Nexstar Broadcasting Group
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 (non-network) 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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