SACRAMENTO—Nexstar has vigorously responded to a motion by eight states seeking a temporary restraining order (TRO) to stop its $6.2 billion merger with Tegna by arguing that a TRO would “irreparably harm Nexstar.”
“A temporary restraining order (TRO) preventing integration would irreparably harm Nexstar and others, halt the benefits of expanded local programming for millions, disrupt a fully approved and closed deal, jeopardize Nexstar’s business by creating confusion in the market, and impose in losses while creating a direct conflict with a lawful FCC Order,” the motion argued. “The States cite to no court that has issued a TRO on a consummated deal where, as here, two expert federal agencies have approved it. The Court should deny this thirteenth-hour request.”
Nexstar made the filing in the United States District Court Eastern District Of California Sacramento Division where eight states filed the antitrust lawsuit shortly after the Federal Communications Commission approved the deal and Nexstar announced the deal had been closed.
Article continues belowThe lawsuit is one of at least three cases in federal courts seeking to block the merger.
In the California filing, Nexstar focused on several other key arguments including: the plaintiffs cannot meet the high standard for a temporary restraining order; the plaintiffs will not suffer immediate and irreparable harm; plaintiffs are unlikely to succeed on the merits; and a temporary restraining order would harm the public interest because it would “create conflicts of law”, deprive public benefits to the community and undermine Congressional intent. The filing also argued that the plaintiffs unduly delayed seeking relief and that the plaintiffs must post a bond for a temporary restraining order.
In the filing, Nexstar was particularly critical of the states, noted that “[t]he Plaintiff States worked directly with the DOJ in its review of the transaction yet raised no substantive concerns with Defendants until filing their Complaint. Now the States ask this Court to upend—on an expedited basis without adequate review—the well-considered decisions of two expert agencies. The FCC concluded the transaction serves the public interest by enabling expanded local news and information.”
The motion also emphatically rebutted the contention made by the states in their antitrust lawsuit that “the future Nexstar could charge more to cable and satellite companies for a license to retransmit local television signals,” which in turn would raise the costs of video programming.
“The States seek an `extraordinary remedy’ reserved for rare situations involving imminent, irreparable harm,” Nexstar said. “The States cannot support their sweeping request of the Court with their vague, speculative allegations of possible future financial injury. No imminent, irreparable harm exists. The States’ main theory is that Nexstar will raise retransmission fees at some point in the future. But, as the States acknowledge, any change in retransmission fees for expiring agreements is barred until after November 30, 2026 for parties that accept that extension. That alone defeats any claim of imminence. The FCC Order maintains the status quo, and many other agreements not covered directly by the FCC Order will not expire for years.”
The filing also contended that “their second claim of harm, that the transaction will hurt local journalism, fares no better. Again, among other reasons, the FCC Order commits Nexstar to expand local journalism and programming, just as it has done after prior deals. The FCC has committed Nexstar to divest six stations, including in Colorado, Connecticut, and Virginia, to further allay such concerns. At a minimum, those three States should dismiss their claims to preserve judicial resources.”
Nexstar repeated arguments that existing ownership caps are obsolete in the current media landscape where they compete against giant tech companies and contended that the TRO would delay the public benefits of the merger, which would allow Nexstar to invest more money in local journalism.
In addition, the “TRO would `impose a significant burden on Nexstar,” the filing noted. “Nexstar will suffer irreparable operational, financial, and competitive harm if forced to hold Tegna separate. A hold-separate order would prevent Nexstar from effectuating plans designed to result in cost savings and efficiencies, including systems integration, policy standardization, and retention of key employees. A delay will also impede coordination on key business functions, such as advertising sales, pricing, inventory management, and contract negotiations. Lost operational efficiencies alone have been valued at approximately and cannot be recaptured. A hold-separate requirement would also create uncertainty regarding the company’s operations and strategic direction, impairing Nexstar’s ability to preserve and grow key relationships and compete effectively. That uncertainty also creates substantial risk of attrition among key personnel, especially high performers. That uncertainty carries additional financial consequences—financing for the deal was based on operational and revenue synergies that, if delayed, could materially degrade Nexstar’s standing in financial markets. Finally, a TRO would force Nexstar not to implement its commitments under the FCC Order, putting it at risk of violating the FCC Order.”
