Tegna Shareholders Approve $6.2B Nexstar Merger Amid Regulatory Scrutiny
With shareholder approval secured, the broadcaster's fate now rests with DOJ and FCC regulators, creating a significant arbitrage opportunity for investors.
TEGNA Inc. (NYSE: TGNA) shareholders have overwhelmingly approved the company's planned $6.2 billion merger with Nexstar Media Group (NASDAQ: NXST), a critical step forward in a deal that aims to create the largest local television station owner in the United States. The vote, confirmed in a company announcement on Tuesday, removes a key hurdle but shifts the spotlight entirely onto a contentious regulatory review that has cast a shadow over the acquisition's prospects.
The shareholder approval, while expected, solidifies the terms of the agreement, under which Nexstar will acquire all outstanding shares of TEGNA for $22.00 per share in cash. The transaction, inclusive of TEGNA's debt, represents a significant premium for the broadcaster. However, TEGNA's stock, trading around $19.87, remains well below the offer price, signaling deep market skepticism that the deal will clear the high bars set by federal regulators.
The Regulatory Gauntlet
The fate of the merger now lies in the hands of the U.S. Department of Justice (DOJ) and the Federal Communications Commission (FCC), where it faces significant challenges. The primary obstacle is the FCC's national television ownership cap, which currently prohibits a single entity from reaching more than 39% of U.S. television households. The proposed combination of Nexstar and TEGNA would create a broadcasting titan with 265 stations, reaching an estimated 80% of the country—more than double the current limit.
Nexstar has expressed confidence that it can navigate the regulatory landscape, potentially banking on a favorable deregulatory environment. However, the DOJ has already signaled heightened antitrust scrutiny, issuing a "Second Request" for additional information from both companies in late October. This move extends the waiting period for approval and indicates a deeper investigation into how the merger could impact market competition, advertising rates, and retransmission fees charged to cable and satellite providers.
Strategic Rationale: Scale Against Big Tech
For Nexstar, the acquisition is a strategic move to build the scale necessary to compete in a media landscape increasingly dominated by digital giants. The company aims to leverage a larger footprint to enhance its negotiating power with advertisers and content distributors, while achieving an estimated $300 million in annual synergies through combined operations.
The combined entity would have a powerful presence in political advertising, with stations in 41 of the top 50 designated market areas (DMAs), including key contested states. Proponents of the deal argue that such consolidation is necessary to preserve and fund local journalism, which has been under pressure from the decline of traditional advertising revenue.
An Arbitrage Play for Investors
The significant gap between TEGNA's current share price and Nexstar's $22.00 offer has turned the stock into a classic arbitrage play. The spread reflects the market's calculation of the risk that regulators will block the deal or demand substantial divestitures that could alter the deal's economics. An analyst downgrade of Nexstar last week, citing regulatory uncertainty, has only amplified these concerns.
Investors are now weighing the potential upside of a successful closing against the risk of the deal collapsing, which would likely send TEGNA's shares down toward pre-announcement levels. With an analyst consensus price target of $21.67, Wall Street sees value but remains cautious.
A Divided Outlook
The proposed merger has drawn both support and sharp criticism. While Nexstar leadership has pointed to a broader deregulatory agenda as a potential path to approval, critics argue the deal would harm the public interest. Competing media outlets and public interest groups have raised concerns that the consolidation could lead to less diversity in local news, homogenized content, and higher cable bills for consumers.
With shareholder consent now in the rearview mirror, all eyes turn to Washington. The decisions made by the DOJ and FCC in the coming months will not only determine the future of TEGNA but could also set a new precedent for media ownership and consolidation in the digital age. The deal is currently expected to close in the second half of 2026, pending regulatory clearance.