Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: Antitrust Division requires divestitures in $4.6B Nexstar, Media General deal, (Sep 6, 2016)
Law Firms Mentioned:Fried, Frank, Harris, Shriver & Jacobson LLP | Kirkland & Ellis LLP
Organizations Mentioned:Fried, Frank, Harris, Shriver & Jacobson, LLP | Graham Holdings Co. | Gray Television, Inc. | Incstar Corp. | Kirkland & Ellis, LLP | Media General, Inc. | Nexstar Broadcasting Group, Inc. | U.S. Department of Justice
By Greg Hammond, J.D.
The Department of Justice Antitrust Division is requiring Nexstar Broadcasting Group to divest seven broadcast television stations in order to move forward with its $4.6 billion acquisition of Media General, Inc. (U.S. v. Nexstar Broadcasting Group, Inc., Dkt. 1:16-cv-01772).
Nexstar and Media General own and operate broadcast television stations in various Designated Market Areas (DMAs) throughout the United States. The Antitrust Division claims that the two companies’ stations compete head to head for the business of local and national companies that seek to advertise on broadcast television stations operating in six particular DMA markets, where Nexstar and Media General together account for a substantial share of the broadcast television station advertising revenues. In addition, the complaint asserts that Nexstar and Media General compete to license programming to multichannel video programming distributors (MVPDs) for retransmission to MVPD subscribers and each operate at least one station affiliated with a major broadcast network in each of the DMA markets.
If consummated, the proposed acquisition would eliminate the substantial head-to-head competition that currently exists between Nexstar and Media General, which would likely result in: (1) higher prices for broadcast television spot advertising in each of the DMA markets; and (2) higher licensing fees for retransmission of broadcast television programming to MVPD subscribers in each of the DMA markets, the Antitrust Division claimed. As a result, the transaction would likely substantially lessen competition in those markets.
A proposed settlement has been filed, requiring Nexstar to divest the following television stations to designated acquirers or other acquirers approved by the United States: (1) WBAY-TV (Green Bay, Wisconsin) to Gray Television Inc.; (2) WSLS-TV (Roanoke-Lynchburg, Virginia) to Graham Holdings Co.; (3) KADN-TV and KLAF-LD (Lafayette, Louisiana) to Bayou City Broadcasting Lafayette Inc.; (4) WTHI-TV (Terre Haute, Indiana) to USA Television MidAmerica Holdings Inc.; (5) WFFT-TV (Fort Wayne, Indiana) to USA Television; and (6) KWQC-TV (Davenport, Iowa/Rock Island-Moline, Illinois) to Gray Television.
"As originally structured, this transaction would have given Nexstar 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," stated Acting Assistant Attorney General Renata Hesse of the Justice Department’s Antitrust Division. "Today’s settlement will protect advertisers, MVPDs and consumers—who ultimately 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."
Attorneys: Mark Andrew Merva, U.S. Department of Justice, for the United States. Ellen Jakovic, Ian Conner, and Ian G. John (Kirkland & Ellis LLP) for Nexstar Broadcasting Group, Inc. Bernard A. Nigro Jr. (Fried, Frank, Harris, Shriver & Jacobson LLP) for Media General, Inc.
Companies: Nexstar Broadcasting Group, Inc.; Media General, Inc.
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