Nexstar Media has agreed to buy smaller rival Tegna for $3.54 billion, creating a local-TV powerhouse that seeks to compete better with Big Tech and national media for advertising dollars.

Acquiring Tegna will expand Nexstar’s presence in nine of the top 10 U.S. markets, covering 80% of TV households across key geographies, including Atlanta, Phoenix and Seattle.

That could give Nexstar, the largest U.S. regional TV station operator, more leverage with advertisers and pay-TV distributors at a time when local media is grappling with falling revenue and subscriber loss because of the popularity of streaming services.

Shares of Nexstar rose 7% in early trading, while those of Tegna gained nearly 5% to trade near the offer price of $22 per share. The offer values Tegna at $6.2 billion, including debt, and marks a 44% premium to the stock’s closing price on Aug. 8, before reports of a possible deal emerged.

The transaction is the latest in a wave of media M&A as firms once reliant on steady cable TV profits prepare for a streaming future. Earlier this year, Skydance merged with Paramount, while Comcast and Warner Bros Discovery have announced plans to split their businesses.

Nexstar and Tegna are betting on looser antitrust policies under U.S. President Donald Trump to push their deal in a sector long wary of local news consolidation.

The Federal Communications Commission (FCC) said in June it was seeking to refresh a rule that caps station ownership at a combined reach of 39% of U.S. television households. An appeals court also recently struck down the FCC’s “Top Four” rule, which barred ownership of two top-rated stations in the same market.

“The initiatives being pursued by the Trump administration offer local broadcasters the opportunity to expand reach, level the playing field, and compete more effectively with the Big Tech and legacy Big Media companies,” Nexstar CEO Perry Sook said.

Nexstar owns or partners with more than 200 stations and operates brands such as The CW and NewsNation, while Tegna runs 64 stations and networks, including True Crime Network and Quest.

The companies expect annual cost savings of about $300 million from the deal. Nexstar has secured financing from BofA Securities, J.P. Morgan Chase and Goldman Sachs to fund the transaction, expected to close by the second half of 2026.

If Tegna terminates the merger to take a higher bid, it must pay Nexstar $120 million. If regulators block the deal, Nexstar will owe Tegna $125 million, according to an SEC filing.

After a strong fiscal 2024 fueled by political ads, Tegna’s revenue has fallen for two consecutive quarters, including a 5% drop in the second, while profit has also slipped. Nexstar has also reported similar declines.

Craig Huber, analyst at Huber Research Partners, said the deal would make the combined company “bigger to compete in the marketplace but does not change things dramatically.”

BofA Securities, J.P. Morgan Securities LLC and Goldman Sachs & Co. LLC are Nexstar’s financial advisers, while Allen & Company LLC is Tegna’s financial adviser.

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(Reporting by Kritika Lamba in Bengaluru; Editing by Anil D’Silva)