Atlanta TV station owner wants to expand. A looser FCC might help.
Atlanta-based television station owner Gray Media will expand significantly across the U.S. by year-end, acquiring stations in no fewer than five new markets as the larger broadcast industry hopes for deregulation under the Trump administration.
Station owners like Gray are hoping a more business-friendly Federal Communications Commission will ease ownership restrictions.
In the last month, Gray announced plans to acquire stations from three ownership groups. The groups include SagamoreHill Broadcasting, a deal that includes Columbus NBC affiliate WLTZ, as well as Block Communications and Allen Media Group. The deal with Allen Media was announced hours before the company’s second-quarter earnings call Friday.
In July, Gray also announced plans to swap television stations across five markets with the E.W. Scripps Company. The Block deal was valued at $80 million, while the pact with Allen Media was valued at $171 million. The price tag of the Sagamore deal has not been disclosed.
If approved by regulators, the transactions will create 11 new top four duopolies for Gray, Chairman and co-CEO Hilton Howell said during the earnings call. This means the company will own two of the four highest-rated stations in a market, which will allow Gray to capture a larger audience and share of ad revenue.
On the other hand, it can set the stage for consolidation and further cost-cutting, as a key advantage of a duopoly is the ability to share resources between stations. One owner will spend less to operate two stations than two separate owners. This could include slashing real estate costs or reducing the number of reporters in a newsroom, said Sean McLaughlin, the vice president of Detroit-based Graham Media Group.
“Everybody goes into it with the best of intentions,” McLaughlin said. “Financial realities over time will continue to pose challenges.”
Gray is one of the top owners of television stations across the U.S. Its portfolio of stations serves 113 markets and reaches about 37% of U.S. television households. By comparison, its close competitor Nexstar Media Group, which is the largest broadcaster of local news in the country, has 200 owned or partner stations in 116 markets.
In a statement, Howell said the recent announcements reflect the company’s commitment to strengthening its strategic position and creating more opportunities for stations and the communities they serve.
“Across the board, they expand what we can do and what we can deliver as a local broadcaster,” Howell said during the earnings call.
Gray’s announcements followed recent news regarding the FCC’s restrictions on television ownership.
In late July, a federal appeals court threw out the FCC’s “top-four rule” for TV stations, which prohibits groups from owning more than two stations ranked in the top four within the same local market, as well as reaching more than 39% of total U.S. households.
The agency has long said the restrictions preserve competition, localism and viewpoint diversity. But station owners have long argued that these rules are outdated and do not account for new competition from digital media, a problem that has exacerbated as streaming disrupted traditional television consumption and skewered ratings.
Shortly after the 2024 election, ownership groups expressed hopes that the government will follow through on Trump’s promises to lower regulations across industries.
Evidence reviewed by the federal appeals court indicated there were dozens of markets where the top-ranked station’s audience share eclipsed the combined total of the second- through fourth-ranked stations, which showed there wasn’t a threat to competition. The court gave the FCC 90 days before lifting the top-four rule, which gives the agency time to respond or revise the rule.
With a deregulatory environment on the horizon, station owners are either buying or selling.
On Monday, ownership giant Sinclair said it is launching a strategic review of its broadcast business that could result in a merger. It is also evaluating spinning off or splitting from its “ventures” portfolio, which includes Sinclair’s private equity and real-estate assets, the Tennis Channel and its ad tech unit.
Last week, The Wall Street Journal reported Nexstar was in advanced talks to acquire Tegna, which owns 64 stations in 51 markets.
During the earnings call, Howell said he doesn’t anticipate any hurdles in approving the transactions.
Gray’s chief legal and development officer, Kevin Latek, also said the company’s focus in the near term is to execute the transactions it has already announced, not chasing another four or five over the next few months.
Gray said earlier this year that it was open to acquiring Atlanta’s top-rated station, WSB-TV, from Cox Media Group. If approved, this transaction would give Gray a duopoly in its home market of Atlanta.
Gray hasn’t detailed its plans for the stations it will acquire if the four deals are approved. In the cities where Gray will have duopolies, it’s possible the stations will change their reporting. Instead of having two stations under one owner report on the same fire, one might choose to report on a City Council meeting or another item the newsroom previously didn’t have the resources to cover.
Gray will look for efficiencies and ways to cut costs where it can, McLaughlin said.
“The interesting question is: How much consolidation happens in the newsroom? Do you have separate brands, two separate anchors? What’s shared and unique in both stations?” McLaughlin said. “You have the opportunity to save lots of costs, but you want the revenue benefit of continuing to maintain the ratings and loyalty that exists to both brands. There’s a balance there that could be tricky.”
About the Author
Savannah Sicurella is an entertainment business reporter with The Atlanta Journal-Constitution.
