Standard General CEO Soo Kim said he doesn’t understand the opposition to his company’s $5.4 billion acquisition of Tegna.
One of the concerns raised in the petitions is the role of private-equity giant Apollo Global Management, which controls station owner Cox Media Group and is involved in financing Standard General’s deal. In particular, it is claimed Apollo would work with Standard General to put pressure on cable operators in retransmission consent negotiations and consolidate newsrooms in markets where both own stations.
Kim told Broadcasting+Cable that he and Standard Media CEO Deb McDermott have a record of investing in the stations they have bought over the past decade that should outweigh any issues raised by Apollo, a relative newcomer to the broadcast business.
“I guess they cast a larger shadow,” he said. “Look, this is our deal. To say this is about Apollo is almost like shading Deb and myself. I just don’t understand it.”
In particular, Kim said he was surprised by the petition filed by Graham Media Holdings, which was concerned about the possibility that Standard General and Apollo’s Cox Media Group would control four network-affiliated stations in Jacksonville, Florida, where Graham also owns a station.
Station owners rarely criticize other broadcasters’ deals, Kim said. “I’ve never seen a broadcaster file against another broadcaster,” he asserted. Other observers believed Graham's action was unusual if not unprecedented.
Kim was also taken aback by petitions from unions, including the NewsGuild and the Communications Workers of America. He said Standard General has worked well with unions. While the NewsGuild has just a handful of members at Tegna stations, Standard General has said it doesn’t plan any newsroom cuts and McDermott sent a note to employees emphasizing Standard General’s commitment to stations and local news.
”We hope to dialogue with them and figure out what’s going on,” Kim said. If there was a problem between the union and Tegna, “we will hope to improve on any relationship in the past.”
Kim said he thinks some of the opposition to the Tegna deal is coming from parties interested in acquiring Tegna or some of its stations, rather than being about the public interest, and that Apollo’s involvement was just an excuse to criticize the transaction.
“Look, this is our deal,“ he said. ”We own 100% of this company. Apollo is one of 12 banks and preferred financing sources. I don’t work for other people.”
Tegna was too big for Standard to buy by itself and Apollo wanted to buy some of the Tegna stations. Kim said that Apollo was involved in the bidding for Tegna before Standard General got involved. He said Standard General didn’t bring Apollo into the deal.
“We’ve operated stations for years and years. People should know what they get with us,” he said.
“What they’ll get is a company with a minority owner, run by a woman, that’s committed to serving diverse communities,” Soo said. “We think that’s good business.”
Kim said he respects the regulatory process. “Large deals typically get a little bit more scrutiny from all parties,” he said.
But other big deals — like Gray Television’s acquisition of the Meredith local stations — have sailed through in a matter of months without comment from the parties opposing the Tegna sale. Gray’s deal and Nexstar Media Group’s earlier acquisition of Tribune Broadcasting consolidated the industry, while Standard General’s would do the opposite because Tegna’s stations in Dallas are being sold to Apollo’s Cox Media Group.
“I don’t see any real legal, regulatory or precedential reason” why the deal would not be approved, he said. “We specifically designed this deal so we weren’t asking for anything special. We’re not asking for any waivers. This is literally right down the middle of the fairway.”
Nevertheless, Kim maintains that the opposition hasn’t knocked Standard General off schedule. The review process is still “well within the bounds of that we have both expected and allocated.” While calling himself “patient,” he said “We’re eager to get our work started. We have some really interesting plans which we’re also happy to share with regulators. This is an industry that needs to evolve, that needs to continue to push forwards, and we’re just looking forward to doing that.”
Still a Good Deal
Since Standard General agreed to buy Tegna in February, the stock market has plummeted and inflation has cast a shadow over an economy already weakened by the pandemic.
But Kim maintains paying $5.4 billion — or $8.6 billion including debt — for Tegna is a good deal.
“Absolutely,” Kim said. “We didn’t buy this to do a quick flip. We believe that broadcast television is at a crossroads and it needs to decide what it needs to be. But I think that the opportunity set is huge.”
The Tegna stations will benefit from being part of a private company unconcerned about quarterly earnings, Kim said. “That will actually give us a little bit of headroom and the breathing space a company needs to think about the future,” he said. “The industry requires some evolution. It can’t be locked into the past. And we think a private structure is the optimal way to get from point A to point B.”
“I think the future is bright for local video journalism,” he said. “Local content is more important than ever and something that’s free and ubiquitous is meaningful.”
Kim describes Standard General as a “representative company.”
“A representative company is actually the best company, because a company that most closely resembles its audience can deliver on its customer promise best,” he said.
The company’s staff should reflect its audience, management should reflect the team members and the board should reflect the management team, he said. “I’m not doing this to check a box,” he said. “It’s my strong belief that it’s good business.”
Kim noted that Tegna has faced some complaints from Black and Latino journalists in the past.
“We’re going to solve this problem,“ he said. ”We’re going to outreach these groups and look at the situation on a station-by-station, market-by-market basis and make sure that we are representative and that local community voices are heard.”
Kim said the company has a plan that looks a bit like the community access cable operators offer. Standard Media stations will find time to open their studio to community journalists and give them airtime.
“We only use our tools some of the hours of the day,” he said. “So in the time we’re not using them, maybe we should open up some of those tools for the community so they can put up high-quality product on the air and increase the voices in our market.
Kim said his relationship with TV started when he emigrated to the U.S. in 1980. “My parents didn’t know how to speak English and neither did I. I learned English by watching TV, watching Sesame Street and The Electric Company. I believe in the power of broadcast to do good for society. " ■
Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.
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