TOP FOUR SHOWING

FCC Form 2100 – Schedule 314 August 2021

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TOP FOUR SHOWING

By this application, Nexstar Media Inc. (“Nexstar”) seeks consent to the assignment of WBDT(TV), Springfield, Ohio (Facility Id. No. 70138) from WBDT Television, LLC to TribuneBroadcasting Company II, LLC, a Nexstar subsidiary. WBDT is a CW affiliate whichhistorically has been the {{BEGIN HCI END HCI}} ranked station in the Dayton DMA.Nexstar currently owns WDTN(TV), an NBC affiliate that is currently, and historically has been,the {{BEGIN HCI END HCI}} ranked station in the market. Due to a recent shift of programming in the Dayton market, the programming from the {{BEGIN HCI ENDHCI}} ranked station, WRGT-TV, moved to a digital sub channel of the {{BEGIN HCIEND HCI}} ranked station, WKEF(TV). As a result, WBDT recently became the {{BEGINHCI END HCI}} ranked station in the market. Because the competitive dynamic in themarket has not changed, however, the Commission should find that application of the Top-Four Prohibition found in Section 73.3555(b)(1)(ii) of the FCC’s Rules (the “Top-Four Prohibition”) to Nexstar’s acquisition of WBDT is not in the public interest.1 Considering the specific circumstances of the Dayton DMA and the details of the proposed transaction, application of the Top-Four Prohibition would be inconsistent with the spirit of the rule and is not necessary to achieve the Commission’s goal of promoting competition in the local television marketplace.

In its initial decision in the 2014 Quadrennial Review of the broadcast ownership rules, the Commission retained the Top-Four Prohibition even though the agency recognized that television duopolies “can create operating efficiencies, which allow the commonly owned stations to invest in news and other local programming.”2 On reconsideration, although the Commission re-affirmed its decision to retain the Top-Four Prohibition, it recognized that “modification of the Top-Four Prohibition to include a case-by-case analysis is appropriate in order to address instances in which the application of the Top-Four Prohibition may not be warranted based on the circumstances in a particular market or with respect to a particular transaction.”3 The Commission explained that this “hybrid approach” is designed to address situations where the demonstrable benefits of a top-four combination exceed potential harms “based on an evaluation of the characteristics of a particular market or a particular transaction.”4 The Commission stated that, in making this evaluation, it would consider information including the following: (1) ratings share data of the stations proposed to be combined compared with other stations in the market; (2) revenue share data of the stations proposed to be combined compared with other stations in the market, including advertising (on-air and digital) and

1 47 C.F.R. § 73.3555(b)(1)(ii). 2 2014 Quadrennial Regulatory Review – Review of the Commission’s Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996 et al., Second Report and Order, 31 FCC Rcd. 9864, 9881, para. 44 (2016) (“2014 Quadrennial Review Order”). 3 2014 Quadrennial Regulatory Review - Review of the Commission's Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 202 of the Telecommunications Act of 1996, Order on Reconsideration and Notice of Proposed Rulemaking, 32 FCC Rcd. 9802, 9837, para. 78 (2017) (“2014 Quadrennial Review Recon Order”). 4 Id. at 9837, para. 90.

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FCC Fonn 2100 - Schedule 314 August 2021

retransmission consent fees; (3) market characteristics, such as population and the number and types of broadcast television stations serving the market (including any strong competitors outside the top-four rated broadcast television stations); (4) the likely effects on programming meeting the needs and interests of the community; and (5) any other circumstances impacting the market, particularly any disparities primarily impacting small and mid-sized markets.5

As demonstrnted below, the benefits of allowing common ownership ofWBDT and WDTN outweigh any theoretical haims given two significant factors that make the Dayton DMA unique. First, the Dayton DMA features a { {BEGIN HCI END HCI } station Cox Media's WHIO-TV which { {BEGIN HCI

END HCI}} . WHIO-TV has a number of natural a vantages m t e mai· et: 1t 1s t e o <lest station in the market, it shai·es common ownership with WHIO(AM), WHIO(FM), WHKO(FM), and WZLR(FM), and it shares a newsroom with the ai·ea's local daily newspaper, The Dayton Daily News (with which it also shai·ed common ownership for more than 70 yeai·s, until the recent transfer of control of Cox Media).6 Common ownership ofWBDT and WDTN will create a stronger competitor to WHIO-TV in the Dayton market, thereby strengthening competition and serving the public interest. Second, owing to the benefits of digital broadcast technology, the top four rated broadcast channels in the Dayton DMA only occupy three broadcast licenses. On Januaiy 1, 2021, WKEF Licensee L.P. (a subsidiaiy of Sinclair Broadcast Group, Inc.) began broadcasting all of the programming from Fox-affiliated WRGT-TV on a digital sub channel of its commonl -o erated ABC affiliate WKEF.7 The old WRGT-TV ro ramming has { {BEGIN HCI

END HCI from the new i i al su

END HCI} }. Applying the Top-Four Prohibition in these circumstances would only serve to hinder WBDT' s ability to compete in the mai·ket without any con esponding benefits, and is not in the public interest.

a. Ratings Share Data.

The Dayton DMA is exactly the type of market in which "the concerns that the Top-Four Prohibition is intended to address" ai·e not present.8 First the Da on DMA ah-ead features a com etitive imbalance in which BEGIN HCI

5 Id. at 9838-39, pai·a. 82. 6 See Comments of Cox Media Group, MB Dkt. No. 09-182 (Mai·. 5, 2012); Application of Xenia Broad., Inc., (Assignor) & Cox Radio, Inc., (Assignee}, 13 FCC Red. 21714, pai·a. 9 (1998) (noting Cox's ownership ofWHIO-TV, radio stations, and two newspapers in the market). 7 See Fox 45 Digital Channel Change to Require Rescan, https :/ / dayton24 7now .com/news/local/fox-45-digital-channel-change-to-require-rescan (Dec. 29, 2020). 8 2014 Quadrennial Review Recon Order, 32 FCC Red. at 9837, para. 79.

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[ the Bureau 's] assessment of the impact of the transaction on competition . "9 Second, the Dayton DMA is unique because one station has two "big four" network affiliations that are counted separately in the ratings. The Commission must account for this dynamic when determining how combined ownership of WBDT and WDTN will affect competition in the market.

1. The Combination Will Strengthen Competition in the Market by Creating a Stronger Competitor to the Dominant Station.

~ or the Dayton DMA { {BEGIN HCI - END HCI}}, which remains the beneficiaiy of several historical advantages from its position as the first television station on the air in Dayton and its common ownership with four local radio stations and, until recently, the local daily newspaper. These advantages have allowed WHIO-TV to become enti·enched as the preeminent station in the mai·ket and retain that position for more than 70 yeai·s .

As de1 · · · {{BEGIN H For six of the

-IE shai·e { {BEGIN H HCI}} . As for the r WDTN was the { {B owned WKEF was t WBDT was the

FILED CONFIDENTIALLY] , WHIO-TV is the END HCI}} in the Dayton DMA. ratin s eriod, WHIO-TV's rating

exstar 's air-nd

put

WHIO-TV's dominance extends from All-Day ratings to local news ratin s.10 In the May 2021 ratin s eriod WHIO-TV's newscasts BEGIN HCI

=r-----+-< 9 See Application of Red River Broadcast (Assignor) and Gray Television Licensee, LLC (Assignee), Memorandum Opinion and Order, 34 FCC Red. 8590, pai·a. 13 (MB 2019) ("KDLT Order") ( observing that the presence of a station with "a very sti·ong and steady number one position in the mai·ket" conti·ibutes to the "unique sti11cture" of the local television market) . 10 See Exhibit A [FILED CONFIDENTIALLY].

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11. As a Result of the Unique Market Dynamic, the Proposed Combination Will Not Harm Competition.

Although the ratings alone make a compelling case for pennitting the proposed combination, ratings by station license do not tell the full sto1y given the makeup of the Dayton DMA. In upholding the Top-Four Prohibition in the 2014 Quadrennial Review Recon Order, the Commission detennined that the prohibition remained "necessaiy to promote competition in the local television marketplace."15 In suppo1t of drawing a line at the top four stations in the market, the FCC recognized that "there is generally a ' significant ' cushion ' of audience shai·e percentage points ' that ' sepai·ate(s] the top four stations from the fifth-ranked stations."16 Thus, the Commission found, "top-four combinations would generally result in a single fnm's obtaining a significantly larger market share than other stations and reduced incentives for commonly owned local stations to compete for programming, adve1tising, and audience shares."17 This rationale however, does not suppo1t application of the Top-Four Prohibition to the proposed combination here.

While WBDT is the BEGIN HCI END HCI}} in the mai·ket, it ~ CI END HCI}} . Instead, the { {BEGIN HCI - END HCI}} in the market is WKEF's 22.2, which broadcasts programming from the Fox Television Network, ainong other programming. Before Januaiy 1, 2021 th t ning was found on WRGT-TV, which is historically the { {BEGIN HCI

END HCI}} in the market. WBDT was historically the { {BEGIN HCI END HCI}} in the mai·ket. On Janua1y 1, 2021, however, WRGT-TV's

programming moved from channel 45.1 to WKEF 's digital sub channel 22.2 .18 As a result, although ownership of stations in the Da on mai·ket did not chan e in the most recent ratings period, WKEF had { {BEGIN HCI END HCI and WRGT-TV o

Below ai·e the Monday-Friday All Day ratings for the Dayton DMA in May 2020, November 2020, and May 2021.19

{{BEGINHCI

15 See 2014 Quadrennial Review Recon Order, pai·a. 79 n. 230.

16 Id.

17 Id. (citing 2014 Quadrennial Review Order, pai·a. 44). 18 See supra n. 7.

19 Nielsen does not calculate a weekly rating for digital sub channels, so the May 2021 data reflects the average of the daily ratings. Data from May 2020 and November 2020 can be found at Exhibit B [FILED CONFIDENTIALLY].

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END HCI}}


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While it is well within the discretion of the licensee of WKEF to provide desirable programming on a digital sub channel,20 the FCC must account for this programing when considering how the proposed combination of WDTN and WBDT will affect com etition in the market. Before Januai 1 2021 the benefits of combining { {BEGIN HCI

END HCI}} presumptively would have outweighed any etnmenta e ects on competition, and Nexstai· could have owned both WDTN and WBDT

without ti·iggering the Top-Four Prohibition. But now, due solely to the shiftin of ro ·amming from WRGT-TV to a di ital sub channel ofWKEF BEGIN HCI

END HCI}} and the Top-Four Prohibition is implicated. For the same reason that t e com mat10n of WDTN and WBDT would not have haimed competition on December 31 , 2020, it would not haim competition today. Under these circumstances, waiver of the Top-Four Prohibition is appropriate.

b. Revenue Shai·e Data21

Given its cleai· status as the mai·ket leader in ratings, it is hai·dly smprising that WHIOTV' s dominant position in the Dayton DMA extends to its revenue shai·e. Over the past five

20 See 47 U.S.C. § 326 (prohibiting FCC from interfering with right of free speech of broadcasters). 21 Nexstai· has not included herein an analysis of reh'ansmission consent revenue for the Dayton DMA. While SNL Kagan and BIA Adviso1y Services prepai·e estimates of reti·ansmission consent revenues for eve1y station in the country , those estimates ai·e unreliable in that: (i) they are based on data exh'apolated from public company repo1is rather than actual figures; (ii) they

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n the always remained

at least { {BEGIN ND HCI}}. WHIO-TV's annual r H~ WBDT's annual revenue. Indeed, WHIO-TV's annual revenue was { {BEGIN HCI

END HCI}} than the combined revenue of WDTN and WBDT.

The Commission has previously recognized that where, as here, "one broadcast station .. . has consistently earned a majority of adve1iising revenue," it can be "harder for the other stations in the market to effectively compete against it."23 Accordingly, there is no basis to conclude that requiring WDTN and WBDT to remain independently owned and operated is necessa1y to ensure competition in the Dayton DMA.

c. Market Characteristics and Other Circumstances Impacting the Market

The Dayton market has two unique characteristics that both illustrate the public interest benefits that would result from common owne1,shi of the traditional number { {BEGIN HCI - END HCI}} and number { {BEGIN HCI END HCI}} stations in the market and ~ ain why waiver is paiiicularly appropriate ere. First, the DMA includes a single station, WHIO-TV, whose historical advantages have allowed it to dominate both the ratings and mai·ket revenue for more than 70 yeai·s. Second, the mai·ket recently saw highly rated programming shift from the primaiy channel ofWRGT-TV to the digital sub channel ofWKEF, altering the application of the Top-Four Prohibition without any change in the competitive dynainic in the

do not account for the individual factors that go into each agreement (including the date the agreement was signed, the number of subscribers for each MVPD, competition from cable networks, the rights included in the retransmission consent agreement (including, inter alia, mobile, DVR, and over-the-top), etc.), and (iii) they cannot possibly account for the contribution of any individual station to the retransmission consent rates included in multi-mai·ket agreements, such as those frequently entered into by Cox Media, Sinclair, and Nexstai·. Retransmission consent revenue numbers also are gross estimated revenues, not net. Therefore, they do not account for the high cost of prograinming, which vai·ies from station to station and mai·ket to mai·ket. 22 See Exhibit C - BIA TV Competitive Repo1i [FILED CONFIDENTIALLY] . 23 See KDLT Order, para. 14.

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market. These features combine to form a market in which application of the Top-Four Prohibition to prevent common ownership of WDTN and WBDT would not serve the public interest and would actually harm competition.

WHIO-TV’s Historic Advantages in the Dayton DMA

WHIO-TV’s dominance in both ratings and revenue over the course of more than seven decades is the result of a number of factors that distort the competitive balance in the Dayton DMA. As an initial matter, WHIO-TV had a first-mover’s advantage. When it first signed on in 1949, WHIO-TV was the fifty-fifth commercial television station in the country and the first in the region.24 WHIO-TV shares common ownership with four radio stations in the market, (WHIO(AM), WHIO(FM), WHKO(FM), and WZLR(FM)), and, until recently, with the two primary local daily newspapers serving the market, The Dayton Daily News and the Springfield News-Sun.25 WHIO-TV has strategically used this common ownership to develop synergies unavailable to other stations in the market, highlighted by its operation of a joint newsroom with WHIO Radio and the Dayton Daily News.26

Although WHIO-TV no longer shares common ownership with The Dayton Daily News, the station continues to benefit from its entrenched position as the market leader. In addition to its continued ratings and revenue dominance, WHIO-TV has extended its advantage to social media, where it received almost five times the amount of social media activity as its nearest competitor.27 Under these circumstances, there is no risk of the “harm to competition” that the Top-Four Prohibition was designed to protect against; rather, the combination of two distant competitors to WHIO-TV under common ownership will help overcome WHIO-TV’s historical advantages and better position them as competitors in the market.

The Effect of Having Two Highly Rated Program Streams on a Single Station Also relevant to the Commission’s consideration is the recent shift of programming from the Fox Television Network and other programs from the primary channel of full power television station WRGT-TV to a digital sub channel of WKEF. In the 2014 Quadrennial Review Recon Order, the FCC emphasized that the sole justification for the local television ownership rule is to promote competition in the local television marketplace and that the Top-Four Prohibition advances this interest by preventing a single firm from “obtaining a significantly larger market share than other stations,” which would “reduce[] incentives for commonly owned

24 See WHIO.com, WHIO-TV marks 70-years: ‘The soul of broadcasting is public service’ (Feb. 20, 2019), https://www.whio.com/news/special-reports/whio-marks-years-the-soul-broadcasting-public-service/diq7NO0aDO3Kqc0YxKr3ZL/. 25 See supra n. 6. 26 See supra n. 24 27 See TVNewsCheck, WHIO Way Ahead in Dayton’s Social Media (Oct. 10, 2017), https://marketshare.tvnewscheck.com/2017/10/10/whio-way-ahead-in-daytons-social-media/.




local stations to compete for programming, adve1iising, and audience shares."28 The presence of two highly rated channels on a single station necessarily alters that analysis. Nexstar 's incentive to compete for programing, advertising, and audience shares on WBDT and WDTN would be the same whether the to four channels in the market are on four se arate stations or as here are

BEGINHCI

After the programming from WRGT-TV migrated to a d~ f WKEF, Sinclair became the only broadcaster to operate { {BEGIN HCI-END HCI}} channels in the market. Upon Nexstar 's ac uisition ofWBDT that would not change: Nexstar would simply own { {BEGIN HCI END HCI}} channels in the market. Although WBDT is technically the { {BEGIN HCI END HCI}} station in the market, Nexstar would have the same incentives both e ore an a er its acquisition of WBDT to compete against the traditional powerhouse station in the market, WHOI-TV, and the two Big Four network affiliated channels owned by Sinclair. Accordingly, application of the Top-Four Prohibition in these circumstances would not advance the Commission's interest in promoting competition. The benefits of establishing a stronger competitor to WHOI-TV and strengthening WBDT (as discussed below) easily outweigh any negative effects, which would be de minimis.

d. Effects on Programming Meeting the Needs and Interests of the Community

Nexstar 's acquisition of WBDT will produce meaningful public interest benefits that will allow both WBDT and WDTN to better provide programming that meets the needs and interests of the entire Dayton community.

One of the most immediate benefits of the transaction will be WBDT gaining access to Nexstar 's other news resources and special events programming. At the same time, the expanded distribution channel will provide Nexstar with a greater incentive to invest in local programming for the Dayton market as well as more relevant third-party programming.

For example, upon completing its consummation ofWBDT, Nexstar intends to begin broadcasting Dayton's only lifestyle show about all things Dayton, Living Dayton, on WBDT so it is accessible to viewers outside of its cmTent timeslot of weekdays at Noon. Living Dayton provides coverage of local events, activities, organizations, and businesses that cannot be found on any other station in the market. Recent episodes of Living Dayton have included extended coverage of the Downtown Dayton Pa1inership 's Ali in the City event, tips on how to prepare for the upcoming Dragons 5K race, a segment with the Dayton Better Business Bureau about how to avoid event and ticket scams, and a feature about pet adoption with the Society for the Improvement of Conditions for Stray Animals.

Nexstar also expects to strengthen WBDT's service to the community through the station's paiiicipation in a number of highly regai·ded company-wide initiatives, including:

28 2014 Quadrennial Review Recon Order, 32 FCC Red. at 9837, paras. 76, 79 & n. 230.

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Hidden History - Nexstar markets recognize Black History Month each year through a

local content initiative titled Hidden History. Beginning every year on Martin Luther King Jr. Day and running through February, each local market devotes time to recognize important historical events and individuals. The company-wide project allows each market to build its own content based on local stories and events. To expand the reach of its Hidden History initiative, Nexstar provides relevant information for local schools to use in their curriculum.

Veteran’s Voices - Veteran’s Voices is a local content initiative aimed at highlighting the veterans in each of Nexstar’s local markets. The program occurs in the month leading up to Veteran’s Day. Stations in each market develop their own plan for how to contribute to this initiative, such as by producing a special program for broadcast, and/or highlighting Veterans in local news stories and digital content.

Remarkable Women – As part of Nexstar’s celebration of Women’s History Month and

International Women’s Day, stations in each of Nexstar’s local markets selected four local women for consideration as that market’s “Remarkable Woman.” Profiles of the top four nominees in each market aired on the local newscasts of Nexstar stations every Tuesday, from March 9, 2021, to March 30, 2021. Nexstar made a $1,000 contribution on behalf of each market-winner to the non-profit organization of their choice and a $5,000 contribution in honor of the “Nexstar Woman of the Year”.

Hispanic Heritage – Nexstar markets recognize Hispanic Heritage Month in Mid-

September to Mid-October, producing local stories, local broadcast specials and a digital content section highlighting Hispanic heritage and culture. Each Nexstar station develops its own plan for how it will participate in this initiative.

In sum, allowing Nexstar to own both WDTN and WBDT will improve service to the

public and, far from creating any competitive harm, will enhance competition in the unique Dayton DMA. Accordingly, the Commission should permit common ownership of the two stations.


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