States challenge "broadcast behemoth" mega-merger

Eight states sued to block the massive $6.2 billion merger of Nexstar and Tegna that could create the largest local broadcast company in the country by far. Why it matters: The deal, which would require lifting the limit on television station ownership, is a litmus test for the Federal Communications Commission's deregulation drive.

FCC Commissioner Brendan Carr has already signaled he supports the transaction.

Driving the news: California, Colorado, Connecticut, Illinois, New York, North Carolina, Oregon and Virginia sued in federal court Wednesday to block the creation of a "broadcast behemoth" that they argue would harm competition and raise fees.

They argue that "eliminating independent news operations will diminish diversity in news coverage," which is "critical to the ability of an informed citizenry to participate in local governmental and community activities." The lawsuit argues the merger violates the Clayton Antitrust Act, a primary antitrust guardrail. The merger, they say, would make it even more difficult for competitors to enter markets that are already highly consolidated.

What they're saying: "When broadcast media is owned by a handful of companies, we get fewer voices, less competition, and communities lose the critical check on power that local journalism delivers," California Attorney General Rob Bonta said in a statement.

Tegna and Nexstar did not immediately respond to Axios' request for comment.

Between the lines: The fate of the deal ultimately rests on whether the FCC can lift the current limit on television station ownership, which prevents any group from owning stations that would collectively reach more than 39% of U.S. households.

Carr, who supports modifying consolidation rules, argues the FCC can do so without Congress. The National Association of Broadcasters, the primary trade group for the industry, backs Carr's position. While Trump has signaled he is not in favor of lifting the national ownership cap, he's endorsed the deal as a means for "more competition against THE ENEMY, the Fake News National TV Networks."

By the numbers: Nexstar is already the largest owner of local TV stations in the nation, while Tegna ranks in the top five.

The companies say that the merger will help preserve local news from trusted sources and expand coverage. Together, the new entity would own 265 local TV stations across 132 of the country's 210 television designated market areas, Axios' Sara Fischer reports.

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