Key Takeaways
- A multi-state coalition led by California and New York launched an antitrust legal challenge against Nexstar’s $6.2 billion Tegna purchase
- The merged entity would control 60% of American TV households, significantly exceeding the 39% statutory limit
- FCC leadership under Brendan Carr and former President Trump have expressed support for the transaction
- DirecTV initiated separate legal proceedings, expressing concerns about inflated distribution costs
- The company plans to launch an investment-grade bond offering within days to secure acquisition financing
A group of eight state attorneys general launched antitrust litigation on Wednesday aimed at preventing Nexstar Media Group’s proposed $6.2 billion acquisition of Tegna. The legal action was initiated in Sacramento’s federal courthouse.
Nexstar Media Group, Inc., NXST
The coalition—featuring California, Colorado, and New York among others—contends the transaction would generate excessive market dominance in regional broadcasting. California’s top legal officer, Rob Bonta, emphasized that consolidation diminishes the diversity of perspectives in community journalism.
Nexstar currently holds the position as America’s dominant local television broadcaster. Tegna occupies a spot among the top five operators, managing 64 broadcast facilities across the nation.
Regulatory statutes limit any individual corporation’s audience penetration to 39% of American television households. The proposed Nexstar-Tegna combination would command 60% market reach, necessitating regulatory modifications for completion.
FCC Chairman Brendan Carr has voiced endorsement for the transaction and committed to advocating for its authorization. Former President Trump has similarly expressed backing for the consolidation, posting on Truth Social that an enlarged Nexstar would provide a counterweight to what he characterized as biased mainstream media networks.
The states contend the merger would drive up subscription costs for cable and satellite television customers. They further maintain it would diminish the caliber of regional news programming.
New York’s Attorney General Letitia James stated she’s pursuing an injunction applicable across all 44 states where both broadcasters maintain operations. She indicated expectation that additional states will participate in the litigation across party lines.
California’s Bonta highlighted that Nexstar hasn’t proposed divesting any broadcast properties to address competitive concerns.
DirecTV Launches Separate Legal Action
DirecTV, serving over 8 million pay-television customers, submitted its own complaint in Sacramento’s federal district court. The satellite television distributor alleges Nexstar would leverage its enhanced market position to inflate the fees charged to carriers for broadcasting rights.
“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.
Neither Nexstar nor Tegna provided immediate statements regarding the litigation.
The Justice Department’s competition enforcement division continues its examination of the proposed transaction. A DOJ representative declined to comment on the status of the ongoing assessment.
Debt Financing Advances Despite Legal Obstacles
Notwithstanding the mounting legal challenges, Nexstar continues progressing with transaction funding arrangements. The broadcaster intends to access the investment-grade debt markets within the coming week, according to sources with knowledge of the situation.
Bank of America has communicated to market participants that Nexstar will secure a second investment-grade assessment from Fitch, enabling the high-grade bond issuance to proceed. The company is additionally considering high-yield unsecured debt instruments as components of the comprehensive financing structure.
The debt arrangement will refinance $5.73 billion in commitments underwritten by Bank of America, JPMorgan Chase, and Goldman Sachs. A closing deadline for a $2.75 billion leveraged loan component associated with the transaction was scheduled for Wednesday.
While Nexstar carries below-investment-grade corporate ratings from both S&P and Moody’s, its collateralized debt maintains a BBB- designation from S&P—representing the minimum investment-grade threshold. The broadcaster requires a second high-grade rating on secured obligations to execute the investment-grade bond strategy.
Nexstar announced its agreement to acquire Tegna last August in the $6.2 billion transaction. NXST stock declined 4.73% when news of the legal challenge emerged.
