Federal judge issues injunction against Nexstar-Tegna merger
Says it violates federal antirust law
A federal judge blocked the $6.2 billion merger between Nexstar Media Group and Tegna Friday evening, setting the stage for a long and perhaps costly court battle.
As first reported by The Desk, U.S. District Judge Troy Nunley in Sacramento issued the 52-page injunction, stating the mega-merger violates antitrust laws, and declared it illegal, despite being approved by the Justice Department and the FCC, mere hours after DirecTV and eight state attorneys generals (including Illinois’ Kwame Raoul) filed separate lawsuits seeking to stop the merger. The ruling replaces a restraining order that was issued weeks ago on behalf of both suing parties, halting the planned merger, which would have given Nexstar 228 stations covering 80 percent of the country and a presence in nine of the top ten largest media markets. The FCC gave Nexstar a waiver in all markets where it would buy a Tegna station, blowing past the 39 percent national ownership cap set by Congress in 2004.
Nexstar owns WGN-TV Chicago and three-quarters of The CW.
Nulney ruled in favor of the plaintiffs, saying the merger would do damage in the form of increased bills for consumers as Nexstar would have significantly more leverage over cable and satellite providers, which could drive even more viewers to cut the cord, as subscriptions have declined for nearly a decade. While pledging to increase local news at its stations, Nexstar would also consolidate its newsrooms and lay off journalists where Tegna owns a station, including St. Louis, which would leave the city with just two television newsrooms remaining. Nexstar laid off anchors and reporters two months ago at its big-market stations, with WGN-TV being the hardest hit.
Due to the court battle, Nexstar remains owner of Tegna, but cannot integrate their operations into Tegna’s, or share sensitive business information, such as financial statements. The plaintiffs argue the deal violates both Sherman Antitrust Act and the Clayton Act, and Nunley agreed.
Nexstar says it will appeal to the Ninth Circuit Court, setting up a battle that could last for months, and might wind up at the doorstep of the U.S. Supreme Court.
“For nearly thirty years, Nexstar has provided free over-the-air access to all its broadcast stations — local news, weather, and community-focused programming alongside major network programming. This pro-competitive transaction will make local stations stronger and support continued investment in local journalism and fact-based news.”, said the suburban Dallas-based company in a statement. “We will appeal today’s decision and look forward to presenting our case on its merits before the Ninth Circuit Court of Appeals.”
Meanwhile, DirecTV praised the decision.
“[This court order]reinforces the coalition of states’ and our shared belief that unchecked station consolidation will force consumers to pay more for less by reducing the quality and variety of local news coverage, driving up content prices, and increasing the threat of station blackouts,” according to a statement provided to The Desk. “DIRECTV remains committed to a competitive, diverse, and affordable media landscape for all Americans.” DirecTV claims the Nexstar-Tegna merger would raise cable fees by $135 million.
The decision was also lauded by FCC Commissioner Anna Gomez, who is the only Democrat on the agency. As of this writing, there has been no comment from FCC Chairman Brendan Carr, or President Donald Trump, who backed the deal after initially opposing it. Nexstar-Tegna’s marriage has spawned merger and acquisition activity elsewhere, including Paramount and Warner Bros. coming together, and a rumored merger between airline rivals American and Chicago-based United.
This latest twist in this drama will certainly put a chill in any merger and acquisition activity in a blow to the television industry, as station groups claim the cap is preventing them from competing against unregulated tech rivals including Amazon, Apple, Google, Netflix, and legacy rivals Disney, Paramount, and Comcast as all (except Google, which has YouTube) have major streaming services. You can look for more divestitures or modifications to this deal as the parties battle this out in court. But if Nexstar stands resilient and takes this case all the way to the Supreme Court, then all bets are off given the Justices seemed to favor big businesses if this decision from 2021 is any indication.
You can read the judge’s decision here.