The U.S. Court of Appeals for the D.C. Circuit has denied Standard General’s petition asking the court to force the FCC to vote on its proposed acquisition of Tegna before its financing expires on May 22.
Standard General reached its agreement to buy Tegna in February of 2022 and the review by the Media Bureau of the Federal Communications Commission has stretched out for more than a year. On February 24, the bureau designated the transaction be reviewed by an administrative law judge, a process likely to take several more months.
Tegna owns 64 TV stations in 51 U.S. markets and agreed to be acquired by Standard General for $8.6 billion including debt. Tegna also owns multicast networks True Crime Network, Twist and Quest and advanced advertising company Premion.
If the review goes past May 22, when financing for the deal expires, the deal expires with it, Standard General founder and managing partner Soo Kim said.
In its filings, Standard General has said that sending the deal to an administrative law judge unconstitutionally kills the deal without the FCC actually ruling on its application to have the Tegna station licenses transferred to Standard General.
But the D.C. Circuit ruled Standard General did not demonstrate the FCC “has unreasonably delayed in acting on their applications.” Standard General also did not show that the FCC had a “crystal clear” duty to rule on the application without resort to a hearing, the court ruled.
Observers agreed the ruling probably means the deal won’t close. Tegna shares fell 3% to $16.50 in midday trading Friday.
“While there may be various appeals and while the Administrative Law Judge proceeding is moving forward, we view the matter as largely closed, as none of those routes are likely to result in the transaction being approved before the May 22 deadline for the financing commitments,” noted former FCC chief of staff Blair Levin, who is now policy adviser to New Street Research.
“As expected, the D.C. Circuit found no merit in Standard General's effort to get an order directing the FCC to ditch its hearing process in the Tegna matter,” said Andrew Jay Schwartzman, noted communications attorney who represents The NewsGuild-CWA and NABET-CWA, which opposed the deal.
Added Schwartzman: “Standard General's desperate attempt to salvage its Tegna deal never had a chance. It didn’t take long for the D.C. Circuit to toss out each of the two cases it filed. This should be the end of the road; Standard General says that it can't extend its financing beyond May 22, and the FCC cannot possibly complete its ongoing hearing by then.”
Opposition to the deal centered on potential newsroom job losses at Tegna stations and higher retransmission rates that would lead to higher cable bills.
"Throughout this process, we’ve been consistent in our ask to be treated equally: that this transaction and the parties to it should be treated fairly, applying the same precedent and procedural norms given to past deals," Standard General said in a statement.
"If the Commission has concerns with the deal, it can transparently share them with Standard General, instead of effectively rejecting our application without ever even having to give any reason by extending the ALJ process into 2024 — far past the May 22, 2023 date when funding for the deal expires. At any point, however, between now and May 22nd, the FCC has the ability to override the Media Bureau’s deeply flawed Hearing Designation Order and bring this deal to a vote. We urge the FCC to treat this matter fairly and hold that vote — all applicants deserve a timely answer,” Standard General said.
