Nexstar Media Group, with founder and Chairman/CEO Perry Sook present in the courtroom, has reluctantly moved forward with agreeing to a preliminary injunction that will keep TEGNA Inc.’s assets separate from those it owned prior to the rule-busting merger of the two companies, which DirecTV challenged in a Sacramento federal district court.
It’s now up to a judge to determine whether to sign off on it.
The decision from Chief Judge Troy Nunley could come as soon as this evening, as Tuesday deliberations saw Nunley clear the courtroom so representatives from Nexstar, TEGNA and DirecTV could review confidential compliances of the order putting what market observers believe will be a preliminary injunction into effect.
Given the lengthy private discussion in the courtroom after two hours of public access to the hearing, the preliminary injunction is looking likely, one attorney who requested anonymity told RBR+TVBR.
To be clear, nothing has changed since a TRO was put in effect, as the judge took the preliminary injunction under advisement; the TRO stays in place — until it expires.
The actions Tuesday afternoon in Northern California came after TEGNA and Nexstar submitted a proposed order modifying a Temporary Restraining Order blocking the full merger of the two companies, issued March 27 by Judge Nunley some eight days after the FCC and Department of Justice each approved the transaction. For the Commission, it was Media Bureau Chief Erin Boone who pushed the deal forward, granting rule waivers to get it to the finish line.
How Nexstar proceeds with its merger now depends wholly on what transpires next in Nunley’s court. A preliminary injunction would require a party to act or stop acting to preserve the status quo until a final judgment is reached. It is considered an “extraordinary remedy” intended to prevent immediate, irreparable harm to the moving party before the case concludes.
With DirecTV chiming in with suggested modifications to the TRO, and the failure of both sides to agree on these suggestions, Judge Nunley nudged Nexstar and TEGNA to convert the TRO to a preliminary injunction — something Sook visibly seemed to be avoiding during the hearing on Tuesday afternoon. By mid-morning Wednesday, a proposed order granting the preliminary injunction was submitted to the court not by DirecTV attorneys, but by California State Attorney General Rob Bonta, and could get signed by Judge Nunley.
Interestingly, Bonta was not in attendance on Tuesday in the Sacramento courtroom.
What’s covered under a possible injunction? First, it involves restrictions only applicable to TEGNA-licensed “Big Four” stations in DMAs where Nexstar also owns stations.
Then, there is the confidential topic of debt service, and employee retention versus a reduction-in-force effort, among other compliance issues. Retransmission consent is also a topic, and Nexstar and TEGNA advocated for the continued administration of existing retransmission agreements, the handling of payments, or necessary discussions relating to expiring contracts and fulfilling the commitments under the FCC Order. Thus, they wanted the judge to “not require unwinding or invalidating contractual provisions recognized pre-closing that occurred at closing.”
Furthermore, TEGNA and Nexstar advocated that “for TEGNA Big 4 stations in overlap DMAs, TEGNA will be able to negotiate or renegotiate any such retransmission agreement in the ordinary course. Any MVPD may choose to negotiate with Nexstar regarding an overlap DMA Big 4 Tegna station.”
For its part, DirecTV agreed not to raise its rates to consumers in the DMAs with TEGNA Big 4 stations subject to the hold-separate order; DirecTV also agreed to post a bond of an amount to be determined.
The TRO is sent to expire on April 10.
Meanwhile, it became known in court filings posted Wednesday morning that a Nexstar and TEGNA joint request to seal documents was granted by Judge Nunley. This keeps the first four pages of Nexstar’s Compliance Report out of the public eye, in addition to the first four pages of a declaration by Elizabeth Ryder in support of the compliance report.
