DOJ Settlement From Tribune Deal Unlikely to Affect Nexstar/Tegna
A 2020 settlement with DOJ connected to the Nexstar/Tribune deal is unlikely to have much effect on the outcome of Nexstar’s proposed $6.2 billion purchase of Tegna, broadcast and antitrust attorneys told us.
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Though Nexstar agreed as part of that settlement not to require 11 stations that it divested to Tegna to secure approval of the Tribune deal, DOJ has discretion on whether to enforce the terms, attorneys said. If antitrust regulators aim to approve a deal, going around such a settlement could require judicial sign-off, but it likely wouldn’t be more than “a speed bump,” said Bona Law antitrust attorney Steven Cernak in an interview. “I think it's something to be overcome, but it certainly can be.”
A collection of state broadband and cable associations raised the settlement as a possible barrier to the Tegna transaction in their petition to deny last week. “Nexstar now seeks to reacquire from Tegna 11 stations across eight markets that the DOJ required it to divest as part of the Tribune transaction,” the groups said. “The fact that these reacquisitions would violate the clear terms of DOJ’s settlement with Nexstar is yet another reason why the proposed Transaction is not in the public interest and must be denied.” The stations divested to Tegna included WTIC-TV (Fox) Hartford, Connecticut; WATN-TV (ABC) Memphis; and WPMT (Fox) York, Pennsylvania.
Nexstar didn’t comment.
The 2020 settlement and divestiture requirements were aimed at preventing Nexstar from owning multiple top-four stations in the same market, said the state groups' petition to deny. The Nexstar/Tegna deal would make that the case in 10 markets. The FCC’s former prohibition on top-four combinations was rejected by the 8th U.S. Circuit Court of Appeals last year (see 2507230063).
The DOJ settlement, which was filed in the U.S. District Court for the District of Columbia, said Nexstar “may not reacquire any part of the Divestiture Assets, unless approved by the United States in its sole discretion,” for 10 years. Despite that language, broadcast and antitrust attorneys told us it isn’t likely to matter materially in DOJ approval of Nexstar/Tegna. If antitrust regulators take a dim view of Nexstar’s arguments that broadcasters compete with tech companies for local advertising dollars, they could invoke the settlement among their justifications for rejecting the deal, attorneys said, but if regulators agree with Nexstar, they would likely work around the settlement. If DOJ and Nexstar both agree on changing the terms of the settlement, it can be changed, they said, adding that even if judicial sign-off is necessary, courts are likely to agree to changes backed by DOJ.
However, it remains unclear how DOJ will respond to the Nexstar/Tegna deal, attorneys said. Antitrust attorneys have told us that the Trump administration’s priorities in merger reviews remain opaque but that the current DOJ seems more open to reaching settlements than previous iterations (see 2511040059). Many of the same staffers that oversaw the Nexstar/Tribune deal are likely still there, Cernak noted. The department requested more information from the companies in October. Opposition filings to petitions to deny Nexstar/Tegna are due at the FCC Jan. 15.