Nexstar claims it cannot comply with the court’s TRO halting its acquisition of Tegna

A federal judge has ordered the $6.2 billion merger of Nexstar Media with rival Tegna pending the court’s review of whether the partnership violates antitrust laws. But Nexstar and Tegna say they cannot fully comply with the court’s temporary restraining order. They claim that certain actions caused by the closing of the deal cannot be undone.

In a filing Tuesday in the U.S. District Court for the Eastern District of California, Nexstar and Tegna said they “hereby notify the court that Defendants cannot implement certain provisions of the TRO as written due to actions already completed at closing and legal obligations that cannot be reversed.”

The temporary restraining order “creates immediate operational harm to Tegna and Nexstar, regulatory conflicts and a governance vacuum,” the companies said. They outlined “clarifications and/or changes” to the TRO and asked for “guidance” from the court on these matters (see below).

Nexstar, already the largest local TV station group in the US, announced on March 19 that the Tegna deal had been completed following approval from the FCC and the Justice Department. The combined company would have 259 full-fledged TV stations (after divesting six) affiliated with networks such as ABC, CBS, Fox and NBC, reaching approximately 80% of US TV households.

But the day before, on March 18, DirecTV and eight attorneys general had sued the companies, attempting to block the merger on antitrust grounds. On March 27, Judge Troy Nunley granted DirecTV’s request for a temporary restraining order — barring Nexstar and Tegna from integrating their operations for the time being — ruling that the proposed merger is “likely to violate antitrust laws based on the company’s combined market share alone.” (Nunley, in a ruling Tuesday, ordered that lawsuits seeking to block Nexstar-Tegna, filed by DirecTV and the states, be consolidated into a single action.)

Portions of Nexstar-Tegna’s filing in response to the TRO (available at this link) have been redacted because portions of it “contain highly confidential business information that would harm Nexstar if made public,” the companies said.

“In closing, Nexstar and Tegna took many typical steps that may not have been apparent to the Court when it issued its TRO,” the TV channel group companies said. “It is extremely difficult to freeze the integration that has already occurred, as opposed to a conventional hold-separate order. Compliance with certain aspects of the TRO is impossible and could jeopardize Nexstar and the Tegna assets the Court seeks to preserve.”

For starters, the two companies argued, “administrative integration cannot be reversed without significantly disrupting employee compensation.” In addition, Nexstar said it has “ongoing SEC reporting obligations and debt agreements that require Tegna’s financial information to be included in Nexstar’s reports as of the closing date.”

Nexstar and Tegna also said that when their deal closed, Tegna’s retransmission agreements with pay-TV providers that also offer a Nexstar channel were “contractually replaced by Nexstar agreements” with those companies. “This creates an internal contradiction: the TRO requires ‘separate management’ of
Tegna and that “Tegna personnel must maintain control over Tegna decision-making, including with respect to consent agreements and retransmission negotiations,” but those stations are now contractually governed by Nexstar’s agreements of which no former Tegna personnel are aware.

“The news of the TRO has already caused confusion about its impact on the applicability of the Nexstar agreements to the Tegna stations, and Nexstar is beginning to receive inquiries from distributors that will increase in volume and urgency as Nexstar approaches the end of the billing cycle,” the companies said. “This creates operational chaos and accounting complexity that hurts both Nexstar and Tegna.”

The companies also argued that the FCC has ordered Nexstar to take certain actions in connection with the approval of the transaction “that appear to contradict the TRO.” That includes Nexstar’s commitment to divest six stations; increasing news programming in certain markets; and pay television providers with which Nexstar has an existing retransmission consent agreement (RCA) expiring after Tegna’s closing date and before November 30, 2026, an “extension of such RCA at existing rates through November 30, 2026.”

Regarding staffing and workforce plans, the companies noted that Tegna publicly announced a $90 million-$100 million cost savings initiative between February and June 2024 that would eliminate editorial and support positions, consolidate station operations and management, and develop technologies such as AI automation. Tegna has made additional layoffs this year. However, under the order to halt the merger between Nexstar and Tegna, “it is unclear whether Tegna is required to implement its pre-transaction reduction plans – or whether it is prohibited from doing so – to maintain current workforce levels or even increase workforce levels to the 2025 peak, which could harm Tegna financially.”

Here are Nexstar and Tegna’s nine proposed “clarifications and/or changes” to the TRO, as filed with the court: