Trump pours cold water on proposed FCC rule change that would allow Nexstar and Sinclair acquisitions
Dow Jones2025.11.24 18:25
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Former President Trump expressed concerns over proposed FCC rule changes that would allow media giants like Nexstar and Sinclair to expand their ownership, fearing it could empower 'radical left' networks. His comments led to a temporary drop in share prices for Nexstar and Sinclair. The FCC's proposed changes aim to modernize ownership caps, but face opposition and legal challenges, as only Congress can alter these rules. Nexstar and Sinclair are pursuing mergers that would exceed current limits, requiring FCC waivers or rule changes.
By Lukas I. Alpert
Share prices fall for both local TV-station groups as Trump raises worry that move to raise ownership caps could empower the 'radical left'
Among the local TV-station groups seeking a merger that would require FCC rule changes is Nexstar Media Group. Nexstar owns the TV channel NewsNation, which hosted the Republican presidential debate, pictured above, in late 2023.
It seemed like the perfect time to make a deal for local television-station owners: The Trump administration had promised a light touch on regulations, and the head of the FCC loudly backed changes to decades-old rules that limited the number of stations one company could own.
But now, President Trump is saying not so fast.
In a post on Truth Social, Trump said he was concerned that the proposed rule change would give too much power to what he called "radical left" networks like ABC (DIS) and NBC (CMCSA), and that if it would allow them to get any bigger, he "would not be happy."
Share prices for the two of the biggest stations groups, Nexstar Media Group Inc. (NXST) and Sinclair Inc. (SBGI), which are both seeking to close mergers that would defy the ownership caps, fell more than 4% in morning trading following Trump's comments, although they later pared back those losses.
Representatives for both Sinclair and Nexstar didn't immediately respond to messages seeking comment.
Trump was responding to comments made by Christopher Ruddy, the chief executive of conservative news outlet Newsmax Inc. (NMAX), who said the proposed rule change could spell "disaster" for conservatives.
"Reagan understood if you have left-wing networks like ABC, NBC and CBS - or groups like Nexstar today controlling every local station and their local news - Republicans would have little chance to win in state and federal elections," Ruddy said in an interview on his channel.
"If people in New York were deciding what the local news in Pittsburgh was or in Detroit or in Cleveland ... it's a very dangerous thing what the FCC is promulgating, and I think could be a disaster for conservatives around the country," he added.
For months, however, Brendan Carr, chair of the Federal Communications Commission, has strongly backed changing the rules, saying they are antiquated and put local television companies at a disadvantage compared to tech giants like Netflix Inc. (NFLX) and Alphabet Inc.'s (GOOGL) (GOOG) YouTube, which have no such limits.
Many observers - including Anna Gomez, the sole Democratic member of the FCC board - have said that the commission does not have the authority to change the ownership cap on its own, and only Congress can.
Despite the standing rules, both Nexstar and Sinclair have been looking to seize the moment and get bigger. In August, Nexstar announced an agreement to acquire rival Tegna Inc. (TGNA) for $6.2 billion, in a deal that would blow past the cap. And last week, Sinclair announced that it had taken a stake in rival E.W. Scripps Co. (SSP) after months of quiet but so far unsuccessful talks to acquire it.
Neither Nexstar nor Sinclair, however, are considered to be ideologically on the left.
Both deals would require FCC rule changes, or at least significant waivers from the Trump administration. On Monday, Sinclair signaled it was apparently unfazed by Trump's skepticism of the FCC rule changes by sending the Scripps board a formal acquisition proposal of $7 per share.
What's at issue is something called the 39% rule, which is the limit set by current FCC rules for the percentage of households one broadcast company is allowed to reach in the U.S. There are also limits to the number of stations a company can own in a single market, which would affect the Nexstar-Tegna deal as well.
The limits were designed in part to restrict the amount of control any one company could have over local news broadcasts across the country.
The rule is complicated, however, as the FCC also allows for something called the ultrahigh-frequency (UHF) discount, which lets stations that broadcast with historically less reliable UHF systems count only 50% of their audience. In theory, that means a company operating only UHF stations could own channels that reach 78% of U.S. households.
Nexstar says it currently reaches 70% of U.S. households if the UHF discount is removed, through the roughly 200 stations it owns in 116 markets. The company says that figure would jump to 80% if it were allowed to acquire Tegna's 64 stations. Even with the UHF discount applied, the combined company would still reach 60% of U.S. households.
Together, the new company would operate 265 stations in 44 states. Nexstar also operates the CW Network and NewsNation.
Last week, Nexstar CEO Perry Sook formally asked the FCC for a waiver to certain rules that would impede its deal to acquire Tegna.
Opponents have also raised concerns about possible political concessions that companies like Nexstar might be asked to make for such deals to be allowed - pointing to the company's willingness in September to pull late-night show host Jimmy Kimmel's program off its ABC affiliates under pressure from Carr and the White House.
-Lukas I. Alpert
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11-24-25 1325ET
