The must-watch TV of the moment is local news. As the spread of the coronavirus and fervent anti-racism demonstrations play out differently in cities, counties, and states across the country, Americans are relying on their local stations to broadcast essential information.
The unfolding crisis has shown local news outlets to be indispensable—just as it has threatened their survival. This spring, viewership soared while earnings plummeted. “Here you have more people consuming local news than at any time in recent history,” says Steve Passwaiter, a vice president and general manager at Kantar, a consultancy firm. “And what’s happening? We can’t find advertisers that want to take advantage of it.” Ad revenue for local TV companies has dropped as much as 40 percent since the beginning of the pandemic. A poll taken in March by RTDNA/Newhouse School at Syracuse University found that 76 percent of local television stations were worried about losing business due to the coronavirus crisis.
For Nexstar Media Group, the largest local TV news company in the United States, the spring brought surges in viewership and declines in revenue to match the rest of the industry. Perry Sook, Nexstar’s CEO, isn’t as worried as you’d think, though. The network has built its brand on promising to deliver high-quality local TV, and the means by which it proposes to do that—aggressive consolidation—buffers against a troubling future.
Today, after years of consolidation, Nexstar owns or operates 196 local TV stations in 114 markets across the United States, more than any other company. Sook has declared that Nexstar “has the largest news gathering organization in the country,” and staff at the corporate headquarters, in Irving, Texas, refer to their vast network as the “Nexstar Nation.”
To journalists, this may not sound like a promising replacement for a robust economy of independently owned local stations. Even so, Nexstar doesn’t fit neatly into popular story lines about media barons destroying local journalism. Unlike its conservative rival Sinclair Broadcast Group, which made headlines in 2018 for requiring anchors to read identical scripts, Nexstar doesn’t broadcast synchronized or partisan content. And in contrast to the private equity firms that have gutted local print newsrooms nationwide, Nexstar’s corporate management largely comprises veterans of local broadcasting. Those distinctions, and Nexstar’s enormous reach across the country, make the company a unique bellwether of whether consolidation can be in the public interest.
The local TV news industry has changed rapidly in the past decade. Starting about fifteen years ago, a handful of companies including Nexstar, Sinclair, Tegna, and Gray Television competed to buy up independent stations and media companies. The vast majority of local TV stations nationwide are now owned by one of those big broadcasters.
Sook founded Nexstar in 1996, when he purchased WYOU in Scranton, Pennsylvania. The company went public in 2003, after its first big acquisition. In 2017, Nexstar acquired Media General, which ran local newspapers and television stations, for $4.6 billion. Then, late last year, Nexstar finalized an acquisition of Tribune Media for $7.2 billion, a figure that includes the assumption of Tribune’s debt.
The deal sealed the company’s dominance over Sinclair, which had tried to purchase Tribune in 2018 but failed to get support from the FCC. On paper, Nexstar stations reach 38 percent of American households that own a TV, just below the maximum allowed by market caps designed to prevent monopolies. In 2017, though, the FCC reopened an outdated loophole that in effect allows companies to control stations beyond the market cap, paving the way for accelerated consolidation. In reality, Nexstar says, its stations reach 63 percent of American households, well surpassing the cap.
Now that the economy is in free fall, the near-monopoly status of Nexstar and Sinclair means that their stations will have a better chance of surviving. As of June, amid major layoffs across the media industry, the two companies hadn’t reported furloughing or laying off any employees. The company can continue to boast that it serves the public good by keeping local news afloat; in its FCC application to acquire Tribune, Nexstar had argued that the consolidation would result in more airtime for local news and was therefore in the public interest.
Of course, consolidation is in Nexstar’s interest, too. Much of the reason news companies seek to buy up stations is to increase revenue from retransmission fees: charges to cable and satellite companies for permission to air local content. Broadcasters that control a large share of the market have an advantage when negotiating with cable companies and are able to raise their fees, which customers absorb through increased cable rates.
Retransmission fees now account for roughly half of Nexstar’s total revenue—and the majority of these agreements are locked down until 2022, so this revenue is expected to remain steady or even increase. In January, before the pandemic hit, Nexstar’s stock price had nearly doubled from two years prior.
Sook seems to have anticipated this; in 2019 he requested, and was denied, a bonus of $41.4 million in future stock options. (In 2019, Sook’s compensation was worth $16.4 million, while the median salary of Nexstar’s thirteen thousand employees was $43,537.)
This year, Nexstar can also count on election ad spending, which is a key component of nearly every television company’s revenue. In 2018, a high-stakes midterm year, political advertising accounted for roughly 19 percent of Nexstar’s total $1.3 billion in ad revenue, in large part because the company owns stations in swing districts and states across the country. Now, without the usual in-person strategies—rallies, events, door-to-door canvassing—and with reduced expenses, campaigns may allocate more funds to television. Earlier this year, Sook said that Nexstar was already taking in more revenue from political spending than ever before.
Nexstar’s enormous reach across the country makes it a unique bellwether of whether consolidation can be in the public interest.
Nexstar requires its stations to generate local content but otherwise gives them wide leeway. After Nexstar acquired WTNH in New Haven, Connecticut, in 2017, as part of its acquisition of Media General, the news team was encouraged to lead every newscast with a local story. That had been the longtime practice, staff told me when I visited the station last December. Their bread and butter is traffic and weather. They cover community events. Nicole Warren, the assistant news director, told me the team ask themselves questions like, “How do we give a mother everything she needs to know before she gets out the door?” For major stories, they do breaking news.
WTNH produces local shows including What’s Right with Schools, Stretch Your Dollar, and CT Style, which features local businesses that have paid the station to appear. On Sunday mornings, the station airs Capitol Report, a half-hour roundtable conversation with Republican and Democratic public figures about hot topics being debated in Hartford.
When I asked about accountability reporting, Rich Graziano, the general manager, told me that investigating government institutions is not his main priority for WTNH. The station has covered such stories, like the FBI’s 2019 investigation of corruption in the administration of New Haven mayor Toni Harp, when they first surfaced in other outlets. “I’m not so focused on being first,” Graziano said. One of his primary roles, as he sees it, is to help local businesses grow: “We are in an advertising-based business, and we try to come up with different marketing solutions for our partners.”
WTNH staff described problems long familiar to local journalists across the country: too few reporters and too-quick turnarounds. Despite Nexstar’s claims that its consolidation is helping high-quality local news flourish, its stations are essentially left to face the same market pressures as any other. Those pressures can limit journalists’ ambition in deciding what to cover.
The station airs eleven hours of local newscasts every weekday, starting at 4am and ending at 11:30pm. That’s a staggering amount of airtime, and it reveals a contradiction at the heart of the mandate to produce original local programming every day.
Jon Rosen, the executive producer, explained: “Due to, I think, the amount of people on staff that we have and having to fill so much news time, I think there’s a challenge for us to constantly be coming up with original and new story ideas.”
WTNH staff aim for coverage that resonates, but out of necessity they also end up running items like the hack of a man’s home security camera or the umpteenth update on the murder of a local woman. Local TV stations tend to have a glut of crime stories, ranging from the horrific to the mundane, because a steady stream of them are always arriving through the police blotter. To break up the bleakness, they mix in stories about local acts of charity.
This spring, WTNH added even more hours of news programming, likely in a move to increase revenue. But the constant pressure to deliver content keeps producers and reporters in a daily churn that does not allow them time for longer or more complicated projects—the kind of quality coverage that benefits the public. If Nexstar’s general mandate to encourage “localism” does not explicitly incentivize station managers to embrace a muckraking ethos, in other words, it’s unlikely to happen.
Nexstar corporate officers suggested that it’s impossible to generalize about the stations or their programming. Susan Tully, Nexstar’s senior vice president of local content development, explains, “Now we own a station in market 2 [in Los Angeles] and a station in market 195 [in San Angelo, Texas]. And everything in between. And the station size, the market size, the geographic part of the nation, it is so diverse and varied that there is no one way fits all.”
Investigative journalism, Tully says, is important to viewers in some markets and less so in others, and it is up to station managers to gauge demand. Blake Russell, executive vice president of station operations and content development, says that Nexstar “sometimes” supplies local stations with more staff when they expand their news programming: “It depends on the market.”
While Nexstar’s corporate management has figured out how to make the company profitable—amass power in retransmission negotiations—they are no different from newsrooms anywhere in that they haven’t made this kind of reporting profitable. Their promise to expand high-quality local news coverage, then, relies on something unlikely if not impossible: dozens of individual station managers deciding to go against market pressures and sink resources into projects that may, over time, jeopardize their stations.
The guiding principle that Nexstar passes down to station managers—’commitment to localism’—is amorphous and lackluster
Despite its branding emphasis on local news, Nexstar’s banner projects are designed to share state and national stories with regional audiences. In September, its cable network WGN America (a former Tribune holding) will launch a three-hour nightly prime-time program that will compete with cable news shows. Nexstar has also invested heavily in its Washington, DC, bureau—part of an industry-wide prioritization of national figures and news—which conducts interviews with members of Congress and sends the interviews to stations in the states they represent.
Nexstar is increasingly producing content that will be aired across multiple stations in a region—a plan that has both benefits and drawbacks for the public. Some regional broadcasts, such as “town halls” with lawmakers that run with limited advertising breaks, are a clear public service. In other cases, producing news reports and shows that are relevant across an entire state or region—or, less often, the whole “Nexstar Nation”—serves to reduce cost.
From a programming perspective, this regional strategy could be an opportunity to fulfill an acute need. Between 2003 and 2014, newspapers lost about a third of their full-time statehouse reporters, a significant loss. Nexstar is rolling out new state bureaus—it now operates news bureaus in twenty state capitals—which could fill those gaps. These new bureaus are both a service to local residents and a relatively modest investment: the Jefferson City, Missouri, bureau, for example, which opened this year, has a single full-time reporter who can reach some 2.5 million viewers in at least four Missouri markets.
The opportunities to foster necessary, dynamic journalism are there—they just need proper attention. One special Nexstar project demonstrates how the company can bring high-caliber local coverage to new audiences. In the spring of 2019, Sook and Timothy Busch, Nexstar’s president, were visiting a Nexstar station in El Paso when they realized that Nexstar’s local focus, numerous stations, and nonpartisan lens meant it was uniquely positioned to produce and aggregate stories from the southern border. That night they purchased the domain name BorderReport.com, and soon afterward Sandra Sanchez and Julian Resendiz, two veteran newspaper journalists, were hired to report for the new site.
The Border Report team is small. Sanchez is based in McAllen, Texas; Resendiz, in El Paso. The two cover an enormous radius—often driving multiple hours to cover a story—and usually write between two and four pieces a day, mostly related to migration. Their stories run on the website and are also aired on Nexstar stations across the border region, from San Diego to Albuquerque to McAllen, thereby reaching larger audiences than stories for a single local paper or TV station would. They have recently gained another digital reporter and a California correspondent.
Sanchez and Resendiz are able to execute their stories because of their investigative skills and due to an ingrained conception of themselves as accountability journalists. It is this experience, as much as geography, that varies across the Nexstar Nation. The guiding principle that Nexstar passes down to station managers—“commitment to localism”—is amorphous and lackluster in contrast to the Border Report journalists’ clear mission. And regardless of how much an individual station manager personally values accountability reporting, in the end that manager is tasked with keeping the station profitable, which means running more hours of news programming with a lean staff, making it much more difficult for a reporter to spend two months setting up a necessary interview with a government official.
What the FCC proceedings showed without a doubt, however, were the hard limits of a media conglomerate’s ability to truly serve the public interest.
At the same time that Nexstar has promoted itself as working in the public interest, it has also advocated that the federal government further loosen restrictions for media conglomerates. The company runs a corporate political action committee that has donated to dozens of congressional Democrats and Republicans across the ideological map. Several recipients of Nexstar donations, including Sens. John Thune, Marsha Blackburn, Amy Klobuchar, and Ted Cruz, sit on the Senate subcommittee tasked with overseeing the FCC.
Nexstar has also hired lobbyists to exert influence in Congress and at the FCC while simultaneously expanding its DC bureau, where its news staff covers Congress. When I asked Gary Weitman, Nexstar’s chief communication officer, whether Nexstar’s political activity presented a potential conflict of interest, he responded, “The pac is there because Nexstar is in a regulated industry and there are a number of issues that it’s important to be heard on, and that’s what the pac enables us to do.… I don’t see that as a conflict.”
In 2019, when Nexstar was seeking FCC permission to acquire Tribune, public interest groups including Common Cause filed a petition arguing that the merger would give Nexstar monopoly-like control, enabling it to keep raising retransmission fees. They argued that the merger would diminish local news because Nexstar lays off employees at some stations it acquires and relies too much on pumping content from its regional hubs. The criticisms have merit, but the picture is complicated: although Nexstar’s coverage is uneven, many of its stations nationwide do provide substantive local news.
What the FCC proceedings showed without a doubt, however, were the hard limits of a media conglomerate’s ability to truly serve the public interest. In response to the petition, Nexstar’s and Tribune’s attorneys argued that the public interest groups did not have standing to petition, a common legal argument. The FCC agreed, and in their final decision allowing the merger they went a step further and enshrined a new policy that restricts public opposition to future mergers. In a dissenting opinion, Commissioner Jessica Rosenworcel called the new policy “bureaucratic and cruel.” She wrote, “It perversely means that the public will have fewer opportunities to comment on the use of the public airwaves.”
As the political implications of the coronavirus crisis evolve in the coming weeks and months, in-depth local reporting will only become more urgent. State and local officials will confront profound dilemmas as they attempt to manage rampant unemployment, food insecurity, and pending evictions, all while facing unprecedented budget cuts. Officials will need to respond to the outpouring of grief and anger over state violence against Black Americans.
The ideal figures to hold those officials to account are local journalists familiar with state budgets, local lawmakers, and the unique contours of their communities. Nexstar may well stay the course, or even thrive, but the public will need more than a broadcast of a governor’s press conference to understand how, why, and at whose behest elected officials are making decisions. We will see Nexstar’s dual purposes—serving the public and expanding to maximize profits—continue to be at odds.
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