Tegna Stock Plunges After FCC Sends Standard General Deal to Judge

The Tegna Inc. headquarters stands in McLean, Virginia, U.S., on Friday, March, 13, 2020. Comedian and TV producer Byron Allen has made a $20-a-share, all-cash offer for Tegna in a deal that values the TV station owner at $8.5 billion, including debt, according to a person familiar with the situation.
(Image credit: Andrew Harrer/Bloomberg via Getty Images)

Tegna stock plunged 25% in after-hours trading after the Federal Communications Commission’s Media Bureau sent Standard General’s $8.6 billion agreement to buy Tegna to be reviewed by an administrative law judge.

The stock fell more than 22% to below 17 a share in early trading Monday. It closed at $17.71 a share, down $4.15 or 19%

The FCC's action— which extends an already lengthy regulatory review of the acquisition — was seen as a blow to the deal, making it less likely to be cleared and closed.

“The FCC’s move suggests that a deal for Tegna will break,” Wells Fargo analyst Steven Cahall said.

If Standard General withdraws its offer, Tegna is expected to get a $136 million break fee, Cahall notes.

Tegna said it is evaluating its options. Standard General hasn’t commented. 

Also: Standard General Says Change Will Be Good for Tegna

Standard General was offering $24 a share for Tegna. On Friday, after the FCC’s decision was rendered, Tegna stock dropped from 21.84 a share to $16.30. Cahall dropped his target price for Tegna shares from $24 to $20.

“As far as we could tell, the deal met typical FCC and DOJ requirements,” Cahall said. “However, politics can be a tricky thing.” He said it appeared that the FCC and Congress were concerned about the broadcaster being bought in a private-equity deal. 

“We think another buyer could emerge if it believed it had a stronger political argument and still meets regulatory requirements,” Cahall said. 

With the breakup fee and $300 million in cash on its balance sheet, Cahall also noted, Tegna could buy back a bunch of its own shares, helping to restore its stock price.

The FCC said it sent the deal to a judge rather than approving it because there were concerns the transaction could lead to higher prices for consumers and job losses, particularly in newsrooms. 

Those concerns were stoked by unions and cable operators.

Standard General made several pledges not to raise fees or fire staffers if the deal is approved.

“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.” ■

Jon Lafayette

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.