Minority-owned Marshall Broadcasting Group (MBG) is calling on federal regulators to investigate broadcast giant Nexstar Broadcasting (Nexstar) for what it called a “calculated conspiracy” to dupe government officials, sabotage Marshall’s operations and circumvent federal guidelines governing the business relationship between the two companies. In a complaint filed with the Federal Communications Commission (FCC) on Wednesday, June 12, 2019, MBG officials say these actions – amid many others – warrant a federal investigation into Nexstar’s continued qualifications to be a licensee of televisions stations in the U.S.
“Ever since the FCC approved our purchase of three Nexstar stations, Nexstar officials have engaged in a calculated conspiracy to mislead federal officials, cripple our ability to operate independently and thwart the FCC’s mission of minority ownership in television broadcasting,” MBG president and CEO Pluria Marshall, Jr. said in a statement.
“This reckless disregard for the FCC’s rules of engagement has, essentially, defrauded federal regulators and consistently hampered our ability to thrive in the markets we adopted as part of the FCC agreement,” Marshall said. “We didn’t think the FCC’s Enforcement Bureau would look too kindly on that, which is why we’re calling for a federal investigation into the matter.”
From 2014 to 2015 Nexstar orchestrated the sale of three TV stations (KPEJ-TV, KMSS-TV, KLJB-TV) to MBG. Nexstar was forced to spin off the stations due to a separate larger acquisition which put Nexstar over the FCC’s ownership caps. Nexstar chose MBG as a buyer, believing that the FCC would look favorably upon MGB’s status as a minority-owned business. While the FCC was led to believe that the sale would further the Commission’s objective of increasing ethnic diversity in broadcast ownership, Nexstar was actually undermining MBG’s operations to decrease its worth.
“Nexstar made promises to the FCC and the public, under the guise of diversity to get the deal approved,” said Marshall. “Yet, they have continued to undermine our business and undercut our authority, with little regard for the commitments they made to us, the FCC and Congress.”
The FCC complaint comes on the heels of a lawsuit MBG filed in April with the Supreme Court of the State of New York and details several violations of the commitments Nexstar made to the FCC, and therefore the public, in an effort to obtain FCC approval to purchase the larger cluster of television stations.
Although the FCC’s mission is to make the national communications system available “to all the people of the United States, without discrimination on the basis of race, color, religion, national origin, or sex,” the American broadcast industry suffers from a historic shortage of minority owners. Currently only 12 out of 1400 full-power, commercial television stations are black-owned – little more than a statistical rounding error. MBG owns 3 of the 12.
In fact, in a recent hearing involving the FCC’s multiple ownership rules, the United States Court of Appeals for the Third Circuit criticized the FCC for maintaining inadequate data on the impact FCC ownership rule changes would have on minority and female broadcast ownership. Nexstar’s efforts to push MBG out of business would remove 25 percent of the minority-owned stations on the air today.
“Nexstar’s actions negate the FCC’s quest for diversity in ownership, and could impact ALL minority-owned businesses in the telecommunications space if left unchecked,” said Dr. Benjamin F. Chavis Jr., President & CEO, National Newspaper Publishers Association (NNPA). “Nexstar has demonstrated how to use minority-owned businesses for companies’ own gain and suppress diverse programming as soon as the deal is done. The FCC should act to protect the handful of remaining minority-owned stations and foster a welcoming environment for prospective minority owners.”
During negotiations, the FCC originally expressed concerns that the transaction would leave Nexstar with too much influence over the MBG assets. As such the deal was only approved after Nexstar stated that “MBG shall maintain full control, supervision, and direction of” the TV stations, including the stations’ “management, programming, finances, editorial policies, personnel, facilities and compliance with the FCC Rules and Regulations.”
Contrary to these provisions and the FCC’s requirements, Nexstar has continuously hampered MBG’s ability to operate its own stations independently by:
- Consistently interfering in MBG’s sales and operations in defiance of FCC directives and its commitment to Congress for diverse programming.
- Overcharging MBG for the same stations and assets that it intended to sell to another potential buyer by more than an additional $16 million.
- Trying to cause MBG to default on its bank line of credit by withdrawing its guaranty despite Nexstar’s commitment to the FCC to guarantee MBG’s debt for 5 years. Only after MBG threatened litigation did Nexstar abide by its contractual obligations.
Marshall emphasized, “Nexstar acted with impunity by flouting the spirit and letter of its FCC-sanctioned deal with MBG.” Accordingly, MBG is asking that Nexstar’s conduct and misrepresentation be investigated and the subject of the severest level of FCC disciplinary action and penalty and that Nexstar’s continued qualifications as an FCC licensee be the subject of an FCC hearing.