When Nexstar CEO Perry Sook opened an investor call on Thursday, he referred to the company’s merger situation with Tegna as “unusual.”

That sounds like an understatement. The company’s hopes of becoming a broadcaster behemoth, with almost 260 stations covering 80% of the country, well above the current limit for a single owner, have been put on pause by an antitrust case in California. A legal challenge is also being mounted in D.C. over the way that the FCC gave the deal its blessing.

While there ultimately could be some sort of resolution, wherein Nexstar agrees to more divestitures, the company is in the rather rare position of owning assets that it, under the terms of a court order, largely has to keep apart.

What is unclear is a timeline, whether it will be weeks or even months before Nexstar can proceed or, in the alternative, has to drop its plans to merge or greatly alter them in the face of an adverse court ruling.

“We believe we will prevail on the merits of this case,” Sook told analysts, while assuring them that “you know everything we know in terms of what is in front of us at this time.”

The uncertainty has made Wall Street restless, with analysts pressing executives at Nexstar and rival Gray Media for their views of the regulatory landscape. Nexstar shares have stagnated since the judge’s ruling, as have the stocks of other local TV players.

Citi analyst Jason Bazinet spoke for many when he observed on the Nexstar call, “In all my years, I’ve never really come across a situation where shareholders own an asset and can’t manage it.” He also expressed “worry” that Nexstar shareholders could be holding the bag if there’s an extended period of what he called “suspended animation,” with employees unable to focus given concerns about their job futures. Sook & Co. said they are “comfortable” with Tegna continuing to operate as a separate subsidiary, saying the arrangement has effectively been the case since the deal was proposed last fall.

Temperature Change

Just two months ago, Nexstar looked to be on the cusp of completing its combination with Tegna, creating an unprecedented giant in broadcasting. The company, which has grown in 30 years from a single Scranton, PA station to the No. 1 owner of stations in the U.S., sees massive scale as the only way to preserve local journalism at a time when newspapers and radio have all but vanished in most markets. Stations would be better able to compete with tech giants, which have siphoned off the local advertising base, Nexstar says. (Last month, in an appearance at the NAB Show in Las Vegas, Sook painted a starkly existential picture, saying it is “a matter of time” before just two or three companies control the entire local TV sector.) Donald Trump endorsed the deal in February and, soon after, the president’s FCC chairman, Brendan Carr, signaled his support.

On the evening of March 19, the FCC announced that its media bureau had signed off on the merger. About 15 minutes later, Nexstar followed up with a release announcing that the transaction had closed, following not just approval from the FCC but the lack of a challenge from the Justice Department.

Yet in the 24 hours before the FCC’s greenlight, a group of state attorneys general and DirecTV had each filed separate suits challenging the transaction on antitrust grounds.

A week later, a federal judge in California granted a temporary restraining order halting the combination, which meant that Nexstar, which had already paid for its new assets, had to keep the companies separate. The judge, Troy Nunley, later granted the state AGs a preliminary injunction.

Nexstar is appealing that case, with its opening brief due on May 20. It recently added Beth Wilkinson, a well known trial lawyer, to its team. She had represented the NFL in its successful effort to overturn a jury verdict over the joint licensing of broadcast rights to DirecTV’s Sunday Ticket.

More states have since joined the state AG’s challenge, including Massachusetts and Vermont, as well as three states where Republicans hold that office, Indiana, Kansas and Pennsylvania. Another Republican AG, Dave Yost of Ohio, reached an agreement where Nexstar agreed to keep separate journalism teams at each of the Tegna stations in the state unless there is a “material adverse change” to the business.

In the meantime, a separate proceeding is ongoing in the D.C. Circuit Court of Appeals. There, a group of cable and broadband associations and Newsmax, the conservative outlet led by Chris Ruddy, are challenging the FCC’s approval of the deal.

They alleged that the merger was rushed “across the finish line,” as it was approved before the end of an unofficial 180-day timeline for review, while the greenlight was given by media bureau staffers, not the full commission. Moreover, the plaintiffs are challenging the decision to grant Nexstar waivers, including one that limits an entity owning stations that cover more than 39% of the country. The rule in particular is hotly contested, with Ruddy and others testifying before a Senate committee earlier this year that only Congress has the power to raise that cap on ownership.

Last week, a three-judge panel of the D.C. Circuit declined to issue a ruling halting the FCC’s approval, deeming it premature as the agency has yet to act on the plaintiffs’ application for review, calling for a vote of the full commission on the merger. While that would appear to put the case in a kind of procedural limbo, the judges also directed the FCC to state when it will act on the application for review. With no action, the plaintiffs warn, “the chair need only sit back and keep the ensuing applications for review in a holding pattern until the merger goes through.”

Carr has defended the process. In a letter to Sen. Ted Cruz (R-TX) and Sen. Maria Cantwell (D-WA), the top lawmakers on the Senate Commerce Committee, he insisted that the commission had legal and agency precedent on its side in waiving the ownership cap for Nexstar, as well as waiving a local ownership rule that restricts how many outlets an entity can hold in the same market.

Carr wrote that the “bureau level decision is not a final action by the full commission,” but did not specify a timeline. He did offer to work the senators on “legislative ideas” about the FCC’s decision making process. But in this environment, where mergers are ever more politically fraught, anything substantial seems unlikely.

Wall Street Conundrum

Wall Streeters are trying to come to terms with the extent of the regulatory and legal morass surrounding the merger. One analyst on the Nexstar call repeatedly pressed the company for an answer about why the FCC hadn’t opted to ease or eliminate the cap before approving the Nexstar-Tegna deal. Nexstar President Mike Biard replied that he didn’t think that sequence of events “would change anything” in the case, arguing the claims in the lawsuits are “outside the FCC’s purview.”

Experts in the broadcast regulatory process have told Deadline that the scenario of the FCC altering the cap as a prelude to blessing the merger could have created greater liability for the agency. It has already been the position of many stakeholders, including some legal opponents of Nexstar but also both Democrats and Republicans alike, that changes to the cap can only be enacted by Congress and are not in the FCC’s jurisdiction. An effort to circumvent Congress would likely have elicited a lawsuit.

Gray Media executives declined to offer specific comments on the Nexstar-Tegna situation on their earnings call Thursday. Chief Legal and Development Officer Kevin Latek did offer an overall assessment of the regulatory landscape.

“We’re definitely mindful of what’s happening, and we are evaluating our opportunities through the lens of potential, additional uncertainty under new and novel theories being advanced by some attorney generals in various states,” he said. For now, Gray is holding off on pursuing new M&A deals as executives “evaluate the new FCC and DOJ understanding our industries, and this new uncertainty.”

Yet prior administrations, even the first Trump one, had less of a grasp of the broadcast industry, Latek said. The DOJ in particular, he said, “really seems to understand our industry far better than it has, probably ever. And that’s supportive. So, we do think that it facilitates the industry … continuing to do M&A.”