Judge orders Nexstar-Tegna to pause merger
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A U.S. district judge on Friday issued a preliminary injunction requiring Nexstar and Tegna to remain separate, despite closing their $6.2 billion megamerger last month.
Why it matters: The ruling significantly dampens the consolidation outlook for the entire local broadcast industry.
Zoom in: In a lengthy decision, District Judge Troy Nunley said the court agrees with DirecTV that the merger would force national pay-TV providers like DirecTV to lift their prices on consumers, causing "irreparable harm."
- He also said the plaintiffs' argument that the deal will reduce competition in dozens of markets was likely to prevail in court.
Between the lines: The preliminary injunction follows Nunley's decision to grant a temporary restraining order last month.
- Nexstar said it will appeal the ruling.
Catch up quick: Nexstar, the country's largest broadcast group, announced a deal to acquire Tegna for $6.2 billion last year. The combined company would span more than 259 stations and would have more than 80% reach into U.S. households.
- To approve the merger, the Federal Communications Commission had to waive a rule that caps local broadcast station ownership to reaching no more than 39% of U.S. households.
- There's been a fierce debate over whether the FCC has the authority to unilaterally lift the cap. Opponents of the deal say Congress passed a law setting that threshold, and thus only Congress could unwind it.
State of play: In March, eight U.S. states and DirecTV filed lawsuits to block the merger, arguing the deal would hurt jobs and would result in one company having too much control over local TV. They preemptively filed their lawsuit hoping to get ahead of any approvals at the federal level.
- The following day, regulators at the Justice Department announced an early termination of its antitrust probe into the deal, approving it from an antitrust perspective. The FCC's Media Bureau also approved Nexstar's application to transfer Tegna's broadcast licenses without a full, public commission vote.
- Nexstar announced that day it closed its deal to acquire Tegna. A coalition of consumer groups, Newsmax and DirecTV filed an emergency petition to stop the deal, arguing the FCC doesn't have the legal authority to waive the broadcast cap, and that the FCC's Media Bureau couldn't unilaterally approve the license transfer.
What's next: The injunction goes into effect at 5pm PT on April 21, when the previous temporary restraining order expires.
- While in place, the injunction prohibits Nexstar and Tegna from any action to consolidate their stations.
- Nexstar must also permit Tegna to continue operating as a separate and distinct, independently managed business unit from Nexstar.
Editor's note: This story has been corrected to reflect that the preliminary injunction was issued on Friday (not Saturday).
