Key Points

• Opponents of Nexstar’s TEGNA acquisition say CEO Perry Sook’s comments contradict claims made to regulators about market challenges.
• The National Hispanic Media Coalition argued Nexstar presents different narratives to investors and the FCC about the deal’s impact.
• DIRECTV also raised concerns that Nexstar shared key economic studies with the DOJ but not with the FCC.

Several opponents of Nexstar Media Group’s proposed $6 billion acquisition of TEGNA have pointed to comments made by Nexstar CEO Perry Sook as proof that the Federal Communications Commission (FCC) should reject, or more closely scrutinize, the deal.

In a letter filed with the FCC this week, the National Hispanic Media Coalition (NHMC) called into question remarks made by Nexstar and TEGNA executives in seeking the agency’s approval for the transaction, which characterized the acquisition as necessary due to “intense challenges” faced by TEGNA “that underscore how market changes are threatening local broadcasting.”

During an investor conference last month, Sook said the acquisition came from a position of market strength, noting TEGNA’s “best run” and “strong balance sheet.”

“We literally think it’s putting the best of breed and best practices together under one roof,” Sook remarked.

The NHMC said the comments stood as proof that the broadcasters tell one story to regulators, and then another to investors, as they try to persuade both sides that the acquisition is good for business and competition.

“This doublespeak, while surprising, is part of a long pattern,” Brenda Victoria Castillo, the President and CEO of NHMC, wrote in the letter. “Nexstar tells different versions of its narrative depending on its audience. To investors, Nexstar brags that the merger will produce nine-figure increases in annual retransmission revenues — paid for by higher monthly bills for consumers — and ‘line by line, person by person’ cost cuts in markets where the combined company will ‘operate two stations off of one infrastructure.”

“Yet their FCC filings omit these clear harms and pretend that higher consumer bills and widespread journalist layoffs somehow serve the public interest,” the NHMC continued. “Now, Nexstar’s leadership appears increasingly emboldened to tout that this merger was specifically designed to absorb a ‘best of breed’ broadcast competitor, directly undercutting the company’s
prior claims to the Commission.”

In a separate letter, officials at DIRECTV pointed to comments made by Sook at the same investor conference, during which he acknowledged that Nexstar has provided “over 2 million documents” to officials at the U.S. Department of Justice, who are scrutinizing the TEGNA acquisition on antitrust grounds.

Those documents include, among other things, “economic studies” that include “very good information that provides rationale that the definitions of markets and the definition of video certainly needs to evolve with the times.”

That was news to DIRECTV, which has challenged the merger in prior filings with the FCC and which has a signed agreement with the agency to send and receive confidential business-related materials about Nexstar, TEGNA and the deal.

“Nexstar has provided no such ‘economic studies’ to the Commission in the record of this proceeding,” Michael Nilsson and William Wiltshire, attorneys representing DIRECTV, wrote in a letter dated March 6. “Applicants in license transfer or assignment proceedings of this magnitude almost always submit such studies to support their applications, giving both the Commission and interested parties the opportunity to review them.”

Rather than provide the FCC with the economic studies, “Nexstar has apparently chosen to submit such studies under seal to the DOJ, but not to the Commission.”

The comments come about three weeks after FCC Chairman Brendan Carr said he was interested in seeing Nexstar’s acquisition of TEGNA move forward. The comments strongly implied that antitrust reviewers at the DOJ were the ones holding up the deal, something confirmed by two sources with knowledge of the matter.

DIRECTV makes the case that the FCC shouldn’t approve the deal if it doesn’t have all the information before it.

“We question how the Commission can clear the transaction at all when applicants have chosen to keep the key evidence — the alleged ‘rationale that the definitions of markets and the definition of video certainly needs to evolve with the times’ — a secret,” Nilsson and Wiltshire wrote.

It wasn’t clear if Nexstar submitted the economic study to the FCC under seal, or whether it intends to do so. A spokesperson for the company has not yet returned a request for comment.

Nexstar is already the largest independent owner-operator of broadcast TV stations in the country, with control over more than 200 of them, all of which are licensed by the FCC.

The transaction with TEGNA, if approved, would include an additional 60 licensed TV stations in around 40 markets, including cities where Nexstar already owns one or two stations.

Under existing FCC rules, broadcasters are not allowed to have direct ownership of TV stations that reach more than 39 percent of the American viewing audience. Nexstar has lobbied the FCC to lift those ownership restrictions — something that critics say might be illegal, if the FCC moves forward with it, since the ownership cap were mandated by Congress — or to approve waivers of its ownership rules in each market where Nexstar and TEGNA own at least one TV station each.

Last month, Sook said Nexstar was confident it will get approvals for the TENGA deal, but warned investors that the company might have to divest an unknown number of stations to satisfy certain regulatory concerns.

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