Shares of Nexstar Media Group traded sharply lower on Monday, the first full day of trading since a federal judge blocked the broadcaster’s $6.2 billion acquisition of peer TEGNA late last week.
Nexstar’s stock priced closed at just over $185 per share, down nearly $28 from its opening price. The broadcaster is considered among the healthiest on Wall Street among its peer group, with its share price trading substantially higher than that of Sinclair, Inc., the E. W. Scripps Company and TEGNA, which was trading around $22 per share before its stock was absorbed by Nexstar two weeks ago.
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As first reported by The Desk, a federal judge in Sacramento last Friday issued a temporary restraining order in separate but related cases brought by DIRECTV and more than a half-dozen state attorneys general, who argued that the combination of Nexstar and TEGNA violated antitrust laws and concentrated too much market power within a single company in the broadcast sector.
U.S. District Judge Troy Nunley of the Eastern District of California said the arguments raised by DIRECTV and the state attorneys general were likely to succeed if the case was brought before trial, and concerns about competitive harms raised by the transaction were sound enough to grant the temporary restraining order.
The restraining order is the first substantial step toward an injunction, which would block the transaction from moving forward while the lawsuits play out. Nexstar and TEGNA have been ordered to submit their arguments in writing by the end of the week, with a hearing on the injunction scheduled for next week.
Nexstar said it closed on its acquisition of TEGNA within hours of securing approvals from the U.S. Department of Justice and the Federal Communications Commission (FCC). The company argued that the combination was necessary to better compete against streaming services and other forms of media, and to continue its ongoing investments in local news and community-oriented programming.
The transaction gives Nexstar access to major network-affiliated stations in markets like Phoenix, St. Louis, Rochester and Washington, D.C. Nexstar was already the largest independent owner-operator of major network-affiliated stations in the country, with more than 200 TV stations in its portfolio; the TEGNA deal involves another 60 stations across 40 markets.
For now, the temporary restraining order requires Nexstar and TEGNA to maintain separate management and operations, comparable to before the transaction closed several weeks ago. The judge also required Nexstar and TEGNA to enact a firewall between the companies so confidential business-related materials is not exchanged while the restraining order is in effect.
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