The recent performance of broadcast television companies on Wall Street has been less than stellar, with five-year returns that are quite discouraging. Sinclair Broadcast, which operates over 150 local stations throughout the United States, has seen a decline of 48%. Gray Media, with its local TV stations and digital assets in 113 TV markets, has plummeted by 78%. E.W. Scripps, the owner of more than 60 stations, has experienced an 85% decrease. The general consensus on the industry's downturn is that as the cancellation of traditional pay TV services increases, fewer households are tuning into broadcast TV, instead opting for streaming platforms such as Netflix and Disney+. This shift has prompted executives to push for industry consolidation, similar to the efforts of major media conglomerates like Warner Bros. Discovery, Paramount Global, and Comcast's NBCUniversal, which are also seeking to reorganize their declining cable assets.

Current government regulations limit the consolidation of broadcast TV stations. A broadcasting company is permitted to own only one "Big 4" affiliate—NBC, ABC, CBS, or Fox—in a given metropolitan area, with the option to own one additional independent station, like a CW or Ion station. Moreover, the Federal Communications Commission (FCC) stipulates that the total number of TV stations owned by any single company cannot exceed coverage of 39% of the U.S. population.

However, there is a growing sense of optimism among industry executives that a second term for Donald Trump could potentially ease these restrictions. Trump has nominated Brendan Carr to be the new chairman of the FCC. The National Association of Broadcasters (NAB) released a statement following Carr's nomination, highlighting his track record of challenging "big tech," which has dominated people's attention and advertising revenue in recent years. "Commissioner Carr has been a steadfast leader in holding Big Tech accountable and supporting policies that will allow local broadcast stations to better compete with these behemoths and thrive," the NAB stated on November 17th.

This sentiment was echoed by Sinclair's CEO, Chris Ripley, during his company's recent quarterly earnings call. "We're very excited about the upcoming regulatory environment," Ripley said. "It does feel like a cloud over the industry is lifting here… some much-needed modernization of the regulations will be forthcoming." Should this change occur, broadcast TV station groups would have the opportunity to expand their scale, enhance their financial health, and become more significant contenders for local sports rights as the regional sports network model evolves.

There is already evidence of broadcast TV's increasing influence over regional rights. Scripps has secured local NHL rights for teams such as the Vegas Golden Knights, Utah Hockey Club, and the Florida Panthers. Gray has inked deals for NBA teams like the Phoenix Suns, Cleveland Cavaliers, New Orleans Pelicans, Oklahoma City Thunder, and Milwaukee Bucks, as well as WNBA teams including the Las Vegas Aces, Phoenix Mercury, and Atlanta Dream. Tegna now holds local rights for the WNBA's Indiana Fever and the NHL's Seattle Kraken. Sinclair has also acquired rights for NBA teams like the Utah Jazz and Portland Trail Blazers.

Kerry Bubolz, President and Chief Operating Officer of the Golden Knights, expressed satisfaction with the team's higher TV ratings and broader reach since moving their games to broadcast TV after AT&T shut down its regional sports network, AT&T SportsNet Rocky Mountain, in October 2023. Bubolz noted that Scripps makes Knights games available in 15 different markets due to its station ownership across the Pacific Northwest. "We're getting three markets in Idaho, two markets in Wyoming, six markets in Montana, two in Arizona, including Phoenix, and then, of course, Las Vegas and Reno," Bubolz said. "It's allowing us to build more of a regional fan structure because you can't build fans unless they can follow your team."

The challenge for broadcast stations is that they cannot afford to pay teams the same fees that regional sports networks (RSNs) have historically paid. This is because they do not receive as much compensation from pay-TV distributors in retransmission fees as cable networks do. However, if Trump's FCC eliminates regulations and allows for more consolidation, it could "create an economic environment in which broadcasters are able to further invest in the relationship they have in the local markets, both through local news programming and local sports," said Scripps' CEO Adam Symson in an interview.

Symson envisions a future where MLB, NBA, NHL, and WNBA teams employ both digital streaming and broadcast strategies to maximize their reach. Splitting rights with a streamer and a broadcaster could also compensate for lost revenue by signing deals with two companies instead of one RSN. "Owners and leagues have come to realize that our reach is as valuable as our dollars," Symson said. "We've moved past an era of exclusive distribution platforms and into an era of 'yes, and.' We have a mutually beneficial environment in which we want people to be able to watch for free at home, on their 60-inch screen TV. And then, if they want to take it on the go and watch on their iPad or their iPhone, they can subscribe to that."

Should these restrictions be lifted and more mergers and acquisitions (M&A) activities ensue, one clear winner will be media and sports investment bankers. Lazard is already taking steps to strengthen its presence in these areas. According to insiders, seasoned media banker Stephen Finkel is joining Lazard later this month in a newly created role: Managing Director and Global Head of Sports. Finkel's career includes stints at Credit Suisse, Rothschild, and Guggenheim Securities. He will be joined by two other bankers, Manoel Carvalho and Bryan Tannenbaum, who will take on roles in Lazard's sports, media, and entertainment group—both also transitioning from Guggenheim to Lazard. A spokesperson for Lazard declined to comment on the matter.