Transaction Would Create the Largest Minority-Owned Broadcasting Company in U.S. History
WASHINGTON–(BUSINESS WIRE)–Today, Standard General filed suit against the Federal Communications Commission in the U.S. Court of Appeals for the District of Columbia Circuit, asking the court to order the FCC to stop its unprecedented treatment of Standard General’s acquisition of broadcast company TEGNA, a deal which would create the largest minority-owned and female-led broadcasting company in U.S. history.
Standard General proposed to acquire TEGNA in order to create one of the nation’s leading local broadcast companies – positioned to invest in and deliver the absolute best local news, weather, sports and entertainment in every community in which it will operate. Standard General’s commitment to this vision has not waivered. If the FCC Media Bureau succeeds in killing this deal, everyone — viewers, newsrooms, TEGNA employees, American communities, and shareholders — will be worse off. Standard General believes the beneficiaries of the transaction are worth fighting for including:
- Viewers: Standard General will bring viewers access to better quality local programming — as they have regularly done at the television stations they have owned, which saw a 40,000 hour increase in local newscasts during Standard General’s ownership.
- Local Newsrooms: In Standard General’s existing TV stations, they have grown newsroom jobs by 30% in recent years. And they will commit to bringing a similar investment to TEGNA’s newsrooms.
- TEGNA Employees: Standard General committed that it would make no headcount reductions in TEGNA’s newsrooms for at least two years. This commitment to preserve jobs stands in sharp contrast to the overall trend in local media nationwide, which are experiencing drastic job cuts.
- Communities: American communities will be better informed — and entertained — if this deal goes through, as the owners and managers of TEGNA will finally reflect the diversity of their audiences in the communities they serve.
- Shareholders: Rejecting this deal will cost current TEGNA shareholders more than $2 billion, hardly encouraging future investment in the broadcast industry.
This deal should never have become controversial in the first place.
- It conforms to all FCC rules and precedents, requiring no waivers or divestitures.
- This deal does not constitute consolidation—in fact, it is making TEGNA, an existing group of stations, smaller.
- Standard General has a proven track record, with more than a decade of experience owning television stations—and doing so in a way that has grown, not shrunk, newsrooms across the country.
- The DOJ waiting period to close the deal expired without any judicial challenge—in a time where many deals are being challenged.
- The FCC has a standing policy in favor of acquisitions that would help diversify the media industry—and this deal would triple the number of minority-owned commercial TV stations nationwide.
The FCC Media Bureau subjected this deal to unprecedented — and unfounded — scrutiny.
- Ordinarily, the agency abides by a 180-day shot clock (see: Scripps-ION; Grey-Meredith) — but, in this case, the FCC opened three extended public comment periods over 10 months, during which Standard General produced 13 million pages of documents to the FCC and DOJ.
- The FCC repeatedly declined Standard General’s offers to meet—granting them only one 30-minute session with the Commissioners and an hour-long session with the Media Bureau—while meeting with special interests opposed to the deal over a dozen times.
- Not once during its nearly year-long review did the Media Bureau express any concerns with the transaction, much less discuss with the applicants what would address those concerns.
- After all of this, the Media Bureau unilaterally, without seeking a vote of the full Commission, designated novel “questions” relating to the transaction for a lengthy hearing before an administrative law judge without giving Standard General an opportunity to engage with the Media Bureau and address these questions—an unprecedented and legally improper maneuver.
- The Media Bureau’s maneuver—which it appears to have deliberately waited almost a full year to deploy—had a singular purpose: to kill the deal without affording Standard General a full Commission vote or judicial review by delaying the process beyond the May 22nd financing deadline for the transaction, a full fifteen months after the deal was announced.
- To be clear, Standard General is prepared to answer the questions raised by the Media Bureau and has nothing to hide. As is apparent through the 13 million of pages we have submitted, we have never been afraid of a detailed review. All we seek – and have been seeking throughout – is an opportunity to do so through a fair process that can be completed within a timeframe that will allow us to close our deal.
This is why the deal has received widespread support.
- Dozens of bipartisan legislators, policy experts and advocacy organizations including civil rights groups, labor unions, broadcasters, advocates for women in tech, media, and public interest groups seeking to advance diversity in broadcasting have expressed support for the transaction.
- Supporters include multiple state and local chapters of the NAACP, including the NAACP New York State Conference and the Missouri State Conference NAACP; the Council of Korean Americans, including the Korean American Civic Empowerment, the New York Association of Korean American Business and the Korean American Association of New Jersey; the National Association of Hispanic Publications; Rev. Jesse Jackson, Dr. Benjamin Chavis, Charles Yoon, and Hazel Dukes, among many other important voices from the civil rights community; and labor organizations including the International Union of Operating Engineers and UNITE HERE.
To bring this vision to reality, Standard General has diligently sought the necessary regulatory approvals for over a year now. But rather than independently evaluate Standard General’s applications, the FCC catered to a group of serial objectors that showed up to challenge the deal, including lobbyist and attorney David Goodfriend, whose entrance in August coincided with the approval process noticeably slowing. The objectors claim that the deal might increase the fees charged to distributors for retransmitting station content or result in newsroom layoffs—even though no evidence bore out these claims. In fact, Standard General voluntarily committed to keep current fees and staffing intact, both major concessions in unstable economic times. In addition, Standard General has also offered a 20% increase in local news budgets, a multimillion-dollar local journalism grant program, and neutrality commitments for unions.
Even worse, the opposition tried to gin up fears of “foreign influence,” an offensive implication given that Mr. Kim—a proud U.S. citizen—immigrated to this country from Korea when he was just five years old. In one filing alone, these objectors used the word “foreign” a half a dozen times.
Unfortunately, even though the law requires the FCC to demand real proof from challengers before giving their claims credence, the Media Bureau readily accepted the challengers’ unsupported complaints—and then relied on those claims to procedurally sideline the transaction without a vote of the full Commission.
In February—fully aware of the deal’s May 22 drop-dead date—the FCC’s Media Bureau ordered the matter to undergo a lengthy factfinding hearing before an administrative law judge on claims raised by the objectors before it will even be considered on its merits. If this decision is not reversed, it will guarantee that Standard General will never get a full-Commission up-or-down decision on its applications in time; over the past 30 years, the average such hearing has taken over two years, and no hearing has concluded in less than 300 days. The deal will be dead before the hearing even gets off the ground. Obtaining a positive ruling from an administrative law judge a year or two from now will be far too late.
The hearing order is both extralegal and unnecessary. It flouts the Constitution by assigning the hearing to an administrative law judge who is insulated from presidential control. And it tasks her with considering two issues—retransmission fees and staffing—that are not under threat and beyond the Commission’s authority to address.
Something is terribly wrong at the FCC Media Bureau. Agencies are tasked with serving the public interest in a transparent manner—an obligation the FCC has tried to dodge in this case by utilizing its Media Bureau to order a hearing that will effectively kill the deal without a formal denial. But Standard General will not let this stand. It will continue to pursue every avenue—including doing everything in its power to work with the FCC to timely resolve this matter—both in and out of the courtroom. At any time, three FCC Commissioners can decide to do the right thing and demand a vote.
Because, as an FCC Commissioner said just last month, when it comes to diversity in media, “We need to do better.” And approving this historic deal would do exactly that.
About Standard General
Standard General was founded in 2007 and manages capital for public and private pension funds, endowments, foundations, and high-net-worth individuals. Standard General is a minority-controlled and operated organization. Soo Kim, Standard General’s Managing Partner and Chief Investment Officer, is supported by a diverse, highly experienced 17-person team, including seven investment professionals with over 120 years of collective investing experience.
For media inquiries:
Andy Brimmer / Jamie Moser / Jack Kelleher
Joele Frank, Wilkinson Brimmer Katcher