The local TV station group business has quickly turned into a horror show.
Shares of some of the sector’s biggest players are down more than 25 percent this year, the result, sources said, of a crackdown by the Federal Communication Commission on stations’ joint sales agreements.
Leading the crackdown is the new FCC boss, Tom Wheeler, critics said.
“[Wheeler’s] trying to break apart broadcasters,” one source told online news blog TVNewsCheck.
The joint sales agreements allowed TV groups to skirt ownership limits by getting together in the same market to sell each other’s airtime.
The agreements helped increase stations’ revenue and profits and made them more valuable.
Wheeler wants to see stations limit ad sales no more than 15 percent of other station’s inventory.
The FCC is expected to rule on the issue next month.
In the meantime, local TV station groups, are down sharply in 2014.
For example: Shares of Hunt Valley, Md.-based Sinclair Broadcasting Group have fallen 26.3 percent this year; Nexstar Broadcasting, of Irving, Texas, is down 26.2 percent; Lin Media, Providence, RI, is down 25.2 percent; and Gray Television, Atlanta, is down 29.1 percent.
That’s quite a turnaround from 2013, when the same stocks doubled and tripled amid a red-hot M&A market sparked by escalating cable company retransmission fees.
Big TV groups, such as Tribune Co. and Gannett, gobbled up local TV stations as part of multibillion-dollar transactions.
Sinclair shares fell 5.5 percent on Wednesday after it reported a drop in profit as it extinguished debts.
Sinclair acquired 63 stations last year.
Sinclair’s $930 million acquisition of AllBritton is currently a victim of the FCC issue and is stuck in a second round of regulatory review with the Justice Department.
Local media ad revenues are expected to grow just 2.8 percent a year through 2017, to $151.5 billion, according to BIA/Kelsey.
Over-the-air TV’s share of ad revenue is expected to decline over that period.
John Tupper, of Tupper Kepper, a firm that brokers TV station deals, acknowledges the “winds have changed somewhat,” adding, “we are having a little pause.”
There won’t be a thaw in the frigid local TV station M&A business until deal makers know how Washington will react to more transactions, Tupper said.
Some critics have accused the FCC boss of working to help cable operators since he used to run their trade association, the NCTA.
Wheeler is also urging broadcasters to share spectrum and put spectrum up for sale to telecom operators. That’s another move that station owners believe is aimed at helping telecom players.
One company CEO told The Post there are plenty of threats piling up at the station-group door.
“There’s the FCC, there’s Aereo, then the networks want more money coming back to them and there’s pressure from the distributors,” the CEO said.