A federal judge is being asked to clarify that Nexstar is prohibited from having its executives serve on the board of Tegna, as plaintiffs claim that it potentially violates an injunction that has put a pause on the merger of the two broadcast station groups.
A coalition of state attorneys general, as well as DirecTV, filed a motion Wednesday in federal court to clarify that the injunction “does not permit Nexstar to appoint its current or recent former employees, executives, consultants, or other personnel to Tegna’s Board.”
In April, U.S. District Judge Troy Nunley issued a preliminary injunction to halt the merger for the time being as the legal proceedings play out. But Nexstar already had closed the Tegna transaction, so the judge required that they keep their operations separate.
In their filing, the plaintiffs, which include the states of California and New York, cited the judge’s order that Tegna had to operate as a “separate and distinct, independently managed business unit from Nexstar,” and that Nexstar “must place and maintain internal controls and procedures to prevent the sharing of competitively sensitive information.”
In claiming a potential violation of the injunction, the plaintiffs pointed to the presence of Nexstar CEO Perry Sook and others on the board of Tegna.
“These Nexstar executives have already taken part in managing Tegna’s strategy: They have approved Tegna’s budget, which was developed from forecasts that surely contain Tegna’s competitively sensitive information and which would not have been shared with Nexstar is the two companies were independent competitors.” The plaintiffs also wrote that Sook has “openly touted” that Tegna operates as a “subsidiary of Nexstar,” which “in his view means that Tegna senior management must ‘report to the Board’ and can ‘have conversations’ with Nexstar executives.”
In response to the filing, Nexstar said in a statement that it “has scrupulously complied with the Court’s hold-separate order. Tegna continues to operate independently, and Nexstar has no involvement in Tegna’s retransmission consent negotiations, content decisions, staffing, or other day-to-day operations. Nexstar’s executives’ service on Tegna’s Board is consistent with the Court’s order and is critical to ensuring that Nexstar can continue to satisfy its financial reporting obligations while the hold-separate requirements are in place.”
Nexstar is appealing the preliminary injunction, but the Ninth Circuit has yet to set a date for oral argument.
The merger would give Nexstar nearly 260 stations covering 80% of the country, or the largest station group. The FCC signed off on the transaction on March 19, and the company announced the deal had closed shortly after that. The approval came less than a day after DirecTV and the state attorneys general each sued to block the transaction.
In their filing, plaintiffs argue that “antitrust law prohibits executives of one company from serving on the board of a competing company because doing so would enable a company to influence its competitor and access its confidential information — exactly what this Court’s preliminary injunction seeks to prevent.”
The plaintiffs also want to judge to require that Nexstar to submit regular reports on its compliance with the injunction, and that it responds to requests for what type of information Tegna’s board has reviewed, among other things.
