Earlier this week, U.S. Senator Bob Menendez (NJ) took to the Senate floor to express his concerns over the Federal Communications Commission’s review of the proposed Standard General – Tegna transaction. His is the latest in a chorus of alarm bells sounding over a flawed merger review process that risks undermining both investment in local television stations’ free service to the public and media diversity.
More than a year ago, Standard General proposed to acquire TEGNA – a company that owns 66 local television stations in 54 markets across the country. At that time, the Justice Department’s Antitrust Division reviewed the proposed acquisition and did not challenge the deal.
By contrast the FCC dragged its feet, substantially exceeding its self-imposed 180-day review period and causing a great deal of uncertainty for the parties involved. Then, the Commission’s Media Bureau surprisingly announced that it was designating the transaction for a hearing before an administrative law judge. That decision – made approximately one year after the acquisition was announced without a vote from the FCC Commissioners themselves – sent this deal to a regulatory purgatory from which no transaction has ever returned.
To be clear, the National Association of Broadcasters does not take a position on the merits of potential mergers and acquisitions of specific broadcasters’ companies. But even for those who do not support Standard General’s acquisition, the FCC’s actions raise serious concerns about the future of ALL broadcast transactions which may have a profound impact on broadcast viewers. This is why NAB filed in support of Standard General and TEGNA in their appeal to the federal judiciary to try to force the Commission to vote up-or-down on the transaction.
Now every industry under the regulatory microscope of the FCC should be asking themselves if they are next. For all of us, the FCC’s unprecedented action spotlights several areas for concern with its merger review process.
First, this decision was made by FCC staff members who are not accountable to the public rather than the commissioners themselves. Presidents nominate the FCC’s five commissioners, and the Senate confirms them. These are the officials who should be making the critical decisions that can impact the broadcast industry and the hundreds of millions of viewers who rely on this free service. Of course, the Commission staff should advise them, but they should not be allowed to make a final determination sending a multi-billion-dollar transaction to the gallows. The current process deprives the commissioners, who are subject to checks and balances by Congress, of the opportunity to participate in decisions that carry significant implications for the broadcasting industry and by extension, our listeners and viewers.
Second, the drawn out review of this transaction for nearly a year demonstrates that the FCC’s self-imposed 180-day shot clock is nothing more than an illusion. The failure to abide by this self-imposed timeframe, which is intended to streamline the process, has real-world consequences for merging parties, as well as for the entire broadcast industry.
During a long delay such as this, companies are unable to make prompt and necessary operational changes that allow them to respond to a rapidly changing marketplace. At a time when broadcasters face increasing competition from big tech behemoths that have little to no regulation, this inaction by the FCC further disadvantages these broadcasters and the public who rely upon them. It can also discourage companies from pursuing mergers that could help them better compete and better invest in the critical local journalism they provide.
Finally, the current amorphous “public interest” review standard in this case allowed the Commission to justify its actions by ad hoc concerns unrelated to its mandate, while at the same time deprioritizing the fact that the transaction “would make TEGNA the largest minority-owned broadcast station group in the country,” as Senator Menendez noted in his remarks. Ensuring that a given transaction complies with the FCC’s rules should be the primary focus of merger review, rather than allowing for arbitrary demands that fall outside the FCC’s oversight.
The Commission’s handling of the Standard General-TEGNA merger has exposed the flaws in the current system of transaction review, and it is our hope that FCC will reverse course and correct this miscarriage of justice. We must create a more transparent, fair and predictable environment that allows broadcast companies a fair chance to compete in the marketplace and continue serving the public. Otherwise, the critical local journalism that broadcasters provide is in jeopardy.
