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Before theFederal Communications Commission
Washington, D.C. 20554
Applications Filed for the Transfer of )Control and Assignment of Broadcast )Television Licenses from )
)Media General, Inc. )
)Transferor, Assignor )
)to )
)Nexstar Broadcasting Group, Inc. )
)Transferee, Assignee )
MB Docket No. 16-57
PETITION FOR CONDITIONS
Matthew A. BrillAmanda E. PotterLATHAM & WATKINS LLP555 Eleventh Street, NWSuite 1000Washington, DC 20004
Counsel for Cox Communications, Inc.
March 18, 2016
i
SUMMARY
Pursuant to Section 73.3587 of the Commission’s rules and Sections 309(d) and 310(d) of the Communications Act of 1934, as amended (the “Act”),1 Cox Communications, Inc. (“Cox”) hereby petitions the Commission to impose conditions in the event it approves the applications filed in the above-captioned proceeding (“Applications”).2 The Applications arise from the proposed acquisition by Nexstar Broadcasting Group, Inc. (“Nexstar”) of Media General, Inc. (“Media General” and, together with Nexstar, the “Applicants”). Absent appropriate conditions, the proposed transaction, which would create the nation’s largest broadcast station group, would cause significant anticompetitive effects and other harms to Cox and its subscribers.
Based on the station assets of the two companies today, a combined Nexstar-Media General would control 171 stations in 100 markets,3 reaching a national audience in excess of the 39 percent cap (excluding the UHF Discount).4 Of particular concern to Cox, the proposed transaction would result in a dramatic over-concentration of post-transaction Nexstar’s market power within Cox’s footprint. A staggering 55 percent of Cox’s video subscribers reside in designated market areas (“DMAs”) with Nexstar- or Media General-owned stations.5 The aggregation of market power associated with the proposed transaction therefore threatens to have a disproportionate impact on Cox and its subscribers. In particular, the transaction would enable Nexstar to wield blackout threats that drive up Cox’s retransmission consent fees to unreasonable levels and that present an undue risk of resulting in actual blackouts that deprive millions of consumers of access to broadcast programming. Indeed, Nexstar’s CEO has acknowledged that
1 47 C.F.R. § 73.3587; 47 U.S.C. §§ 309(d), 310(d).2 A complete list of the licenses and application file numbers at issue is provided in the
Public Notice issued on February 26, 2016 in connection with the transaction. See Public Notice, Media Bureau Announces Permit-but-Disclose Ex Parte Status for Applications Filed for the Transfer of Control and Assignment of Broadcast Television Licenses from Media General, Inc. to Nexstar Broadcasting Group, Inc., MB Docket No. 16-57 (rel. Feb. 26, 2016) (“Public Notice”); see also Public Notice, Media Bureau, Broadcast Applications, Report No. 28671 (rel. Feb. 16, 2016); Public Notice, Media Bureau, Broadcast Applications, Report No. 28672 (rel. Feb. 17, 2016).
3 See Press Release, Nexstar Broadcasting Group Enters into Definitive Agreement To Acquire Media General for $4.6 Billion in Accretive Cash and Stock Transaction (Jan. 27, 2016), http://cdn.idstatic.com/cms/live/13/NXST-MEG-Transaction-Announcement-1-27-16.pdf?1453902377.
4 See CDBS File No. BTCCDT-20160210AFF et al., Comprehensive Exhibit at 2 (acknowledging that the proposed transaction, absent divestitures, would exceed the national television ownership limit when excluding the UHF Discount).
5 Declaration of Andrew I. Albert ¶ 4 (dated March 18, 2016) (“Albert Declaration”), attached hereto as Exhibit 1.
ii
a central rationale of such transactions is to use the leverage afforded by consolidation to garner increased retransmission consent fees.6
Cox’s recent experience negotiating a retransmission consent agreement with Nexstar (even absent the increased scale and over-concentration threatened by the proposed transaction with Media General) leaves no doubt that Nexstar uses threats of blackouts—often timed to exploit multichannel video programming distributor (“MVPD”) subscribers’ fear of losing access to marquee events like the Super Bowl—as a brinkmanship tactic to extract increased fees.7
Even assuming such tactics could be squared with the Commission’s existing rules (or soon-to-be-revised good faith rules), the extraordinary market power that the transaction would confer on Nexstar-Media General vis-á-vis Cox and its subscribers requires specific remediation.
The Commission therefore should condition approval of the transaction on carefully tailored requirements to protect Cox’s subscribers from the harms that otherwise would result from the disproportionate bargaining leverage Nexstar would garner as a result of the transaction. In particular, if the Commission ultimately decides to approve the transaction, Cox proposes the following conditions:
In the event of a retransmission consent dispute between Nexstar and Cox, Nexstar should be required to submit to mediation overseen by the Commission.Such dispute resolution should be conducted by a mediator with knowledge of and experience with industry norms in the retransmission consent arena, and withsufficient access to Nexstar’s and Cox’s retransmission consent agreements to facilitate resolution of the dispute between the parties. In addition, mediation would become available immediately upon either party’s making its last and final offer in carriage negotiations.
During the pendency of mediation, Nexstar should be prohibited from withholding its signals, subject to a true-up of rates, where applicable, following the execution of a final retransmission consent agreement.
Nexstar should be prohibited from spinning off any stations in overlap markets to Mission Broadcasting, Inc. (“Mission”), White Knight Broadcasting (“White Knight”), Vaughan Media, LLC (“Vaughan”), Super Towers, Inc. (“Super Towers”), or any other “sidecar” entity in which Nexstar has or (post-transaction) would have a significant interest. The Commission instead should ensure that all
6 See, e.g., Mission Buying 5 Stations for $103M, TVNEWSCHECK (Sept. 16, 2013), http://www.tvnewscheck.com/article/70502/nexstar-mission-buying-5-stations-for-103m(quoting Perry Sook as stating that Nexstar expects to “realize additional retransmission consent revenues” through a proposed broadcast transaction); Perry Sook and Tom Carter, UBS 43rd Annual Global Media & Communications Conference, Nexstar Broadcasting Group, Inc.: Keeping it Local, at 9 (Dec. 8, 2015), attached hereto as Exhibit 2 (describing growth in retransmission consent revenue of Nexstar, which has been driven, in significant part, by station acquisitions).
7 Albert Declaration ¶ 9.
iii
such divestitures are made to bona fide third-party, independently operated broadcasters.
iv
TABLE OF CONTENTS
SUMMARY..................................................................................................................................... i
BACKGROUND .............................................................................................................................4
ARGUMENT...................................................................................................................................6
THE COMMISSION SHOULD CONDITION ANY APPROVAL OF THE PROPOSED TRANSACTION ON REQUIREMENTS THAT WOULD PREVENT DISPROPORTIONATE HARM TO COX AND ITS SUBSCRIBERS .........................................6
A. The Transaction Threatens Significant Harm to Cox’s Subscribers Based on the Applicants’ Aggregation of Extraordinary Market Power Within Cox’s Service Areas.................................................................................................6
B. The Commission Should Adopt Targeted Conditions To Address These Transaction-Specific Harms...................................................................................12
CONCLUSION..............................................................................................................................15
Before theFederal Communications Commission
Washington, D.C. 20554
Applications Filed for the Transfer of )Control and Assignment of Broadcast )Television Licenses from )
)Media General, Inc. )
)Transferor, Assignor )
)to )
)Nexstar Broadcasting Group, Inc. )
)Transferee, Assignee )
MB Docket No. 16-57
PETITION FOR CONDITIONS
Pursuant to Section 73.3587 of the Commission’s rules and Sections 309(d) and 310(d) of
the Communications Act of 1934, as amended (the “Act”),8 Cox Communications, Inc. (“Cox”)
hereby petitions the Commission to impose conditions in the event it approves the applications
filed in the above-captioned proceeding (“Applications”).9 The Applications arise from the
proposed acquisition by Nexstar Broadcasting Group, Inc. (“Nexstar”) of Media General, Inc.
(“Media General” and, together with Nexstar, the “Applicants”). Absent appropriate conditions,
the proposed transaction, which would create the nation’s largest broadcast station group, would
cause significant anticompetitive effects and other harms to Cox and its subscribers.
8 47 C.F.R. § 73.3587; 47 U.S.C. §§ 309(d), 310(d).9 A complete list of the licenses and application file numbers at issue is provided in the
Public Notice issued on February 26, 2016 in connection with the transaction. See Public Notice, Media Bureau Announces Permit-but-Disclose Ex Parte Status for Applications Filed for the Transfer of Control and Assignment of Broadcast Television Licenses from Media General, Inc. to Nexstar Broadcasting Group, Inc., MB Docket No. 16-57 (rel. Feb. 26, 2016) (“Public Notice”); see also Public Notice, Media Bureau, Broadcast Applications, Report No. 28671 (rel. Feb. 16, 2016); Public Notice, Media Bureau, Broadcast Applications, Report No. 28672 (rel. Feb. 17, 2016).
2
Based on the station assets of the two companies today, a combined Nexstar-Media
General would control 171 stations in 100 markets,10 reaching a national audience in excess of
the 39 percent cap (excluding the UHF Discount).11 Of particular concern to Cox, the proposed
transaction would result in a dramatic over-concentration of post-transaction Nexstar’s market
power within Cox’s footprint. A staggering 55 percent of Cox’s video subscribers reside in
designated market areas (“DMAs”) with Nexstar- or Media General-owned stations.12 The
aggregation of market power associated with the proposed transaction therefore threatens to have
a disproportionate impact on Cox and its subscribers. In particular, the transaction would enable
Nexstar to wield blackout threats that drive up Cox’s retransmission consent fees to unreasonable
levels and that present an undue risk of resulting in actual blackouts that deprive millions of
consumers of access to broadcast programming. Indeed, Nexstar’s CEO has acknowledged that
a central rationale of such transactions is to use the leverage afforded by consolidation to garner
increased retransmission consent fees.13
10 See Press Release, Nexstar Broadcasting Group Enters into Definitive Agreement To Acquire Media General for $4.6 Billion in Accretive Cash and Stock Transaction (Jan. 27, 2016), http://cdn.idstatic.com/cms/live/13/NXST-MEG-Transaction-Announcement-1-27-16.pdf?1453902377.
11 See CDBS File No. BTCCDT-20160210AFF et al., Comprehensive Exhibit at 2 (acknowledging that the proposed transaction, absent divestitures, would exceed the national television ownership limit when excluding the UHF Discount).
12 Declaration of Andrew I. Albert ¶ 4 (dated March 18, 2016) (“Albert Declaration”), attached hereto as Exhibit 1.
13 See, e.g., Mission Buying 5 Stations for $103M, TVNEWSCHECK (Sept. 16, 2013), http://www.tvnewscheck.com/article/70502/nexstar-mission-buying-5-stations-for-103m(quoting Perry Sook as stating that Nexstar expects to “realize additional retransmission consent revenues” through a proposed broadcast transaction); Perry Sook and Tom Carter, UBS 43rd Annual Global Media & Communications Conference, Nexstar Broadcasting Group, Inc.: Keeping it Local, at 9 (Dec. 8, 2015), attached hereto as Exhibit 2 (describing growth in retransmission consent revenue of Nexstar, which has been driven, in significant part, by station acquisitions).
3
Cox’s recent experience negotiating a retransmission consent agreement with Nexstar
(even absent the increased scale and over-concentration threatened by the proposed transaction
with Media General) leaves no doubt that Nexstar uses threats of blackouts—often timed to
exploit multichannel video programming distributor (“MVPD”) subscribers’ fear of losing access
to marquee events like the Super Bowl—as a brinkmanship tactic to extract increased fees.14
Even assuming such tactics could be squared with the Commission’s existing rules (or soon-to-
be-revised good faith rules), the extraordinary market power that the transaction would confer on
Nexstar-Media General vis-á-vis Cox and its subscribers requires specific remediation.
The Commission therefore should condition approval of the transaction on carefully
tailored requirements to protect Cox’s subscribers from the harms that otherwise would result
from the disproportionate bargaining leverage Nexstar would garner as a result of the transaction.
In particular, if the Commission ultimately decides to approve the transaction, Cox proposes the
following conditions:
In the event of a retransmission consent dispute between Nexstar and Cox,
Nexstar should be required to submit to mediation overseen by the Commission.
Such dispute resolution should be conducted by a mediator with knowledge of
and experience with industry norms in the retransmission consent arena, and with
sufficient access to Nexstar’s and Cox’s retransmission consent agreements to
facilitate resolution of the dispute between the parties. In addition, mediation
would become available immediately upon either party’s making its last and final
offer in carriage negotiations.
14 Albert Declaration ¶ 9.
4
During the pendency of mediation, Nexstar should be prohibited from
withholding its signals, subject to a true-up of rates, where applicable, following
the execution of a final retransmission consent agreement.
Nexstar should be prohibited from spinning off any stations in overlap markets to
Mission Broadcasting, Inc. (“Mission”), White Knight Broadcasting (“White
Knight”), Vaughan Media, LLC (“Vaughan”), Super Towers, Inc. (“Super
Towers”), or any other “sidecar” entity in which Nexstar has or (post-transaction)
would have a significant interest. The Commission instead should ensure that all
such divestitures are made to bona fide third-party, independently operated
broadcasters.
In further support of the Petition, Cox states the following:
BACKGROUND
Cox offers subscription video services in 16 DMAs in which Nexstar and/or Media
General operate broadcast stations, including two of the overlap markets (Lafayette, LA and
Roanoke-Lynchburg, VA) identified in the Applications as DMAs in which both Nexstar and
Media General currently operate. The following chart identifies the DMAs and signals within
Cox’s footprint that are controlled by Nexstar or Media General.15
Cox DMA Broadcaster Station Affiliations
Details of Station Ownership/Operation
Mobile, AL-Pensacola, FL Media General CBSCW
Media General owns CBS and CW stations.
Ft. Smith-Fayetteville-Springdale-Rogers, AR†
Nexstar FOXNBC
Nexstar owns NBC and FOX stations.
Phoenix (Prescott), AZ Nexstar CW Nexstar owns CW station.Hartford-New Haven, CT Media General ABC
MyNetMedia General owns ABC and MyNetworkTV stations.
15 Id. ¶ 3.
5
Cox DMA Broadcaster Station Affiliations
Details of Station Ownership/Operation
Panama City, FL Nexstar ABC Nexstar owns ABC station.Joplin, MO-Pittsburg, KS†• Nexstar ABC
NBCNexstar owns NBC station and operates ABC station through sharing agreement with Mission.
Topeka, KS†• Media General ABCFOXNBCCW
Media General owns NBC and FOX stations and operates ABC and CW signals (which are multicast on the same station) through sharing agreement with Vaughan.
Wichita-Hutchinson, KS Plus Media General NBC Media General owns NBC station.
Baton Rouge, LA†• Nexstar FOXNBCCW
Nexstar owns FOX and CW stations and operates the NBC station through sharing agreement with White Knight.
Lafayette, LA*† Nexstar FOXNBCMyNet
Nexstar owns NBC and FOX stations and multicasts MyNetworkTV signal on the FOX station.
Media General CBS Media General owns CBS station.
Providence, RI-New Bedford, MA†•
Media General CBSFOXMyNet
Media General owns CBS station and operates FOX and MyNetworkTV signals through sharing agreement with Super Towers.
Springfield-Holyoke, MA Media General NBC Media General owns the NBC station.
Springfield, MO• Nexstar CBSMyNet
Nexstar owns the MyNetworkTV station and controls the CBS station through sharing agreement with Mission.
Las Vegas, NV Nexstar CBS Nexstar owns CBS station.Norfolk-Portsmouth-Newport News, VA†
Media General FOXNBC
Media General owns FOX and NBC stations.
Roanoke-Lynchburg, VA* Nexstar FOXCW
Nexstar owns FOX and CW stations.
Media General NBC Media General owns NBC station.
* Identifies overlap market in which Nexstar and Media General own stations.
6
† Identifies DMA in which Nexstar or Media General controls multiple Big Four signals.• Identifies DMA in which Nexstar or Media General operates one or more broadcast
signals through a sharing agreement.
Because Cox must negotiate retransmission consent agreements with the Applicants in
these DMAs, the extraordinary increase in bargaining leverage that would flow from the
transaction—including in particular post-transaction Nexstar’s ability to wield blackout threats
that would deprive more than half of Cox’s video subscribers of high-demand programming—
would result in substantially increased costs for Cox’s subscribers, as well as related harms
associated with threatened and actual blackouts, as described more fully below.
ARGUMENT
THE COMMISSION SHOULD CONDITION ANY APPROVAL OF THE PROPOSEDTRANSACTION ON REQUIREMENTS THAT WOULD PREVENT DISPROPORTIONATE HARM TO COX AND ITS SUBSCRIBERS
A. The Transaction Threatens Significant Harm to Cox’s Subscribers Based on the Applicants’ Aggregation of Extraordinary Market Power Within Cox’s Service Areas.
Nexstar’s aggregation of market power through the acquisition of Media General—to
create the largest broadcast station group in the nation—would threaten significant
anticompetitive effects and other public interest harms. Especially based on the disproportionate
over-representation of the combined company within Cox’s operating territories,16 a combined
Nexstar-Media General would have the incentive and ability to extract unreasonable fees and to
inflict related harms through retransmission consent negotiations with Cox, thus necessitating the
imposition of conditions in the event the proposed transaction is approved.
As many stakeholders have extensively documented in the ongoing retransmission
consent and media ownership reform proceedings, basic economic principles and the
16 Id. ¶ 4.
7
Commission’s own empirical analysis demonstrate that the aggregation of market power by
broadcasters drives up the prices they impose for retransmission consent.17 The key tool that
large broadcast station groups—including Nexstar in particular—have employed to leverage
their market power is the ability to withhold broadcast programming in the event their fee
demands are not met. Such threats of blackouts often seek to exploit MVPD subscribers’ fears
of losing access to marquee programming.18 For example, Cox’s recent negotiation with Nexstar
was heavily influenced by the threat of having to black out Nexstar’s signals to approximately
1.2 million Cox subscribers,19 and depriving hundreds of thousands of access to the Super
Bowl.20
17 See, e.g., Letter from Michael Nilsson, Counsel to ATVA, to Marlene H. Dortch, Secretary, FCC, MB Docket No. 15-216, at 2-5 (filed Feb. 18, 2016) (collecting overwhelming evidence of impact of increased retransmission consent fee demands on MVPD prices); Comments of the American Television Alliance, MB Docket No. 15-216,at 14-16, 20-21 (filed Dec. 1, 2015) (“ATVA Good Faith Comments”) (documenting the explosive growth of retransmission consent fees in the past decade and the impact on MVPD subscriber bills); Implementation of Section 103 of the STELA Reauthorization Act of 2014; Totality of the Circumstances Test, Notice of Proposed Rulemaking, 30 FCC Rcd 10327 ¶ 3 (2015) (“Good Faith NPRM”) (“[R]etransmission consent fees have steadily grown and are projected to increase further, thereby applying upward pressure on consumer prices for MVPD video programming services.”).
18 See Good Faith NPRM ¶ 16 & n.78; Comments of the Broadcast Affiliates Associations, MB Docket No. 15-216, at 32-34 (filed Dec. 1, 2015) (acknowledging that broadcasters time retransmission consent negotiations around marquee events “as retransmission consent negotiating leverage”); Comments of NTCA—The Rural Broadband Association, MB Docket No. 15-216, App. at IV (filed Dec. 1, 2015) (reporting that 49 percent of NTCA and INCOMPAS members “have faced a [broadcaster] threat to withhold or black out a broadcast station or network in a time period approaching the airing of popular sports, entertainment, or other marquee programming content); ATVA Good Faith Comments at 27.
19 Albert Declaration ¶ 9; see also, e.g., Mike Sunnucks, Super Bowl 50 hangs over Cox Communications, Nexstar fee fight, PHOENIX BUSINESS JOURNAL (Feb. 4, 2016), http://www.bizjournals.com/phoenix/news/2016/02/04/super-bowl-50-hangs-over-cox-communications.html.
20 Albert Declaration ¶ 9. Although the parties agreed to a short extension of the expiring retransmission consent agreement that enabled Cox to continue to carry Nexstar’s
8
Such threats of blackouts have a significant impact on the retransmission consent fees
that broadcasters are able to extract from MVPDs, and in turn impose substantially increased
costs on consumers.21 Blackout threats also cause consumer confusion and frustration, and lead
some MVPD subscribers to switch to a less-preferred MVPD, thereby causing switching costs
and eroding consumer welfare.22 While the overwhelming concentration of post-transaction
Nexstar within Cox’s footprint would leave Cox little choice but to accede to unreasonable
pricing (and other) demands made by Nexstar, an actual blackout would inflict considerable
additional harm on Cox’s subscribers by depriving them of high-value programming across the
16 distinct DMAs at issue.
In light of such broadcaster brinkmanship and its demonstrated harms, any transaction
that substantially increases a broadcast station group’s market power—such as the Nexstar-
Media General transaction, which would create the nation’s largest broadcast station group—
would threaten to undermine the public interest. In this particular case, making matters worse,
much of the market power aggregation flowing from the proposed transaction would be
concentrated within Cox’s service territory. Absent appropriate conditions, the transaction
therefore would result in substantial anticompetitive effects and other public interest harms from
the standpoint of Cox’s subscribers. As noted above, post-transaction Nexstar would be present
in 16 DMAs within Cox’s video footprint, reaching a staggering 55 percent of Cox’s cable
stations for a period of time beyond the initial expiration date, the extension options offered by Nexstar ensured that the agreement would expire before the Super Bowl. Id.
21 See, e.g., Steven C. Salop et al., Economic Analysis of Broadcasters’ Brinkmanship and Bargaining Advantages in Retransmission Consent Negotiations, at 16-20 (June 3, 2010), filed as an attachment to the Reply Comments of Time Warner Cable Inc., MB Docket No. 10-71 (filed June 3, 2010) (“Salop Report”) (describing asymmetrical harm to MVPDs and their customers from blackouts); supra n.17 (describing consumer impacts of increased retransmission consent fees).
22 See Salop Report at 11-16.
9
subscribers. By contrast, based on the applications, it appears that Cox’s subscriber base would
represent less than five percent of Nexstar-Media General’s national audience share. Such an
enormous disparity in bargaining leverage would ensure any threatened or actual programming
blackouts of Nexstar stations on Cox’s cable systems would have a dramatically greater impact
on Cox than on post-transaction Nexstar. Thus, notwithstanding the Applicants’ proposal to
divest certain stations—and thereby bring the post-transaction company within the 39-percent
national television ownership limit—the transaction is certain to concentrate increases in
bargaining leverage within Cox’s footprint, exacerbating the harms well beyond what would
occur if the combined Nexstar-Media General were to operate in areas distributed proportionally
across MVPD footprints.
The proposed transaction thus would circumvent the protections intended by the national
television ownership limit. Since the emergence of broadcast television in the 1940s, the
Commission has recognized the danger of unfettered broadcast television ownership and thus
placed limits on the ability of broadcasters to amass market power through consolidation.23
Indeed, the Commission consistently has confirmed that a primary purpose of the national
television ownership limit is to prevent the “undue concentration” of broadcaster market
power.24
Likewise, preventing over-concentration in the broadcast television industry has been a
longstanding priority for Congress. In the Telecommunications Act of 1996, Congress codified
23 See 6 Fed. Reg. 2284-85 (Tuesday, May 6, 1941) (adopting the first ownership limit for television broadcast stations).
24 Amendment of Multiple Ownership Rules, 9 R.R. 1563 (1953) (identifying the twin goals of promoting diversification of viewpoints and preventing “undue concentration of economic power” as the policy objectives of the national television ownership rule). See FCC v. Sanders Brothers Radio Stations, 309 U.S. 470 (1940).
10
the national television ownership limit at 35 percent,25 and later Commission efforts to relax the
cap were met with sharp congressional disapproval. In particular, when the Commission
modified the cap in 2003 to permit a single broadcast entity to control stations sufficient to reach
45 percent of the national audience26—a level that still falls well short of the 55 percent coverage
Nexstar proposes to obtain within Cox’s footprint—Congress took swift action, enacting
legislation that rejected the modified cap and ultimately adopting the current 39-percent
threshold.27 That action reflected the judgment of Congress regarding the need to retain
competitive balance in the distribution of broadcast television signals and to avoid any situation
where the public’s access to broadcast programming would be concentrated in the hands of only
a few large corporations.28
25 See Telecommunications Act of 1996, Pub. L. No. 104-104, § 202, 110 Stat. 56 (1996); Implementation of Sections 202(c)(1) and 202(e) of the Telecommunications Act of 1996 (National Broadcast Television Ownership and Dual Network Operations), Order, 11 FCC Rcd 12374 (1996).
26 See Broadcast Ownership Rules – 2002 Biennial Regulatory Review, Report and Order and Notice of Proposed Rulemaking, 18 FCC Rcd 13620 ¶ 500 (2003).
27 The 35 percent audience cap was included in omnibus appropriations bills adopted by both houses of Congress. See Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 2004, H.R. 2799, 108th Cong. § 624(2003); Consolidated Appropriations Act, 2004, H.R. 2673, 108th Cong. § 629 (2003). Following conference committee, the cap was set at 39 percent in final legislation. SeeConsolidated Appropriations Act, 2004, Pub. L. No. 108-199, § 629, 118 Stat. 3, 99-100(2004) (“2004 Consolidated Appropriations Act”).
28 See S. Rep. No. 108-141, at 1 (2003) (“Senate Report”) (“The purpose of this legislation is to prevent any one entity from owning, operating, controlling, or having a cognizable interest in broadcast television stations that have an aggregate national audience reach exceeding 35 percent.”); H. Rep. No. 108-221, 197-198 (2003) (Additional Views of the Honorable David R. Obey and José E. Serrano) (discussing the threats posed by concentrated broadcast television ownership, including threats to democracy and localism); 149 Cong. Rec. H7287 (daily ed. July 22, 2003) (statement of Mr. Markey) (stating that the 45 percent cap “goes too far” and stating that no broadcast entity “should have that kind of power”—“[t]he kind of power that ... will make Citizen Kane look like an underachiever”); see also 149 Cong. Rec. H7286 (daily ed. July 22, 2003) (statement
11
This pro-competitive policy, together with the longstanding interests in promoting
localism and diversity, is embodied in the current 39 percent audience cap established by
Congress,29 and compels special consideration within the context of the proposed transaction and
its effects on Cox and its subscribers. Congress’s determination that subscriber penetration
above 39 percent would result in such public policy harms indicates that the Applicants’ proposal
to combine stations in a manner that would reach more than half of Cox subscribers would
threaten those subscribers with anti-competitive effects and a diminution in localism and
diversity. Indeed, from the perspective of the 55 percent of Cox subscribers who would be
affected, Nexstar’s proposed acquisition of Media General warrants remediation to avoid an
outcome that plainly would contravene Congress’s intent in establishing the 39 percent national
audience cap.30
The harms posed by the transaction would be further exacerbated in DMAs where
Nexstar or Media General controls multiple broadcast signals. Nexstar or Media General
currently controls multiple Top Six broadcast signals in a total of 11 DMAs (out of the total 16)
in which Cox operates.31 Of those 11 DMAs, Nexstar or Media General controls multiple Big
Four signals in seven of the DMAs.32 In addition, Nexstar and Media General continue to use
sharing agreements with various “sidecar” entities to control multiple broadcast signals within
the same DMA. Of the 11 DMAs in which the broadcasters currently control multiple Top Six
of Mr. Sanders) (“[I]t is a very different and even much more serious problem when a handful of large corporations control what the American people see, hear and read.”).
29 See 2004 Consolidated Appropriations Act.30 See Senate Report at 1.31 See Chart, supra pp.4-6; Albert Declaration ¶ 6.32 See Chart, supra pp.4-6; Albert Declaration ¶ 6.
12
broadcast signals, the Applicants use sharing agreements in five of the DMAs.33 Mission is one
such “sidecar” entity. Although Mission purportedly operates independently from Nexstar,
Nexstar has significant managerial rights and economic interests in the Mission stations,
including the Mission stations in the Joplin, MO-Pittsburg, KS and Springfield, MO DMAs
within Cox’s operating territory.34 Nexstar also uses a sharing agreement with White Knight in
the Baton Rouge, LA DMA.35 Media General, for its part, which is now under investigation by
the Commission for abuses related to a sharing agreement in the Augusta, GA DMA,36 also
relies on sharing agreements within Cox’s footprint. It has entered into such an agreement with
Super Towers in the Providence, RI-New Bedford, MA DMA, and with Vaughan in the Topeka,
KS DMA.37
B. The Commission Should Adopt Targeted Conditions To Address These Transaction-Specific Harms.
As the foregoing discussion demonstrates, enabling Nexstar to aggregate so many
stations covering such a disproportionate share of Cox’s subscriber base would threaten
significant harms. The Commission therefore should impose targeted conditions to prevent, or at
least mitigate, the harms that otherwise would be imposed on Cox and its subscribers. Absent
such conditions, Cox and its subscribers would face unique and unprecedented exposure to
Nexstar’s proposed consolidation of market power—including, as discussed above, the ability (a)
to impose unreasonable retransmission consent fees, thus driving up MVPD rates based solely on
33 See Chart, supra pp.4-6; Albert Declaration ¶ 7.34 Albert Declaration ¶ 8.35 Id.36 Harry A. Jessell, FCC Launches Investigation of Media General, TVNEWSCHECK (Mar.
10, 2016), http://www.tvnewscheck.com/article/93012/fcc-launches-investigation-of-media-general.
37 Albert Declaration ¶ 8.
13
a market-power premium; (b) to wield tactical blackout threats that would induce some
consumers to switch to a less-desired MVPD, thus diminishing consumer welfare; and (c) to
carry out those threats, thus inflicting even more severe harm on Cox subscribers.
To be sure, the competitive concerns raised by the Nexstar-Media General transaction
(or, for that matter, Nexstar’s and Media General’s control of multiple broadcast signals within
the same DMA across each company’s respective footprints) highlight the need for broader,
industry-wide reforms that address the deeply flawed retransmission consent regime and the
Commission’s outdated broadcast attribution rules, a need that is well-documented in pending
rulemaking proceedings before the Commission. But the potential for such industry-wide
reforms plainly does not obviate the need to address the transaction-specific harms that would
flow from Nexstar’s ability to control broadcast signals reaching more than half of Cox’s video
subscriber base. To the contrary, the Commission has an obligation to ensure that the proposed
license transfers will serve the public interest, and that could not occur if Nexstar were permitted
to exploit the dramatic over-representation of the stations it proposes to combine within Cox’s
footprint.
Accordingly, the Commission should condition any decision approving the Applications
to ensure that Nexstar could not use its extraordinary bargaining leverage to the detriment of Cox
and its subscribers. In particular, the Commission should order that, in the event of a
retransmission consent dispute between Cox and post-transaction Nexstar, Nexstar must submit
to mediation overseen by the Commission. In the event mediation became necessary, the
Commission should appoint a mediator who has knowledge of industry norms in the
retransmission consent arena. Upon his or her appointment, the mediator should be provided
access to the retransmission consent agreements entered into by either party over the past 24
14
months, as well as the most recent carriage agreement between the parties themselves, to provide
the mediator with sufficient information to facilitate resolution of the parties’ dispute.38 The
Commission also should specify that either party may invoke the right to mediation once either
Nexstar or Cox makes its last and final offer.
In addition, during the pendency of such dispute resolution, the Commission should
require interim carriage of Nexstar’s broadcast signals on the terms set forth in the expiring
agreement(s),39 subject to a true-up provision in the event successor rates established via
mediation are higher than the previously applicable rates. The congressional sponsors of the
retransmission consent regime made clear that the Commission should play such a role where
necessary.40 Leaving aside whether interim carriage should be made available in connection
with dispute resolution more generally, it is necessary to combat the extraordinary leverage
38 The mediator should consider other information that impacts the value of retransmission consent, taking into account the financial and non-financial terms proposed by the partiesand their economic impact.
39 At the conclusion of mediation, the Commission should establish a reasonable implementation period, during which interim carriage would remain in place so that the parties could implement any new carriage agreement, or, if necessary, prepare for the withdrawal of Nexstar’s signals (including adequately apprising consumers of such withdrawal).
40 See, e.g., 138 Cong. Rec. S643 (Jan. 30, 1992) (“the FCC has the authority under the Communications Act to address what would be the rare instances in which such carriage agreements are not reached.”) (Sen. Inouye); id. at S14604 (“existing law provides the FCC with both the direction and authority to ensure that the retransmission consent provision will not result in a loss of local TV service”); id. at S14615-16 (“[I]f a broadcaster is seeking to force a cable operator to pay an exorbitant fee for retransmission rights, the cable operators will not be forced to simply pay the fee or lose retransmission rights. Instead, cable operators will have an opportunity to seek relief at the FCC.”) (Sen. Lautenberg); Letter from Sens. Inouye and Stevens to Kevin Martin, Chairman, Federal Communications Commission (Jan. 30, 2007) (“At a minimum, Americans should not be shut off from broadcast programming while the matter is being negotiated among the parties and is awaiting [Commission resolution].”).
15
Nexstar would obtain vis-à-vis Cox as a result of the significant over-representation of Nexstar-
Media General stations in Cox’s service territory.
Finally, the Applicants’ promise to divest stations in overlap markets would be wholly
insufficient if the companies could continue to use “sidecar” entities to control carriage
negotiations for multiple competing stations within the same DMA, across multiple DMAs
within Cox’s footprint. Given the Applicants’ existing ownership or operation of multiple
signals within DMAs in which Cox operates, the Commission should prohibit Nexstar or Media
General from spinning off any stations in overlap markets to Mission, White Knight, Vaughan,
Super Towers, or any other “sidecar” entity in which Nexstar or Media General have significant
interest (and/or post-transaction Nexstar would have significant interest), rather than operating
independently. Such a condition is particularly necessary to enable the Commission to ensure
that all divestitures are made to bona fide third-party broadcasters.
CONCLUSION
For the foregoing reasons, Cox urges the Commission to adopt conditions on any
approval of the proposed Nexstar-Media General transaction consistent with the proposals
described herein.
Respectfully submitted,
/s/ Matthew A. BrillMatthew A. BrillAmanda E. PotterLATHAM & WATKINS LLP555 Eleventh Street, NWSuite 1000Washington, DC 20004
Counsel for Cox Communications, Inc.March 18, 2016
CERTIFICATE OF SERVICE
I, Megan L. Kuhagen, hereby certify that on this 18th day of March, 2016, a true and
correct copy of the foregoing Petition for Conditions was served, via first-class mail, upon the
following:
Scott R. FlickPILLSBURY WINTHROP SHAW PITTMAN LLP1200 Seventeenth Street, NWWashington, DC 20036
Gregory L. MastersWILEY REIN LLP1776 K Street, NWWashington, DC 20006
David Brown*Media [email protected]
Jeremy Miller*Media [email protected]
Alison Nemeth*Media [email protected]
*Service by email only.
/s/ Megan L. KuhagenMegan L. Kuhagen
Exhibit 1
Exhibit 2
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2007
2008
2009
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2011
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2013
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NXS
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ose
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urna
l Com
mun
icat
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spin
off o
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ir re
spec
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pril
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rty
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ia C
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NXS
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&A
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201
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atio
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arke
ts
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en B
ay, W
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quet
te, M
I
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ore
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adca
stin
g
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)
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port
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evis
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12 /
2013
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rt #1
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tions
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kets
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port
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rand
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Z
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201
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noke
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port
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014
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eb 2
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201
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V
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star
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rred
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l, 52
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iona
l, 18
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rans
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itica
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er,
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etiz
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l opp
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ip /
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SA In
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exst
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ly 1
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KA
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ttle
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sonv
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) (O
&O
) K
MSS
(FO
X) (L
SA)
KSH
V (M
NTV
) (LS
A)
Bat
on R
ogue
, LA
(93)
W
GM
B (F
OX)
(O&
O)
WB
RL-
CD
(CW
) (O
&O
) W
VLA
(NB
C) (
LSA
) K
ZUP
(RTV
) (LS
A)
Lafa
yette
, LA
(121
) K
AD
N (F
OX)
(O&
O)
KLA
F-LD
(NB
C) (
O&
O)
Mon
roe,
LA
-El D
orad
o, A
R (1
37)
KAR
D (F
OX)
(O&
O)
KTVE
(NBC
) (LS
A)
Ale
xand
ria, L
A (1
79)
WN
TZ (F
OX/
MN
TV) (
O&
O)
Bol
d Te
xt in
dica
tes
acqu
ired
mar
kets
– c
lose
d tr
ansa
ctio
ns
Blu
e Te
xt in
dica
tes
acqu
ired
mar
kets
– a
nnou
nced
tran
sact
ions
Fr
esno
, CA
(54)
K
GPE
(CB
S) (O
&O
) K
SEE
(NB
C) (
O&
O)
Bak
ersf
ield
, CA
(126
) K
GET
(NB
C/C
W) (
O&
O)
KK
EY-L
P (T
elem
undo
) (O
&O
)
Expa
ndin
g G
eogr
aphi
c R
each
Lo
cal C
omm
unity
Foc
us
Exis
ting
Nex
star
Mar
kets
Rec
ently
Acq
uire
d M
arke
ts
Pro
form
a: 1
15 T
elev
isio
n St
atio
ns in
62
mar
kets
reac
hing
~18
.1%
of a
ll U
.S. T
V H
H
14
Gra
nd J
unct
ion-
Mon
tros
e-G
lenw
ood
Sprin
gs,
CO
(185
) K
FQX
(FO
X) (L
SA)
KR
EX (C
BS)
(O&
O)
KR
EG* (
CB
S) (O
&O
) K
REY
* (C
BS)
(O&
O)
KG
JT (M
NTV
) (O
&O
)
CO
LOR
AD
O
Phoe
nix,
AZ
(12)
K
ASW
(CW
) (O
&O
)
AR
IZO
NA
Des
Moi
nes,
IA (7
2)
WO
I (A
BC
) (O
&O
) K
CW
I (C
W) (
O&
O)
Qua
d C
ities
, IA
(101
) W
HB
F (C
BS)
(O&
O)
KG
CW
(CW
) (O
&O
) K
LJB
(FO
X) (L
SA)
Siou
x C
ity, I
A (1
49)
KC
AU
(AB
C) (
O&
O)
IOW
A
MA
RYL
AN
D
Was
hing
ton,
DC
-Hag
erst
own,
MD
(7)
WH
AG (N
BC) (
O&
O)
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mpa
ign-
Sprin
gfie
ld-D
ecat
ur, I
L (8
5)
WC
IA (C
BS) (
O&
O)
WC
FN (M
NTV
) (O
&O
) Pe
oria
-Blo
omin
gton
, IL
(117
) W
MBD
(CBS
) (O
&O
) W
YZZ
(FO
X) (L
SA)
Roc
kfor
d, IL
(136
) W
QR
F (F
OX)
(O&
O)
WTV
O (A
BC/M
NTV
) (LS
A)
Evan
svill
e, IN
(103
) W
TVW
(CW
) (M
SA)
WEH
T (A
BC) (
O&
O)
Ft. W
ayne
, IN
(111
) W
FFT
(FO
X) (O
&O
) Te
rre
Hau
te, I
N (1
55)
WTW
O (N
BC) (
O&
O)
WAW
V (A
BC) (
LSA)
IND
IAN
A
Wilk
es B
arre
-Scr
anto
n, P
A (5
5)
WBR
E (N
BC) (
O&
O)
WYO
U (C
BS) (
LSA)
Jo
hnst
own-
Alto
ona,
PA
(104
) W
TAJ
(CBS
) (O
&O
) Er
ie, P
A (1
50)
WJE
T (A
BC) (
O&
O)
WFX
P (F
OX)
(LSA
)
Mar
quet
te, M
I (18
0)
WJM
N (C
BS) (
O&
O)
MIC
HIG
AN
Sprin
gfie
ld, M
O (7
5)
KOLR
(CBS
) (LS
A)
KOZL
(Loc
al) (
O&
O)
Jopl
in, M
O –
Pitt
sbur
g, K
S (1
51)
KSN
F (N
BC) (
O&
O)
KOD
E (A
BC) (
LSA)
St
. Jos
eph,
MO
(201
)KQ
TV (A
BC) (
O&
O)
MIS
SOU
RI
ILLI
NO
IS
Roc
hest
er, N
Y (7
6)
WR
OC
(CBS
) (O
&O
) Sy
racu
se, N
Y (8
4)
WSY
R (A
BC
) (O
&O
) B
ingh
amto
n, N
Y (1
59)
WB
GH
(NB
C) (
O&
O)
WIV
T (A
BC
) (O
&O
) U
tica,
NY
(172
) W
FXV
(FO
X) (O
&O
) W
PNY-
LP (M
NTV
) (O
&O
) W
UTR
(ABC
) (LS
A)
Elm
ira, N
Y (1
75)
WET
M (N
BC
) (O
&O
) W
ater
tow
n, N
Y (1
77)
WW
TI (A
BC
) (O
&O
)
NEW
YO
RK
Billi
ngs,
MT
(167
) KS
VI (A
BC) (
O&
O)
KHM
T (F
OX)
(LSA
)
MO
NTA
NA
Mem
phis
, TN
(50)
W
ATN
(AB
C) (
O&
O)
WLM
T (C
W) (
O&
O)
Jack
son,
TN
(176
) W
JKT
(FO
X) (O
&O
)
Min
ot-B
ism
arck
-Dic
kins
on-W
illis
ton,
ND
(185
) K
XMC
(CB
S) (O
&O
) K
XMB
(CB
S) (O
&O
) K
XMA
(CB
S) (O
&O
) K
XMD
(CB
S) (O
&O
) K
MC
Y* (A
BC
) (LS
A)
KB
MY*
(AB
C) (
LSA
)
TEN
NES
SEE
NO
RTH
DA
KO
TA
Las
Vega
s, N
V (4
0)
KLA
S (C
BS)
(O&
O)
NEV
AD
A
Har
linge
n-W
esla
co-B
row
nsvi
lle-M
cAlle
n, T
X (8
6)
KVE
O (N
BC
/Est
rella
) (O
&O
) W
aco-
Tem
ple-
Bry
an, T
X (8
7)
KW
KT
(FO
X/Es
trel
la) (
O&
O)
KYL
E (M
NTV
/Est
rella
) (O
&O
)
El P
aso,
TX
(92)
K
TSM
(NB
C/E
stre
lla) (
O&
O)
Tyle
r-Lo
ngvi
ew, T
X (1
09)
KET
K (N
BC
/Est
rella
) (O
&O
)K
FXK
(FO
X) (L
SA)
KFX
L-LD
(FO
X) (L
SA)
KLP
N-L
D (M
NTV
) (LS
A)
Amar
illo,
TX
(131
) KA
MR
(NBC
) (O
&O
) KC
IT (F
OX)
(LSA
) KC
PN-L
P (M
NTV
) (LS
A)
Lubb
ock,
TX
(144
) KL
BK (C
BS) (
O&
O)
KAM
C (A
BC) (
LSA)
W
ichi
ta F
alls
, TX
-Law
ton,
OK
(147
) KF
DX
(NBC
) (O
&O
) KJ
TL (F
OX)
(LSA
) KJ
BO-L
P (M
NTV
) (LS
A)
Ode
ssa-
Mid
land
, TX
(145
) KM
ID (A
BC) (
O&
O)
KPE
J (F
OX/
Estr
ella
) (LS
A)
Abile
ne-S
wee
twat
er, T
X (1
65)
KTAB
(CBS
) (O
&O
) KR
BC (N
BC) (
LSA)
Sa
n An
gelo
, TX
(198
) KS
AN (N
BC) (
LSA)
KL
ST(C
BS) (
O&
O)
Salt
Lake
City
, UT
(34)
K
TVX
(AB
C) (
O&
O)
KU
CW
(CW
) (O
&O
)
WIS
CO
NSI
N
Gre
en B
ay, W
I (68
) W
FRV
(CBS
) (O
&O
) La
Cro
sse,
WI (
128)
W
LAX
(FO
X) (O
&O
)W
EUX
(FO
X) (O
&O
)
Bur
lingt
on, V
T (9
8)
WFF
F (F
OX)
(O&
O)
WVN
Y (A
BC
) (LS
A)
Roa
noke
, VA
(69)
W
FXR
(FO
X/C
W) (
O&
O)
WW
CW
(CW
/FO
X) (O
&O
)
TEXA
S
VIR
GIN
IA
ALA
BA
MA
CA
LIFO
RN
IA
UTA
H
LOU
ISIA
NA
PEN
NSY
LVA
NIA
WES
T VI
RG
INIA
C
harle
ston
/Hun
tingt
on, W
V (6
7)
WO
WK
(CB
S) (O
&O
) W
heel
ing,
WV/
Steu
benv
ille,
OH
(157
) W
TRF
(CB
S) (O
&O
) B
luef
ield
/Bec
kley
, WV
(160
) W
VNS
(CB
S) (O
&O
) C
lark
sbur
g/W
esto
n, W
V (1
69)
WB
OY
(NB
C) (
O&
O)
VER
MO
NT
Affil
iatio
ns re
new
ed
thro
ugh
12/1
6
Affil
iatio
ns re
new
ed
thro
ugh
12/1
8 &
6/2
0
Long
-term
reco
rd o
f neg
otia
ting
mut
ually
ben
efic
ial N
etw
ork
Affil
iatio
n ag
reem
ents
Net
wor
k A
ffilia
tion
Agr
eem
ents
15
Affil
iatio
ns re
new
ed
thro
ugh
12/1
7
Affil
iatio
n re
new
al
thro
ugh
12/1
9
Long
Ter
m A
ffilia
tion
Con
trac
ts w
ith “
Big
4”
Net
wor
ks
Not
e: A
ffilia
tion
expi
ratio
n ba
sed
on N
exst
ar a
nd M
issi
on o
wne
d st
atio
ns a
s of
12/
31/1
4
Affil
iatio
n Ag
reem
ents
100%
of a
ll “B
ig F
our”
mar
kets
are
rene
wed
thro
ugh
YE20
16
Cre
atin
g th
e fir
st N
BC
affi
liate
in L
afay
ette
, LA
and
the
MyN
etw
orkT
V a
ffilia
te in
Wac
o, T
X (
both
effe
ctiv
e 7/
1/15
) th
roug
h ef
ficie
nt re
-allo
catio
n of
Nex
star
’s e
xist
ing
spec
trum
ass
ets
16
Fina
ncia
l Ove
rvie
w
$15.
1
$41.
7 $5
4.3
$80.
0
$114
.7
$244
.7
050100
150
200
250
300
2003
/200
420
05/2
006
2007
/200
820
09/2
010
2011
/201
220
13/2
014
($ in millions)
~30.
6 m
illion
out
stan
ding
sha
res
(refle
ctin
g re
purc
hase
s of
app
roxi
mat
ely
one
milli
on
shar
es in
Q3’
15)
Acc
retiv
e M
&A
and
debt
retir
emen
t/lev
erag
e re
duct
ion
prio
ritie
s
NXS
T Fr
ee C
ash
Flow
bas
ed o
n tw
o ye
ar c
ycle
s
Sign
ifica
nt F
ree
Cas
h Fl
ow G
row
th S
ince
IPO
Org
anic
Gro
wth
, fue
led
by P
oliti
cal a
nd R
etra
nsm
issi
on R
even
ues,
and
Con
tribu
tions
from
R
ecen
tly C
ompl
eted
Tra
nsac
tions
will
driv
e Fr
ee C
ash
Flow
to
~ $4
82 M
illio
n in
201
5/20
16
17
Gro
win
g Tw
o Ye
ar F
CF
Cyc
le (F
Y)
$85.
1 $9
6.2
$63.
2
$112
.3
$96.
1
$146
.3 $1
66.7
$234
.7
$0.0
$50.
0
$100
.0
$150
.0
$200
.0
$250
.0
2007
A20
08A
2009
A20
10A
2011
A20
12A
2013
A20
14A
$249
.8
$237
.7
$212
.5
$235
.9
$247
.3
$266
.3
$348
.8
$389
.1
$74.
3 $6
6.1
$55.
1 $6
2.0
$65.
7 $7
6.1
$113
.4
$109
.9
$0.0
$50.
0
$100
.0
$150
.0
$200
.0
$250
.0
$300
.0
$350
.0
$400
.0
$450
.0
2007
A20
08A
2009
A20
10A
2011
A20
12A
2013
A20
14A
FY N
et R
even
ue
FY C
ore
Rev
enue
s
$175
.5
$171
.6
$157
.4
$173
.9
FY A
djus
ted
EBIT
DA(
1)
FY F
ree
Cas
h Fl
ow(2
)
(1)
Adj
uste
d E
BIT
DA
is c
alcu
late
d as
BC
F le
ss c
orpo
rate
exp
ense
s.
(2)
Free
cas
h flo
w is
EB
ITD
A le
ss c
ash
inte
rest
exp
ense
, cap
ital e
xpen
ditu
res
and
net c
ash
inco
me
taxe
s
$181
.6
32%
34
%
25%
36
%
31%
His
toric
al F
inan
cial
Sum
mar
y (in
mill
ions
)
$190
.2
39%
His
toric
al F
inan
cial
Sum
mar
y (in
mill
ions
)
18
$265
.4
33%
$266
.8 $2
84.9
$252
.0 $3
13.4
$30
6.5
$378
.6 $5
02.3
$631
.3
$0.0
$100
.0
$200
.0
$300
.0
$400
.0
$500
.0
$600
.0
$700
.0
2007
A20
08A
2009
A20
10A
2011
A20
12A
2013
A20
14A
$279
.2
Loca
l Rev
enue
N
atio
nal R
even
ue
37%
$2
8.0
$26.
3 $1
9.9
$60.
1
$34.
2
$80.
5 $8
4.9
$159
.7
$0.0
$20.
0
$40.
0
$60.
0
$80.
0
$100
.0
$120
.0
$140
.0
$160
.0
$180
.0
2007
A20
08A
2009
A20
10A
2011
A20
12A
2013
A20
14A
Q3
/ Nin
e M
onth
s 20
15 F
inan
cial
Sum
mar
y (in
thou
sand
s)
1)B
road
cast
cas
h flo
w m
argi
n is
bro
adca
st c
ash
flow
as
a pe
rcen
tage
of n
et re
venu
e. A
djus
ted
EB
ITD
A m
argi
n is
Adj
uste
d E
BIT
DA
as
a pe
rcen
tage
of n
et re
venu
e.
19
Deb
t/Lev
erag
e A
naly
sis
TTM
EN
DED
3-
Mo
END
ED
(in m
illio
ns)
12/3
1/20
11
12/
31/2
012
12
/31/
2013
12
/31/
2014
PF
12/3
1/14
* 09
/30/
15
Rev
olve
r $
24
.3
$
-
$
-
$
5.5
$
41
.0
$
7
.0
TLB
14
8.1
28
8.3
54
5.4
705.
1 70
5.1
686.
4 8.
875%
Sr S
ec 2
nd L
ien
Not
es31
8.4
319.
4 -
--
-6.
875%
Sr S
ub N
otes
-
25
0.0
52
5.7
525.
6 52
5.6
519.
6 6.
125%
Sr S
ub N
otes
-
- -
- 27
5.0
272.
1 7%
Sr S
ub N
otes
14
9.6
-
-
- -
- 11
.375
% S
enio
r dis
coun
t not
es
-
-
- -
- -
Tota
l Deb
t $
640.
4
$
85
7.8
$
1,
071.
1 $
1,
241.
6 $
1
,546
.7
$
1
,485
.1
C
ash
on H
and
$
7.5
$
69
.0
$
4
0.0
$
13
1.9
$
20.
0 $
23.
4
R
epor
ted
EB
ITD
A
$
9
6.2
$
146.
3
$
16
6.7
$
234.
7
$
N
/A
$
7
3.2
C
ompl
ianc
e E
BIT
DA
$
103.
3 $
189.
5
$
17
6.7
$
21
1.2
$
3
43.6
$
3
44.3
Com
plia
nce
Leve
rage
: 6.
20x
4.
16x
5.
84x
4.40
x 4.
49x
4.
26x
FCF
$
3
4.2
$
80.
5
$
8
4.9
$
15
9.7
$
N
/A
$
4
6.2 20
Nex
star
Deb
t/Lev
erag
e An
alys
is
*Pro
-form
a fo
r tra
nsac
tion
finan
cing
s th
roug
h 1/
29/2
015.
Tran
sfor
mat
iona
l Acq
uisi
tions
and
Ope
ratin
g St
rate
gies
Driv
ing
Rec
ord
FCF
Clo
sed
and
Succ
essf
ully
Inte
grat
ed H
ighl
y Ac
cret
ive
Acqu
isiti
ons
Incr
ease
d st
atio
n pl
atfo
rm b
y ~7
0% s
ince
YE
’12
Clo
sed
~$65
0 m
illio
n in
acq
uisi
tions
sin
ce 1
2/1/
14
Con
tinue
d D
oubl
e D
igit
Gro
wth
of N
on-c
ore
Rev
enue
Cha
nnel
s Po
litic
al –
stro
ng e
ven
and
odd
year
pol
itica
l rev
enue
gro
wth
E
ven
year
CA
GR
of 2
5.0%
(200
8-20
14)
Odd
yea
r CA
GR
of 6
.1%
(200
7-20
13)
Ret
rans
mis
sion
con
tract
rene
wal
s fo
r >20
0 re
trans
agr
eem
ents
in la
st tw
o ye
ars
Hig
h su
b co
unts
, no
serv
ice
inte
rrup
tions
A
gree
men
ts w
ith 3
of 5
top
dist
ribut
ion
partn
ers
~60%
of s
ub b
ase
succ
essf
ully
re-p
riced
in 2
013
and
2014
~8
5% o
f sub
bas
e to
be
re-p
riced
in 2
015
and
2016
D
igita
l Med
ia p
latfo
rm ra
pidl
y ex
pand
ing
N
ew re
venu
e ap
plic
atio
ns a
nd m
onet
izat
ion
of m
obile
mar
ketin
g in
itiat
ives
lead
ing
to o
rgan
ic g
row
th a
nd
grow
th th
roug
h ac
cret
ive
acqu
isiti
ons
Bro
adca
stin
g Sp
ectr
um m
onet
izat
ion
oppo
rtun
ity
Dec
linin
g co
st o
f cap
ital a
nd le
vera
ge
Wei
ghte
d av
erag
e co
st o
f deb
t dec
lined
to ~
5.0%
at Y
E20
14 fr
om ~
5.75
% a
t YE
2013
N
et le
vera
ge ra
tio d
eclin
ed to
4.2
6x a
t 3Q
2015
from
4.4
0x a
t YE
2014
Stro
ng o
pera
ting
fund
amen
tals
, acc
retiv
e M
&A
tran
sact
ions
, sha
re re
purc
hase
s an
d st
reng
then
ed b
alan
ce
shee
t driv
ing
reco
rd fr
ee c
ash
flow
N
exst
ar e
xpec
ted
to g
ener
ate
free
cash
flow
of $
482
milli
on d
urin
g th
e 20
15/2
016
cycl
e, o
r ave
rage
free
cas
h flo
w o
f app
roxi
mat
ely
$7.8
5 pe
r sha
re p
er y
ear
On
pace
to re
turn
app
roxi
mat
ely
$72.
0 m
illio
n to
sha
reho
lder
s in
FY
2015
, or a
ppro
xim
atel
y $2
.00
per s
hare
21
Keep
ing
it Lo
cal
NXS
T: N
ASDA
Q
To
m C
arte
r, C
hief
Fin
anci
al O
ffice
r M
ay 1
2, 2
015
MMMMMMMay
1,,,,,, 2
MMMMMMMMaaaaaaaaaaaaaaaayyyyyyyyyyyyyyyyyyyyyyyyyyyy
1111111111111111111111111111111111111112222222222222222222222222222222222222222222222222222222222222222222222222222222222222222222222,
43rd
Ann
ual G
loba
l Med
ia &
Com
mun
icat
ions
Con
fere
nce
Perr
y So
ok, C
hief
Exe
cutiv
e O
ffice
r To
m C
arte
r, C
hief
Fin
anci
al O
ffice
r D
ecem
ber 8
, 201
5
