Home arrow Home arrow Brokers Don’t See Broadcast M&A Rush After SCOTUS Ruling
Brokers Don’t See Broadcast M&A Rush After SCOTUS Ruling
Brokers Don’t See Broadcast M&A Rush After SCOTUS Ruling

Last week's U.S. Supreme Court ruling
in favor of FCC media ownership deregulation isn’t likely to immediately increase station sales, broadcast brokers and analysts said in interviews (see 2104010067). "This ruling is a day late and a dollar short," said radio broker Michael Bergner of Bergner and Co. "Any - time there is a relaxation of a regulatory barrier to [mergers and acquisitions], it will be helpful to activity," said media broker Robert Heymann of Media Services Group, but "the practical impact will be minimal." Some brokers said the unanimous decision could set the stage for looser regulations later, but most also said that’s unlikely to happen soon.

The decision relaxes rules against owning newspapers and radio stations alongside TV stations and eases the TV eight-voices test for owning multiple stations in a single market, but the possible deals freed up by those changes are highly situational, brokers said. It’s likely not an accident that reports surfaced after the ruling that Meredith is shopping its stations, but most groups won’t be able to profit from the rule changes, said Elliot Evers, managing director of MVP Capital. Every broker interviewed said cross-ownership deals with TV and either radio or newspapers will be extremely rare. "That’s an empty gift," said Evers. Meredith didn’t comment.

Relaxing the eight-voices test could lead to "a few TV deals" but not widespread consolidation, said Bergner. The large groups that might seek to buy stations, such as Sinclair or Nexstar, mostly remain up against the broadcast ownership cap, brokers said. The consolidation in broadcasting that already happened doesn’t leave much room for more to occur under the existing rules, said BIA Advisory Services Chief Economist Mark Fratrik.

It would take action to loosen that cap or the radio subcaps to bring a real wave of deals, experts said. "The chances of this commission doing something to deregulate the industry are very low," said Evers. "With a Democratic administration and its impact on the control of the FCC, my guess is that they will not be aggressive in additional relaxation of the radio ownership rules," said Heymann. Evers said it’s a poor time to sell a radio station, since economic recovery from COVID-19 is likely to pick up as more are vaccinated. TV stations, which have fared better in the pandemic, would make good sales now, he said.

The SCOTUS ruling’s affirmation of the FCC’s authority to regulate could protect future FCC ownership deregulation efforts, and the 9-0 decision "sends a strong message" that those efforts could be pro - tected from future court intervention, said Patrick Communications broker Gregory Guy. "It opens the door to something down the road," he said. Bergner said it’s possible the current FCC could act to loosen radio regulation in connection with efforts to increase ownership diversity, but he also called it "a long shot."

Most of the brokers discounted the likelihood of the FCC stiffening media ownership regulations after the SCOTUS decision. The pandemic hit radio hard, said Evers: "You’d have a tough time" arguing that ownership should be more tightly regulated. "In the age of Google and Facebook, the idea that someone owning more than one radio station in one market would control the media is so silly that when you say it you almost start laughing," said Bergner. FCC acting Chairwoman Jessica Rosenworcel and Commissioner Geoffrey Starks issued statements after the ruling highlighting the court’s comments on deference and mentioning the collection of data on ownership diversity. - Monty Tayloe