Tegna shares surged over 28% on Monday following a Wall Street Journal report that Nexstar is in advanced talks to acquire the company, while the latter’s shares popped 3.3%.
The outlet did not disclose any terms for the deal and Tegna and Nexstar declined to comment to TheWrap on “rumors or speculation.”
Tegna owns and operates 64 television stations in 51 markets, making it one of the largest and geographically diverse broadcasters in the U.S. and the largest owner of Big Four affiliates in the top 25 markets. Meanwhile, Nexstar has more than 200 owned or partner stations in 116 U.S. markets, reaching 220 million people.
As of Monday, Tegna had a market capitalization of $3.15 billion, while Nexstar had a market cap of $5.85 billion.
This isn’t the first time Tegna has held talks about being acquired. In 2023, the company received an $8.6 billion offer from private equity firm Standard General, but that deal would later be scrapped after pushback from Congress and the FCC.
The move comes as the National Association of Broadcasters, conservative groups and members of Congress have all lobbied the Federal Communications Commission, asking for the agency to modernize broadcast ownership rules, which currently limit a single entity’s ability to own TV stations that collectively reach more than 39% of U.S. TV households. The agency has opened up the matter for public comment.
The U.S. Court of Appeals for the Eighth Circuit also recently ruled against limiting a single entity from controlling multiple Big Four affiliate networks in a single market.
During a panel discussion hosted by the Milken Institute in May, FCC chairman Brendan Carr signaled support of TV station ownership reform being one way to empower local broadcasters, calling the current rules “arcane” and “artificial.” But experts have previously told TheWrap that there are a number of hurdles for local TV station owners looking to pursue M&A besides just regulatory approval, including declining station and retransmission values due to cord-cutting and higher production costs and debt.
When asked about M&A last week during the company’s second quarter earnings call, Nexstar CEO Perry Sook said “growing our national footprint probably has more strategic importance to the company than simply doubling in markets where we had a single station.”
“We’re already kind of doubled up in about half of our markets. But what will govern our M&A activity is what has always governed, what is the highest and best use of our cash and balance sheet in the interest of growing shareholder value,” he continued. “From our perspective, there are a number of conversations going on. And I would say just broadly that everybody is talking to everybody. Out of that, we hope to find a love connection that would allow us to create shareholder value well beyond what would be created by simply buying back our own stock.”
In addition to Tegna and Nexstar, Gray Media recently agreed to acquire 10 stations from Allen Media Group for $171 million. The latter previously said in June that it was exploring a potential sale for its portfolio of 28 owned and operated stations in 21 U.S. markets.
