The announcement that Gray Media and The E.W. Scripps Company are swapping some TV stations might have seemed like another routine deal, but the proposed transaction could mark another step towards big changes in FCC policy.
If okayed, the deal would mark the first approval of a transaction creating new duopolies of full-power network affiliates in multiple markets.
It’s a distinction so specific that it may sound like the answer to a trivia question. But it would mark a third step on a ladder of ownership policy changes after two previous transactions in the Upper Midwest began the process.
People who work in the broadcast industry know that TV companies have already been creating duopolies of ABC, CBS, FOX, and NBC affiliates for decades — there are currently multiple major network affiliations under the same roof in 15 of 22 Upper Midwest TV markets.
But most of those previous transactions have used various workarounds to comply with a rule that says a company that already owns one top-four rated station in a market can’t buy another. There have been several common practices used:
- Operating a second affiliate under a joint sales agreement or time brokerage agreement
- Moving the second affiliation to a subchannel of the acquiring station
- Moving the second affiliation to a low-power TV station, which doesn’t count towards ownership caps (often simulcasting it on a subchannel)
- Buying a second full-power license without a major affiliation and then moving an affiliation to that station
In many cases, companies kept the disruption to the public as minimal as possible, with the new affiliates retaining the network’s previous channel position on cable and satellite providers. In some markets, the new LPTV affiliates assumed the virtual broadcast channel numbers and callsigns of the old affiliates, meaning that after a rescan, it appears as if nothing has changed.
Then came a change in the rules that said the FCC would consider, on a case-by-case basis, granting waivers of the top-four rule. A transaction using this method was approved in Sioux Falls before a court ruling blocking the change took effect.
Now, the rule change is back in place. A transaction in Rochester, Minn., tested the waters earlier this year and received approval after two months, an average amount of time for a routine sale to be approved.
The latest proposed transaction would create full-power network duopolies in two markets: Gray would have one in Lansing, Mich., and Scripps would have one in Colorado Springs, Colo. Unlike the Rochester transaction, these sales would result in combinations of TV stations that currently operate as competitors.
Gray and Scripps’ news releases announcing the transaction stated, “The regulatory approvals will require certain waivers of outdated local ownership restrictions that have uniquely restricted local broadcasters’ ability to compete in today’s dynamic and highly competitive media environment. The parties intend to work closely with regulators, employees and other stakeholders to obtain the requisite approvals and to facilitate the smooth transitions of these stations to new ownership.”
Such waivers may no longer be required for future transactions if the FCC drops the top-four restriction. FCC Chairman Brendan Carr has spoken in favor of eliminating the rule as part of a broader overhaul of regulations.
No date is set for a vote on ownership rules; the FCC is currently taking public comments.
The Gray-Scripps transaction is not dependent on the rule change.