Key Highlights
- A multi-state coalition led by California and New York filed antitrust litigation to halt Nexstar’s $6.2 billion Tegna purchase
- The merged entity would control 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 independent legal action, citing concerns about leverage for increased transmission fees
- Nexstar plans to issue investment-grade bonds within days to finance the acquisition
An eight-state coalition initiated antitrust proceedings on Wednesday aimed at stopping 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 coalition—comprising California, Colorado, New York, and five additional states—contends the transaction would generate excessive market consolidation in regional television broadcasting. California’s top law enforcement official, Rob Bonta, emphasized that consolidating ownership diminishes diversity in local news reporting.
Nexstar currently holds the position as America’s premier local television station operator. Tegna maintains a top-five ranking, controlling or managing 64 broadcast facilities.
Current federal regulations restrict any individual corporation’s market penetration to 39% of American television households. The proposed Nexstar-Tegna combination would command 60% of the market, necessitating regulatory modifications for completion.
FCC Chairman Brendan Carr has voiced his endorsement of the transaction and pledged to advocate for its approval. Former President Trump has similarly championed 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.”
State prosecutors contend the consolidation would elevate subscription costs for cable and satellite television customers. They further maintain it would compromise the caliber of regional news programming.
New York’s Attorney General Letitia James stated she is pursuing an injunction applicable to all 44 jurisdictions where both corporations maintain broadcast operations. She anticipated additional states would participate in the litigation irrespective of political orientation.
California’s Bonta highlighted that Nexstar has not proposed divesting any stations to address competitive concerns.
DirecTV Launches Independent Legal Challenge
DirecTV, serving over 8 million pay-television customers, submitted separate litigation in federal court in Sacramento. The satellite broadcasting company asserts Nexstar would leverage its enhanced market position to escalate the fees charged to distributors for station carriage.
“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.
Both Nexstar and Tegna declined to provide immediate commentary on the legal proceedings.
The Justice Department’s antitrust division is conducting its own examination of the transaction. A DOJ representative did not respond to inquiries regarding the current status of that assessment.
Financing Plans Advance Despite Legal Obstacles
Notwithstanding the regulatory challenges, Nexstar is proceeding with transaction financing arrangements. Sources familiar with the situation indicate the corporation intends to access the investment-grade bond marketplace within the coming week.
Bank of America has communicated to market participants that Nexstar will secure a secondary investment-grade assessment from Fitch, enabling the high-grade bond issuance to advance. Nexstar is simultaneously evaluating high-yield unsecured notes as a component of the comprehensive financing structure.
The debt arrangement is designed to refinance $5.73 billion underwritten by Bank of America, JPMorgan Chase, and Goldman Sachs. Wednesday marked the deadline for a $2.75 billion leveraged loan component connected to the transaction.
Nexstar maintains below-investment-grade issuer classifications from both S&P and Moody’s, though its secured obligations carry a BBB- designation from S&P—representing the minimum investment-grade threshold. The corporation requires a secondary high-grade rating on secured instruments to execute the investment-grade bond strategy.
Nexstar reached agreement last August to acquire Tegna in the $6.2 billion transaction. NXST stock declined 4.73% following disclosure of the legal challenge.
