Local TV station M&A activity spiked in 2018 (GOOGL, NXST, TRCO)

The dealmaking activity between local US TV stations surged last year, with 162 TV stations changing hands, up from 104 in 2017, the Financial Times reports.

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Moreover, the value of local US TV deals reached $8.4 billion in 2018, almost twice the value of local TV deals in 2017 and 2016, per BIA Advisory Services.

The 2018 wave of TV M&A deals was spurred in part by loosened regulations and station owners push to grow reach and protect revenue.The FCC in 2017 voted to loosen regulations around local broadcast ownership, which effectively cleared the way for the consolidation of TV stations.

Meanwhile, TV station owners have been turning to M&A to boost reach so they can increase leverage in both ad price and carriage fee negotiations. Ensuring higher revenue from advertising and retransmission is increasingly critical as traditional TV viewing dips and digital giants like YouTube increasingly capture budget from brands.

Local TV stations have a couple attributes that they can pitch to attract ad spend, even in the environment of dropping linear TV viewership:

TV is the most common way Americans get their news, despite the torrent of digital news alternatives. Fifty percent of US adults said they often get news on TV in an August 2017 survey by Pew Research Center, while just 43% said they often get news online. TVs lead over online decreased from 2016 to 2017, and will likely decrease in the year ahead, but in the near term TV stations can still point to their top spot to attract brands that want to advertise alongside news content.
Data shows that US consumers trust local TV news more than national network news and online-only news outlets. Seventy-six percent of US consumers across the political spectrum said they have a fair amount or a great deal of trust in their local TV news, while these figures were lower for national network news (55%) and online-only news companies (47%), per Poynter. A consumer is more likely to engage with an ad on a platform that hosts content they trust, per our 2018 Digital Trust Survey , which local TV networks could pitch to onboard more ad clients.

There is more TV station M&A activity on the horizon.Cox Enterprises in mid-2018 said it was considering the sale of 14 TV stations, for example. Meanwhile, Nexstar Media Group is expected to close its $4 billion acquisition of Tribune Media in Q3 2019 if regulators approve the deal, per Engadget.

Regulatory approval of the deal would likely encourage other TV station owners to explore M&A deals in the years ahead, as bolstering revenue streams and shoring up against digital rivals remains a priority for traditional media.