With Paramount Global and its assets currently in play, Nexstar CEO Perry Sook was asked in a phone call today whether the country’s largest broadcaster might also look into CBS networks.
“Given our station footprint, spinning off the CBS station assets would obviously be a difficult proposition, particularly under this regulatory environment and regime,” he said in a call after the quarterly results. “If that changed, maybe our opinion would change too. But I think that would definitely have to happen for anyone to have confidence in their ability to execute a complicated regulatory transaction in the current environment.”
Regulators could also be a headache for Sony and Apollo over their preliminary $26 billion joint bid for Paramount. There would be a merger of two more Hollywood studios. Sony is not allowed to own US broadcast assets under FCC regulations. Apollo can do that, but it already owns stations and could run into the current ownership cap — an issue that already derailed a big deal it was involved in for Tegna last year.
Nexstar, CW’s parent company, is a large company with a sizable market cap of $5.8 billion and an enterprise value of about $12 billion, cash on hand, and low debt. Of course, there were also possible takeovers. The network was said to have been interested in the ABC network when Disney CEO Bob Iger briefly seemed open to a sale.
“We view the balance sheet as an asset of the company, and one way to generate an outsized return was to make some big moves,” such as buying Media General and Tribune. “We’ll keep looking,” Sook said. “We are very patient at the moment, not only given the cost of capital but also given the opportunities that present themselves. But if we feel that an acquisition of any size delivers a risk-adjusted return, we would definitely try to get to the finish line.”
He said he expects Nexstar to be bigger in three years than it is now. “What acquisitions will lead to this… I can really say. But I’m looking forward to…finding out.”
When asked about the value of non-network stations, he said, “There were television networks before there were television networks, and there will be television networks after there are television networks.” And from my perspective, if you build your community with solid networks, you’re in business provide local news and trading opportunities. It doesn’t matter what programming you rent and who you rent it from to fill the times when you’re not programming on site – and that’s basically what a network affiliation is at this point.”