Shares of Nexstar Media Group (NASDAQ:NXST) fell about 9% on Monday after a federal judge ordered the broadcaster to halt further integration efforts tied to its recently completed merger with Tegna Inc.
U.S. District Judge Troy L. Nunley in Sacramento granted a request from DirecTV to temporarily stop the deal while litigation over the merger proceeds. The ruling, issued Friday, requires the companies to suspend any additional steps to combine operations after closing the transaction last week.
DirecTV and a coalition of state attorneys general led by California have challenged the merger on antitrust grounds, arguing the transaction could strengthen Nexstar’s negotiating power over distributors.
The companies “do not contest this merger will increase Nexstar’s bargaining leverage to extract higher fees,” Nunley wrote in his 24-page order.
Nunley also said he was persuaded by DirecTV’s “assertion that despite defendants’ claim the rise of streaming services and ’cord-cutting’ will create a downward pressure on retransmission rates, Nexstar’s CEO Perry Nook recently told investors the opposite.”
Retransmission fees are payments cable and satellite providers make to local broadcasters to carry their channels, costs that can ultimately be passed on to consumers through higher subscription bills.
The judge scheduled a hearing for April 7 to determine whether the pause should remain in effect while the case moves toward trial.