Last Friday, antitrust officials with the U.S. Department of Justice (DOJ) approved Nextstar Broadcasting’s proposed $4.6 billion purchase of Media General (MG), subject to the parties’ compliance with conditions that require divestiture of seven television stations in six markets. Announced in January, the proposed union of Irving, Texas-based Nextstar and Richmond, Virginia-based MG would catapult the merged entity (known as Nextstar Media Group) to the rank of the nation’s third-largest local television broadcaster with control of 171 stations in 100 markets.
The DOJ concluded that the transaction as originally structured “would have given Nextstar the power to impose higher prices on local and national advertisers, and to demand higher retransmission fees from cable and satellite companies in six markets.” The DOJ thus conditioned approval on the parties’ previously-announced commitment to sell seven television stations in the following designated market areas (DMAs): (1) Green Bay, Wisconsin; (2) Roanoke-Lynchburg, Virginia; (3) Lafayette, Louisiana; (4) Terre Haute, Indiana; (5) Fort Wayne, Indiana; and (6) the Quad Cities DMA which covers various counties in northwestern Illinois and southeastern Iowa. In remarks to the press, acting Assistant U.S. Attorney General Renata Hesse predicted that conditional approval “will protect advertisers, multichannel video programming distributors and consumers –who ultimately would have borne many of these increased costs—by ensuring that Nextstar does not obtain undue bargaining leverage when negotiating broadcast television spot advertising prices and retransmission fees.” DOJ officials further noted that, without the required divestitures, Nextstar Media Group would have controlled between 41% and 100% of broadcast television station gross advertising revenues in the six DMAs in question.
Executives of Nextstar and MG declined comment on the DOJ’s action. Nextstar has 90 days in which to comply with the DOJ’s requirements. While an FCC decision on the deal remains outstanding, observers anticipate that FCC approval will follow shortly.