Federal judge issues preliminary injunction against Nexstar-Tegna pact

A federal judge in Sacramento has issued a preliminary injunction against Nexstar’s acquisition of Tegna TV stations as part of DirecTV’s lawsuit to block the merger of TV station groups.

Judge Troy Nunley of the Eastern District of California issued the 52-page ruling late Friday, siding with DirecTV’s argument that allowing Nexstar to move forward with the integration of Tegna’s 64 stations could cause “irreparable harm” to DirecTV. Nexstar has promised to appeal.

On March 19, Nexstar announced that its acquisition of Tegna was complete, despite lawsuits in California and other states blocking the deal. On its face, Nexstar’s acquisition of Tegna puts the combined company outside the FCC’s existing boundaries on the number of TV stations a single entity can own. But the FCC is actively reviewing these ownership limit rules. Nexstar went ahead with the purchase of Tegna in a bold gamble that the rules would be changed and thus the merger would receive federal approval, which it did. The FCC and the Department of Justice greenlighted the purchase. But eight state attorneys general and DirecTV are pushing back hard.

On March 27, Nunley issued a temporary restraining order against the integration of Nexstar. The preliminary injunction strengthens the court order for Nexstar to cease all integration efforts with Tegna. The ruling also examines the deal’s impact on local news, as Nexstar has a history of consolidating newsgathering operations across markets and regions. The merger’s impact on local news is at the center of the lawsuit filed by Bonta and his counterparts in New York, Colorado, Illinois, Oregon, North Carolina, Connecticut and Virginia.

For DirecTV, the focus is on the expanded Nexstar’s ability to increase the retransmission consent rates it charges cable operators and satellite providers like DirecTV to carry its local channels.

“The Court agrees with Plaintiffs that Defendants’ integration efforts are precisely those that would make it more difficult to divest Tegna stations because they will eliminate competition and result in Defendants’ layoffs and newsroom closures,” Nunley wrote. “The Court also notes that Plaintiffs initiated the immediate actions prior to Defendants’ consummation of the transaction. Accordingly, Defendants could have waited seven days to complete the acquisition or commence integration efforts until after this Court ruled on Plaintiffs’ motions for TRO. Therefore, especially in light of Plaintiffs asserting a likelihood of success based on the merits of their claims and entering an order that is in the public interest, the Court agrees with Plaintiffs that the private benefits of Nexstar could obtain through the acquisition of Tegna, be compensated by the damages to the plaintiffs.”

Nexstar is the largest owner of TV stations in the country, with nearly 200 outlets nationwide. Tegna owns Big Four network stations in key large and mid-market TV markets, including Washington, DC, Houston, Dallas, Seattle, Denver and Phoenix.

“This transaction was completed over four weeks ago after receiving all required regulatory approvals
from the Federal Communications Commission and the U.S. Department of Justice. Nexstar Media Group now owns Tegna and has taken steps consistent with the court order in effect,” Nexstar said in a statement. “For nearly thirty years, Nexstar has provided free wireless access to all of its channels – local news, weather and community-oriented programming in addition to major network programming. This pro-competitive transaction will strengthen local broadcasters and support continued investments in local journalism and fact-based news. We will appeal today’s decision and look forward to presenting our case on the merits to the Ninth Circuit Court of Appeals.”

DirecTV, on the other hand, was quick to praise Nunley’s statement.

“We applaud the court’s decision, which strengthens the coalition of states and our shared belief that unchecked channel 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 channel blackouts,” DirecTV said. “DirecTV remains committed to a competitive, diverse and affordable media landscape for all Americans.”

Rob Bonta, California’s attorney general, called Nunley’s ruling “a crucial victory” for the plaintiffs.

“My office and attorneys general across the country have secured a preliminary injunction in our lawsuit challenging the illegal and US DOJ-sanctioned Nexstar/Tegna merger – an injunction requiring the broadcast titans to stop merging while our case continues. This is a critical victory in our case,” Bonta said. “This merger is illegal, plain and simple. The federal government may have thrown in the towel, but we will continue to fight for consumers, for workers, for affordability and for our local news.”