Standard General is working to secure regulatory approval for its pending $8.6 billion acquisition of broadcaster Tegna, and Standard Media CEO Deborah McDermott is feeling positive about closing.
The current chief executive at Standard Media, McDermott will step into the CEO role at Tegna if the deal goes through. Tegna owns 64 TV stations in 51 U.S. markets. As part of the deal Standard General plans to sell Tegna stations in Austin, Dallas and Houston to Cox Media after the transaction closes.
“Our vision is to really grow Tegna’s presence as a leading local broadcast television company” and explore state-of-the-art technology, provide the very best news coverage and programming targeted to its audiences, McDermott said in an interview with Fierce Video.
The deadline for reply comments with the FCC passed on August 1. At this point, McDermott said the company has provided everything it needs for the DoJ and FCC, which are now in their review process. It’s currently a bit of a waiting game, but if approved, the deal could potentially close in the fourth quarter, she said. Tegna shareholders approved the acquisition, which would take the company private, in May.
And she feels good about deal approval.
“I feel very positive that this deal is going to be approved and hoping that that happens,” McDermott said. “We’re very excited and very positive about seeing this through.”
There has been a fair amount of opposition to the transaction, including unions represented by the Communications Workers of America’s (CWA) NewsGuild and National Association of Broadcast Engineers and Technicians unions. Some, such as Altice USA, filed reply comments saying the FCC should condition approval on Standard not raising retransmission consent prices, with concerns the parties created a complicated deal structure and “financial engineering” to do so. NCTA, meanwhile, doesn’t oppose the acquisition but has asked the FCC to ensure there aren’t any “interlocking relationships" among the consolidated company.
Some critics opposing the deal have cited concerns such as harms to journalism jobs and local news, increased consumer prices, and worries that Apollo Global Management (which is financing part of the deal) will have an attributable level of influence with Tegna.
Still others, such as Estrella Media, have been positive on the deal. In an August 1 filing to the FCC, the Spanish-language media company said it believes the transaction “will increase the diversity of available broadcast programming, thereby furthering the public interest” and giving Estrella enhanced opportunities to better serve the Hispanic community in the U.S.
Over the summer the FCC requested additional information on the deal regarding job cuts and how Standard would negotiate retransmission agreements with cable providers. Following the move, New Street Research analysts in June questioned if the FCC could request two conditions for the deal, including no retransmission fee increases or material job cuts for some time.
Regarding retransmission fees, New Street’s Blair Levin wrote at the time that, “part of the rationale for the deal is to engage in station swaps that enable an increase in retransmission consent fees. Given the inflation concerns by many policy makers, one could see certain decision makers at the FCC limiting the ability to do so.”
In regard to retransmission consent fees, McDermott only said that the company would fulfill whatever contracts it has. Separately, Standard has said many claims raised by critics reflect a misconception that Apollo Global Management will play some type of ownership role or have control over the new entity.
According to the company, Apollo’s role is strictly limited to financing, with no operating control over the new station group or voting rights. Apollo is one of 17 entities funding the transaction, and of those ranks 14th in size of funding. Furthermore, it stresses that Apollo and Cox Media won’t have any knowledge of Tegna’s retransmission agreements or negotiations following the deal.
Planning to invest in journalism, not cut jobs
McDermott didn’t comment on the potential for FCC conditions, but from her view as would-be CEO, she won’t be making job cuts, saying that investing and growing news is a top priority of the Tegna deal.
“We do not, and we never have [cut jobs] when we’ve gone into new organizations,” she said, such as the mergers from first Media General and then Lin Broadcasting (Media General was eventually sold to Nexstar Broadcasting), where McDermott played key roles. “We did not cut positions. In fact, we usually go in and figure out how we can go in and grow the television stations and we invest in them.”
Taking it a step further, McDermott said currently, “we have committed to the employees that we’re not cutting any jobs.”
Rather than a response to deal critics, McDermott said she made that commitment so that people working for the company would know their jobs are secure.
“We believe in news…we believe in serving the community. Journalism is the backbone of what we do, and why would we change that?” she added.
And McDermott and Standard General have a proven track record of increasing and improving the quality of news, she said.
“Tegna is a great organization and we want to enhance what they’ve been doing,” she continued.
McDermott pointed to an example of the Media General merger, where a Tampa station that was acquired had come on hard times. She said its standing in the market had dropped dramatically from its No.1 or 2 position to No.3 or 4.
“We immediately stepped into that television station and invested in a major radar, a weather radar for predicting hurricanes,” she said, noting it was one of a kind in the country that had just come out, with in-depth and accurate reporting. “We thought that was a really important commitment to the community” and “it was a great investment for us.”
She said they also added news staff in that market, looking at opportunities to leverage its experience for efforts that could move the needle. In about 18 months to 2 years, she said that station moved back up in the rankings.
McDermott, who has a degree in journalism herself, has a relationship with Standard General and its founding partner Soo Kim that goes back more than a decade.
McDermott previously led Young Broadcasting as president, which came out of bankruptcy in 2010 with Standard General as the largest shareholder. It immediately spent $25 million on 10 TV stations over a period of 18 months, she noted – adding that Standard General was a great partner for more than 10 years, during which she’s also worked alongside Soo Kim, who will take over as chairman for Tegna at deal close.
Promoting diversity, equity, inclusion
With Kim, an Asian-American, and McDermott at the helm, the new Tegna would be the largest minority-owned, female-led TV station owner. McDermott emphasized the importance of diverse voices in the TV business, adding the board will be comprised of a majority of women and half of its members reflect minorities.
Increasing diversity, equity and inclusion is a key focus across the business and to “ensure content reflects the communities we serve,” she noted.
In addition to Estrella Media, Southern state legislative and Black Caucus leaders from South Carolina, North Carolina and Georgia also voiced support for the deal. In an August 12 letter, they said it will improve local news and increase diversity in media ownership while benefiting the communities the state legislators represent.
The letter specifically calls out Kim saying he “has a long history of serving as an ally to communities of color and has used his investments in local broadcast journalism to continue to create opportunities.”
Since the deal is still in the regulatory process, McDermott said determining specific steps and initiatives will come later when Standard Media and Tegna teams can come together and are no longer siloed per regulatory rules.
ATSC 3.0 big opportunity
And when it comes to stepping into the Tegna CEO role, McDermott said Tegna is already very strong in some aspects and Standard wants to enhance what they’re doing, with plenty of ideas in the works.
One element of that is the move to ATSC 3.0 standard, also known as NextGen TV, where she sees lots of opportunities, including digital and social.
“There are many, many avenues that we can pursue,” on the ATSC 3.0 front.
Tegna is one broadcaster that has already started the shift to NextGen TV broadcast standard, which is happening on a market-by-market basis, while Standard Media has yet to do so. McDermott said it’s staying on top of what the technology can do and while it hasn’t detailed priorities yet, “it has huge opportunities going forward.”
The industry is only at the beginning stages of ATSC 3.0, she noted, while citing potential to expand content, interaction with audiences and targeting viewers, alongside non-broadcast related efforts.