Nexstar Closes Tegna Acquisition
Less than 24 hours after eight states and DirecTV filed suit to block a $6.2 billion Nexstar–Tegna merger, Nexstar closed on the acquisition following FCC and DOJ approvals.
The FCC Media Bureau approved the sale Thursday on the condition Nexstar sell certain local stations and by waiving certain ownership rules regarding the 39% national ownership cap and local market limits. The FCC said Nexstar has committed to divesting six stations across six different DMAs as well as commitments that go to affordability and localism.
Nexstar committed to divest KTVD (MyNetwork), Denver; WTHR (NBC), Indianapolis; WCTX (MyNetwork), New Haven, Connecticut; WAVY-TV (NBC), Portsmouth, Virginia; WUPL (MyNetwork), Slidell, Louisiana; and KNWA-TV (NBC), Rogers, Arkansas, “no later than two years” following the Tegna closing date, provided that a waiver of the local TV ownership rule remains necessary under the Commission’s rules. After the six divestitures, the consolidated company would own two stations in each of 17 DMAs instead of 23.
The Media Bureau found that special circumstances warrant the grant of waiver requests to permit Nexstar to own three full-power television stations in 21 of the 23 requested DMAs. “In particular, we find that such degree of common ownership better serves the public interest than strict application of the Local Television Ownership Rule in those DMAs where at least one of the stations in the proposed combination is weak relative to the stronger stations in the market,” the order said. “Even in those DMAs here where the weak, third station is the fifth–ranked station in the market, it is a distant fifth in terms of revenue and audience share, or other special circumstances exist to offset any competition concerns. Requiring divestiture of these weak stations to an independent buyer is not likely to enhance competition or preserve and promote increased local programming.”
The Bureau granted a waiver of the 39% audience cap, saying that by enabling Nexstar to achieve the “scale needed to sustain its operations, the transaction will deliver concrete public interest benefits with respect to localism.” The order gave the example of acquiring rights to sports and entertainment programming as well as increased access of Tegna stations to Nexstar’s D. C. news bureau.
After President Trump voiced his support of the deal, FCC Chair Brendan Carr telegraphed last month that approval was soon expected. And as Anna Gomez, the lone Democrat FCC Commissioner, feared, the approval happened on a bureau level instead of a full Commission vote.
“By approving this transaction, which allows Nexstar to own less than 15% of television stations, the FCC acts mindful of the media marketplace that exits today—not the one from decades past—and the agency ensures that these broadcasters have the resources to continue investing in their local news operations,” Carr said in a statement. “The D.C. Circuit has already determined that the relevant media ownership regulation is an agency rule, not a firm statutory limit, and the full Commission has reached the same determination on multiple occasions. Waiving that rule here is consistent with longstanding FCC authorities and doing so promotes the underlying purpose of the FCC’s media regulations by promoting competition, localism, and diversity. I want to thank the Media Bureau team for their great work on this matter.”
Gomez complained that the merger was approved behind closed doors with no transparency for consumers. “A transaction of this magnitude, which includes new and novel issues before the FCC, demands open deliberation before the full Commission, not a quiet sign-off meant to avoid public scrutiny. Given the increasingly alarming pace of reckless media consolidation, the American public deserves to know how and why this decision was made,” she said.
Nexstar CEO Perry Sook said the transaction is essential to sustaining strong journalism. Critics disagree, arguing that mergers result in a consolidation of resources for newsrooms.
“By bringing these two outstanding companies together, Nexstar will be a stronger, more dynamic enterprise—better positioned to deliver exceptional journalism and local programming with enhanced assets, capabilities, and talent,” Sook said. “We are grateful to President Trump, Chairman Carr, and the DOJ for recognizing the dynamic forces shaping the media landscape and enabling this transaction to move forward.”
DirecTV and the state attorneys general for California, Colorado, Connecticut, Illinois, New York, North Carolina, Oregon and Virginia aren’t the only ones pushing back against the merger. Public Knowledge said Thursday it would pursue every available avenue to challenge the FCC’s approval. However, it’s typically rare for courts to unwind a deal that has already closed.
“This outcome was inevitable once the president gave his marching orders to the FCC, which is still by law, if not in practice, an independent agency,” John Bergmayer, Legal Director at Public Knowledge, said in a statement. “Broadcast licensing decisions are supposed to be made on the merits, not ordered up by the president on social media and executed by a compliant chairman.”