(Bloomberg) — A group of state attorneys general are suing to block the $3.5 billion deal by Nexstar Media Group Inc. for rival Tegna Inc., which would create the largest operator of local broadcasters in the country.
In the lawsuit filed late Wednesday in federal court in Sacramento, California, a group of Democratic law enforcers from states including California, New York and Colorado, argue the deal would give the combined company too much control over television in dozens of markets around the US. The combination would impact the delivery of local news, raise cable prices, and lead to job cuts, they argue.
“This illegal merger threatens local news and could raise fees for consumers by combining hundreds of TV stations under the same owner,” said New York Attorney General Letitia James in a statement.
Attorneys general in Connecticut, Illinois, North Carolina, Oregon and Virginia also joined the lawsuit. Satellite television company DirecTV also filed its own lawsuit challenging the deal, saying it will lead to prolonged programming blackouts as the newly enlarged company fights with distributors over fees.
Nexstar and Tegna didn’t respond to requests for comment. The shares were down 3.1% and 1.1%, respectively, as of 1:15 p.m. New York time.
If the deal goes through, the combined companies would own 265 full-power TV stations, reaching 80% of US households, according to the states’ lawsuit. Federal law bars a local station owner from serving more than 39% of the country. Both Nexstar and Tegna operate stations affiliated with ABC, CBS, NBC and Fox. Nexstar also owns the CW network and NewsNation.
The deal requires approval from US telecom regulator, the Federal Communications Commission, and the Justice Department. The FCC would either have to grant the companies a waiver from the media ownership cap, or lift the cap altogether. President Donald Trump said in a social media post in February that he supports the deal, and FCC Chairman Brendan Carr seconded the president’s opinion.
In a statement, California Attorney General Rob Bonta expressed concern that Trump and Carr had already decided that the deal should be approved. Anna Gomez, the FCC’s lone Democratic member, said in a separate statement that “the FCC must not rubber stamp this unlawful merger behind closed doors.”
The White House, the FCC and the Justice Department didn’t immediately respond to requests for comment.
Since Trump took office, the FCC has decided to rethink the limits on how large station owners can become. And last July, an appeals court overturned the so-called “top four” rule, which bars a station owner from running two of the four top stations in a single market.
–With assistance from Kelcee Griffis.
(Updates with Dish lawsuit details, stock prices and FCC commissioner comments.)
