Nexstar-Tegna merger approved by DOJ and FCC

Approved despite lawsuits by states, DirecTV

In a historic move, the Federal Communications Commission and the Department of Justice approved the $6.2 billion merger between Irving, Tex.-based Nexstar and McLean, Va.-based Tegna, despite a lawsuit filed by eight state attorneys general and DirecTV. The deal officially closed Thursday night. 

The FCC granted waivers to Nexstar despite the national ownership cap being at 39 percent of the country. Now, Nexstar will own more than 250 stations reaching 80 percent of the country, including seventeen of the top twenty markets. 

Nexstar and other broadcasters have long complained about the cap, saying the legislation stymies them from competing against better-funded tech streaming companies such as Netflix, Google, and Amazon – not to mention the “Big 4” networks owned by Disney (ABC), Comcast (NBC), Paramount (CBS), and Fox. In Chicago, New York, Los Angeles, Philadelphia, and San Francisco, the networks own their stations, with Nexstar owning the CW affiliate (except New York City, where they operate WPIX through Mission Broadcasting.) The NFL has begun negotiations to increase its rights fees with the Big Four, starting with Paramount, which could pay $3 billion more than it does now, as that increase will likely be passed onto its affiliates in the form of “reverse compensation”. 

In a statement, FCC Chairman Brendan Carr said, “The FCC has been focused on empowering broadcast TV stations to serve their local communities, consistent with their public interest obligations. Today’s agency decision does exactly that as both the record and Nexstar’s enforceable commitments demonstrate. For too long, the FCC stood by while newspapers closed by the dozen in communities all across the country. Those trusted sources of local news and information shuttered while the FCC dithered. If you care about local news, you should care about the future of local broadcast TV stations.” This is the same Carr who threatened local stations’ broadcast licenses on Saturday after President Trump blasted the New York Times and the Wall Street Journal for what he said were “inaccurate reporting” on the War in Iran. 

Regardless of what Carr says, the deal would consolidate news operations in cities where Tegna and Nexstar own stations, likely leading to layoffs. In a surprise ruling, the Justice Department told Nexstar to sell just six stations within a two-year timeframe. They are KTVD Denver; WTHR Indianapolis; WCTX-TV New Haven, CT (Hartford); WAVY-TV in Norfolk-Portsmouth, VA; WUPL-TV in New Orleans; and KNWA Rogers, Ark. The agencies will let Nexstar keep KSDK St. Louis, despite owning KTVI and KPLR in the same market, reducing the local news operations in that city to only two, as Sinclair’s KDNL does not produce news. 

In the last few weeks, Nexstar has laid off on-air personnel in some markets, including Chicago’s WGN-TV, where they laid off eight people last month. 

The Nexstar-Tegna deal was all but sealed after President Trump reversed course on the ownership cap, giving his blessing, followed by Chairman Carr’s. 

The FCC also wasn’t concerned – or more bluntly, didn’t care – about DirecTV’s and others’ claim that the deal would lead to higher retransmission fees, meaning subscribers would pay more in monthly bills, leading to even more cord-cutting. “We do not believe that an increase in retransmission consent rates, by itself, is necessarily a public interest harm”, said the FCC Media Bureau in a statement separate from Carr’s. The deal was also opposed by the American Cable Association, Black congressional lawmakers, and conservative news network Newsmax, a rival to Nexstar’s NewsNation. 

One wonders if this approval by the DOJ and the FCC was rushed due to a lawsuit filed by eight state AGs Thursday, including Kwame Raoul here in Illinois. Other parties to the suit are California, Colorado, Connecticut, New York, North Carolina, Oregon, and the Commonwealth of Virginia.

DirecTV filed a separate suit on Thursday: “This merger would create a massive concentration of market power. The acquisition would give Nexstar control of 228 broadcast stations reaching 80% of television households in 132 local markets and increase concentration in more than a dozen local markets by more than 10 times the amount that is presumptively unlawful under the antitrust laws. That enormous increase in market power will enable Nexstar to raise prices and reduce the amount, variety, and quality of local news without having to worry about losing business to competition.” 

Although the deal has been approved and finalized, lawsuits will continue, according to DirecTV and California AG Rob Bonta, and additional lawsuits may follow.

Anybody who lives in a Tegna market should get a glimpse of what’s in store if one watched WGN’s election night coverage on Tuesday as it was panned by viewers for reasons I brought up here two years ago (in all fairness, Fox 32’s wasn’t any better, and NBC 5 had limited coverage because of an NBA game they were carrying in primetime.) Given Nexstar’s likely layoffs in the months ahead, in addition to those that have already taken place, the FCC’s notion that local news can be saved because of this merger is just plain bullshit.