Feds Intervene in Merger |of Broadcast Firms

WASHINGTON (CN) — The Justice Department said Friday that Nexstar Broadcasting Group must sell off seven TV stations before it can go forward with a $4.6 billion merger with Virginia-based Media General.

In January, Nexstar and Media General, which together own television stations in 110 cities across the country and rake in more than $2 billion in revenue, announced a merger that would bring together two of the top competitors in six broadcast markets, court records show.

But the U.S. Department of Justice blocked the merger Friday with a complaint and proposed settlement filed in Washington, D.C., Federal Court, in which it argued the merger would crush competition and raise prices on advertisers.

"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," Renata Hesse of the Justice Department's Antitrust Division said in a statement. "Today's settlement will protect advertisers, [multichannel video programming distributors, or MVPDs] and consumers — who ultimately would 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."

If the deal went forward, Nexstar would own 41 to 100 percent of broadcast revenue in six markets spread across Virginia, Indiana, Wisconsin, Louisiana, Iowa and Illinois, the government says.

By one metric the Justice Department uses in its complaint, the merger would result in "highly concentrated markets" in the Roanoke-Lynchburg, Va., Terre Haute and Fort Wayne, Ind., Green Bay-Appleton, Wis., Lafayette, La., and Quad Cities, Iowa and Ill., markets.

In order to get around this potential shrinking of the market, the Justice Department says Nexstar must divest its stations in these markets to a list of companies the government has preapproved.

Nexstar could sell the stations to companies other than the ones the government suggests, but would need to go through an approval process to do so, according to the proposed judgment.

Both Nexstar and Media General have agreed to a proposed final judgment that outlines the stations Nexstar must sell off.

The seven stations that must be sold are: WBAY-TV in Green Bay-Appleton; WSLS-TV in Roanoke-Lynchburg; KADN-TV in Lafayette; KLAF-LD in Lafeyette; WTHI-TV in Terre Haute; WFFT-TV in Fort Wayne; and KWQC-TV in the Quad Cities.

As of now the company has 90 days to sell off the stations, though it could go down to as few as five days if the court enters the judgment. The government can also grant an extension as it sees fit, the proposed judgment states.

Neither Nexstar nor Media General immediately responded to requests for comment Friday.

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