A black-owned TV company sued Nexstar Media Group on Wednesday, accusing the company of sabotaging its efforts to operate independently.
Marshall Broadcasting Group owns three Fox affiliates in Odessa, Texas; Shreveport, La.; and Davenport, Iowa. The company, owned by Pluria Marshall Jr., bought the stations from Nexstar in 2014, as Nexstar was looking to divest in order to win FCC approval for a series of acquisitions.
According to the suit, Nexstar aimed to sell to Marshall, knowing that the FCC would look favorably upon a sale to a minority-owned company. Nexstar went so far as to guarantee the financing to complete the transaction. But the suit alleges that since the deal, Nexstar has sabotaged Marshall’s effort to run the stations.
The suit claims that Nexstar intends to torpedo the value of the stations and then reacquire them, with the hope that “in the current political climate Nexstar will face significantly less regulatory push-back than it did in late 2014.”
Nexstar issued a statement denying the allegations: “The allegations made by MBG in its lawsuit against the company are spurious and without merit. The company intends to vigorously defend itself regarding this matter in a court of law.”
Nexstar is poised to become the nation’s largest TV station owner, if it can gain regulatory approval to acquire Tribune Media. Nexstar announced the $4.1 billion deal in December, and hopes to close by the end of 2019.
Marshall is the publisher of the Wave Community Newspapers, a group of African-American newspapers in Los Angeles. According to the suit, he tried to acquire TV stations in the late 1980s and early ’90s, but could not obtain financing. He tried again to buy stations in 2008 from Media General, but institutional lenders were unwilling to finance a deal due to “lack of sufficient independent assets.”
Nexstar helped Marshall overcome that obstacle in 2014, agreeing to extend a five-year guarantee to lenders, including Bank of America, to help him secure the three stations. However, Marshall alleges that the terms of the deal were tilted heavily in Nexstar’s favor.
Marshall contends that Nexstar overcharged him by $16 million for the stations, and has withheld millions of dollars in retransmission fees from cable providers. The suit claims that Nexstar also threatened to withdraw its financial guarantee, which would force Marshall into default.
“It has become clear that our only value to Nexstar was diversity optics at the FCC,” Marshall said in a statement.
“Ultimately this is a bait and switch,” Marshall told Variety in an interview. “The spirit of the agreement was for us to work together to grow Marshall Broadcasting. But I don’t think Nexstar ever really had designs on letting us grow. … This could happen to anybody else that is a minority looking to partner with a larger business so they can grow.”
According to Marshall, only 12 of 1,400 full-power commercial TV stations in the U.S. are black-owned.
The suit was filed in New York Supreme Court. Marshall Broadcasting is represented by David Boies of Boies Schiller Flexner LLP.