After roadblocks with regulators, Standard General and Tegna have terminated their proposed acquisition agreement, after a deal financing deadline passed without getting the greenlight from regulators.
The private equity firm since February 2022 when the deal was first announced has been working to acquire Tegna, owner of 64 TV stations, in a transaction valued around $8.6 billion.
On Monday, the date of a May 22 financing deadline, a filing with the SEC disclosed the agreement was terminated pursuant to terms of the deal. Tegna also issued a press release announcing a $300 million accelerated share repurchase program and a 20% increase in its quarterly dividend as it returns excess capital to shareholders after ending the proposed deal.
“We are taking the first step of immediately returning a significant portion of the excess capital accumulated during the pendency of the Standard General transaction. We are actively reviewing TEGNA’s capital allocation strategy and look forward to our engagement with investors over the coming months,” said Howard Elias, chairman of Tegna’s board of directors.
Deal terms entitle Tegna to a termination fee of $136 million from Standard General.
Tegna’s CEO and President Dave Lougee said he was “extremely proud” of Tegna colleagues for focus in the face of distractions from the long-pending merger, saying it maintained business momentum, building on total and subscription revenue, net income, free cash flow and Adjusted EBITDA in 2022.
“As we look ahead, we are confident that TEGNA is well positioned to continue serving all our stakeholders based on our portfolio of leading broadcast assets and innovative digital brands, our delivery of high-quality, trusted news and content in the markets where we operate, and our continued focus on fostering a culture of diversity and inclusivity,” Lougee continued.“TEGNA’s standalone financial position and outlook are a direct result of our great team, our impactful local content, our predictable cash flows, and our strong balance sheet with the lowest leverage levels since TEGNA became a pure-play broadcasting company.”
Tegna will hold an investor call this Thursday, May 25 to discuss first quarter earnings and provide second-quarter and full-year 2023 guidance.
The Standard General deal financing deadline was Monday, but even before that prospects for approval were looking bleak – particularly when the FCC earlier this year issued a hearing designation order (HDO) that bumped the deal to an Administrative Law Judge to review concerns, including potential increases in retransmission fees and impacts to local newsrooms. ALJ hearings can be lengthy, and the move in itself is often seen as a deal-killer.
Still, Standard General made pushes – both in the courts and through public appeal – up until the last moments. It filed lawsuits in a federal appeals court to accelerate the timeline and hoped to force a full vote from the Commission, but was unsuccessful on both of its petitions. Another blow came when the ALJ made the decision to postpone a hearing on the matter until sometime after the then-impending May 22 deadline – essentially indicating it was pointless to spend the time and effort it would take to advance an ALJ proceeding for a transaction that ultimately wasn’t likely to survive beyond the May timeframe.
Standard General has maintained that the FCC’s treatment of the deal has been “unprecedented” and the company got support from political figures, including Democratic Senator Bob Menendez of New Jersey, who was among those that criticized the lack of a full Commission vote.
As recently as May 10 Standard General met separately with with FCC Commissioners Carr and Simington and staff to see if they could discuss matters designated for the ALJ hearing. The meeting itself caused some confusion, as Standard General then issued a press release saying it provided “a response to FCC’s invitation to negation with new disclosures and commitments, and indicated the Bureau suggested that the parties attempt to resolve outstanding issues to allow the transaction to move forward.
“We’ve received unprecedented support from labor unions, civil rights organizations and leaders on both sides of the aisle – and this deal must receive an FCC vote before Monday when its financing will expire. All we are asking for is to be treated fairly by receiving an up or down vote before it is too late,” said Standard General founding Parnter Soo Kim, in the May 17 press release.
The FCC Enforcement Bureau in a filing yesterday attempted to clarify, saying the press release was a misrepresentation and the FCC did not invite negotiation or suggest to resolve issues so the deal could move forward.
“Rather, as is plain from its Notice of Oral Ex Parte Presentation, the Bureau merely acknowledged during the May 10 meetings that, procedurally, the matters designated for hearing in the HDO are of the type that could be settled pursuant to the Commission’s rules,” the bureau stated.
It went on to clarify for the record that it would not “unilaterally settle the designated issues.”
Standard General and the commission said the company provided more documentation, but in Monday’s filing the agency said they were “insufficient for the parties to engage in meaningful settlement discussions at this point.”
Throughout the proceeding Standard General has maintained the transaction would’ve created the largest minority-owned and woman-led broadcaster in the U.S., while also offering commitments related to retrans fees, not cutting jobs and increasing local news budgets and programming, among others.
Fierce reached out to Standard General, which has not commented on the deal termination.