As Standard General’s pending acquisition of Tegna remains in a precarious regulatory spot, the hedge fund on Monday announced a new series of commitments to protect journalism jobs.
Notably, Standard General pledged to not lay off Tegna newsroom employees for at least three years post-transaction, an expansion from the two-year commitment the company made in December. The commitment covers all employees part of the NewsGuild-CWA and NABET labor unions, both of which oppose the $8.6 billion deal.
In addition to its commitment against layoffs, Standard General said it plans to increase local news budgets and programming by around 20% across Tegna-owned stations as well as establish a $5 million local journalism grant fund.
“The commitments announced today underscore the strong, good-faith relationship between Standard General, organized labor and the American public,” said Standard General Founding Partner Soo Kim in a statement. “The only obstacle to this deal moving forward is the Federal Communications Commission refusing to hold a vote on the deal.”
Though the Standard General-Tegna deal was initially set to close at the end of 2022, the FCC in December extended its regulatory review with another round of comments. Then in February, the FCC’s Media Bureau decided to send the transaction to an administrative law judge (ALJ) hearing, a lengthy process that’s often seen as a deal-killer.
Standard General also announced on Monday it reached an agreement with the International Alliance of Theatrical Stage Employees (IATSE) in connection with the deal. IATSE, which has 168,000 members across 360 local chapters, is one of Tegna’s largest unions.
“We are happy to be entering into this agreement with Standard General to support its pending acquisition of Tegna,” stated Matt Loeb, international president of IATSE. “Standard General’s additional commitments confirm the company’s dedication to protecting jobs while focusing on industry growth and expanding diversity of ownership in the media.”
Attempting to speed up a decision on the deal, Standard General in late March filed a lawsuit in the DC Court of Appeals against the FCC’s hearing designation order. Standard General sought an expedited timetable for the review, as the transaction’s financing expires on May 22.
The court earlier this month rejected Standard General’s initial appeal, essentially finding there was not yet a final FCC action for the company to appeal. The DC Court of Appeals added it will consider a conditional writ of mandamus petition, which Standard General also filed.
If granted, a writ of mandamus would force the FCC to reach a decision on the transaction, as Law360 pointed out. The FCC, along with unions and other parties opposing the deal, filed briefs against the writ on April 11.
Standard General last Friday submitted a reply brief to the DC Court of Appeals, stating the FCC “should not be permitted to kill a deal, without accountability, by stretching the proceedings beyond the negotiated expiration date to consider challengers’ fact-free conjecture.”
The company’s reply brief also referenced a Supreme Court ruling made on that same day, concerning the use of ALJs at the Federal Trade Commission and SEC.
According to New Street Research, the Supreme Court determined those involved with a merger should have an immediate right to challenge the constitutionality of an ALJ proceeding, rather than wait for the ALJ hearing to run its course.
Standard General in its brief argued the FCC “opposes ‘material relief’ for the unconstitutional insulation of its ALJ—a fatal defect the Supreme Court today unanimously confirmed inflicts ‘a here-and-now injury’ and justifies immediate judicial review.”
However, NSR’s Blair Levin said it’s unlikely the Supreme Court’s decision will provide the necessary relief to close the transaction by the May 22 financing deadline.
“Indeed, we would guess that the FCC and the intervenors would not care much about an injunction like that because it does not go to the core SG problem,” he said in a note to investors. In Standard General’s case, the issue lies in “getting a court to order the FCC to issue a license even if the court immediately ruled against the FCC on the constitutionality of the ALJ’s role.”
Levin added the FCC is under no obligation to finish its review by any particular time, and that the DC Court of Appeals will likely decide the matter “is not ripe for judicial review.”
“If we are wrong on that, we think it will still be difficult to get the court to order the FCC to grant the license transfer on a timely basis,” he said.