Nexstar officials cannot serve on the board of Tegna as an order remains in place to keep the two companies separate, a federal judge ruled on Thursday.
U.S. District Judge Troy Nunley clarified that his preliminary injunction, issued in April, prohibited current and former Nexstar “officers, employees, directors, consultants, or other affiliated personnel” from serving on Tegna’s board. He wrote that Nexstar had to file a report within 10 days to ensure compliance.
“It is shocking that Defendants think installing a Board of Directors comprised primarily of Nexstar executives would not create influence over Tegna management,” the judge wrote. “This undermines Tegna as an independent entity and violates the preliminary injunction.”
The judge also admonished Nexstar for their “lack of candor,” pointing to their lack of disclosure of the fact that three Nexstar officials, including CEO Perry Sook, were appointed to the Tegna board.
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“Defendants repeatedly failed to disclose material information to this Court, declined to seek Court guidance or relief, and then publicly declared that the Court had ‘approved’ their actions,” the judge wrote.
A coalition of state attorneys general and DirecTV sued to block the Nexstar-Tegna merger in March. In the next 24 hours, the FCC gave its greenlight to the transaction, and Nexstar closed the deal soon after that.
Nunley later granted a preliminary injunction that requires that the Nexstar and Tegna assets and operations be kept separate.
The plaintiffs last month objected to the presence of Nexstar officials serving on Tegna’s board, including Nexstar CEO Perry Sook.
In his order, Nunley also ordered a set of steps to ensure compliance, including providing board minutes and other documents to the plaintiffs on a monthly basis. He also directed the parties to file a stipulation and proposed order to potentially appoint a special master to oversee compliance. The judge wrote that Nexstar’s actions “violated the preliminary injunction as clarified. Therefore, ongoing compliance monitoring and discovery is warranted in this case to ensure adherence to the preliminary injunction, particularly in light of Defendants’ lack of candor.”
A Nexstar spokesperson did not immediate return a request for comment.
Nexstar is appealing the preliminary injunction, with oral arguments expected in November or December. A trail is on the docket for next year. The company had argued that its executives must sit on the Tegna board to fulfill
Sarbanes-Oxley Act requirements and debt agreement obligations, but the judge wrote that he was not persuaded.
The company said in a statement last month that it “has scrupulously complied with the Court’s hold-separate order. Tegna continues to operate independently, and Nexstar has no involvement in Tegna’s retransmission consent negotiations, content decisions, staffing, or other day-to-day operations. Nexstar’s executives’ service on Tegna’s Board is consistent with the Court’s order and is critical to ensuring that Nexstar can continue to satisfy its financial reporting obligations while the hold-separate requirements are in place.”
The plaintiffs argued that “antitrust law prohibits executives of one company from serving on the board of a competing company because doing so would enable a company to influence its competitor and access its confidential information — exactly what this Court’s preliminary injunction seeks to prevent.”
