The plaintiffs in an ongoing lawsuit over Nexstar Media Group’s acquisition of TEGNA have accused the company of potentially violating a federal court order’s requiring the two broadcasters to remain separate entities.
In a motion for clarification filed in Sacramento on Wednesday, California Attorney General Rob Bonta and DIRECTV, backed by attorneys general from other states, said the matter involves a Board of Directors at TEGNA that was created shortly after the court issued a preliminary injunction in April that required Nexstar to maintain a hands-off approach to operating TEGNA while their antitrust lawsuit proceeds.
The plaintiffs point to comments made by Nexstar CEO Perry Sook on an conference call with investors in May, during which he said the Board created to comply with the preliminary injunction was “comprised of Nexstar executives and Nexstar management team.” That Board has hired a number of C-level TEGNA executives over the past few weeks, including a former television executive from Fox Corporation who is now operating TEGNA as its Chief Executive Officer.
A report from Bloomberg later said that TEGNA management occupied “limited roles” and had to run various initiatives and other tasks by Nexstar management for approval, and that the TEGNA employees did not have the “authority to communicate” with TEGNA employees, suggesting Nexstar executives were still pulling the strings despite a court order that was intended to prevent them from doing so.
Bonta and DIRECTV requested information from attorneys at Nexstar about the matter. Both sides held a meet-and-confer meeting in early June to discuss the situation, but the plaintiffs say Nexstar only furnished limited responses, none of which answered their questions about how Nexstar was operating TEGNA while the preliminary injunction was in place.
About three weeks after the request was made, Nexstar finally furnished information about who is on TEGNA’s Board. The Board consists entirely of five current or former Nexstar executives — Sook, Nexstar President Michael Biard, Chief Financial Officer Lee Ann Gliha, General Counsel & Secretary to Nexstar’s Board of Directors Elizabeth Ryder and former President of Broadcasting Timothy Busch.
Among the five executives, Nexstar’s attorneys told plaintiffs that Busch checked the box of requiring an independent member on TEGNA’s board because he was no longer officially with the company, according to court records filed by the plaintiffs. Bonta and DIRECTV raised questions about his independence, pointing to Busch’s time at Nexstar, which spanned more than two decades.
Patrick Paolini, the former Fox executive who was appointed to serve as TEGNA’s CEO, is also required to “report to…TEGNA’s Board of Directors,” which is comprised of the five current or former Nexstar executives, raising further questions about whether his position is truly independent of Nexstar as the injunction requires.
In a statement on the matter, a Nexstar spokesperson said the company has complied with all requirements of the preliminary injunction to date.
“Nexstar has scrupulously complied with the Court’s hold-separate order. TEGNA continues to operate independently, and Nexstar has no involvement in TEGNA’s retransmission consent negotiations, content decisions, staffing or other day-to-day operations,” Nexstar spokesperson Gary Weitman said. “Nexstar’s executives’ service on TEGNA’s Board is consistent with the Court’s order and is critical to ensuring that Nexstar can continue to satisfy its financial reporting obligations while the hold-separate requirements are in place.”
In court filings and declarations, Nexstar has argued that the injunction bars its employees from serving as TEGNA officers but does not expressly prohibit them from serving as directors. The company also maintains that board representation is necessary to oversee debt agreements, reporting to federal finance regulators and other activities permitted by the order.
Nexstar proposed that its executives recuse themselves from matters outside those limited areas. The plaintiffs rejected that approach, arguing the company has not explained how recusals would work or provided sufficient information about the board’s oversight of TEGNA management.
The filing says the board has received updates from TEGNA executives and approved a revised budget based on a forecast prepared by the company’s finance staff. The plaintiffs said Nexstar has not disclosed what information board members reviewed before approving the change.
The injunction issued in April was part of an ongoing antitrust case filed by Bonta, other states attorney generals and DIRECTV arguing Nexstar’s $6.2 billion acquisition of TEGNA violated federal antitrust laws.
Attorneys for the U.S. Department of Justice’s antitrust division previously cleared the acquisition, and the merger received final approvals from the Federal Communications Commission (FCC) one day after the lawsuit was filed in court.
The plaintiffs contend that the merger concentrates too much power with a single broadcaster in more than 30 markets where TEGNA and Nexstar currently own or operate licensed TV stations. DIRECTV further warns that the combination will allow Nexstar to exert more leverage to negotiate higher fees for its network-affiliated channels and cable network NewsNation, which will require pay TV consumers to shell out more money for access to those and other channels.
Nexstar says its acquisition was above board, securing all sign-offs from the necessary three-letter federal agencies. It says the combination is meant to help the broadcast sector better compete against deep-pocketed technology companies and their streaming services, which have siphoned off live television broadcast rights to sports and other premium events and built out an advertising business that threatens the survival of the local television industry.
More Stories
- TEGNA hires Patrick Paolini to serve as CEO while legal battle over Nexstar deal continues
- TEGNA names Scott Gill as VP of Technology & Operation
- TEGNA appoints four more executives to senior-level roles
- Parties in Nexstar-TEGNA merger lawsuit propose July 2027 trial date
- State AGs say appeals court should uphold Nexstar-TEGNA injunction
