Deadlocked FCC Still Has Power to Block Standard General-Tegna Deal

FCC chair Jessica Rosenworcel and member Brendan Carr testify before House panel
The clock is running for FCC chair Jessica Rosenworcel (l.) and Republican commissioner Brendan Carr to vote on the Standard General-Tegna merger. (Image credit: Tom Williams/CQ-Roll Call, Inc via Getty Images)

The Federal Communications Commission is getting a full-court press from both friends and foes of the merger of broadcast groups Standard General and Tegna, which Democrats could block even with a politically divided 2-2 regulator.

The political tie-up has forced the FCC to avoid most controversial calls — like reforming the Universal Service Fund, reinstating network neutrality rules or re-regulating broadcasters — all of which could be on the docket with a Democratic majority. Proposed mergers, though, can at least be thwarted without a majority.

Tegna, which owns 64 TV stations in 51 U.S. markets, agreed to be acquired by Standard General back in February for $8.6 billion including debt. Tegna also owns multicast networks True Crime Network, Twist and Quest, as well as advanced-advertising company Premion.

The FCC has sought more information on the proposed merger's impact on jobs and retransmission-consent negotiations, the latter a big issue with the cable operators on the other side of the table.

In fact, to help Standard General and Tegna respond to its second request for  information, the FCC on Wednesday (Oct. 12) posted instructions in the deal docket on "Instructions for Electronic Production of Documents and Electronically stored Information, saying that "[i]n many cases, it is useful for the party producing the documents, its vendor, and the FCC staff to review the technical details of the production prior to submitting the response."

When the FCC is done vetting that input, and public comments, it would only take two Democrats in opposition — chairwoman Jessica Rosenworcel and Commissioner Geoffrey Starks — to block the deal, confirmed a former high-level FCC official. The Democrats on the commission are being pushed by unions and cautioned by some top Democrats in Congress, the official said.

If it were Republican commissioners who opposed the deal, and Democrats who supported it, the Democratic chairwoman could allow the Media Bureau to approve it, though deal opponents would almost certainly seek full-commission review.

The more likely scenario if the deal were deadlocked, though, is that Democrats would be the ones in opposition.

But while Democrats often cite consolidation ias a reason to have issues about a TV station group merger, Standard General has pointed out that Tegna will actually be smaller after the deal, creating what it called the opposite of consolidation. 

There are certainly high-powered Democrats who are highly skeptical of the deal.

Congressional Concerns

Two of the top Democrats in Congress wrote the FCC late last week to express their strong concerns.

According to a copy of a letter provided to Broadcasting+Cable dated October 6, House Speaker Nancy Pelosi (D-Calif.) and Senate Commerce Committee chairman Frank Pallone Jr. (D-N.J.) asked Rosenworcel to “fully examine” the deal and the concerns raised by public comments, which they say are shared by “many of our colleagues in Congress.”

According to the pair, those concerns include that the deal would restrict access to local news coverage, cut jobs and raise prices for consumers via increased retransmission consent fees to cable operators and other multichannel video programming distributors MVPDs.

Deb McDermott, CEO of Standard General’s Standard Media Group, has written to Tegna newsroom personnel to tell them of the company's commitment to news and news jobs.

Standard General executives have also pointed out that the “complicated” deal structure some have criticized would result in a boost in women and minority ownership of media, an FCC public interest goal. 

The resulting broadcast group would be run by a woman, McDermott, working for Standard General managing partner Soo Kim, an Asian-American. In other words, Standard General told the FCC, the deal would create “the largest minority-owned and female-led broadcast station group in U.S. history.”

Given that diversity argument for the deal, which has support including from Richard Rose, president of the Atlanta branch of the NAACP, the FCC could approve the deal with merger conditions that address sticking points like retransmission consent.

NCTA–The Internet & Television Association has told the FCC that if it does approve the deal, it needs to adopt binding conditions that make sure that the newly companioned company does not leverage that new muscle to engage in impermissible joint retrans negotiations.

‘Shot Clock’ Winds Down

The FCC is currently on day 173 of its informal 180-day informal shot clock on completing its review of the deal.

Standard General pointed out that while its deal requires no waivers or station divestitures to comply with FCC rules, the agency has, indeed, failed to make a decision in almost nine months. Other deals — including Gray Television’s acquisition of Meredith and E.W. Scripps’s purchase of Ion Media stations, which did require spinoffs to stay within the rules — were approved in under three months and under six months, respectively. 

“[T]he time has come to approve the transaction and unleash an almost 300% increase in the number of minority-owned TV stations in the U.S., bringing badly-needed diversity to the nation’s broadcast station ownership,” Tegna said. 

"Deb McDermott and I have a proven track record of enhancing stations’ service to their local communities," said Soo Kim, Standard General founding partner. "As a woman and a minority, respectively, we may well have had to work twice as hard as most to get to where we are in the media industry. We will bring decades of experience and perspectives to the ownership and leadership of TEGNA, an important media company." ■

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.