The Communications Workers of America is pushing back against Nexstar’s pending $6.2 billion merger with Tegna, with the union looking to rally shareholder support at the company’s upcoming annual meeting.
The National Association of Broadcast Employees and Technicians (NABET-CWA), which represents workers at the company’s television stations, said it is looking to “improve governance so local TV stations can survive and thrive in the future.”
“Nexstar’s board lacks independent leadership from Chair and CEO Perry Sook, contributing to a record of governance problems that are harmful to shareholders,” NABET-CWA President Charlie Braico said in a statement. “Despite strong shareholder support for an independent board chair, the company has delayed implementation of this policy as a condition of its employment agreement with Sook and the board has not even appointed a lead independent director. Now company leadership is engaged in empire-building through the proposed TEGNA transaction to the detriment of shareholders.”
It also said that Nexstar management’s problems extend to labor relations, accusing the company of repeatedly engaging in “frivolous appeals,” as well as “wasting resources rather than complying with administrative and court decisions requiring it to recognize its workers’ unions at multiple locations.”
“By advancing an independent solicitation, we can ensure shareholders are afforded their right to a voice on the Company’s governance shortcomings,” Braico added.
The CWA’s proposals include adopting a “proxy access” bylaw provision that would require Nexstar to include stockholder-nominated candidates in the its proxy materials for up to 20% of the seats on the board of directors so long as the nominating stockholder (or a group of up to 20 stockholders) has beneficially owned at least 3% of company’s outstanding shares continuously for at least three years.
It is also requesting an amendment to Nexstar’s certificate of incorporation and bylaws as necessary to grant holders of at least 15% of outstanding common stock combined the power to call a special meeting of stockholders and for the board to adopt a poison pill bylaw provision to require that any rights plan be submitted to a stockholder vote within one year of being adopted, extended, or renewed by the board.
Additionally, the CWA is requesting that the board adopt a policy that the board chair must be an independent director who has not previously served as an executive officer of the company and to adopt a “major transactions stockholder approval” that requires the company to obtain stockholder approval of any merger or acquisition prior to closing, when the value of that transaction exceeds 20% of its market capitalization.
Last week, Nexstar CEO Perry Sook said that the company was “highly engaged” in “active discussions” with the Department of Justice and FCC about the merger.
FCC chairman Brendan Carr and President Donald Trump have both expressed support for the deal. Its completion is dependent upon raising or eliminating the 39% national TV ownership cap, which limits how many TV stations at single entity can own. The cap was put in place by Congress in 2004 to ensure viewpoint diversity and prevent monopolization.
Sook noted that Nexstar has provided over 2 million documents to the DOJ following the agency’s second request for information, which “provides rationale that the definitions of markets and the definition of video certainly needs to evolve with the times.”
“I think that that will happen and our transaction will get approved by the end of second quarter,” Sook reiterated. “We fully intend to close as soon as we have that approval.”
Upon closing, Nexstar, together with its partners, will have 265 television stations in 44 states and the District of Columbia, representing 80% of U.S. television households. It will add Big-4 affiliate stations in markets including Phoenix, Atlanta, Toledo and Portland, Maine. The combined company will also have stations in nine of the top 10 markets, and in 41 of the top 50. Together, Nexstar and Tegna will have combined net revenue of $8.1 billion and adjusted EBITDA before stock-based compensation of $2.56 billion, excluding synergies.
A date for Nexstar’s annual meeting has not yet been set. Nexstar declined to comment for this story.
