Nexstar weighed in for the first time on a judge’s order that halted its merger with Tegna, warning the court that it will have difficulty fully complying because certain aspects of the closed transaction “cannot be reversed.”
U.S. District Judge Troy Nunley granted a temporary restraining order to DirecTV on Friday, ruling that it was likely to succeed on the merits of its antitrust claims against the merger. The judge put a 14-day freeze on the merger and set a hearing for April 7 to consider a preliminary injunction.
In a filing on Tuesday, Nexstar’s legal team wrote that the restraining order “creates immediate operational harm to Tegna and Nexstar, regulatory conflicts, and a governance vacuum.”
They wrote, “Upon closing, Nexstar and Tegna took many typical steps that may not have been
apparent to the Court when it issued its TRO. 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.”
Read Nexstar’s filing responding to judge’s order.
The merger will create a broadcast giant with 259 stations reaching about 80% of the country.
DirecTV filed an antitrust lawsuit to block the merger on March 18. The next day, the FCC gave the greenlight to the transaction, and the Justice Department did not seek to challenge it. Shortly after that, Nexstar announced that it had closed the deal.
In their filing, Nexstar cited ongoing “debt agreement reporting obligations that require the inclusion of Tegna’s financial information into Nexstar’s reports from the date of closing,” warning that they otherwise would be in breach of securities laws and Securities and Exchange Commission rules.
Nexstar also noted that, with the deal closed, they face the operational confusion of carrying out contract obligations, as Tegna’s retransmission consent agreements are now governed by Nexstar’s terms “to which no former Tegna personnel are privy.” Nexstar also cited confusion with distribution agreements set to expire in the next half year, as well as their commitments to the FCC to expand news content of the Tegna stations. They pointed to plans to provide those stations access to Nexstar’s D.C. bureau to create programming ahead of the midterm elections.
As part of their filing, Nexstar proposed that the combined company be allowed to service its debt obligations, “as well as completion of the required post- closing security perfection process and avoidance of default under Nexstar’s debt instruments.”
Among other things, Nexstar also asked the judge to allow it to “take reasonable actions” to maintain Tegna’s day-to-day operations, and to allow the continued administration of existing retransmission consent agreements. The company also wants Nexstar to be allowed to appoint Tegna officers to keep the entity going. Those would include “setting thresholds for contract approval, expenditure authorization, and other financial limits.”
Nexstar also warned that “additional proposals and clarifications may be required in the coming days to forestall further material harm associated with the TRO.”
DirecTV said that Nexstar’s filing “raises numerous issues for the first time.” DirecTV said that it plans to file a response on Thursday.
