States Sue to Stop Nexstar’s $3.5 Billion Deal for Tegna
(Bloomberg) — A group of state attorneys general is suing Nexstar Media Group Inc. for rival Tegna Inc. He is suing to block the $3.5 billion deal he made for the company, which would have created the largest local broadcast operator in the country.
In the lawsuit filed late Wednesday in federal court in Sacramento, California, a group of Democratic law enforcement officials from states including California, New York and Colorado argue that the deal would give the combined company too much control over television in dozens of markets around the United States. They argue the combination would impact distribution of local news, increase cable prices and lead to layoffs.
“This illegal merger threatens local news and could increase consumers’ fees by combining hundreds of TV channels under the same owner,” New York Attorney General Letitia James said in a statement.
Attorneys general in Connecticut, Illinois, North Carolina, Oregon and Virginia also joined the lawsuit. Satellite television company DirecTV has filed its own lawsuit against the deal, saying it would lead to long-term programming cuts as the fledgling company fights with distributors over fees.
Nexstar and Tegna did not respond to requests for comment. Shares were down 3.1% and 1.1%, respectively, as of 1:15 p.m. New York time.
If the deal goes through, the combined companies would own 265 full-power TV stations, reaching 80% of U.S. households, according to the lawsuit filed by the states. Federal law prohibits a local station owner from serving more than 39% of the country. Both Nexstar and Tegna operate ABC, CBS, NBC and Fox affiliate stations. Nexstar also owns the CW network and NewsNation.
The deal needs approval from the US telecom regulator, the Federal Communications Commission and the Department of Justice. The FCC would need to either waive the media ownership limit on companies or eliminate the limit altogether. President Donald Trump said he supported the agreement in a social media post in February, and FCC Chairman Brendan Carr also supported the president’s view.
In a statement, California Attorney General Rob Bonta expressed concern that Trump and Carr had already decided that the deal should be approved. Anna Gomez, the FCC’s only Democrat, said in a separate statement that “the FCC should not have approved this illegal merger behind closed doors.”
The White House, FCC and Justice Department did not immediately respond to requests for comment.
Since Trump took office, the FCC has decided to rethink limits on how big station owners can get. Last July, an appeals court overturned the so-called “top four” rule, which prohibited a station owner from operating two of the top four stations in a single market.
–With help from Kelcee Griffis.
(Updates with Dish lawsuit details, stock prices and FCC commissioner comments.)
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