Key Takeaways
- A multi-state coalition led by California and New York launched federal antitrust litigation to stop Nexstar’s $6.2 billion Tegna purchase
- The merger would give Nexstar access to 60% of American television households, significantly exceeding the statutory 39% threshold
- Both FCC Chairman Brendan Carr and former President Trump have expressed support for the transaction
- DirecTV launched separate litigation, claiming the enlarged entity would leverage market power to inflate distribution costs
- The broadcasting giant is preparing an investment-grade bond offering in the coming week to finance the acquisition
An eight-state alliance initiated antitrust proceedings on Wednesday seeking to prevent Nexstar Media Group’s proposed $6.2 billion acquisition of Tegna. The legal action was submitted to federal court in Sacramento.
Nexstar Media Group, Inc., NXST
The participating jurisdictions — encompassing California, Colorado, and New York — contend the transaction would generate excessive market dominance in local broadcasting markets. California’s top legal officer Rob Bonta emphasized that consolidation diminishes diversity in community journalism.
Nexstar currently holds the position as America’s dominant local television station owner. Tegna operates among the nation’s top five broadcasters, controlling or managing 64 television properties.
Federal regulations establish a 39% ceiling on any individual corporation’s penetration of U.S. television households. The proposed Nexstar-Tegna combination would command 60% market reach, necessitating regulatory modifications for approval.
FCC Chairman Brendan Carr has expressed his endorsement of the transaction and commitment to pursuing authorization. Former President Trump similarly voiced approval for the consolidation, stating on Truth Social that an expanded Nexstar would provide a counterweight to what he characterized as “the Fake News National TV Networks.”
The state coalition asserts the combination would elevate cable and satellite television costs for viewers. They additionally contend it would deteriorate the standard of community news programming.
New York Attorney General Letitia James indicated she’s pursuing an injunction applicable across all 44 jurisdictions where both organizations maintain broadcasting operations. She anticipates additional states joining the litigation across party lines.
California’s Bonta observed that Nexstar hasn’t proposed divesting any properties to address competitive issues.
DirecTV Launches Separate Legal Action
DirecTV, serving over 8 million pay-television customers, submitted independent litigation in federal court in Sacramento. The satellite distributor alleges Nexstar would exploit its enhanced market position to increase fees charged to carriers for broadcasting rights.
“Nexstar will black out stations or threaten to do so as means of coercing the multichannel video programming distributor to agree to its pricing demands,” DirecTV said in its filing.
Nexstar and Tegna have not provided immediate statements regarding the legal challenges.
The Justice Department’s antitrust unit is conducting its own examination of the transaction. A DOJ representative declined to comment on the investigation’s current status.
Financing Plans Progress Despite Legal Obstacles
Notwithstanding mounting legal challenges, Nexstar continues advancing its acquisition financing strategy. The corporation plans to access the investment-grade debt markets within the next seven days, according to sources with knowledge of the arrangements.
Bank of America has signaled to market participants that Nexstar will secure a second investment-grade assessment from Fitch, enabling the high-grade bond issuance to proceed. Nexstar is simultaneously evaluating high-yield unsecured notes as components of the comprehensive financing structure.
The debt arrangement is designed to replace $5.73 billion underwritten by Bank of America, JPMorgan Chase, and Goldman Sachs. A deadline for a $2.75 billion leveraged loan facility connected to the acquisition had been scheduled for Wednesday.
Nexstar maintains sub-investment-grade corporate ratings from S&P and Moody’s, though its secured obligations carry a BBB- designation from S&P — representing the minimum investment-grade threshold. The broadcaster requires a second high-grade assessment on secured debt to execute the investment-grade bond strategy.
Nexstar announced its agreement to acquire Tegna last August in the $6.2 billion transaction. NXST stock declined 4.73% following disclosure of the lawsuit.
