Nexstar And State AGs Outline Plans For Overseer In Antitrust Case

As part of the antitrust lawsuit to block Nexstar‘s merger with Tegna, a federal judge earlier this year ordered that the two companies remain separate.

It’s a very unusual situation, given that Nexstar already had closed its transaction, hoping to create a broadcast station giant with almost 260 stations.

Earlier this month, the judge also ruled that Nexstar was violating his preliminary injunction because Nexstar executives were on Tegna’s board. He not only ordered those executives off, but mandated a set of steps to ensure compliance, including the potential appointment of a special master to oversee it.

Late on Thursday, the plaintiffs in the case, including the state attorneys general and DirecTV, and the defendants, Nexstar, outlined the plans for the special master, proposing Charles J. Stevens, a former U.S. attorney and former partner at Gibson Dunn, in the role.

Per the proposal for the special master, the parties still have some areas of dispute.

As part of monthly compliance requirements, the plaintiffs want a record of all written or oral communications between Nexstar and Tegna’s senior management. The company, however, calls such a requirement “unnecessary and unduly burdensome,” and points to instances where executives communicate with each other outside the bounds of the injunction, including about arm’s length agreements and broadcast industry issues.

There is also a dispute over whether Nexstar should provide records not just of written agreements with Tegna, but even those that are discussed. And the parties have disagreement as to the special master’s authority. That includes making initial determinations about compliance with the injunction, as Nexstar wants, or if those ruling should still be left to the judge, Troy Nunley, as the state AGs and DirecTV want.

And there is another area of disagreement: who pays the costs. The plaintiffs say that Nexstar should foot the bill for the special master’s $1,500-per-hour rate. Nexstar says it should cover 75% of the costs, but the state AGs and DirecTV should pay the remaining 25%.

Nexstar is appealing Nunley’s preliminary injunction order, with the Ninth Circuit expected to hear oral arguments in November or December. In the meantime, Nexstar is in the position owning Tegna, but has to keep the companies separate.