing on the transaction and withdrew a request for a JSA waiver, according to FCC documents, a broadcast attorney and documents filed with the commission. The deal involved the transfer of six stations from the estate of Milton Grant to Nexstar, and one station, KLJB Davenport, Iowa, to Marshall Broadcasting.
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With Marshall a minority-owned company, the deal had been viewed as a potential trailblazer for future public interest waivers of the FCC’s new JSA attribution policy. Nexstar, though, had to reconfigure the deal to get it approved, so minority ownership likely will not be viewed as a way to get past the JSA attribution rules, said a broadcast attorney with experience in sharing arrangements. Nexstar didn't comment, and its news release announcing the FCC nod referred to the Marshall deal as “incubating a new, minority-controlled entrant to broadcasting.”
Though Nexstar had requested a public interest waiver of the JSA rules structured around increasing the number of minority broadcasters and providing public interest programming through KLJB, that request was withdrawn Friday. In a joint declaration filed with the FCC, both parties agreed that joint sales will not exceed the 15 percent threshold that triggers ownership attribution.
The declaration said a loan to Marshall financing the acquisition is only guaranteed by Nexstar for five years. In sidecar deals made before the new JSA rules, such a loan would have typically been guaranteed for a much longer term and included an option to buy, said a broadcast attorney. The financing behind the deal was a sticking point holding up its approval, said an FCC official. In guidelines for transactions involving JSAs issued in March, the Media Bureau said financial arrangements involving long-term guaranteed loans and buying options would undergo particular scrutiny.
Nexstar's restructuring its waiver plans means public interest waivers based on minority ownership won’t likely be viewed as a way to continue owning sidecar stations after the JSA rules take effect, said a broadcast attorney. Commissioner Mignon Clyburn’s emphasis on the availability of public interest waivers and recent statements by Chairman Tom Wheeler had suggested that deals involving JSAs and minority owners would be likely to receive waivers, but Nexstar/Marshall suggests otherwise, said the attorney. There’s an industry perception that no broadcast transaction can be approved without Wheeler’s nod, said the lawyer.
The rearrangement of the deal shows the FCC is “doing their due diligence,” said Free Press Policy Counsel Lauren Wilson. Free Press has opposed previous deals involving JSAs, but did not oppose the Nexstar deal. Diversity concerns shouldn’t be addressed by allowing companies to break the law, and such waivers should be granted only when the arrangement provides a path to ownership, Wilson said.
Wells Fargo analyst Marci Ryvicker disagreed about what the deal portends. The deal’s approval is a “positive” that “ should remove some, if not all doubt of [Nexstar’s] strategy to transfer licenses to its minority-owned entity,” she emailed investors Monday. KLJB is one of only three stations Nexstar had planned to transfer to Marshall and run through JSAs, and she said the other transfers, involving stations from Communications Corp. of America, likely will be approved soon.