A federal judge ruled Friday night that Nexstar must halt its merger with Tegna as DirecTV and state attorneys general fight the deal on antitrust grounds.
The decision came from U.S. District Judge Troy L. Nunley in Sacramento, California, with the justice granting DirecTV’s request for the deal to be paused. Nexstar and Tegna closed the deal last week after nabbing FCC approval.
In his 24-page order, Judge Nunley noted that the companies “do not contest this merger will increase Nexstar’s bargaining leverage to extract higher fees.” The judge also stated that he was convinced by DirecTV’s “assertion that despite defendants’ claim the rise of streaming services and ‘cord-cutting’ will create a downward pressure on retransmission rates, Nexstar’s CEO Perry Nook recently told investors the opposite.”
The judge set an April 7 hearing to decide whether to keep the pause in place until a full trial.
Nunley’s ruling came a week after Nexstar closed its $6.2 billion Tegna merger with FCC approval. As we previously reported, the deal gives Nexstar 265 television stations in 44 states and the District of Columbia, representing 80% of U.S. television households, adding Big-4 affiliate stations in Phoenix, Atlanta, Toledo and Portland. The combined company will also have stations in nine of the top 10 markets, and in 41 of the top 50.
The approval of the Nexstar-Tegna deal was subject to raising or eliminating the 39% national TV ownership cap put in place by Congress in 2004 to protect viewpoint diversity, as well as prevent monopolization. However, instead of modifying the ownership rules, Carr granted the companies a waiver and defended that the decision would empower broadcast TV stations and foster local journalism.
“The D.C. Circuit has already determined that the relevant media ownership regulation is an agency rule, not a firm statutory limit, and the full Commission has reached the same determination on multiple occasions,” Carr said at the time. “Waiving that rule here is consistent with longstanding FCC authorities and doing so promotes the underlying purpose of the FCC’s media regulations by promoting competition, localism and diversity.”
Additionally, Nexstar agreed to divest six stations across six different DMAs and agreed to make commitments to affordability and localism, helping close the deal.
Yet, as the merger gained approval by the FCC, a coalition of state attorneys general from California, New York and six other states filed an emergency motion to block the deal. The suit warned that the deal would reduce competition and provide fewer checks on power. Similarly, DirecTV filed its own antitrust lawsuit, defending the merger would “irreparably drive up consumer costs, reduce local competition, shutter local newsrooms and increase both frequency and duration of blackouts of key local teams and network programming.”
“This merger would create a massive concentration of market power,” the legal documents stated. “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.”