Standard General, CMG Blast FCC for Delays in Approving Tegna Deal
The FCC has made “no attempt to expedite the process,” lawyers claimed in a filing with the 2nd Circuit of Appeal
WASHINGTON, D.C.—In a March 30 court filing, lawyers for Standard General, CMG Media and Tegna blasted the FCC for delaying approval of the proposed acquisition of Tegna and asked the court to order the FCC to approve the transaction.
The companies filed an appeal in the United States Court Of Appeals for The District of Columbia Circuit after the FCC’s Media Bureau referred the matter to an administrative law judge. That decision would likely delay action on the deal past the May 22 deadline when the deal’s financing would expire.
“Appellants SGCI Holdings III LLC (Standard General), Tegna Inc., and CMG Media Corporation negotiated an $8.6 billion transaction that would create the largest-ever minority-owned and female-led television station group in the Nation,” the lawyers wrote in the Appellants first brief. “That deal will not only expand opportunities for minority and female journalists and media professionals, but it will also enhance broadcast competition by reducing market concentration and substantially increase much-needed investments in local news nationwide. To effectuate that transaction, the broadcasters applied to the FCC to transfer station licenses. These applications require no waivers, fully comply with FCC rules, and markedly improve diversity in media ownership. Accordingly, approval should have come as a matter of course.”
“The Commission, however, has chosen to kill that transformative transaction,” the brief complained. “And it has done so without a word of explanation. Instead, the FCC elected to allow a subordinate component—its Media Bureau—to set the matter on a protracted and unlawful procedural path that the FCC knows cannot be completed before the deal dies of natural causes. As the Commission has known since the broadcasters first applied for the license transfers more than a year ago (on March 10, 2022), the deal must be completed by May 22, 2023. On that date, critical and now-irreplaceable financing commitments will expire. Yet on February 24, 2023, after permitting unprecedented pleadings and discovery and failing to reach a decision after 11 months, the FCC’s Media Bureau abruptly ordered the matter set for a `hearing' before the FCC’s Administrative Law Judge (ALJ)—in essence, a full-blown trial….It is common ground that such a `hearing’ cannot be completed before the transaction’s long-known, immovable deadline. In the past 30 years, the shortest such hearing lasted nearly a year. Setting the matter for hearing in these circumstances is no different than disapproving the applications outright. But despite the broadcasters’ urgent entreaties, the Commission declined to countermand the Bureau’s Hearing Order, refusing even to respond.”
The brief also noted that “The Hearing Order makes no attempt to expedite the process. It allows 35 days to run (nearly 40% of the time left to close the transactions) just for the parties to enter appearances and for the ALJ [administrative law judge] to enter a scheduling order. Consistent with the agency’s refusal to recognize the time-sensitive nature of the situation, the ALJ waited 33 days and then failed even to comply with the Hearing Order. Instead of setting a schedule with a `set date for resolution,’ she gave the parties three weeks to set a schedule and set an initial status conference for April 26—less than a month before the transaction’s expiration.”
In response, the appellants asked the court to reverse the Commission’s decision and approve the deal. “No reasonable adjudicator could find that the applications are inconsistent with the public interest. Given the urgent timeline and the Commission’s demonstrated propensity for delay, an open-ended remand for further proceedings would simply prolong this $8.6 billion
deal’s unjustified uncertainty. Because granting the applications is indisputably consistent with the public interest, the Court should instruct the Commission to grant the applications,” the lawyers wrote.
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George Winslow is the senior content producer for TV Tech. He has written about the television, media and technology industries for nearly 30 years for such publications as Broadcasting & Cable, Multichannel News and TV Tech. Over the years, he has edited a number of magazines, including Multichannel News International and World Screen, and moderated panels at such major industry events as NAB and MIP TV. He has published two books and dozens of encyclopedia articles on such subjects as the media, New York City history and economics.