Nexstar’s CEO Perry Sook Shares Insights on the Tegna Merger Legal Battle
Nexstar CEO Perry Sook opened the company’s first-quarter earnings call on Thursday with a detailed update on the ongoing legal battle surrounding its $6.2 billion merger with rival Tegna.
The merger, which was finalized shortly after the Federal Communications Commission (FCC) approved it via a Media Bureau order instead of a full commission vote, has faced significant opposition. DirecTV, alongside a group of state attorneys general, filed a lawsuit aimed at reversing the merger. While the Department of Justice’s antitrust division has endorsed the deal, plaintiffs argue that it would create a monopoly. A District Court judge has sided with these claims, prompting Nexstar to appeal the ruling in the Ninth Circuit Court of Appeals.
The merger would significantly reshape the media landscape, enabling the combined entities to reach 80% of U.S. households—exceeding the federal ownership cap. The FCC granted a waiver to facilitate this expansion.
During the earnings call, Sook expressed confidence in Nexstar’s case against the lawsuit. “We believe we will prevail on the merits of this case,” he stated. He emphasized the importance of a financially resilient local broadcast industry, arguing, “We believe this is a fight worth having – for us, for the industry, and for the future of local journalism.” He also voiced concerns about the ownership cap, contending that local TV stations should not be restricted in a media environment dominated by global tech giants. “Despite consolidation within our industry, Nexstar still operates with a fraction of their ubiquitous reach and financial resources,” he asserted, describing the Tegna acquisition as crucial for safeguarding local services.
Looking ahead, Sook cited Nexstar’s intention to advance its appeal, indicating that the company has enlisted attorney Beth Wilkinson, a noted antitrust expert who previously represented the NFL in a successful case regarding competitive practices. He acknowledged that the legal proceedings are expected to unfold over several months and noted that a separate challenge from Newsmax and various broadband industry associations is currently before the D.C. Circuit Court.
Following Sook, CFO Lee Ann Gliha explained how Tegna’s financial results would be reported, in line with the District Court judge’s directive to keep the companies separate during the lawsuit. Since the merger closed in March, Tegna’s results included in the earnings report reflected 13 days of operation alongside a full quarter of Nexstar’s data.
Nexstar’s results surpassed analyst projections, with total revenue reaching $1.4 billion and earnings per share at $5.09 on a diluted basis.
Analysts dominated the call’s question-and-answer segment with inquiries regarding Tegna’s management amid the merger’s complexities. Veteran Citi media analyst Jason Bazinet remarked, “In all my years, I’ve never really come across a situation where shareholders own an asset and can’t manage it.”
Sook responded, clarifying that while Tegna operates as a subsidiary, Nexstar executives are involved in discussions concerning its management. “We were very comfortable in the way Tegna was operated during the pendency of the transaction,” he said, stating that the same governance covenants would continue through the “hold-separate” period.
Additionally, Sook noted that neither company is permitted to reduce headcount while the lawsuit is pending. This focus on job security has been a significant factor in previous regulatory reviews, including those of the Biden administration, which derailed another proposed merger involving Tegna and private equity firm Standard General due to job security concerns.
