Key Takeaways
- A coalition of eight states launched an antitrust legal challenge against Nexstar’s proposed $6.2 billion Tegna acquisition
- The merged entity would control approximately 60% of American television households, significantly exceeding the statutory 39% threshold
- Both FCC Chairman Brendan Carr and former President Trump have expressed support for the transaction
- Satellite provider DirecTV filed a companion lawsuit, expressing concerns about potential carriage fee increases
- The broadcasting giant is preparing to issue investment-grade bonds in the coming week to finance the transaction
On Wednesday, eight state attorneys general filed a federal antitrust complaint seeking to halt Nexstar Media Group’s proposed $6.2 billion acquisition of Tegna. The legal action was lodged in U.S. District Court in Sacramento.
Nextstar Media Group, Inc., NXST
The coalition—featuring California, Colorado, New York, and five additional states—contends the transaction would produce excessive market dominance in regional television broadcasting. California’s top legal official, Rob Bonta, emphasized that consolidation diminishes diversity in community journalism.
Nextstar currently holds the position as America’s largest operator of local television stations. Tegna maintains a top-five ranking, controlling or managing 64 broadcast facilities nationwide.
Current federal regulations limit individual companies to reaching no more than 39% of American television households. The proposed Nexstar-Tegna combination would expand that footprint to 60%, necessitating regulatory modifications for completion.
Federal Communications Commission Chairman Brendan Carr has voiced his endorsement of the transaction and pledged to advocate for its clearance. Former President Trump has similarly championed the consolidation, posting on Truth Social that an enlarged Nexstar would provide balance against what he characterized as biased national networks.
State prosecutors contend the combination would elevate subscription costs for cable and satellite television consumers. They additionally assert it would diminish the caliber of regional news programming.
New York’s Attorney General Letitia James announced she is pursuing an injunction applicable across all 44 states where both companies maintain broadcasting operations. She anticipates additional states will participate in the litigation across party lines.
California’s Bonta highlighted that Nexstar has declined to propose divesting any stations to mitigate competitive concerns.
Satellite Provider Launches Separate Legal Challenge
DirecTV, serving over 8 million pay-television customers, simultaneously filed its own complaint in Sacramento federal court. The distribution company alleges Nexstar would leverage its enhanced market position to inflate retransmission consent fees charged to carriers.
“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.
Both Nexstar and Tegna did not provide immediate responses to media inquiries.
The Department of Justice’s antitrust enforcement division continues its independent examination of the proposed merger. A DOJ representative declined to comment on the current status of that investigation.
Financing Plans Proceed Despite Opposition
Notwithstanding mounting legal challenges, Nexstar continues advancing its transaction financing strategy. The broadcaster intends to access investment-grade debt markets within the next week, according to sources with knowledge of the arrangements.
Bank of America has signaled to market participants that Nexstar will secure a second investment-grade credit assessment from Fitch Ratings, enabling the high-grade bond issuance to proceed. The company is simultaneously evaluating high-yield unsecured note offerings as components of its comprehensive financing structure.
The debt arrangement is designed to restructure $5.73 billion in bridge financing underwritten by Bank of America, JPMorgan Chase, and Goldman Sachs. Wednesday marked the submission deadline for a $2.75 billion leveraged loan component associated with the transaction.
While Nexstar carries sub-investment-grade corporate ratings from both S&P Global Ratings and Moody’s Investors Service, its secured obligations hold a BBB- designation from S&P—representing the minimum investment-grade threshold. The broadcaster requires a secondary high-grade rating on secured debt instruments to execute the investment-grade bond strategy.
Nextstar announced its agreement to acquire Tegna last August in the $6.2 billion transaction. NXST shares declined 4.73% on the trading session when news of the lawsuit emerged.
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