Standard General Appeals FCC’s Hands-Off Maneuver Regarding its TEGNA Merger

Standard General has made a formal appeal to the Federal Communications Commission (FCC) regarding the FCC’s Media Bureau’s decision to send the review of the company’s possible acquisition of Tegna to an administrative law judge, arguing that the move will “torpedo” the deal. That’s unfortunate because excessive government interference in this merger is unwarranted and could harm the businesses and consumers.

Although it’s been a year since the hedge fund Standard General agreed to acquire Tegna for $5.4 million, the deal has been stuck in regulatory review. The FCC has said the “proposed transaction could artificially raise prices for consumers and result in job losses,” even though Standard General says on its website that it submitted a series of binding and enforceable commitments to regulators. These include waiving its contractual rights to apply after-acquired retransmission rates to the Tegna stations and committing to maintain current newsroom staffing for a minimum of two years. Tegna manages 64 broadcast stations and two radio stations in 51 markets in the U.S.

“Standard General has been clear from the beginning that it intends to grow – not shrink – the news gathering operations at our local stations, and TEGNA’s new leadership has a history of doing just that,” the hedge fund said in its post.

The merger would create the largest minority-owned, female-led broadcast company in the United States, but the deal now appears to be in jeopardy.

Standard General, Tegna and Cox Media Group made the appeal to the FCC, and those parties argue that continued delays could kill the merger since financing runs out on May 22.

“As we have made clear previously, our applications comply with all FCC rules and deserve a vote by the FCC commissioners, which any three commissioners can request,“ Standard General said in the filing. “Instead, the Media Bureau’s order is endangering those public-interest benefits through a transparent effort to exercise an unlawful, unprecedented and indefensible pocket veto.”

Standard General also said the commission has “a clear obligation to intervene to prevent the Media Bureau’s disparate treatment of the applications from depriving the public of substantial benefits of the transactions while damaging both Tegna and the entire broadcast industry’s future access to investment capital and financing, all to the great harm of the public.”

Republican FCC commissioners Brendan Carr and Nathan Simington previously issued a joint statement criticizing the Media Bureau’s decision.

“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,” they said.

The petition said that if no decision is made before May 22, the financial obligations of more than a dozen lenders helping fund the deal will expire. The filing further warns that if the FCC doesn’t “correct that overreach” by the Media Bureau by March 27, “applicants will have no choice but to seek judicial relief.”

Johnny Kampis is director of telecom policy for the Taxpayers Protection Alliance.