Nexstar has filed a wide-ranging appeal of a federal court ruling in California blocking it from integrating its operations with Tegna that argues the injunction is costing it “unrecoverable lost operational efficiencies exceeding tens of millions of dollars, a number growing every day.”
The filing with the United States Court Of Appeals For The Ninth Circuit, also argued that the injunction issued in April by the U.S. District Court for the Eastern District of California is much too broad and should be either reversed or limited in its scope.
Nexstar had raised similar arguments about severe financial harm in April in response to an antitrust case filed against it by multiple state attorneys general and DirecTV in the Eastern District of California.
In that case, DirecTV and the AGs had asked the court for an injunction that would prevent Nexstar from going ahead with the merger even though the deal had been closed and the FCC and the Department of Justice had approved the merger.
In its appeal to the Ninth Circuit filed on May 20, Nexstar stressed that the “injunction is inflicting ongoing and severe harm on Nexstar and the assets of former Tegna. As Nexstar’s COO explained, because the injunction requires the companies to `maintain artificial operational separation despite common ownership,’ they are unable to execute fully `key business functions such as advertising sales, management, local news production, distribution, and business strategy.’ That `reduce[s] operational efficiency and limit[s] Nexstar’s (and a separate Tegna’s) ability to compete effectively.’ Nexstar has already suffered unrecoverable lost operational efficiencies exceeding tens of millions of dollars, a number growing every day.” Nexstar also complained that the injunction is preventing from `implementing technological improvements for former Tegna stations’ could make the stations more competitive against streaming and digital platforms.
“For instance, Nexstar will be delayed in implementing the ATSC 3.0 standard, which provides for a more efficient use of spectrum,” the appeal stated. “That standard would enable Nexstar to provide additional services to consumers and businesses, including additional content, interactive television, signal encryption, and data transmission services for former Tegna stations.”
The injunction also makes it impossible to undertake “critically needed cost reductions or indeed making any changes to its business that might be needed to survive” and it “risks the loss of key employees, including former Tegna employees who are uncertain about the company’s structure and future.”
“Since issuance of the injunction, the harms Nexstar described to the district court are now occurring,” the appeal argued. “All these harms injure not just Nexstar and the Tegna assets the district court sought to protect, but also the local news Nexstar creates and disseminates for free to the public. Nexstar thus seeks urgent relief from this Court.”
Nexstar also argued that a “district court lacks authority to issue injunctive relief broader than necessary to remedy the harms alleged by the specific plaintiffs before the court, The preliminary injunction here defies that bedrock principle. Plaintiffs challenge contract negotiations and local-news production in a fraction of the country’s localities—yet the district court froze integration of virtually all of Defendants’ nationwide businesses, reaching stations, operations, and corporate functions that have nothing to do with Plaintiffs’ alleged harms. This Court should narrow the preliminary injunction to match the law and what Plaintiffs actually allege.”
“Plaintiffs fell far short of their burden for the extraordinary relief of a preliminary injunction of any kind, let alone one this sweeping,” Nexstar added. “Defendants are eager for discovery and trial on the merits, where the full evidentiary record will defeat Plaintiffs’ claims. But Defendants cannot wait for trial to challenge the scope of the injunction. With each passing day, the injunction’s unnecessary breadth inflicts unrecoverable harm. Worse still, it degrades the very assets it purports to protect. This appeal seeks urgent, targeted relief: narrowing the injunction to match the harms Plaintiffs argued below.”
