A federal court judge in California has issued a temporary restraining order that halts the merger between Nexstar and Tegna, the owners of KDVR Fox 31 and KUSA 9News in Denver.
The decision in the case filed by DirecTV halts the controversial $6.2 billion acquisition of Tegna by Nexstar Media Group, the two largest owners of local television stations in the country.
The deal would give Nexstar ownership of 228 stations in the U.S., reaching 80% of the television households.
In his ruling, U.S. District Court Judge Troy L. Nunley ordered Nexstar and Tegna to stop all actions of consolidation, continue operating as separate companies (including employees), and continue control of all retransmission fees.
Attorneys general in eight states, including Colorado, also filed request for a temporary restraining order asking the same judge to keep the deal from moving forward. That case has not been ruled on.
In its request for the temporary restraining order, DirecTV said if the deal were to move forward “Nexstar has a ‘Consolidation Playbook’ that describes acquisitions as a way to gain “scale” and “leverage,” with the ultimate aim of raising prices.”
DirecTV is a satellite TV service that pays companies like Tegna and Nexstar retransmission fees to rebroadcast affiliates including ABC, CBS and NBC. The lawsuit claims retransmission fees have increased 2,000% since 2010 and predicted consolidating stations would lead to more price hikes.
The lawsuit also cites concerns about local news coverage, saying that in such consolidations, “it is common practice for both stations to have a single news director, share news talent and journalist teams, operate a single news website, and ‘simulcast the same programming.”
In order to approve the merger, the FCC had to waive its ownership rule, relaxing the number of stations a single company can own.
Late last year, Nexstar asked the FCC to vote to eliminate the rule limiting broadcast companies to controlling no more than 39% of the television market, with CEO Perry Sook saying “current television ownership regulations are outdated and do not reflect the competitive media landscape as it has evolved over the past 25-plus years.”
The FCC agency chose to waive the rule instead.
The DirecTV complaint says the merger was approved by the Federal Communications Commission and the Department of Justice on March 19, without “a full, public Commission vote.”
They also argued that the deal would allow Nexstar to “absorb and eliminate the companies’ head-to-head competition in 31 overlap markets.”
Denver is one of those markets.
The next hearing in the case is scheduled for April 7.