The U.S. Department of Justice on July 31 conditionally approved Nexstar Media Group Inc.'s pending merger with Tribune Media Co. It requires the broadcasters to divest TV stations in 13 markets as a condition of closing the deal.
The department said without the divestitures, the merger would eliminate head-to-head competition between Nexstar and Tribune in more than a dozen markets, likely resulting in higher retransmission consent fees for cable and satellite operators, as well as higher advertising rates for local businesses. Cable and satellite operators pay retrans fees to broadcasters in exchange for permission to carry local stations' signals.
The 13 markets targeted for divestitures include Davenport, Iowa; Des Moines, Iowa; Ft. Smith, Ark.; Grand Rapids, Mich.; Harrisburg, Pa.; Hartford, Conn.; Huntsville, Ala.; Indianapolis; Memphis, Tenn.; Norfolk, Va.; Richmond, Va.; Salt Lake City; and Wilkes-Barre, Pa.
“Without the required divestitures, Nexstar's merger with Tribune threatens significant competitive harm to cable and satellite TV subscribers and small businesses," Makan Delrahim, head of the Justice Department's antitrust division, said in a news release.
In hopes of winning regulatory approval for the deal, Nexstar and Tribune had already committed to a number of divestitures in various markets, including Indianapolis.
Nexstar in November 2018 agreed to buy all outstanding shares of Tribune Media Co. for $46.50 per share in a cash transaction valued at $6.4 billion, including the assumption of Tribune Media's outstanding debt. Tribune Media shareholders will be entitled to an additional cash consideration of about 30 cents per month if the transaction has not closed by Aug. 31.
The deal is expected to close late in the third quarter.