The Reshaping of the Broadcast Industry: Strategic M&A in the Age of Trump-Era Deregulation

The broadcast industry is undergoing a seismic shift, driven by regulatory tailwinds that have redefined the rules of engagement for media consolidation. Under the Trump-era Federal Communications Commission (FCC), sweeping deregulation dismantled long-standing media ownership caps, creating a fertile ground for buy-and-build strategies. For investors, this evolving landscape presents high-conviction opportunities in companies poised to capitalize on a loosening regulatory environment.

Deregulation as a Catalyst for Consolidation

The Trump administration's FCC, led by Chair Brendan Carr, systematically dismantled 42-year-old restrictions on cross-ownership of newspapers and broadcast stations in major markets. These changes, coupled with the removal of caps on station ownership in local markets, effectively erased barriers that once limited a single entity from dominating multiple media platforms. The rationale, as articulated by the FCC, was that traditional broadcast media faced existential threats from tech giants like Netflix and YouTube, necessitating a more flexible regulatory framework.

This deregulatory push directly enabled mergers that were previously unattainable. For instance, Nexstar Media Group's $6.2 billion acquisition of Tegna Inc. in 2021 and Sinclair Broadcast Group's 8.2% stake in E.W. Scripps Co. were made possible by the removal of ownership restrictions. These deals exemplify how regulatory shifts can unlock value by allowing companies to scale rapidly and diversify their content portfolios.

High-Conviction Buy-and-Build Targets

The post-2021 era has seen continued lobbying by industry giants to further erode regulatory constraints. Nexstar and Sinclair, in particular, have spent millions advocating for the elimination of the 39% national audience cap and the two-station-per-market rule. These efforts align with a broader "buy-and-build" strategy, where acquiring smaller regional players allows these firms to expand their reach while leveraging economies of scale.

Investors should closely monitor Nexstar (NXST) and Sinclair (SBGI) as prime candidates for aggressive M&A. Nexstar, already the largest owner of local TV stations in the U.S., has demonstrated a track record of integrating acquired assets efficiently. Sinclair, meanwhile, has shown a willingness to pursue cross-industry partnerships, as seen in its Scripps stake. Both companies are well-positioned to benefit from a regulatory environment that prioritizes deregulation over antitrust scrutiny.

Navigating the Post-2021 Landscape

While the Biden administration's more cautious regulatory stance temporarily chilled M&A activity in 2023-2024, the long-term outlook remains bullish. S&P Global Market Intelligence predicts a resurgence in dealmaking in 2025, particularly if a Trump-aligned FCC regains control. This scenario would likely reduce antitrust hurdles and incentivize private equity firms to re-enter the sector.

However, risks persist. The 40% decline in media M&A activity in 2025 compared to 2024 underscores the sector's sensitivity to macroeconomic conditions. Rising borrowing costs and political uncertainty-exacerbated by Trump's tariff proposals-have dampened short-term enthusiasm. Yet, for investors with a multi-year horizon, these headwinds may represent a buying opportunity.

Conclusion: Positioning for the Next Wave

The Trump-era deregulation has fundamentally altered the broadcast industry's competitive dynamics. By removing ownership caps and embracing a "broad media landscape" framework, the FCC has empowered companies to pursue aggressive consolidation. Nexstar and Sinclair stand out as high-conviction targets, with their strategic positioning and regulatory lobbying efforts aligning with the sector's trajectory.

As the industry braces for potential regulatory shifts in 2025, investors who act decisively now may secure a front-row seat to the next phase of media consolidation. The key lies in balancing the risks of macroeconomic volatility with the long-term tailwinds of a deregulated environment.