Key Takeaways
Eight state attorneys general joined forces Wednesday to file an antitrust lawsuit in federal court in Sacramento, California, challenging Nexstar Media Group's proposed $6.2 billion acquisition of Tegna.
The coalition, including California, Colorado, New York, and five other states, argues the deal would lead to excessive consolidation in local television markets. California Solicitor General Rob Bonta warned that reduced ownership diversity threatens the vitality of local news.
Nexstar is currently the largest operator of local television stations in the U.S., while Tegna controls or manages 64 broadcast stations nationwide, ranking it in the top five.
Under current federal regulations, no single company can have an audience reach exceeding 39% of U.S. television households. Nexstar's combined entity with Tegna would command a 60% market share, necessitating regulatory adjustments for approval.
FCC Chairman Brendan Carr has signaled support for the transaction and pledged to facilitate its clearance. President Trump also voiced approval, posting on Truth Social that an expanded Nexstar would be a formidable counterweight to what he called "fake news national television networks."
The coalition of state governments contends the merger would increase costs for cable and satellite TV subscribers and further diminish the quality of local news programming.
New York Attorney General Letitia James announced she is pursuing an injunction in all 44 states where the two companies have broadcast operations. She anticipates more states, regardless of party affiliation, will join the litigation.
California's Bonta emphasized that Nexstar has failed to propose divesting any stations to resolve competition concerns.
DirecTV Mounts Separate Legal Action
DirecTV, which provides pay-TV service to more than 8 million subscribers, has filed its own lawsuit in federal court in Sacramento. The satellite TV provider alleges Nexstar will leverage its expanded market share to increase retransmission fees for its stations charged to distributors.
"Nexstar will block stations or threaten to do so to compel multichannel video programming distributors to agree to its pricing demands," DirecTV stated in court filings.
Nexstar and Tegna have not yet commented on the lawsuits.
The Justice Department's antitrust division is still reviewing the transaction. A representative for the Justice Department did not respond to inquiries regarding the status of its investigation.
Debt Financing Proceeds Amid Challenges
Despite mounting legal challenges, Nexstar is moving forward with its transaction financing strategy. Sources familiar with the matter revealed the broadcaster plans to access the investment-grade bond market within the next week.
Bank of America has indicated...