The consolidation of the TV station market is far from over.

The $2.4 billion merger between Media General (MEG) and Meredith Corp. (MDP - Get Report) may have reduced the takeover list for large media companies trying to expand, but it's only upping the ante in broadcast acquisition competition.

Soon-to-be Meredith Media General, along with the top players in this market, will continue to pursue more expansion with acquisitions in a playing field that's "wide open in terms of companies combining to create greater scale," said Moody's analyst Carl Salas.

Possible companies that may be purchased include Atlanta-based Gray Television (GTN - Get Report) , whose holdings including 26 CBS  (CBS - Get Report)  affiliated stations and 24 with Comcast's (CMCSA - Get Report) NBC as well as Nexstar Broadcasting Group, (NXST - Get Report) , which owns channels that reach 18% of the U.S. Salas says he even thinks that the industry's dominant players --  Sinclair Broadcast Group (SBGI - Get Report) , Tribune Media (TRCO - Get Report) , Tegna (TGNA - Get Report) and the new Media General -- could seek to acquire one another. 

The impetus behind consolidation among TV station groups is increased resistance from TV operators to pay higher fees for programming whose ratings are in decline. TV station groups are under pressure from pay-TV operators that have also had to consolidate to offset the loss of advertising revenue to Google (GOOG - Get Report) , Facebook (FB - Get Report)  and other digitally-focused companies.

Like TV station owners, pay-TV operators have sought to get larger to gain greater leverage when negotiating with networks over fees to carry their programming. Charter Communications (CHTR - Get Report) is aiming to close its deal to acquire Time Warner Cable (TWC) in a transaction valued at roughly $55 billion while AT&T (T - Get Report) acquired DirecTV in July for $48.5 billion.

Like Meredith, the longtime newspaper publisher Gannett (GCI - Get Report) chose to emphasize its television holdings over its legacy print business when it spun-off its TV group now known as Tegna. Two years ago, Gannett laid the groundwork for that spin-off when it acquired Dallas-based Belo Corp. in a deal valued at roughly $2.2 billion. Tribune Media (TRCO - Get Report) did the same, also in 2013, when it purchased the TV station group Local TV LLC from Oak Hill Partners for $2.725 billion, and spun-off its newspapers into Tribune Publishing (TPUB) .

Getting bigger remains the overarching theme. Baltimore-based Sinclair in 2013 snatched up 22 more television stations through its $373.3 million acquisition of Fisher Communications Inc.

"Long-time operators are looking at the landscape and are more willing to work with others to create stronger companies," Salas said.

By acquiring Meredith's 17-owned and -operated TV stations that reach about 10% of U.S. households, Media General solidifies its place among a "Big Four" that includes Sinclair Tribune and Tegna. All four could make additional acquisitions with Gray and Nexstar being the most likely candidates.

Media General's takeover of Meredith was announced early Tuesday as a stock and cash transaction valued at $2.4 billion. Meredith's net debt puts the value of the deal at about $3.1 billion. The deal, which is expected to close in June of next year with the resulting company to be named Meredith Media General, should yield $3 billion in revenue and reach 30% of U.S. households.

 

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.