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In court, FCC accused of running out clock on Nexstar-TEGNA challenge

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mkeys@thedesk.net

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Our coverage of Nexstar’s acquisition of TEGNA and the subsequent legal challenges is extensive: We reported on the initial announcement of the deal, the FCC’s approval of the acquisition and litigation triggered by several state attorneys general and DIRECTV seeking to unwind the merger. We attended an initial court hearing in Sacramento last month, questioned Nexstar’s CEO and California Attorney Rob Bonta on the case and continue to stay on top of developments.

A consortium of public interest groups challenging Nexstar Media Group’s acquisition of TEGNA are accusing the Federal Communications Commission (FCC) of delaying action on their appeal in a way that could frustrate judicial review of the transaction.

In a reply brief filed Monday with the U.S. Court of Appeals for the D.C. Circuit, a group called Democracy Forward Foundation said the FCC has failed to satisfy its statutory obligation to act on pending applications for review of a Media Bureau order that approved the transfer of TEGNA’s broadcast licenses to Nexstar.

The legal case playing out in Washington is similar, but legally separate, from a challenge brought by several states and DIRECTV in a California federal court that alleges many of the same improprieties and is otherwise seeking to unwind Nexstar’s $6.2 billion acquisition of TEGNA, which closed in March.

The group at the center of the D.C. case is asking the court to either compel the full commission to act immediately or keep their case on hold while a separate preliminary injunction issued by a California judge remains in effect. They also want the D.C. Circuit to retain jurisdiction and require the FCC to provide status updates every 30 days if the court declines to issue mandamus relief.

The filing marks the latest escalation in the legal fight over Nexstar’s deal to buy TEGNA, which grows its already-large portfolio of local TV stations to more than 250. The deal has drawn scrutiny from public interest advocates who argue the combination would further consolidate control of local broadcast outlets and test the FCC’s ownership limits.

Ordinarily, under the FCC’s current rules, one broadcaster is not allowed to have direct ownership of licensed TV stations that reach more than 39 percent of Americans. Nexstar already circumvents this restriction by bankrolling third-party companies to acquire local TV stations on paper, then entering into shared services arrangements that allows them to operate and financially benefit from those stations.

The transaction with Nexstar doesn’t involve a shared services agreement: Instead, Nexstar was granted waivers by the FCC in each market where TEGNA owns a TV station, which gives the company a free pass to skirt the ownership rules in this instance.

The FCC’s Media Bureau completed its review of the license transfer in 108 days, but the full commission has not yet acted on applications for review filed by opponents of the transaction. In an April 28 order, the D.C. Circuit asked the FCC to say when it expected to meet that obligation.

According to the appellants, the FCC responded only that it “expects that it will be able to act on the application for review this year.” The groups said that answer was legally insufficient, arguing the agency did not explain why the full commission’s review would take more than twice as long as the bureau’s initial review.

The appellants argue the delay leaves them in procedural limbo. By declining to act, they say, the FCC denies challengers a favorable ruling or a final adverse decision they can challenge in court. Meanwhile, the Media Bureau’s approval remains operative, even though the full commission has not resolved the pending applications for review.

The brief also notes that the FCC has not stayed the bureau’s order. Instead, the appellants said, the commission has publicly celebrated the transfer, including through an agency release that framed approval of the merger as advancing its policy goals around localism, diversity and competition.

The group say Nexstar’s own conduct is enough of a reason for the court in D.C. to intervene: Within 15 minutes of the bureau’s approval, Nexstar announced the transaction had closed. Days later, on April 17, the U.S. District Court for the Eastern District of California issued a preliminary injunction requiring Nexstar to keep TEGNA’s assets and licenses separate while litigation continues.

That injunction is the only practical safeguard preventing further integration of the companies while the FCC review remains unresolved, the groups say. But they warn the protection may not last, because Nexstar is appealing the California court’s order to the U.S. Court of Appeals for the Ninth Circuit, which could stay the injunction on a temporary basis while the case proceeds or overturn it entirely.

The brief also accuses Nexstar of taking contradictory positions in the two courts: In California, the appellants said, Nexstar relied on the FCC’s approval order to argue against the preliminary injunction. But in the D.C. Circuit, they said Nexstar is now relying on that same injunction to argue the mandamus petition is premature.

In other words, Nexstar’s attorneys are attempting to have it both ways by trying to persuade a judge — and, now, the Ninth Circuit Court of Appeals — to reject the injunction while pointing to it in the D.C. court as reason enough to reject arguments from the plaintiffs there.

If Nexstar succeeds in the Ninth Circuit and the injunction is dissolved before the FCC acts, the groups warn the companies could move quickly to combine their operations in ways that may be difficult or impossible to reverse. They said Nexstar’s speedy announcement after the Media Bureau’s initial approval of its acquisition of TEGNA shows the risk is not hypothetical.

As an alternative to forcing immediate FCC action, the appellants asked the D.C. Circuit to hold the petitions in abeyance, retain jurisdiction and require regular status reports from the agency. They also proposed that the court impose an automatic administrative stay of the FCC’s approval order if the California injunction is lifted.

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About the Author:

Matthew Keys

Matthew Keys is the award-winning founder and editor of TheDesk.net, an authoritative voice on broadcast and streaming TV, media and tech. With over ten years of experience, he's a recognized expert in broadcast, streaming, and digital media, with work featured in publications such as StreamTV Insider and Digital Content Next, and past roles at Thomson Reuters and Disney-ABC Television Group.
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