SACRAMENTO—A sternly worded ruling from a federal judge in California has found that Nexstar violated a preliminary injunction pausing completion of its acquisition of Tegna. The judge also ordered the station group to remove its employees from Tegna’s board of directors.
“Defendants cannot convincingly argue that having Nexstar executives serve on Tegna’s Board complies with the preliminary injunction,” ruled Judge Troy Nunley in the United States District Court for the Eastern District of California. “Defendants’ hyper-technical reading that the Order does not contain a similar prohibition on Nexstar employees or officers serving as Tegna directors is entirely disingenuous — especially given that the Order refers to officers because that is how Nexstar worded its modification request. It is clearly the spirit of the preliminary injunction that Nexstar executives would be prohibited from serving as not just Tegna officers, but Tegna directors as well. It is shocking that Defendants think installing a Board of Directors comprised primarily of Nexstar executives would not create influence over Tegna management. This undermines Tegna as an independent entity and violates the preliminary injunction.”
Judge Nunley in the United States District Court for the Eastern District of California is presiding over an antitrust case brought against the $6.2 billion Nextstar/Tegna deal by by DirecTV, California, Colorado, Connecticut, Illinois, Indiana, Kansas, Massachusetts, New York, North Carolina, State of Oregon, Commonwealth of Pennsylvania, Vermont, and Virginia.
In the August 5 order, which became publicly available on August 6, Judge Nunley also required that Nexstar must reconstitute Tegna's board to exclude Nexstar employees. Within 10 days, Nexstar must also file a status report identifying its actions to ensure compliance with Judge Nunley’s preliminary injunction and within 7 days, Nexstar must comply with the plaintiffs’ outstanding discovery requests regarding compliance.
In the future, Nunley also ruled that Nexstar must provide monthly financial and other reports, as requested by plaintiffs to ensure compliance with the preliminary injunction and that within 14 days, Nexstar and plaintiffs must jointly file a stipulation and proposed order appointing a Special Master to oversee compliance with the preliminary injunction.
The Judge also admonished Nexstar for not notifying the court that it had appointed Nexstar executives to the board.
“Through the instant motion, the Court has learned for the first time that, on the very day the motion for temporary restraining order (“TRO”) was filed, three Nexstar officials were appointed to TEGNA’s Board,” the Judge complained. “Yet, Defendants never disclosed this material information to the Court — not in briefing on the TRO, not in their TRO compliance report, not in seeking modification of the TRO, not during the preliminary injunction hearing, nor in the months following the preliminary injunction. Defendants repeatedly failed to disclose material information to this Court, declined to seek Court guidance or relief, and then publicly declared that the Court had “approved” their actions.”
