Interview w/ Eric Stewart - spectrum/ broadcasting industry expert
Eric managed Entravision's highly successful participation in the FCC's broadcast spectrum auction in 2017 - where he sees opportunity (and hype!) now.
I started following Eric in early 2024, when I was researching Entravision (EVC) as a potential investment. I noted that Eric had managed EVC’s highly successful participation in 2017’s incentive auction, so I figured he was worth following on LinkedIn and X. I only met Eric more recently, when attempting to better understand the spectrum asset class.
Though Eric has spent his career studying spectrum/broadcasting assets (I have been told by third parties that he is considered one of the world’s leading experts on spectrum auctions), he is not someone to toot his own horn - in fact he shuns the “expert” label. In my experience, this is exactly the type of person worth listening to.
After our initial conversations, I wanted to ask him his broader view on the industry and potential opportunities related to regulatory change. I figured that an interview would make a useful framework for doing so.
A note before getting started - expect two new feature ideas this month - the first will be out soon.
Eric, thanks for doing this interview. After the help you provided in my re-thinking Anterix’s spectrum assets, I realized your insights might be valuable for readers.
Sure, no problem, Nat. Happy to do this.
Tell us about your professional background.
In 1992, I joined Alex. Brown & Sons in the equity research division. Working for Drew Marcus, we covered the broadcast and entertainment industries. Our first report was on ownership deregulation in the radio industry. We led Sinclair’s IPO, among other projects. Eventually, I became an analyst, covering the satellite and cable industries. I later worked as an analyst for an investment manager, focusing on the TMT sector with an emphasis on broadcasters.
In 2017, I ran Entravision’s (EVC) Incentive Auction process. It was a huge success. We sold four stations for $264 million, or $4.20 per MHz-pop, compared to the broadcast industry average of $2.08 per MHz-pop. The FCC has been a central focus of my entire career.
What are the largest potential opportunities you see over the next 2–3 years?
This isn’t a novel viewpoint, but the FCC’s expected deregulation of ownership limits is easily the biggest opportunity for publicly traded TV broadcasters—secular industry trends are not their friend. The FCC has a history of deregulating ownership limits in response to profitability issues for broadcasters (radio in the ‘80s and ‘90s, TV in the ‘90s).
Station groups need more scale to negotiate with MVPDs (multichannel video programming distributors) and, more importantly, their networks (Fox, CBS, NBC, ABC).
In terms of how a larger consolidation might proceed - everyone seems to think that it will be lateral. To me, it's not out of the question that one of the Big 4 Networks might sell its O&O (owned and operated) stations to one of the affiliate groups. I've never heard anyone discuss it, but some of the Networks would be quite happy to divest themselves of their regulated businesses that have been in secular decline.
What other key regulatory opportunities do you see?
In its request for comment on TV ownership, the FCC asked: “Are there any developments relevant to the relationship between national broadcast networks and their local affiliate television station groups?”
You may recall that former Commissioner Simington was quoted as saying networks should be capped at 30% of retransmission revenues (source document).
Gray TV is the only broadcaster that breaks out its net retransmission revenue in its 10-K. In 2024, they generated $550 million of ‘net’ retransmission revenue (retransmission revenues less affiliation fees) with a 37% margin. If networks were capped at 30%, Gray’s net retransmission revenue would have nearly doubled to $1,037 million in 2024. Other public TV groups would likely see similar increases.
I have heard pushback on the 30% cap as being too severe for networks, potentially causing blowback. Even if the cap’s magnitude is off, it seems the FCC is actively seeking ways to bolster broadcaster profitability. This aligns with my impression of Chairman Carr—he appears firmly in the broadcaster’s corner. Do you agree, or do you see something different?
That’s a credible argument. This administration may avoid causing significant harm to Fox, making the pushback even more valid. This may be an issue that’s “on the margin,” rather than a significant catalyst. However, I will be paying close attention because of the gravity of the dollars involved.
Regarding Chairman Carr, I would put a finer point on it: He is firmly in the affiliates’ corner. Few people appreciate the contentious nature of network renewals. Any help the Commission gives to affiliates will matter. Fox and CBS affiliates suffer under a ‘fixed fee’ structure (not a subscriber-based affiliate fee structure). If your sub counts are down 10% and your affiliate fee is fixed, you will feel the pinch. If the affiliates were simply to succeed in breaking the fixed fee structure, it would be meaningful.
What should investors be following most closely?
Company fundamentals: core advertising, subscriber trends, and political advertising trends. Lock your models down, because once consolidation starts, you’ll want to track “same-station” core revenue performance and cash flow margins. Free cash flow metrics are the most important. Capital allocation is equally critical. Nexstar is the clear leader when viewed through this lens (best acquirer and capital allocator).
The rulemaking proceeding mentioned above.
Any regulatory action on vMPVDs (YouTube TV). vMPVDs are currently unregulated, and networks negotiate distribution on behalf of affiliates, which is problematic (classic “frog in the pot” issue).
Any leakage of premium content from networks to their streaming platforms (Peacock, Paramount+, Disney+).
The NFL can opt out of its agreements with Amazon, CBS, Fox, and NBC after the 2029 season. If streaming platforms continue to scale, this could be an existential moment for the affiliate distribution model.
Do you have a view on which public companies stand to benefit most from regulatory change?
Nexstar is viewed as the best-run company in the industry. In my 33 years following this sector, I’ve found that “best-in-class” is the best long-term bet.
However, highly leveraged companies like Gray and Scripps could be excellent tactical trades if the FCC succeeds in penalizing networks to benefit affiliates. I haven’t mentioned Sinclair or Tegna, but they would also benefit from these themes.
Are there any related themes or ideas you feel are overblown or less promising?
Yes, I’d put ATSC 3.0 here. Pay attention to the NAB’s petition, but this is a long-tail item. EdgeBeam appears to have a $25 million balance sheet based on Scripps’ recent 10-Q, suggesting Nexstar, Sinclair, Scripps, and Gray are serious about datacasting. I have a “show me” attitude on ATSC 3.0.
I see a lot of FinTwit chatter about the potential for an Incentive Auction 2.0. An auction would be ideal for me—I have a proven track record in this specialized domain. Unfortunately, I don’t see a pathway to another broadcast auction within a 3–5-year horizon. I’m not saying it can’t happen, but I’d comfortably bet against it. It would require additional auction legislation, for instance. The NAB and industry leaders are fiercely opposed. I could discuss this endlessly, so I’ll leave it at that.
I know your current project is Docket Rocket and the related Substack. Can you tell us about these services? How do users stand to benefit?
Regulation is a foundational element of value creation and destruction in the communications industry. The FCC’s regulatory process is complex, and the only way to access the data is through its ECFS (Electronic Comment Filing System).
We utilize GenAI to distill that data, making it comprehensible and actionable for everyone. We don’t predict FCC decisions (yet), but providing investors transparent access to the regulatory process is valuable.
There are single-issue stocks where FCC actions are catalysts (AST SpaceMobile, Anterix, and EchoStar, to name a few).
We use Substack to promote our web application, which mirrors the FCC’s ECFS. On Docket Rocket, you can personalize a dashboard to stay on top of proceedings and receive email updates. I’d be happy to demo the site for anyone interested.
Follow Eric on X here and subscribe to Docket Rocket and the related Substack publication.
I/we (Nat Stewart and/or affiliates) own NXST, GTN, December 2025 GTN calls. Eric Stewart holds no positions in securities mentioned.
DISCLAIMER
Nothing contained herein is investment advice or should be construed as investment advice. The full disclaimer can be found here.