Standard General Blasts FCC Decision On Tegna Merger, Calls For Full Commission Vote
UPDATE: Standard General blasted the FCC’s decision to send its proposed acquisition of Tegna to an administrative law judge, accusing the agency of trying to scuttle the deal by delaying it.
On Friday, the FCC’s Media Bureau issued an order sending the transaction to the judge for a hearing. The bureau took issue with the transaction’s potential to raise consumer prices and to result in layoffs.
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In a statement, Standard General’s managing partner Soo Kim said, “A decision delayed is a decision denied. Our proposed transaction is consistent with all FCC regulations and precedent. It is bolstered by a voluntary commitment to invest in local news, preserve newsroom jobs, and address purported concerns related to consumer pricing. But rather than rule on the transaction’s merits, as the law requires, the Media Bureau is attempting to scuttle the deal by ordering a wholly unnecessary hearing process, that if left standing by the Commission, would kill the deal.”
He called on the commission to vote now on the transaction and render a decision on the merits.
“The unavoidable implication is that this particular transaction may be scuttled not due to substantive or evidence-based concerns, but rather by the Media Bureau’s unexplained view that Standard General simply should not be allowed to own these television stations and that any future applicant to acquire Tegna or any other TV station group must meet the test of being acceptable to the Media Bureau in its sole, absolute, and unreviewable discretion.”
Under the terms of the transaction, an affiliate of Standard General would purchase Tegna, which has 64 stations in 51 markets. Apollo Global Management, owner of Cox Media Group, is involved in financing the deal. Following the close of the transaction, Cox will acquire Tegna stations in Austin (KVUE), Dallas (WFAA and KMPX) and Houston (KHOU and KTBU) from Standard General.
Shares of Tegna were down more than 20% in trading on the New York Stock Exchange.
PREVIOUSLY, Feb. 24: Standard General’s proposed acquisition of Tegna faces new doubts as the FCC sent the merger to an administrative law judge, as the agency took issue with the transaction’s potential to raise consumer prices and result in job losses.
The FCC move has effectively killed past proposed mergers, as it adds delay and uncertainty to whether the deal will get a regulatory greenlight.
In a statement, FCC Chairwoman Jessica Rosenworcel said, “As part of the FCC’s mission, we are responsible for determining whether grant of the applications constituting this transaction serves the public interest. That’s why we’re asking for closer review to ensure that this transaction does not anti-competitively raise prices or put jobs in local newsrooms at risk.”
Rosenworcel said that “the additional review will allow us to make a more informed assessment on whether proposed safeguards are sufficient to protect the public interest, and we will take the time needed to address these critical questions.”
Under the terms of the transaction, an affiliate of Standard General would purchase Tegna, which has 64 stations in 51 markets. Apollo Global Management, owner of Cox Media Group, is involved in financing the deal. Following the close of the transaction, Cox will acquire Tegna stations in Austin (KVUE), Dallas (WFAA and KMPX) and Houston (KHOU and KTBU) from Standard General.
The decision to send the merger to an administrative law judge reflects a more robust posture by Biden-era regulators toward media consolidation. The FCC is split 2-2 between the parties, as the nominee for a fifth seat, Gigi Sohn, has been delayed in the Senate for more than a year. Mergers need an affirmative majority vote to get the regulatory greenlight.
Earlier this week, Standard General said that the Justice Department, which also reviewed the proposed merger, had not challenged the transaction, according to Reuters. But the companies had a higher bar to clear with the FCC, which reviews proposed mergers to determine if they are in the public interest.
The chief of the FCC’s media bureau wrote in the order designating the hearing that there were “significant concerns that warrant further investigation. In particular, substantial and material questions remain as to both the potential impact, and possible harm, to consumers through higher retransmission consent fees, and the effect on localism through potential reductions in local jobs.”
A spokesperson for Standard General did not immediately return a request for comment.
Last fall, then-House Speaker Nancy Pelosi weighed in on the deal, joining with Rep. Frank Pallone (D-NJ) in a letter to the commission that warned of the transaction’s potential impact on jobs, local news and consumer prices. They claimed that the company “have described piping in news produced in Washington, D.C., to fill time on local newscasts as a public interest benefit, potentially leading to fewer local journalists and less local news.” The proposed merger is opposed by a number of public interest groups as well as NewsGuild CWA.
Standard General had argued that the company, led by Soo Kim and Deb McDermott, will be the largest minority-owned and female-led broadcast station group in history, as broadcast diversity remains a primary FCC concern.
The company said in a letter to the FCC late last year that it would not conduct newsroom layoffs or staff reductions at the stations for at least two years following the close of the transaction. It also said that its D.C. newsroom would “supplement and enhance” local news offerings and not replace that content. It also attempted to alleviate concerns over retransmission consent negotiations with multichannel distributors, vowing to keep Cox and Tegna agreements separate.
The FCC announced its decision after the market close. Shares in Tegna plunged 25% in after-hours trading. When the acquisition, valued at $8.6 billion, was first announced in February 2022, the companies said they expected regulatory approval in the second half of last year. At the close of today’s regular trading, Tegna stock finished at $21.84, about where it was when the deal was initially revealed.
In 2018, Sinclair Broadcast Group’s proposed merger with Tribune Media was sidelined when the FCC sent the proposed transaction to an administrative judge. Tribune backed out of the transaction the next month.
— Dade Hayes contributed to this report.
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