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

SACRAMENTO, Calif. (CN) – A federal judge in California on Tuesday pressured advocates over consumer prices and the impact on local journalism as he considered whether to continue blocking Nexstar’s takeover of Tegna.

Chief US District Judge Troy Nunley late last month temporarily halted the merger of the media companies. It is a movement that has affected a small section similar cases in connection with the merger, after Nunley consolidated the lawsuits. It also led to calls for a precautionary measure, which would extend the existing block.

The judge made no ruling Tuesday on that restraining order, instead taking it under submission.

A key component of the arguments was whether the merger would give Nexstar a larger market share, which in turn would lead to higher prices for DIRECTV and similar services. These costs will fall on consumers.

Representing DIRECTV, attorney Glenn Pomerantz argued that the consolidation of market share for the companies was a potential violation of the Clayton Act, which prohibits certain anticompetitive practices. In some areas, the market share would exceed 50%.

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

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

DIRECTV and several states involved in the lawsuit also argued that the merger would raise prices and hurt local TV stations’ newsrooms.

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

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

Arguing for Nexstar, lawyer Alexander Okuliar said the plaintiffs failed to provide evidence to support their arguments. He said a company’s expansion doesn’t automatically translate into more pricing power. The merger of Nexstar and Tegna would improve efficiency and help newsrooms grow, he said.

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

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

Antonini called Nexstar a notorious news copycat. A merger might result in more hours of news broadcast, but would not improve its quality, the lawyer argued.

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

It would also give Nexstar more control over editorial content.

“This is extremely harmful to democracy and the citizens of this country,” Antonini added.

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

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

Okuliar disputed the arguments of increased costs. He said that as streaming services have entered the market, the costs of streaming content have become higher. This, in turn, has caused increased costs for services like DIRECTV.

“Our expenses have increased and in part our costs have increased because of these streaming services,” Okuliar said.

He also argued that the plaintiffs must present more than allegations that they would be harmed by the merger. Instead, they should show how they would be hurt. Those plaintiffs cannot be granted a preliminary injunction merely by showing financial harm, the lawyer said.

Antonini said that it is clear that the loss of competition is an irreparable injury. The market share argument meets that hurdle and warrants a preliminary injunction, she said.