Nexstar To Shed Seven As DOJ OK’s Media General Deal




The U.S. Department of Justice has given its blessing to Nexstar Broadcast Group’s $4.6 billion merger acquisition of Media General Corp. – so long as Nexstar sheds seven stations in six different markets.

The Justice Department’s Antitrust Division on Friday (9/2) filed a civil antitrust lawsuit in the U.S. District Court of the District of Columbia to block the proposed transaction. It simultaneously filed a proposed settlement that, if approved by the court, would resolve the “competitive harm” alleged in the lawsuit.

The dual efforts are a requirement, providing enforcement of the divestures needed by Nexstar.

In its divesture order, the DOJ explained that without the mandated sales, the prices for broadcast television spot advertising and the retransmission fees charged to cable and satellite providers “would likely increase” in the six DMAs singled out by the Justice Department.

The markets are Roanoke-Lynchburg, Va.; Fort Wayne and Terre Haute, Ind.; Green Bay-Appleton, Wisc.; Lafayette, La.; and the Quad Cities, Ill.-Iowa market comprised of Rock Island-Moline, Illinois and Bettendorf-Davenport, Iowa.

Graham, Gray Among The Beneficiaries

Under the terms of the proposed settlement, Nexstar must complete the following deals, as ordered by the Justice Department:

  • KWQC-TV, in Quad Cities, Ill.-Iowa and WBAY-TV, in Green Bay, Wisc., to Gray Television Inc.
  • WSLS-TV, in Roanoke-Lynchburg, Va. to Graham Holdings
  • KADN-TV and KLAF-LD, in Lafayette, La. to Bayou City Broadcasting Lafayette Inc.
  • WFFT-TV, in Fort Wayne and WTHI-TV in Terre Haute, Ind. to USA Television MidAmerica Holdings Inc.

Acting Assistant Attorney General Renata Hesse, of the Justice Department’s Antitrust Division, commented that as originally structured, Nexstar would have had the power to raise its ad rates and retrans fees in the above markets.

“Today’s settlement will protect advertisers, MVPDs and consumers – who ultimately would have borne many of these increased costs – by ensuring that Nexstar does not obtain undue bargaining leverage when negotiating broadcast television spot advertising prices and retransmission fees.”

Without the divestment, DOJ argues, Nexstar would control “between 41% and 100% of the broadcast television station gross advertising revenues in these six DMAs and at least two broadcast television stations affiliated with the four major national television networks.”

As a condition of the merger, the government did require the divestiture of a small number of stations. These were in markets where Nexstar and Media General were competitors, and Gray, Heartland and DuJuan McCoy were the buyers.

With the DOJ’s blessing, the FCC’s stamp of approval should be on the way shortly.

“The big hurdle was really the Justice Department,” says broker George Reed, Managing Director of Media Services Group. “There are no real FCC issues, and I don’t see any reason why it wouldn’t close.”