Democratic States Seek to Block Massive TV Station Merger
Last week, I wrote about how state attorneys general were beginning to find their sea legs amid the effective closure of the federal Justice Department on issues of corporate power. The next day, the latest of what could prove to be a run of state-based cases was filed by Democratic attorneys general in California, Colorado, Connecticut, Illinois, New York, North Carolina, Oregon, and Virginia. It involves a $6.2 billion merger between two companies whose names aren’t familiar but whose product you likely consume every day.
Nexstar and Tegna own hundreds of local television stations across the country. Since the early days of TV, we have had a bifurcated system where the “Big Four” national networks (ABC, NBC, CBS, Fox) broadcast over the air, but local affiliate stations are mostly separately owned. Gradually, these stations have been bought up by conglomerates, despite a federal rule that restricts any one company from owning stations that reach 39 percent of all households. The Nexstar-Tegna merger would join together 265 stations in 44 states and raise that coverage to 80 percent.
A day after the AG lawsuit, the Federal Communications Commission issued a waiver to allow that 80 percent footprint, something Nexstar and other station groups committed millions in lobbying to get done, and the Justice Department closed its investigation of the merger. The FCC also approved the merger, conditioned on six divestitures in mostly minor markets, without even a vote from the full commission, affirmatively endorsing monopolization of local TV stations by partisan allies, under orders from the president.
This was always going to be, as California Attorney General Rob Bonta said to me earlier this month, a “race to the courthouse.” As soon as federal approval came through, Nexstar CEO Perry Sook announced that the merger was closed. Bonta and his AG colleagues then filed a motion for a temporary restraining order to prevent the companies from integrating and commingling assets, which would be harder to unwind. “This merger is illegal, plain and simple,” said Bonta in a statement. “I will not let these corporate behemoths merge without a fight.”
Nexstar has filed notice that it will oppose the restraining order, but that has not yet happened. The company has already initiated firings in the nation’s three largest cities, in preparation for the acquisition.
The FCC lifting the station ownership cap (at the president’s demand) will probably draw its own lawsuit, since its authority to do so is in question after Congress specifically set the cap in 2003. In fact, it’s precisely the kind of misinterpretation of a congressional mandate that the Supreme Court cited in eliminating agency deference in rulemaking. But for now, we have the state AG action, along with private litigation filed by DirecTV, challenging the merger. This signals that the states are building the capacity and will to fight corporate consolidation on multiple fronts.
THE MERGER WOULD BRING TOGETHER the leading station ownership group (Nexstar) with the number three group (Tegna). Nexstar was one of the companies that took Jimmy Kimmel off the air temporarily as part of a conservative witch hunt last year, and in the previous decade it engaged in 20 different acquisitions of stations and station groups, most notably Tribune Media and Media General.
By buying Tegna, Nexstar would gain control of multiple Big Four networks in 31 geographic markets; it would have both a Fox and ABC station in the Sacramento, California, area, for example, and the Fox and CBS station in San Diego. In some locations, the merged company would have a market share over 50 percent, including 77.9 percent in the Norfolk-Portsmouth-Newport News, Virginia, metro area.
The first consequence of this outcome would be the consolidation of local news. Historically, when Nexstar buys a second TV station in a market, it fires the entire staff and runs the same news content across the two stations. Many of these stations are unionized, and contract negotiations by small groups at an individual station will be much more difficult against a $6 billion company. But grabbing multiple stations in a metro area is really how Nexstar cuts costs; the company has called this part of “The Nexstar Consolidation Playbook” in calls with investors.
This not only reduces the quantity of local news but likely the quality. As we saw with the Kimmel situation, where Nexstar curried favor with a conservative administration to get its merger passed, the company has no problem biasing its product for political convenience. President Trump, clearly impressed by Nexstar’s actions with Kimmel, supported the merger to “knock out the fake news.”
But there’s another factor here. I have been on the record about the imminent death of cable television, and the uncertain implications for broadcast networks that could convert to streaming. In that instance, whether local stations would exist at all, or only serve a fraction of their current audience, is unclear. But even in the digital world, these local station assets are important, because of something called retransmission fees.
Today, cable and satellite outlets purchase Big Four content for their programming packages, as do digital sites YouTube TV, Hulu+, Fubo, and others. Station owners like Nexstar and Tegna charge for this content. According to DirecTV, those charges, known as retransmission fees, have gone up 2,000 percent on a per-subscriber basis since 2010. (The AG lawsuit says that retransmission fees doubled between 2018 and 2024.) Obviously, eliminating competition and holding large content shares in dozens of metro areas will cause rates to go up even further, with the costs passed through to customers. DirecTV’s lawsuit says explicitly that its subscription fees would go up after the merger.
The AG complaint has lots of quotes from Nexstar executives saying they will leverage demand for live sports, local news, and other must-see broadcast content to maximize fees. Nexstar Chief Financial Officer Lee Ann Gliha said on an earnings call last November that the company expects $135 million in net retransmission fee revenue from the merger.
Importantly, station ownership groups like Nexstar or Tegna negotiate retransmission fees on a national basis. Even if the merger changes nothing about concentration in a particular metro area, national bargaining will increase fees for that area, and subsequently consumer prices.
This could easily accelerate cord-cutting and the death of the entire cable TV system. (That’s why a lot of cable outlets, including conservative news channels like Newsmax, oppose the deal and are fighting it in court.) The big broadcast networks are preparing for this by establishing streaming outlets and simulcasting their programming there. Of course, if everything moved to streaming entirely, those apps would also be free to charge more.
Though that would leave a very uncertain future for local news, I’m not sure this is a brake on Nexstar’s greed. Politicians use local news to get their message out and local ad breaks to sell their campaign messages. Local news also still gets good ratings and has stature within communities; there would be an outcry if it went away. Must-carry requirements dating back to the 1960s required local stations to get carriage on cable; you could imagine a similar mandate for local stations on smart TVs or streaming bundles. That would almost certainly consolidate local news—multiple news broadcasts unconnected to a big network doesn’t make sense—and the company best positioned to capitalize on that, of course, is Nexstar.
CALIFORNIA ATTEMPTED TO SLOW DOWN the merger by reaching a timing agreement with Nexstar, whereby the company would agree not to close its acquisition of Tegna until the state completed its investigation. But Nexstar went ahead anyway, emailing Bonta’s office that “the relief sought in your Complaint is no longer available,” due to the closing of the transaction.
This really shows what state attorneys general are up against when dealing with at best inert, and at worst actively harmful, federal antitrust enforcement. States are in court now prosecuting the Live Nation monopolization case, after the Justice Department settled. Live Nation CEO Michael Rapino had to take the stand last week. (State settlement talks are ongoing at the behest of the judge.) States are reviewing Paramount’s acquisition of Warner Bros. and have sought outside counsel for a possible lawsuit, as Paramount dangles protection for local jobs in California. “There’s a lot happening at one time right now, and we can do it all … we’ll meet the moment,” Bonta said at a press conference last week.
Later today, state AGs will be in court again in a Tunney Act proceeding challenging the Justice Department’s clearance of a merger between Hewlett Packard Enterprise and Juniper Networks, which has been criticized for being the result of MAGA lobbyist corruption. An incredible document filed in the case earlier this month included on-the-record comments from depositions with lobbyists and Justice Department officials, showing that they went over the head of the Antitrust Division and directly to Pam Bondi’s office and muscled the merger through, while covering up the meetings after the fact. This strong-arm culture has made it into the traditional media, and even Trump is now asking his staff when cases will be settled.
It’s a full-on pay-to-play system in Washington, and the state AGs are the last line of defense. The Nexstar-Tegna deal will offer an early test as to whether they can weather a hostile federal government and an often skeptical judiciary and succeed. But just trying to challenge this case will build skills and fortify commitments for the next one.
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