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In February, President Donald Trump endorsed a proposal that would allow Nexstar, already the largest owner of local broadcast stations in America, to acquire Tegna, a smaller rival. “We need more competition against THE ENEMY, the Fake News National TV Networks,” he wrote on social media. “GET THAT DEAL DONE!”
Last week, the Federal Communications Commission and the Department of Justice approved the merger. The resulting behemoth will control two hundred and sixty-five television stations, reaching 80 percent of US households—more than double the 39 percent national audience cap allowed by law. “It’s a grotesque violation of the cap,” Diana Moss, the vice president and director of competition policy at the Progressive Policy Institute, a liberal Washington think tank, told me. “So bottom line, Brendan Carr, chair of the Federal Communications Commission, who clearly does the bidding of the White House, said that he would wave this merger through, and that has in fact come to pass.”
US antitrust laws are more than a hundred years old and can be split into two big statutes—the Sherman and Clayton Acts, passed in 1890 and 1914, respectively—and three areas of concern: monopolies, mergers, and anticompetitive agreements like price-fixing, Moss told me. She is part of a center-left, pro-enforcement movement founded in the 1990s by antitrust advocates in the nonprofit, academic, and enforcement communities with concerns about the economic consequences of concentration and consolidation. “Mergers that really concentrate markets and create dominant players are generally thought to be harmful to consumers,” she said. “We worked very hard in advancing that movement to get stronger guidelines, better cases, and better legal precedents.” Our conversation has been edited for length and clarity.
CAG: How will the Nexstar-Tegna deal affect consumers and the overall media landscape in this country?
DM: There will be three major consequences of the merger, which will increase Nexstar-Tegna’s market power and bargaining power in the media supply chain. One is higher retransmission rates charged to multi-video programming distributors to carry local TV channels that will increase cable and virtual streaming bills. A second is higher advertising rates in local TV markets that will make it harder for local businesses to survive. A third is a decline in diversity of political, social, and cultural viewpoints and news content.
Less than a day after the FCC approved the merger, the attorneys general of eight states—including California, Virginia, Illinois, Oregon, and New York—filed an emergency motion to block it, arguing that it violates federal antitrust laws. What does that mean for the future of the deal?
The fact that the FCC and DOJ have allowed the merger to proceed does not mean it is not exposed to risk from a decision to block it at the state level. So that case will have to play out in court. And of course, the companies are taking an enormous risk by proceeding to close their deal before the resolution of the states’ lawsuit.
What are the major implications of the national audience-reach cap being waived, and what kind of precedent does it set?
Ultimately, it could affect whether that merger has to be unwound, which is always a sticky problem, but it certainly is setting a very troubling precedent for how mergers are approved. One implication, I think, is a lot of this will be unwound after the Trump administration is gone. During the Trump administration, a lot of it will be caught up in litigation and left for the courts to decide. But for now, the real concern is what’s being done here—this use of antitrust as a political tool—is really hurting competition, markets, consumers, and workers.
The attorneys general who sued over this are all Democrats, but support for the deal isn’t necessarily split along partisan lines. Chris Ruddy, the CEO of the conservative media company Newsmax, opposes the deal, as does Charles Herring, the president of the pro-Trump television channel One America News Network. What do you make of this?
Yeah, I don’t think it’s necessarily a partisan issue. It used to be that you had more right-wing voices wanting to go light on antitrust: “Let’s not go after mergers, let’s just use a light touch.” And it was the Democrats who went harder on antitrust. But that ground is shifting now. We’re seeing a lot of concerns on both sides of the political spectrum about concentration of economic power in the hands of a few.
Another major merger is also on the horizon: the Trump-aligned Ellison family, which already owns CBS and Nickelodeon, won a bidding war with Netflix in February for Warner Bros. Discovery, CNN’s parent company. Senator Elizabeth Warren recently called that deal “an antitrust nightmare.” Do you agree?
In comparing potential mergers between Netflix and Warner Bros. versus Paramount and Warner Bros., the Netflix deal would have raised a much larger concern about higher concentration in streaming—and potentially higher subscription prices, lower quality, and slower innovation. But both deals also raise concerns about consolidation in film studios and labor markets for content creation. Another thing about the Warner Bros. deal is that CNN is part of it. My concern, given how weaponized and politicized our antitrust system is right now, is that there could be political interference in the disposition of CNN from the Trump administration, which would love to see it weakened or neutered.
How has the Trump administration weaponized the antitrust system?
Early on in Trump 2.0, we thought we might get more of Trump 1.0, which actually wasn’t bad on antitrust enforcement. Some Trump 1.0 enforcers brought some aggressive cases. (I’m very pro-enforcement.) That’s not what we got in 2.0. What we got was rumors, which eventually crystallized into the reality that the first stop for companies that wanted to merge was the White House and not the Department of Justice or the Federal Trade Commission (FTC).
And so, hence was born this concept of, “Well, if I want my deal to go through, then I’ve got to curry favor with the White House.” The Trump administration is also advancing its political agenda by requiring companies to adhere to certain conditions as the price of merger approval. These conditions have nothing to do with competitive concerns raised by the mergers. They are simply ways to extort commitments from companies as the price of merger approval.
One example is Paramount’s merger with Skydance. The “price” of the merger to clear the FCC approval process was to eliminate all DEI programs. These conditions had nothing to do with any effect of the merger—it was purely a political concession. Another example is the merger of Omnicom and Interpublic Group (IPG) in November, which was handled by the FTC. The companies are media buyers, so they link up advertisers with ad publishers. That merger didn’t raise significant competitive concerns, but the price of that deal was the condition that the companies—which purportedly had more progressive leanings—were prohibited from tying advertising spending to political viewpoint.
Paramount’s merger with Warner Bros. is not exactly a sure thing. It still has to go through regulatory approval. What does that process look like?
The deal will have to pass muster with the DOJ, which handles mergers in the media space, whether it’s local television stations or streaming mergers. The DOJ and FTC review mergers that are reportable under the federal merger filing requirements. The DOJ’s process is to decide whether to allow the deal to proceed because it raises no concern that it will harm competition, or to require the companies to file additional information under a “second request.” A second request can lead to a fuller investigation. Investigations can lead to four outcomes. One is an eventual close to the inquiry without any action. And second is that the companies abandon the deal. A third is a settlement with conditions that restore competition and protect consumers. A fourth is an injunction, where the government goes to federal court to try to block it.
How likely is it that this last outcome will happen?
We are basically fearful that every merger that goes through the agencies at this point will face some intervention by the White House, some form of interference, that says, “Look, don’t give them their deal unless they agree to x, y, and z.” I think that is potentially a significant risk because of CNN.
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