Opponents to Nexstar-Tegna merger warn of higher prices, loss of newsrooms if deal goes through

SACRAMENTO, Calif. (CN) — A federal judge in California on Tuesday pressed attorneys on consumer prices and the impact on local journalism as he considered whether to continue to block Nexstar’s takeover of Tegna.

U.S. Chief District Judge Troy Nunley late last month temporarily paused the merger of the media companies. It’s a move that’s affected a handful of similar cases about the merger, as Nunley consolidated the lawsuits. It also led to the request for a preliminary injunction, which would extend the existing block.

The judge made no decision Tuesday about that injunction request, instead taking it under submission.

A key component of the arguments was whether the merger would give Nexstar an outsized share of the market, which in turn would lead to higher prices for DIRECTV and similar services. Those costs would then fall onto consumers.

Representing DIRECTV, attorney Glenn Pomerantz argued consolidation of market share for the companies was a likely violation of the Clayton Act, which prohibits certain anti-competitive actions. In some areas, market share would exceed 50%.

History shows that as the percentage of market share rises, the likelihood of anti-competitiveness increases, Pomerantz said.

“Think about the numbers we have here,” he added, arguing his client surpassed a legal hurdle needed for a preliminary injunction. “I think we’re likely to show that.”

DIRECTV and several states involved in the suit also argued the merger would drive up prices and hurt local TV station newsrooms.

Nexstar argued the merger would lower prices — a point Pomerantz disputed. He said Nexstar has sent letters to DIRECTV stating the opposite.

“Basically, they’re trying to tell the court that bigger is better,” said attorney Laura Antonini, representing California and other states.

Arguing for Nexstar, attorney Alexander Okuliar said the plaintiffs failed to provide evidence supporting their arguments. He said the expansion of a company doesn’t automatically translate to more leverage over pricing. Merging Nexstar and Tegna would improve efficiency and help newsrooms grow, he said.

“That’s what we’re asking the court here is to look at that real-world relevance,” Okuliar said.

The plaintiffs argued the merger would damage the quality of news coming from Nexstar stations.

Antonini called Nexstar a notorious news duplicator. A merger may result in the news being broadcast for more hours, but it wouldn’t improve its quality, the attorney argued.

Additionally, Antonini said Nexstar has a history of consolidating newsrooms. That leads to journalists losing their jobs, a loss of different viewpoints and a shift from local news to more general content, she said.

It also would give Nexstar more control over editorial content.

“That’s extremely harmful to democracy and the citizens of this state,” Antonini added.

From DIRECTV’s perspective, that means its subscribers have fewer news options. Pomerantz said his client faces an imminent threat of harm from the merger, and the preliminary injunction is necessary to stave off that damage.

Not only would reporters lose their jobs, but the two companies’ information technology and accounting systems would merge, and Nexstar would get access to Tegna’s sensitive business information, Pomerantz said.

Okuliar pushed back on arguments of rising costs. He said that as streaming services have entered the marketplace, the costs of broadcast content have become higher. That, in turn, has caused costs for services like DIRECTV to climb.

“Our costs have gone up and in part our costs have gone up because of those streaming services,” Okuliar said.

He also argued that the plaintiffs need to present more than accusations they would be injured by the merger. Instead, they need to show how they’d be injured. They plaintiffs cannot be granted a preliminary injunction merely by showing financial harm, the attorney said.

Antonini said it’s clear that a loss of competitiveness is an irreparable injury. The market-share argument meets that bar and warrants a preliminary injunction, she said.