FCC: Standard/Tegna Concessions Delayed Deal Review

The complicated series of transactions in the Standard/Tegna deal and the companies’ own submission of “narrowly crafted” concessions at a “late stage” of the process led to the protracted review of the purchase and subsequent hearing process (see [Ref;2304040063]), said the FCC in a partially redacted response filing Tuesday (docket 23-1084) with the U.S. Court of Appeals for the D.C. Circuit. The broadcasters' response is due Friday.

The court should deny the broadcasters' request for a writ of mandamus compelling the FCC to act, the agency said. “The record here does not show any delay, much less unreasonable or egregious delay,” the FCC said. “If anything, the commitment letters only tend to show that the transactions as originally proposed, and as pursued by Applicants for more than nine months, raised real and substantial concerns worthy of further examination.” Deal opponents and intervenors Common Cause, the United Church of Christ Media Justice Office and the Communications Workers of America also filed a brief with the court Tuesday supporting the FCC position. Standard General declined comment. The American Television Alliance asked the court for permission to file an amicus brief in the case late Tuesday.

Multiple broadcast and appellate attorneys have said mandamus rulings by the appellate courts are extremely rare, and usually happen after a matter has languished for years. Courts also tend to defer to agencies on technical matters under their purview, and the broadcasters’ chances are considered slim. “The agency has a strong response,” said Linda Jellum, administrative law professor at the University of Idaho College of Law.

The multiple pleading cycles in the deal “were necessitated by Applicants’ own submissions” including issuing in December “three new commitment letters purporting to materially alter matters under consideration,” the FCC said. “It was reasonable for the Media Bureau to conclude that the agency should undertake a full hearing to give the transactions a close look, rather than summarily approve them without further scrutiny.”

Commitments not to raise retransmission rates due to after-acquired clauses were issued in the name of Standard General only, which could allow other entities in the deal to raise rates, the FCC said. It isn’t clear how a commitment made by the broadcasters to keep retrans information separate among the involved companies “could be monitored or enforced,” the FCC said. “Judging from the text of the HDO, addressing these new submissions necessitated additional work that may well have added several weeks to the processing,” said the intervenors.

“Many transactions before the FCC take as long or longer than this one to reach decision on whether to grant the application or designate a hearing,” said the intervenor filing from the unions and public interest groups. “In fact, the FCC staff assisted Petitioners by flagging shortcomings in the record. Ultimately, it is the failure of the Petitioners to meet their statutory burden that led to a hearing.”

The Standard/Tegna broadcasters are “wrong to characterize retransmission agreements as purely” private contracts between broadcasters and MVPDs “since the resulting retransmission fees are effectively passed on to consumers who are not parties to those contracts,” the agency said. “These aren’t typical synergies achieved through increased efficiency or cost savings,” said the agency, referring to projections of the deal’s value from internal Standard and Apollo documents submitted in the proceeding. “Instead, these appear to be projected revenue increases from price hikes that do not result from any improvement in the underlying product.” The FCC "may properly consider potential anticompetitive retail price increases in its public interest review," said ATVA.

A commitment not to cut jobs for two years after the deal doesn’t address the FCC’s concerns, the filing said. “A modest time-limited behavioral remedy does nothing to alleviate any underlying structural pressures to reduce local investment and staffing, which would persist after Applicants’ commitment expires.”

The FCC and intervenor filings also emphasize the transaction's complexity. The Standard/Tegna deal is “a novel and complex set of four interrelated transactions” with stations changing hands multiple times among Tegna, Standard and investor Apollo Global Management, which also owns broadcaster Cox Media Group, the FCC said. “The interrelationships in this unorthodox package raise many unprecedented questions, which led the FCC staff to find that there are substantial and material questions of fact,” said the intervenors. “If the broadcasters indeed believed that the Media Bureau was taking too long to act, they should have raised the issue at that time, rather than wait until after it issued the Hearing Order," the agency said.

The May 22 final extension date for the deal shouldn’t affect the court or the FCC’s decision-making, the FCC and intervenor filing said. “Nothing allows Applicants to unilaterally limit, through their private contractual agreements, the time allowed for the government to complete all necessary review.” Private parties don't "dictate regulatory deadlines,” the intervenors said. The agency’s 180-day shot clock is described as “informal” on the FCC’s website and warns that several factors can lead to a longer review. Since Standard/Tegna required foreign-ownership permissions, “it would have been impossible in this case to approve the transactions within six months,” said a footnote in the filing. “Parties who fail to allow sufficient time to accommodate a longer process thus do so at their own risk.”