Key Points
- California and eight other states filed a lawsuit to block Nexstar’s $6 billion acquisition of TEGNA on antitrust grounds.
- Officials argue the deal would increase market concentration and lead to higher cable and satellite fees for consumers.
- The transaction is also under review by the U.S. Department of Justice as regulators assess its competitive impact.
The attorneys general of California and eight other states have filed a federal lawsuit seeking to block Nexstar Media Group’s proposed $6 billion acquisition of peer broadcaster TEGNA.
The lawsuit, filed in a federal court in Sacramento, argued the transaction would create the largest independent owner of ABC, CBS, Fox and NBC affiliates in the country, which would harm consumers because that concentration of power would lead to higher distribution fees charged to cable and satellite companies.
Historically, cable and satellite companies have passed along those fees to consumers in their bills; operators like Comcast, Charter, Dish Network and DIRECTV contend programming-related fees account for the largest share of subscriber bills on a monthly basis.
California is leading the charge on the lawsuit; Sacramento was chosen in part because Nexstar and TEGNA own a station in the community. Other states that have joined the lawsuit include New York, Colorado, Connecticut, Illinois, North Carolina and Oregon, along with the Commonwealth of Virginia.
“This merger would cause incredibly high levels of concentration in local TV markets and is expected to raise cable and satellite prices across the country, causing irreparable harm to local news and consumers who rely on their reporting as a critical source of information,” Rob Bonta, the Attorney General of California, said in a statement. “If approved, this multibillion-dollar deal would combine the nation’s largest and third-largest television-station conglomerates, creating a behemoth covering 80 percent of U.S. television households.”
Bonta continued: “This merger is illegal, plain and simple, running contrary to federal antitrust laws that protect consumers. When broadcast media is owned by a handful of companies, we get fewer voices, less competition, and communities lose the critical check on power that local journalism delivers.”
To some degree, the proposed merger has already led to fewer journalists working at Nexstar-owned stations: In recent weeks, the company has issued pink slips at its largest newsrooms in New York City, Los Angeles and Chicago, with further cuts to the marketing departments at many other outlets.
In a statement, a spokesperson for Nexstar said the job cuts were needed to address current market realities. The company has not issued a comment on the lawsuit as of Wednesday evening.
The lawsuit claims the transaction violates Section 7 of the Clayton Act, which makes mergers illegal when they lead to monopolies in an industry or otherwise suppress competition to a large degree.
The U.S. Department of Justice is currently conducting its own review of the Nexstar-TEGNA deal on antitrust grounds. During a recent investor conference, Nexstar CEO Perry Sook said the company was cooperating with that investigation and had provided more than 2 million documents to federal officials within the Justice Department.
Ordinarily, a transaction of that size would be blocked by the Federal Communications Commission (FCC), which forbids one broadcaster from owning stations that reach more than 39 percent of the American viewing audience. The deal, if consummated, would put Nexstar over that threshold. FCC Chairman Brendan Carr has voiced his support for the acquisition.
“The Trump Administration has shown states and consumers that it is more concerned with protecting corporate interests than doing its job to defend the public and uphold consumer protection and antitrust laws that help make life affordable for American families,” a spokesperson for the California Department of Justice said Wednesday evening.
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