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Fitch: New FCC Rules Could Create Wave of Media Activity
November 16, 2017 / 2:49 PM / a month ago

Fitch: New FCC Rules Could Create Wave of Media Activity

(The following statement was released by the rating agency) Link to Fitch Ratings' Report: New FCC Rules Could Cause Wave of Media Activity here NEW YORK, November 16 (Fitch) New rules proposed by FCC Chairman Ajit Pai could create a wave of intra-market activity through acquisitions, divestitures or station swap deals that would allow TV station groups to bolster market shares in individual markets, according to Fitch Ratings. The new rules could also be a positive driver in the newspaper sector, allowing for opportunities of combination with stronger and less secularly-challenged peers in the media sector (like TV broadcasters). Fitch also believes that the proposed loosening of the local television ownership rules is a positive for the proposed Sinclair-Tribune combination as it could limit the number of stations that will need to be divested in overlapping markets and provide opportunities for advantageous station swaps. The FCC is expected to broadly ease media ownership rules at an open commission meeting on November 16. Mr. Pai has been particularly critical of the rules preventing a company from owning a broadcast and newspaper asset in the same local market. He outlined aspects of his plan for the November 2017 Open Commission Meeting that would make sweeping changes to the media ownership rules on the FCC website. Fitch assumes that the FCC will vote along partisan lines and the changes will be approved on a 3-2 vote by the commissioners and considers the risk of court challenges to be high. The proposal would eliminate the Newspaper/Broadcast Cross-Ownership rule, the Radio/Television Cross-Ownership rule, and loosen the Local TV Multiple Ownership rules, thus making it possible for TV station groups to own more stations in a local TV market and increase their market shares. The FCC plans to eliminate the Eight-Voices Test and to move to a case-by-case review of the competitive conditions in local markets when considering rules preventing the ownership of two stations in the Top-Four (Top-Four Prohibition). Market participants generally expect a loosening of the rules, which will allow for more deal making. Elimination of restrictive cross-media ownership rules are less likely to have an immediate impact, though they could spur more local TV broadcasters to acquire newspapers in the same market given the value of the local news content from the newspapers and potential cost synergies associated with that type of consolidation. Fitch believes that local news content is a valuable asset and could be desirable for local news content creators like TV broadcasters. Fitch believes the loosening of local TV multiple ownership will spur consolidation on the local level for TV broadcasters and afford independent station groups the ability to increase market shares in individual markets. There are meaningful cost advantages for this type of consolidation. Station groups could strengthen asset portfolios within individual markets as shared and centralized functions provide cost cutting opportunities, which could translate into margin expansion. For more information on these proposed rules, including a summary of their provisions, see "Fitch: New FCC Rules Could Create Wave of Media Activity" available on www.fitchratings.com. Patrice Cucinello Director Corporate Finance +1 212 908-0866 33 Whitehall Street NYC, NY Kellie Geressy-Nilsen Senior Analyst Fitch Wire +1 212 908-9123 Media Relations: Alyssa Castelli, New York, Tel: +1 (212) 908 0540, Email: alyssa.castelli@fitchratings.com; Benjamin Rippey, New York, Tel: +1 646 582 4588, Email: benjamin.rippey@fitchratings.com. Additional information is available on www.fitchratings.com. The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings. ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. 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