Key Takeaways
- A coalition of eight states launched legal action to halt Nexstar’s proposed $6.2 billion Tegna purchase on antitrust grounds
- The merger would give the combined entity access to 60% of American television households, far exceeding the statutory 39% threshold
- Despite the legal challenges, FCC Chairman Brendan Carr and President Trump have voiced support for the transaction
- Satellite provider DirecTV filed separate litigation, citing concerns about potential carriage fee increases
- The broadcasting company is preparing to issue investment-grade bonds within days to finance the acquisition
A group of eight state attorneys general initiated federal antitrust litigation on Wednesday aimed at preventing Nexstar Media Group from completing its proposed $6.2 billion acquisition of rival broadcaster Tegna. The complaint was lodged in Sacramento’s federal courthouse.
Nextar Media Group, Inc., NXST
The participating statesāwhich include California, Colorado, and New York among othersācontend that the transaction would result in excessive consolidation within regional television markets. California’s top law enforcement official, Rob Bonta, emphasized that reducing the number of independent media owners diminishes diversity in community journalism.
Nextar currently holds the position as America’s largest operator of local television stations. Tegna occupies a spot among the top five broadcasters, maintaining ownership or operational control of 64 stations nationwide.
Current federal regulations prohibit any single broadcasting company from reaching more than 39% of American television households. The proposed Nexstar-Tegna combination would extend to 60% of households, necessitating regulatory modifications for approval.
FCC Chairman Brendan Carr has publicly expressed his endorsement of the transaction and pledged to advocate for its clearance. President Trump has similarly voiced approval for the consolidation, stating on Truth Social that an enlarged Nexstar would provide a counterbalance to what he characterized as “the Fake News National TV Networks.”
The state coalition asserts that the combination would drive up subscription costs for cable and satellite television customers. Additionally, they maintain it would diminish the caliber of community news programming.
New York’s Attorney General Letitia James indicated she is pursuing a court order that would apply across all 44 states where both companies maintain broadcast operations. She expressed confidence that additional states would participate in the litigation irrespective of political alignment.
California’s Bonta highlighted that Nexstar has not proposed divesting any stations to address competitive concerns.
Satellite Provider Launches Parallel Legal Action
DirecTV, serving over 8 million pay-television customers, initiated its own federal lawsuit in Sacramento. The satellite television distributor argues that Nexstar would leverage its increased market power to impose higher distribution fees on carriers.
“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 stated in its court filing.
Both Nexstar and Tegna declined to provide immediate statements regarding the litigation.
The Department of Justice’s antitrust enforcement division is conducting its own examination of the proposed merger. A DOJ representative did not respond to inquiries about the current status of that investigation.
Financing Plans Advance Despite Legal Challenges
Notwithstanding the mounting legal obstacles, Nexstar continues progressing with transaction financing arrangements. Sources with knowledge of the situation indicate the company intends to access the investment-grade bond marketplace within the coming week.
Bank of America has signaled to market participants that Nexstar will obtain a second investment-grade credit assessment from Fitch, enabling the high-grade debt issuance to proceed. The broadcaster is also evaluating high-yield unsecured note offerings as part of the comprehensive financing strategy.
The debt arrangement will replace $5.73 billion in committed financing from Bank of America, JPMorgan Chase, and Goldman Sachs. A closing date for a $2.75 billion leveraged loan component connected to the transaction was scheduled for Wednesday.
While Nexstar maintains below-investment-grade corporate ratings from both S&P and Moody’s, its secured obligations carry a BBB- assessment from S&Pārepresenting the minimum threshold for investment-grade classification. The broadcaster requires a second high-grade rating on secured debt instruments to execute the investment-grade bond strategy.
Nextar reached an agreement last August to acquire Tegna in the $6.2 billion transaction. NXST shares declined 4.73% on the trading day when news of the lawsuit emerged.
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