A federal judge ordered a halt to Nexstar Media‘s $6.2 billion merger with local TV station group rival Tegna pending the court’s review of whether the tie-up violates antitrust laws. But Nexstar and Tegna say they can’t fully comply with the court’s temporary restraining order — claiming certain actions triggered by the deal closing cannot be undone.
In a filing Tuesday with the the U.S. District Court for the Eastern District of California, Nexstar and Tegna said they “hereby notify the Court that Defendants cannot implement certain provisions of the TRO as written because of actions already completed at closing and legal obligations that cannot be reversed.”
The temporary restraining order “creates immediate operational harm to Tegna and Nexstar, regulatory conflicts, and a governance vacuum,” the companies said. They outlined “clarifications and/or modifications” to the TRO and requested the court’s “guidance” on the matters.
Nexstar, already the biggest local TV station group in the U.S., announced on March 19 that the Tegna deal had closed following FCC and Justice Department approvals. The combined company would with 259 full-power TV stations (after divesting six stations) affiliated with networks including ABC, CBS, Fox and NBC, with reach across 80% of U.S. TV households.
But a day prior to that, DirecTV and eight state attorneys general had sued the companies, seeking to block the merger on antitrust grounds. On Friday, Judge Troy Nunley granted DirecTV’s request for a temporary restraining order — preventing Nexstar and Tegna from integrating their operations for now — ruling that the proposed merger “is presumed likely to violate antitrust laws based on the combined firm market share alone.” (Nunley, in a ruling Tuesday, ordered the lawsuits seeking to block Nexstar-Tegna filed by DirecTV and the states to be consolidated into a single action.)
Parts of Nexstar-Tegna’s filing responding to the TRO (available at this link) are redacted because portions of it “contain highly confidential business information that would harm Nexstar if publicly disclosed,” the companies said.
“Upon closing, Nexstar and Tegna took many typical steps that may not have been apparent to the Court when it issued its TRO,” the TV station group companies said. “It is particularly difficult to freeze integration that was already taking place, unlike a conventional hold-separate order. Complying with certain aspects of the TRO is impossible and could jeopardize Nexstar and the Tegna assets the Court seeks to preserve.”
For starters, the two companies claimed that the “administrative integration cannot be reversed without significant disruption to employee compensation.” In addition, Nexstar said it has “ongoing SEC and debt agreement reporting obligations that require the inclusion of Tegna’s financial information into Nexstar’s reports from the date of closing.”
Nexstar and Tegna also said that when their deal closed, Tegna’s retransmission agreements with pay-TV providers that also carry a Nexstar station “were contractually superseded by Nexstar agreements” with those companies. “This creates an internal contradiction: the TRO requires ‘separate management’ of
Tegna and that ‘Tegna personnel must maintain control over Tegna’s decision-making, including with respect to retransmission consent agreements and negotiations,’ yet those stations are now contractually governed by Nexstar’s agreements to which no former Tegna personnel are privy.”
“News of the TRO has already created confusion of its impact on the applicability of the Nexstar agreements to the Tegna stations, and Nexstar has begun to receive questions from distributors that will accelerate in volume and urgency as Nexstar approaches the end of the month billing cycle,” the companies said. “This creates operational chaos and accounting complexity that harms both Nexstar and Tegna.”
The companies also argued that the FCC has ordered Nexstar to take certain actions in connection with the approval of the transaction “which the TRO appears to contradict.” That includes Nexstar’s commitment to divest six stations; increase news programming in certain markets; and offer pay-TV providers with which Nexstar has an existing retransmission consent agreement (RCA) that expires after the Tegna closing date and before Nov. 30, 2026, an “extension of such RCA at the existing rates through November 30, 2026.”
Regarding staffing and headcount plans, the companies noted that between February 2024 and June 2024, Tegna publicly announced a $90 million-$100 million cost reduction initiative that would eliminate newsroom positions and support positions, consolidate station operations and management, and develop technologies like AI automation. Tegna made additional layoffs this year. However, under the order halting the Nexstar-Tegna merger, “it is unclear whether Tegna is required to operationalize its pre-Transaction reduction plans—or is prohibited from doing so—to maintain current staffing levels or even increase staffing levels to their 2025 peak, which could harm Tegna financially.”
These are Nexstar and Tegna’s nine proposed “clarifications and/or modifications” to the TRO :
- Debt and Cash Management: The TRO (paragraphs 1, 2, 4, 5, 9, and 10) shall allow
Nexstar to undertake ordinary-course cash management, intercompany transfers, and
debt service and repayment activities necessary to comply with Nexstar’s financing
obligations, including refinancing activities, security perfection, and guaranty obligations. This includes permitting intercompany loans and cash management
arrangements necessary for TEGNA to access working capital and for the combined
enterprise to service its debt obligations, as well as completion of the required postclosing
security perfection process and avoidance of default under Nexstar’s debt
instruments. - Corporate Governance and Operational Control: The TRO (paragraphs 1, 2, 3, 4,
and 5) shall allow Nexstar to take reasonable actions necessary to maintain TEGNA’s
day-to-day operations, including authorizing routine financial transactions such as
wire transfers for ordinary course payments, without violating the TRO’s prohibition
on “influence.” - Distribution Agreements and Retransmission: The TRO (paragraphs 1, 2, 3, 4, and
5) shall allow the continued administration of existing retransmission agreements, the
handling of payments, or necessary discussions relating to expiring contracts and
fulfilling the commitments under the FCC Order, and does not require unwinding or
invalidating contractual provisions recognized pre-closing that occurred at closing. - Corporate Governance Structure and Officer Authority: The TRO (paragraphs 1,
2, 4, and 6) shall allow Nexstar to take actions necessary to establish a functional
governance structure for TEGNA, including appointing or reappointing officers, to the
extent necessary to permit TEGNA to fulfill the TRO. It shall not be considered
“influence” for Nexstar to provide and implement Sarbanes-Oxley requirements,
including setting thresholds for contract approval, expenditure authorization, and other
financial limits similar to the interim operating covenants that applied to TEGNA’s
independent management of the business pre-closing. - Financing and Reporting Obligations: The TRO (paragraphs 1, 2, 3, 4, and 5) shall
allow Nexstar to take all reasonable steps to perform all obligations required under its
debt instruments, SEC reporting requirements, or refinancing transactions, including
coordination with TEGNA personnel as necessary. This includes permitting Nexstar to complete required SEC and debt agreement reporting for the combined company
within applicable deadlines, oversight by Nexstar management as to the accuracy of
the TEGNA financial statements, including compliance with internal controls and
procedures, in coordination with TEGNA personnel. - Management Authority and “Ordinary Course” Operations: The TRO
(paragraphs 1, 2, 4, and 6) shall allow Nexstar to take actions necessary to ensure
TEGNA’s continued operations, including officer appointments, contract
administration, and responses to third-party requests. - Corporate Governance and Officer Authority: The TRO (paragraphs 1, 2, 3, and 4)
shall allow Nexstar to appoint or reappoint TEGNA officers as necessary for TEGNA
to exercise independent decision-making authority for retransmission matters. - Employee Compensation and Workforce Decisions: The TRO (paragraphs 1, 2, 3,
4, and 5) shall allow TEGNA to the extent necessary to proceed with pre-existing,
ordinary-course compensation and workforce actions, including merit-based salary
adjustments and related payroll actions planned prior to the Transaction. - Interim Operating Covenants: To provide appropriate guardrails for TEGNA’s
operations over the coming days and limit its ability to make financial commitments
beyond the typical obligations of a subsidiary, the interim operating covenants set
forth in the Merger Agreement (Biard Decl. Ex. C) shall govern what actions TEGNA
may take without Nexstar’s input or approval.
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