Nexstar and Tegna Clap Back at Merger Opponents, Question Their Standing

“Those who oppose the Transaction remain anchored in the past,” Nexstar and Tegna said. “The archaic constraints that bar local broadcasters from taking steps to achieve the scale necessary to compete in the current competitive environment threaten, rather than foster, localism.”

Newsmax and the MVPDs and public interest groups that filed petitions to deny the deal haven’t shown that the merger will affect them beyond speculation on generalized harms, Nexstar and Tegna argued. “Each of the Petitioners lacks standing, and the Commission should, at most, treat their pleadings as informal objections.” For example, Newsmax doesn’t own any FCC licenses or have any commercial agreements with the broadcasters, the filing said. “Newsmax fails to identify a single direct, non-speculative injury it would suffer from grant of the Applications.” In addition, EchoStar, DirecTV and MVPD interests “have not shown beyond mere speculation that they will suffer any injury as a result of the Transaction.”

In previous deals, the FCC has ruled that groups such as Free Press and the United Church of Christ's Media Justice Ministry don’t get standing from claiming that a given merger affects issues they work on, the filing said. Those groups and the Communications Workers of America have argued they have standing because individual members of the organizations live in markets affected by the deal, but the broadcasters countered that their submissions are flawed and that if any standing is granted, it should be only in individual markets involved.

In a filing in support of the deal, Sinclair said the petitioners “are wolves in sheep’s clothing.” The groups “lecture the Commission about competition and the importance of local journalism despite their complete lack of involvement in promoting, preserving, or expanding local news.” The FCC “should not simply ignore its requirements for demonstrating standing because the public interest groups fervently wish to play the role of nationwide transaction police,” Sinclair added.

Nexstar and Tegna said rejecting their deal would actually cause the job losses and decline in local news that opponents have said will result from approving the merger. The petitions to deny “ask the FCC to suspend reality and assume the broadcast marketplace of 1950, or even 2021, remains unchanged and that local broadcasting exists in a vacuum” without streaming, social media and digital ads, their filing said. “This utopia of local broadcasting no longer exists.” In the last year, video streaming climbed to 100% market penetration and became the primary way video is consumed, while broadcast TV viewership “plummeted to a new low of just 18.5 percent of total monthly television viewing,” Nexstar and Tegna said.

In a heavily redacted section, the filing appeared to say that Tegna was considering “dramatic options” to cut costs in line with shutting down some local news operations but paused those efforts because of Nexstar’s offer. “Continuing to artificially limit local broadcasters from achieving whatever scale necessary to even begin to compete with powerful, unregulated market participants is the real threat to localism.”

The broadcasters also pushed back on arguments that the deal will lead to less local news. The transaction “will afford Nexstar the ability to further streamline administrative functions and additional flexibility to identify ways to strengthen investment in local news production, digital distribution, and audience engagement.” The filing noted that Nexstar has increased local news hours by 12.5% across its stations since 2020, and Nexstar doesn’t provide “must run” stories or programming to its stations. “Nexstar’s local newsroom managers who live and work in the same communities as Nexstar station viewers have full decision-making autonomy about whether or not to utilize content” from the company’s other bureaus and stations, the filing said. "This practice will not change post-Transaction."

Waiving Cap Is the 'Only Hope'

The FCC should waive the national ownership cap and local station ownership limits, allowing the combined company to “better serve both the underlying purpose of the National Cap and the public interest,” Nexstar and Tegna said. “Growing pressures” from tech companies “and international media conglomerates like Disney and Comcast” require Nexstar and Tegna to combine operations, the filing said. “Doing so provides the only hope to achieve the scale needed to sustain operations.” The broadcasters have requested waivers to allow the new company to own more than two stations in 23 markets. Ad revenue in those markets is stagnant or falling, and in 21 of them, at least one Nexstar or Tegna station has an audience below the FCC’s 4% failing station threshold, they said.

Nexstar and Tegna also said the FCC should reject arguments that the 8th U.S. Circuit ruling that ended the agency’s top-four prohibition created a higher standard for such combinations. “When the court in Zimmer Radio v. FCC vacated the Top Four Prohibition, it did not raise the bar for demonstrating that a combination of two Top Four Stations would serve the public interest,” the filing said. “To maintain otherwise is absurd.”

In addition, assertions that the merger would harm the retransmission consent and spot advertising markets are speculative and raise antitrust issues that are outside FCC authority, Nexstar and Tegna said. “Requesting the FCC to import an antitrust standard misses the mark, because the FCC’s statutory mandate to grant license transfers that serve the ‘public interest’ is much broader than the antitrust authorities’ narrow focus on competition and monopoly power.”

The combined company won’t have outsize power over spot advertising because “digital local video advertising alternatives abound in every” designated market area, Nexstar and Tegna said. “These alternatives absolutely do and will continue to constrain Nexstar’s ability to compel above-market rates for local spots.”

The FCC isn’t required to maintain balance between MVPDs and broadcasters, the filing argued. The MVPD industry “is far more consolidated than broadcasting -- well over 90 percent of the MVPD market is controlled by the ten largest providers,” it said. MVPDs “are in no position to complain about being on the wrong side of the ‘leverage’ equation.” The agency also generally doesn’t block mergers over concerns about rising retrans rates, the filing added. “In no dispositive decision has the FCC denied a television assignment or transfer of control on the basis of retransmission consent-related concerns, including after-acquired clauses.”