Nexstar Media Group founder and CEO Perry Sook said his company is open to settling an antitrust lawsuit brought by DIRECTV and numerous state attorneys general over its acquisition of peer broadcaster TEGNA.
During a conference call with investors following Nexstar’s second quarter (Q2) earnings on Thursday, Sook said Nexstar and TEGNA face fewer business and legal pressures compared to other companies like Paramount, whose acquisitions remain in limbo, after the U.S. Department of Justice (DOJ) and the Federal Communications Commission (FCC) allowed their acquisition to move forward in March.
Nexstar and TEGNA are legally required, with few exceptions, to maintain separate operations while the antitrust case continues. The case was filed one day before the DOJ and the FCC allowed Nexstar to move forward on the transaction, which closed on paper hours after those unconditional blessings were delivered.
“If we can settle the litigation prior to going to trial next year, that has a benefit to us,” Sook noted on Thursday. “But we’re not necessarily under the same pressures that other people are in terms of drop-dead dates or ticking fees or whatever, because we’ve already closed on the acquisition.”
The “ticking fees” mentioned by Sook likely referenced Paramount’s agreement to pay shareholders of Warner Bros Discovery (WBD) a missed deadline fee if its deal did not close by the end of September. The payment is due every three months that the deal remains pending beyond that time. A trial in a separate but similar antitrust case against Paramount brought by some of the same opponents to Nexstar’s merger with TEGNA is slated for next year.
It wasn’t clear what settlement Nexstar has proposed or could propose to end litigation regarding its ownership of TEGNA. The broadcaster already offered to divest a handful of low-rated, independent stations in smaller markets as a condition of closing on the deal.
When asked by The Desk in May if his office was willing to make any concessions, California Attorney General Rob Bonta reaffirmed his commitment to blocking the deal.
“What we’re looking for is a block of the merger — that’s what we’ve asked for,” Bonta said. “It’s already permissively unlawful, and that’s why it’s been blocked through a preliminary injunction…Nexstar and TEGNA are both appealing the order; I do not think they will prevail based on the facts and the law, but it is their right to try.”
Separately, Sook addressed the FCC’s decision Thursday to eliminate the national television ownership cap, a move he praised but said would not materially change Nexstar’s legal defense.
The repeal “will remove a certain level of uncertainty in future M&A,” Sook said, adding that he believes the FCC is on “very firm legal footing.”
But he said the decision would have only “marginal benefit” in the Tegna litigation because the lawsuit is focused more on antitrust claims than ownership limits.
“It makes the unknown known from a regulatory perspective, but I don’t know that it will have a ton of effect as we go through our process,” Sook said. “It’s more about antitrust than the national ownership cap.”
Sook said the new regulatory approach could still create uncertainty for broadcasters because future transactions will require case-by-case reviews of market impact and consolidation.
“This new second layer of approval is something that I think all industry is going to have to grapple with,” he said.
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