By David Shepardson
WASHINGTON, March 27 (Reuters) – A U.S. judge late on Friday ordered Nexstar to temporarily keep Tegna’s assets separate pending a review of whether the broadcast station owner’s $3.54 billion acquisition of its rival Tegna violates federal antitrust laws.
The companies quickly closed the deal after the Justice Department and Federal Communications Commission approved the deal on March 19.
U.S. District Judge Troy Nunley in Sacramento, California issued the order in response to a federal antitrust lawsuit filed by DirecTV, which argued it would irreparably drive up consumer costs, reduce local competition, shutter local newsrooms and increase both the frequency and duration of blackouts of key local sports teams.
Nexstar and DirecTV did not immediately respond to requests for comment. Eight states led by California and New York have also sought a temporary restraining order to stop the merger.
The states argue that the deal, which creates the largest broadcast station group in the U.S. reaching 80% of American households, would “put more broadcast programming in the hands of fewer people, cut local jobs, increase cable bills, and significantly impact the delivery of news and other media content to Americans nationwide.”
Nunley said DirecTV established “the proposed merger is presumed likely to violate antitrust laws based on the combined firm market share alone.”
DirecTV argues the merger creates a massive concentration of market power and enables Nexstar to raise prices and reduce the amount of local news.
The broadcast stations sell pay-TV providers like DirecTV rights to retransmit their content. Increases in retransmission fees result in higher prices for TV subscribers and DirecTV argues the deal will let it increase license fees further.
Nunley said Nexstar and Tegna “do not contest this merger will increase Nexstar’s bargaining leverage to extract higher fees.” The judge ordered Nexstar and Tegna to appear at an April 7 hearing to determine if a preliminary injunction should be issued.
Nunley’s order says Tegna must operate as a separate and distinct, independently managed business unit and must be maintained as an economically viable and active competitor.
Tegna must have separate management and Nexstar must prevent sharing of competitively sensitive information, including any information related to retransmission fee negotiations, among other restrictions.
(Reporting by David Shepardson; Editing by William Mallard and Lincoln Feast.)
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