Nexstar CEO Perry Sook began the company’s first quarter earnings call Thursday with a 5-minute update on the company’s efforts to fend off a legal challenge to its $6.2 billion merger with rival Tegna.
DirecTV and a collection of state attorneys general filed a lawsuit to try to undo the merger, which was closed soon after the FCC approved it. The Department of Justice’s antitrust division has also signed off, but plaintiffs in the lawsuit say the deal will be a clear monopoly play. A District Court judge agreed with the monopoly claims, but Nexstar has appealed the decision in the Ninth Circuit Court of Appeals.
From any perspective, the merger would be a dramatic change for the media landscape, resulting in a combined entity with reach to 80% of U.S. households, more than twice the current federal limit. In approving the deal, the FCC granted a waiver, allowing Nexstar to exceed the ownership cap.
Given all of the movement, Sook wanted to update Wall Street analysts on the call about the state of affairs. “We believe we will prevail on the merits of this case,” he said. “We are confident in our arguments, expressed in detail in the FCC’s order approving the transaction, that a stronger, more financially resilient local broadcast industry is in the public’s best interest. We believe this is a fight worth having – for us, for the industry, and for the future of local journalism.
Sook reiterated the stance he and industry peers have taken recently about the cap, insisting that local TV stations should not be limited in a media and tech landscape dominated by global tech giants. “Despite consolidation within our industry, Nexstar still operates with a fraction of their ubiquitous reach and financial resources, prohibiting us and every other company in our industry from competing on a level playing field,” Sook said. The Tegna acquisition “represents an important step in solidifying our future and our ability to continue providing these valuable services to local communities across the United States.”
As far as next steps in the lawsuit, Sook noted that Nexstar is pushing forward in its appeal and has hired attorney Beth Wilkinson, an antitrust expert who has served as lead trial counsel for the NFL. She recently led the league’s successful defense in a recent case alleging its Sunday Ticket package violated laws designed to ensure competition. In an appearance at last month’s NAB Show, Sook acknowledged that the process will play out over several months. A separate legal challenge is before the D.C. Circuit Court.
CFO Lee Ann Gliha followed Sook on the call, explaining to analysts that Tegna’s results would be presented alongside Nexstar’s, with 13 days of Tegna results included, reflecting the timing of the deal’s close.
Results in the quarter exceeded analysts’ expectations, with total revenue hitting $1.4 billion and earnings per share at $5.09 on a diluted basis.
MORE to come …
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