In a blow to the prospects for the Standard General-Tegna-Cox Media transaction, the FCC’s Media Bureau has designated the deal for hearing before an administrative law judge.
"[Chairwoman] Jessica Rosenworcel has just killed the deal, said one former top broadcast official at the news of the hearing designation. That death knell also rang false for at least one former FCC chair.
Standard General has been trying to acquire Tegna’s 64 TV stations and other assets, but the Federal Communications Commission said the judge needs to weigh in on “material concerns in the record related to how the proposed transaction could artificially raise prices for consumers and result in job losses.”
“As part of the FCC’s mission, we are responsible for determining whether grant of the applications constituting this transaction serves the public interest,” FCC chair Jessica Rosenworcel said. “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.”
If the designation does not kill the deal, as it has historically for other transactions, it definitely will delay any decision for months to come.
The FCC has made multiple requests for further documents from the companies related to jobs and retransmission consent fees, which are passed along by MVPDs to consumers.
Standard General agreed to acquire Tegna in an $8.6 billion deal that includes the assumption of $3.2 billion in debt. Apollo Global Management (AGM) is providing some of the funding for the deal. AGM controls Cox Media Group, which will own some of the Tegna stations if the deal is approved.
Petitions to deny were filed by The NewsGuild-CWA, the National Association of Broadcast Employees and Technicians (NABET)-CWA and Graham Media Holdings.
The FCC's Republican commissioners, Brendan Carr and Nathan Simington, were not supportive of the Media Bureau decision.
“Hundreds of local newspapers have shut down over the last few years alone. This trend is part of a broader decline in the investments necessary to sustain the journalists and reporters that are vital to communities across the country,” they said in a joint statement. “Many of the nation’s local TV stations are trying to step up and expand their newsgathering operations. At this moment, the FCC should be working to encourage more of the investment necessary for these local broadcasters to innovate and thrive. It does the opposite today. After a protracted, nearly yearlong review, the commission should be providing the parties with a decision on the merits — not an uncertain future.”
“Now that the FCC has designated the transaction for a hearing, do not expect an Administrative Law Judge to act quickly,” said Yosef Getachew, democracy program director for Common Cause, which opposes the merger. “An administrative proceeding is a long and drawn out process where the companies have the burden of proof to show that the transaction would not result in the potential harms outlined by the FCC. The best path forward now is for the companies to withdraw their deal. This proceeding should serve as a warning to private equity and hedge funds looking to make a quick buck by tearing down one of the key pillars in our democracy.”
Former Republican FCC Chairman Mark Fowler tore into the FCC's hearing designation decision and minced no words in the process.
"I read the Standard/Tegna hearing designation order today," he told Broadcasting & Cable. "I haven't followed the Commission in years. Now I remember why. When you get out the 1980s Reagan high school yearbook and compare an old flame to the 2023 Facebook, it can be psychologically mutilating. Ditto this Commission order.
"The two issues designated for hearing smack of manufactured lies reminiscent of Soviet-style show trials -- followed by next-day executions. The purported reasons crudely interfere with the business judgments of the parties. The decision isn't a correct understanding of the marketplace. It is suffocating government, Moscow/Beijing 2023.
"[Some] commissioners speculate that bad things might happen from possible retransmission fee hikes and reductions in local news personnel and that they might be bad. (They also give fortune teller readings.)The order makes the public interest standard unrecognizable, like a 1934 antique slathered over with layer upon layer of regulatory paint. It reeks of the thick fog of the authoritarian ideology which hovers over today's FCC headquarters.
The decision's ignorance of how business works is really the equivalent of fentanyl poisoning. It kills the transaction. Enjoy reading this Commission's order if you have nothing else to do that day.
Kudos to dissenting [Republican] commissioners [Brendan] Carr and [Nathan] Simington."
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