A group of state attorneys general has filed a lawsuit in federal court in Sacramento, California, to block Nexstar Media Group Inc.'s $3.5 billion acquisition of rival Tegna Inc., according to reports from Bloomberg. The lawsuit was filed late Wednesday by Democratic law enforcers from California, New York, and Colorado, along with attorneys general from Connecticut, Illinois, North Carolina, Oregon, and Virginia. The legal action aims to prevent the creation of what would become the largest operator of local broadcasters in the United States.
The states argue that the combined company would gain too much control over television in dozens of markets across the US, as reported by Bloomberg. The lawsuit claims the merger would impact local news delivery, raise cable prices, and lead to job cuts. New York Attorney General Letitia James stated that the deal threatens local news and could raise fees for consumers by combining hundreds of TV stations under the same owner. Satellite television company DirecTV has also filed its own lawsuit, citing concerns about prolonged programming blackouts as the newly enlarged company negotiates fees with distributors.
According to the states' lawsuit, if the deal proceeds, the combined companies would own 265 full-power TV stations, reaching 80% of US households, as reported by Bloomberg. This exceeds federal law that bars a local station owner from serving more than 39% of the country. Both Nexstar and Tegna operate stations affiliated with ABC, CBS, NBC, and Fox, with Nexstar also owning the CW network and NewsNation. The deal requires approval from the Federal Communications Commission and the Justice Department.
President Donald Trump has expressed support for the deal in a social media post in February, with FCC Chairman Brendan Carr seconding the president's opinion, according to Bloomberg. The FCC would need to grant the companies a waiver from the media ownership cap or lift the cap altogether. Since Trump took office, the FCC has decided to rethink limits on how large station owners can become, and last July, an appeals court overturned the so-called 'top four' rule that bars station owners from running two of the four top stations in a single market.
Shares of both companies declined following the lawsuit announcement, with Nexstar shares down 3.1% and Tegna shares down 1.1% as of 1:15 p.m. New York time, as reported by Bloomberg. California Attorney General Rob Bonta expressed concern that Trump and Carr had already decided the deal should be approved, while FCC Democratic member Anna Gomez stated the FCC must not rubber stamp the unlawful merger behind closed doors. The White House, the FCC and the Justice Department didn't immediately respond to requests for comment.
