FCC approves $3.5 billion sale of Tegna to Nexstar despite state objections

By David Shepardson and Juby Babu

WASHINGTON, March 19 (Reuters) - The Federal Communications Commission said on Thursday it approved the $3.54 billion sale of local television station owner Tegna TGNA.N to Nexstar NXST.O, despite objections from Democratic-led states.

Soon afterward, Nexstar said it had closed its acquisition of Tegna following approval from the FCC and U.S. Justice Department.

"This transaction is essential to sustaining strong local journalism in the communities we serve," Nexstar CEO Perry Sook said in a statement.

The acquisition, if not reversed by courts, will expand Nexstar's presence to cover 80% of U.S. TV households. The FCC said it is waiving a rule that allows broadcast television station owners to reach no more than 39% of U.S. television audience households as part of its approval.

In February, President Donald Trump said he supported the deal. Trump has repeatedly pressured Carr to revoke the licenses of NBC and ABC stations. Critics have said Carr is violating the free speech rights of broadcasters.

"By approving this transaction, which allows Nexstar to own less than 15% of television stations, the FCC acts mindful of the media marketplace that exists today — not the one from decades past," FCC Chair Brendan Carr said in a statement.

The approval comes a day after a group of eight states filed a suit in the U.S. District Court in Sacramento, California, to block the merger that would make the combined entity the largest U.S. broadcast station group.

Streaming and satellite TV provider DirecTV also filed a separate suit, seeking to prevent the deal, late on Wednesday.

Carr argues national networks like Comcast-owned CMCSA.O NBC and Walt Disney's DIS.N ABC have amassed too much power and has said he wants to empower local affiliates owned by companies like Tegna and Nexstar to preempt programming.

The FCC order said the deal "will help preserve Nexstar’s ability to influence network programming through collective negotiation and to preempt network programming in favor of programming that better serves the local community."

Democratic FCC Commissioner Anna Gomez criticized the deal, saying it concentrates "broadcast power in fewer corporate hands, shrinking independent editorial voices, and prioritizing national business interests over local needs."

Nexstar is the largest U.S. local television broadcasting group, controlling more than 200 stations in 116 U.S. markets reaching 220 million people, while Tegna owns 64 television stations in 51 media markets.

Nexstar has agreed to divest six stations within two years in the deal valued at $6.2 billion including debt.

In September, Carr praised Nexstar for briefly opting not to air "Jimmy Kimmel Live!" on its ABC-affiliated stations.

ABC temporarily suspended Kimmel's show over comments he made about the assassination of conservative activist Charlie Kirk. Hours before the suspension, Carr warned local broadcasters who aired Kimmel could face fines or loss of licenses and said, "It's time for them to step up."