NATPE 06: Nexstar s Perry Sook: We re in the Middle of the Ballgame on Consolidation

Complete Coverage: NATPE 2016

TV station groups have been exchanging hands at a fast and furious pace over the past few years, and broadcasters don't expect that pace to slow until the entire industry is consolidated into 10 or 12 major companies, several station group chiefs said at a panel at NATPE 2016 in Miami.

In five to six years, there will be 10 TV companies that people really care about, expects Perry Sook, president and CEO of Nexstar Broadcasting, who is currently leading his company in a bid to acquire Media General. I think we're in the middle of the ballgame on consolidation, he said.

It's a steady march to consolidation, agreed Jack Abernethy, CEO of Fox Television Stations. I think we'll see a lot more of it and it will be good because we'll be at scale.

Local broadcasters operate in local markets and they are limited by the U.S. broadcast ownership cap not to cover more than approximately 40% of the country, but with cable networks and streaming services now blanketing the country, it increasingly makes less sense to keep local broadcasters constrained under a national cap. For now, however, the ownership cap remains in place.

Sook remained confident that Nexstar's bid to buy Media General would go through, even though Meredith, which announced it was buying Media General last fall, hasn't backed away from the deal yet.

I can say what's already been said publicly, which is that Media General and Nexstar are both producing their proxies, said Sook. If you talk to the public shareholders, you'll get a pretty good sense of where they come down on which proposal is superior.

Media General may have to call a vote of its shareholders to determine to whom the company will ultimately be sold, but that hasn't happened yet. I'm not the one in control of whether a vote will happen or not, said Sook.

While they are trying to consolidate their businesses to make the most sense in a new media age, they are also engaged in ongoing negotiations over how much they should have to pay to the broadcast networks for the privilege of carrying those networks, a payment scheme known as reverse compensation.

In some cases, like last week when Capitol Broadcasting's WRAL Raleigh, N.C., switched to an NBC affiliation when it didn't want to accede to CBS reverse comp demands, broadcasters are looking for different business partners when negotiations don't go their way.

That's a case of one station saying this has become a bad business model for us, these projections do not look favorable,' said Larry Wert, president of broadcast media for Tribune Media.

There's tremendous strain on all of these relationships, said Abernethy. It's a very tough environment no matter where you sit. You might have to work on these relationships so you can deal and get something done and not destroy either side. I think there's no room for sentiment in that, you have to be good business partners and be very clear on why you are doing what you are doing. It behooves us to be smart about it and honest.

One of the sticking points in negotiations between broadcasters and networks is over digital rights to content so broadcasters can offer their own over-the-top streaming solutions to viewers.

The sooner we can keep all of those digital rights and keep them behind a paywall and distribute all of our programming across digital platforms, the better, said Sook. Let's let the innovation happen and then figure out renewals. Right now we're trying to create a perfect deal, but a perfect deal will mean that there will be no deal. If we can have all of our programming to put out across all platforms - more money will come from those and rising tides lift all ships.

On the other side of this equation are broadcasters pushing cable and satellite operators to pay them more money per subscriber for what are known as retransmission-consent fees. Broadcasters have gotten much more aggressive on this front, but they still have progress to make.

Broadcast stations in aggregate generate 35% of the viewing, said Sook. Last year, most broadcasters in aggregate received about 12% of the distribution revenue. We're not receiving the value we're delivering.

All three panelists agreed that they would like to see more innovation and creativity from producers so that they would more choice when it comes to first-run syndication.

We hear people on the other coast talk about too much TV and how terrible it is. We have the opposite problem. Our goal is to work with as many people as we can - more screens, more tests, more creativity -- that's our strategy, said Abernethy.

This fall, Fox will debut the only national syndication launch, Harry, produced by NBC Domestic Television Distribution. Fox also tests a lot of shows, currently trying out Warner Bros.' South of Wilshire in an eight-week test, and looks for live and day-and-date shows, such as Warner Bros.' TMZ Live and Debmar-Mercury's Wendy Williams, which the group renewed Tuesday through 2019-20.

While many broadcasters are trying their hand at producing their own programs, such as Tegna, which is shopping new talk show T.D. Jakes at NATPE, Sook says broadcasters should stick to what they do best. I have to say with all due respect to my station brethren who are trying to be syndicators that we who do local well should do local and those who do national well should do national. It's like a catcher playing short stop.

LINK:	http://www.broadcastingcable.com/news/local-tv/natpe-2016-nexstar-s-pe...
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