US television broadcasters and their investors are hoping relaxed regulations will create opportunities to unlock value through M&A in an industry under pressure from big tech.

The Federal Communications Commission—now led by two Trump-appointed commissioners—is expected in the coming months to relax television ownership rules that limit broadcasters from reaching more than 39% of US households. The commission is also examining modifying the discount applied to ultra-high frequency stations when calculating national reach, which could make it easier for companies to increase the number of stations they own.

“We are optimistic about what a relaxed regulatory environment could mean for broadcasters,” said Jason Combs, CFO of broadcaster E.W. Scripps, in an interview with Debtwire, adding that this presents a real opportunity for all local broadcasters to create stronger portfolios.

If the rules change, broadcasters may be able to build a stronger presence through M&A as they fight for advertising dollars against increasingly popular streaming services and social media companies, according to industry executives and investors.

The industry, like cable providers, has been stuck in secular decline for years as viewers as advertisers have shifted spending to digital platforms. That had left some broadcasters’ capital structures trading at stressed levels before market sentiment rebounded on the prospects of dealmaking.

“From an investor point of view, there is already trouble because of the fall of linear television, both broadcast and cable. People are seeking to figure out an economic way to survive and thrive through various transactions,” said Blair Levin, policy advisor to New Street Research.

Buyers and sellers

While changes in regulation might pave the way for more consolidation in the media sector, each company’s balance sheet and leverage will ultimately determine how it will benefit.

Nexstar Media, TEGNA and Sinclair are viewed as likely buyers, according to a buysider and two sellsiders. Gray Media could also pursue some transactions, though its higher leverage could limit the acquiring options, these sources added.

“They have limited options with respect to the balance sheet, it’s not 3x levered unlike Nexstar,” the buysider said about Gray.

E.W. Scripps, Cox Media and Allen Media were listed among potential sellers by market participants based on leverage and demonstrated interest.

“I don’t see us being a significant buyer given our balance sheet and where our leverage is, [but it] doesn’t mean there couldn’t be some select opportunities out there,” E.W. Scripps’ Combs said, adding “We’re more focused on swapping existing assets to get deeper into markets that we view as strategic, as well as selling some of our less strategic assets.”

Last month, E.W. Scripps and Gray announced television station swaps across five mid-sized and small markets. Combs said the swap was a “win-win” transaction for both companies.

Gray also recently announced plans to acquire two Texas stations from SagamoreHill Broadcasting and acquire  Block Communications’ television stations for USD 80m.

Ahead of the deals, Gray executives signaled they were preparing to seize the opportunity to transact.

“We’re optimistic that the more relaxed regulatory environment that has been discussed extensively [in] the last few months could present opportunities to accelerate our deleveraging efforts through M&A later this year,” said Gray Media CFO Jeff Gignac during the broadcaster’s 1Q25 call on 8 May.

The same day, Nexstar founder and CEO Perry Sook said on his company’s earnings call that Nexstar was ready to “capitalize on deregulation through M&A” thanks to its “strong financial position and balance sheet.”

Cable and broadcast group Allen Media, meanwhile, has said it hired Moelis to explore a sale of its ABC, NBC, CBS and FOX affiliated television TV in 21 US markets. Apollo-backed Cox Media Group reportedly also hired Moelis to facilitate the sale of the entire company earlier this year.

Improving sentiment 

Broadcasters are already reaping the benefits of the deregulatory push by taking advantage of the market’s more positive outlook on the sector, along with a more open primary market in general, to fix their capital structures.

“The perception has changed in their favor,” said the second sellsider.

Gray raised USD 900m with the sale of 9.625% senior secured second lien notes due 2032 and an additional USD 775m from the issuance of 7.25% senior secured first lien notes due 2033 in July. Both deals were upsized from the original offering sizes. The company also upsized and extended its revolving credit facility.

E.W. Scripps sold USD 750m second lien notes due 2030 with a coupon just under two digits to refinance its 2027 unsecured debt, as reported, a deal that faced daunting prospects only months earlier, according to the sellsiders. The refi came months after the company completed a liability management exercise to address its secured debt.

“We are very pleased with the positive reception to our improved financial condition by the credit markets, which allowed us to move quickly on this transaction, at an upsized amount, in a new-money deal, and at favorable rates, said E.W. Scripps’ Combs.

Long-term challenge

Still, consolidation won’t reverse trends pushing advertisers and consumers away from linear TV.

“The problem with that is the advertising market is shifting to digital, and with AI, it’s going to shift more and faster. So, you may create increased value for a few years, but not as a long-term play,” New Street Research’s Levin said. “If you have a larger national broadcast footprint, that doesn’t mean you can compete with the tech companies.”

Broadcasters also face political uncertainty from Trump’s FCC, with market participants questioning if every company will receive the same treatment when proposed transactions are reviewed.

Paramount Global, parent of the CBS network, faced a lengthy FCC review of its sale to Skydance Media that wrapped up last month, weeks after Paramount settled a lawsuit brought by Trump over allegations one of CBS’s programs improperly edited an interview with his 2024 opponent, Vice President Kamala Harris.

The president has claimed Skydance will provide him with USD 20m in advertising in addition to a settlement payment from Paramount, though the parties have reportedly denied a connection between the deal approval and the settlement.

FCC Chairman Brendan Carr also recently asked the commission to examine Comcast’s relationships with its local broadcast television affiliates in regard to the public interest standard. Comcast is in the process of spinning off its cable channels, while holding on to the NBC broadcast network and its giant cable business.

“What Carr and Trump are doing is applying a political lens to a very difficult problem and making it more difficult for the market to figure out the solution,” Levin said, adding that some transactions can see a “Trump transaction tax” for networks that don’t align with the president’s views, adding further volatility to the market.

Gray, Nexstar and Sinclair declined to comment. Cox and its sponsor Apollo, Allen Media, TEGNA and the FCC did not respond to requests for comment.