Part Five: Affiliate Mergers or, the Preservation of Favoured Markets in the Struggle for Life

Note: This post, like all other posts on this website, is nothing but my personal tale on MAJOR WORLD EVENTS. Some fact, some opinion, no fiction, no friction. PLZ NO SUE. I mean no harm and obey Wheaton's Law here!

So where I last left y'all was in 1955 with the FCC's creation of the Television Market Area (TMA), simplified from the Metropolitan Statistical Areas (MSA) that back in THE GOLDEN AGE OF RADIO helped determine broadcast regulations, licenses, and (what will be important today!) ownership rules. From the rapid rise of television, we could see the how

1. Television Networks became reliant on non-Owned and Operated Affiliates
2. And pivoted to focus more on content creation (mostly series)

So on the other side of the coin, the distribution side, we'll explore what led to the station ownership situation we see today. And its roots and reason go further back than even radio...

In 1880, 1887, and 1906 the Hearst, Scripps, and Gannett families purchased their respective newspapers to begin what became their print media empires. Over the next few decades as newspaper was king, they amassed their business and family fortunes. But with the rise of radio, by the 1930s, these newspaper titans had to make two major changes to stay afloat:

1. They began investing heavily in radio, each scooping up a handful of affiliates that were not O&Os.
2. They created Joint Operating Agreements (JOAs), which allowed for two competing newspapers in the same town to use the same printing press (one for the morning edition, one of the evening edition).

The takeaway from the first point is relatively simple: many of the newspaper giants were caught off guard by the advent and popularity of radio, particularly in respect to Americans' enjoyment of radio news. When television networks began popping up a decade later, newspaper companies had learned their lesson and were more quickly ready to invest into this emerging market.

The second point was a money-saving technique that was the cornerstone to both the erosion of antitrust laws and the beginning of mass media consolidation in the United States. Naturally, when it came to the JOAs, the larger more powerful newspaper corporation would own the printing press and charge printing fees to the smaller newspaper company leasing it. This was beneficial to the large corporations because they subsidized the cost of their printing press with printing fees and it was beneficial to the small companies because they did not need to own or maintain bulky, expensive printing presses.

Additionally in order to keep a free market, free press federal antitrust laws forbid the same company from owning two newspapers, radio stations, or television stations within the same MSA or, later, the same TMA.

By the late 1960s though with both radio and O&O television stations cutting deep into newspaper corporations' advertising and subscription dollars, newspaper corporations began buying up the smaller companies and lobbying against the antitrust laws that both political parties supported. Democrats opposed such behavior on the grounds that it hurt free speech. Republicans opposed such behavior on the grounds that it hurt the free market. But the Hearst newspaper company even went as far as to threaten Richard Nixon in a 1969 letter to pull their endorsement of any of his policies unless he found a way to legalize local duopolies. And in 1970 Congress passed and he signed into law the Newspaper Preservation Act. This allowed for a single company to own as many newspapers in a single market as they desired, as long as they legally kept their newsrooms distinct. Hearst, Scripps, and Gannett survived and thrived.

It was not until the early 1990s that non-O&O television affiliates took the idea of JOAs and ran with it. Up until then most large non-O&O television corporations owned a dozen television stations maximum because of the untenability of operating costs when spread across too many TMAs. If a station group could corner a local market, bring in a a majority of advertising revenue, and spread equipment costs over a single facility the resulting growth would open up more distant markets.

In 1991, small-time operator Sinclair Broadcast Group bought WPGH in Pittsburgh, sold their former Pittsburgh station WPTT to a Sinclair employee, and kept running WPTT if nothing had changed. They did so by a new legal maneuver called a Local Market Agreement (LMA) between the larger Sinclair and the smaller, newly created, legally different spinoff. The newer company at the time existed pretty much in name only, paying Sinclair to run WPTT for it.

In 1996 newspaper company Gray Communications followed suit and pivoted to local television ownership, using LMAs to quickly acquire affiliate stations. That same year Nexstar was founded wholly on the principal of business-by-LMAs. Unburdened by existing station ownership or a contracting newspaper division, they could grow leaps and bounds over both the newspaper-owned stations and their mid 1990s station group contemporaries.

By 1999, the FCC had to revise its policies on television market duopolies to meet the growing demand for corporate growth and consolidation. Like the Newspaper Preservation Act three decades ago, television stations received permission via a simple memo. (IT'S AN AMAZING READ, SERIOUSLY CLICK IT.)

And with that (and Gannett spinning off its TV company as Tegna), the consolidation race was on:

And while this creates an efficient, consolidated, easily-investible media market, it does create the side effect that your non-O&O local station may not be, well, uniquely local:

So! Now you know how and why nationwide networks (like CBS, NBC, and ABC) rely on other nationwide station-group-owning companies (like Nexstar, Gray, and Sinclair) to distribute their content. Ta-daa! It's like magic! But with money! BILLIONS OF MONEY.

Stay tuned for:

• Television Channels needing Film Studios (and vice versa) aka the CONAN PULLS A LEVEL JOKE
• What happens when all this goes wrong? GET TO THE GOOD JUICY STUFF ALREADY
• The #insider Nitty Gritty MORE BORING THEN YOU THINK
• PACKERS
• And always(!) so much more(!!!)