Nexstar Broadcasting Group, Inc., (NASDAQ: NXST) is an entity of broadcast television stations headquartered in Irving, Texas. The company consists of 50 television stations across the U.S., ranging from market sizes 9(a) (Washington, D.C. sub-market) to 201 (St. Joseph, Missouri). 43 of the stations are broadcasting at full power, with the other 4 broadcasting at low power. Nexstar is known for owning multiple television stations in a single market in 22 of their markets. They do this by sidestepping FCC regulations limiting owners to only one station per market. They typically do this through a familiar, but legally unrelated company often Mission Broadcasting.
The key to the "virtual duopolies" joint operation is in drafting and abiding by a series of agreements between the stations. One company (usually Nexstar) will take the lead and operate the larger station. Mission typically employs two people in each of their stations and a few more at their home office. Per an FCC decision (letter to Jones Eastern of the Outer Banks) one person is tasked with the management duties for Mission, another with the staff duties. Since two people can't do all that is needed in a small or medium market network affiliate, the larger company signs a "Joint Sales Agreement" to represent the smaller company station in sales, in exchange for a commission of 30% or so. The other 70% goes to the smaller station. The two employees of the smaller station will now need help scheduling and airing the network and local programs, much less producing several newscasts a day. Enter a "Shared Services Agreement" where master control services, news gathering and newscast production are outsourced in exchange for a fee.
This is legal as long as the station owner is in sole control of the program decisions, sales policy, AND the amount of outside produced (nonnetwork) programs does not equal or exceed 15%. This last threshold determines if the relationaship is "attributable" per FCC rule 47CFR73.3555.
In FCC terms the two stations have found a dividing line, and are fine so long as they maintain the small nominal separation. In GAAP and SEC terms, the two operations have to be consolidated as the smaller station has few business dealings except those with Nexstar.
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These stations are either owned and operated by Nexstar, or controlled by Nexstar through management services agreements (MSAs) with Sinclair Broadcast Group. Prior to October 2011, Nexstar operated television stations that were owned by the Four Points Media Group; however, on September 8, 2011, Sinclair announced its intent of purchasing the Four Points stations outright and took over the MSA for the stations that October upon Federal Trade Commission (FTC) approval of the deal (the Federal Communications Commission (FCC) gave final approval of the group deal on December 21, and the Sinclair purchase of the Four Points stations was completed on January 3, 2012).[1] Nexstar also holds the license of one station which is operated by Newport Television through an MSA. Most of the stations Nexstar owns and operates were acquired through the acquisition of Quorum Broadcasting in 2003. Many of these stations are licensed under the Mission Broadcasting brand, operated through MSAs with Nexstar to comply with current FCC ownership limits.[2]
Many viewers of Nexstar owned or operated stations have complained that these stations have lagged far behind other stations in those markets in beginning airing local programming (including newscasts) in high definition. For example, although a couple of stations owned by Four Points Media managed by Nexstar had already been airing high-definition newscasts (though the upgrades occurred prior to Nexstar taking over operations of the stations) and at least one Nexstar duopoly has been airing newscasts in enhanced definition widescreen, it wasn't until April 2011 that the first Nexstar-owned properties began airing newscasts in high definition under its own stewardship.
Each Nexstar cluster also operates its own news website, although they do not use their station branding in the addresses, choosing to use a slogan related to their area.
In 2011, Nexstar and Fox entered into a dispute over terms of reverse compensation; this occurred as Fox began to aggressively seek shares of earnings from retransmission consent agreements with cable and satellite operators as part of affiliation agreement renewals between station groups with affiliates whose affiliation contracts already expired (and carrying the network's programming without a contractual agreement) or were near expiration. Reportedly, the amount from retransmission consent fees from cable and satellite operators that Fox wanted its affiliates to pay the network would be 25 cents per subscriber during the first year of the affiliation agreement, increasing to 50 cents by the fourth year.[3] President of affiliate sales and marketing for Fox, Mike Hopkins, had said earlier in the year that the network would consider moving its affiliation to another market station as a last resort, if existing affiliates did not agree to the terms for reverse compensation retrans sharing.[4]
Fox dropped its affiliation from Nexstar-owned/managed stations in four markets, with three of the replacement stations adding Fox in addition to existing affiliations with the MyNetworkTV program service (owned by Fox parent company News Corporation). In Indiana, two markets saw Fox go from a primary affiliation of one station to joining an existing MyNetworkTV-affiliated digital subchannel of a competing Big Three station, with MNT going to a secondary affiliation: in Evansville, Fox moved from WTVW (which became an independent station) to a MNT-affiliated subchannel of CBS affiliate WEVV-TV on July 1, while in Fort Wayne, the Fox affiliation moved from WFFT-TV to an MNT-affiliated subchannel of NBC affiliate WISE-TV on August 1.[5] The network also moved its affiliation in Springfield, Missouri from KSFX-TV (operated in a duoploly with area CBS affiliate KOLR) to upstart MyNetworkTV affiliate KRBK on September 1, 2011, with both stations becoming independents.[5] Nexstar chose to drop Fox from WFXW in Terre Haute, Indiana and re-affiliate with ABC on September 1, 2011 (becoming the only Nexstar station thus far to affiliate with another network following the removal of the Fox affiliation) as part of a long-term renewal agreement between Nexstar and ABC for the group's nine existing ABC stations, reversing a 1995 switch that saw Terre Haute losing over-the air carriage of ABC programs (since then, ABC has been seen in the market via Indianapolis affiliate WRTV on area cable and satellite providers);[6][7] the Fox affiliation then moved to a digital subchannel of CBS affiliate WTHI-TV which also added MyNetworkTV as a secondary affiliation.
Nexstar announced on July 21, 2011 that it is exploring and evaluating strategic alternatives intended to maximize shareholder value, including a possible sale of the company.[8]
The CEO of Nexstar, Perry Sook, has donated over $4,300 to Republican candidates and officials.[9]
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