January 12, 2023

Warren to FCC: Promote Competition in Media Industry by Blocking Hedge Fund Standard General’s Acquisition of Broadcaster Tegna

“FCC should block any transaction that it knows is likely to harm competition or the public interest such as Standard General’s proposed acquisition of Tegna”  

Text of Letter (pdf)

Washington, D.C. – U.S. Senator Elizabeth Warren (D-Mass.) sent a letter to Federal Communications Commission (FCC) Chair Jessica Rosenworcel urging the agency to block hedge fund Standard General’s proposed acquisition of broadcaster Tegna Inc. (Tegna). In the letter, the Senator expresses concerns about the proposed transaction and calls on the agency to use its authority under the Communications Act to block the deal to promote competition and address increasing consolidation in the media industry. 

“The FCC has significant and underutilized authorities to protect competition in the media industry by preventing deals that harm the public interest or reduce competition…I urge you to fulfill your statutory duty by blocking this acquisition,” wrote Senator Warren.

In February 2022, Standard General, backed by private-equity firm Apollo Global Management (Apollo), announced its proposed $5.4 billion acquisition of broadcaster Tegna. In the letter, the Senator highlights how the deal presents straightforward competition concerns. Given that Tegna and Standard General both own stations in overlapping media markets, the deal will reduce the number of competitors that can place spots on television for advertisers, produce programming for television audiences, and employ workers in those markets. The Senator noted that this complex financial transaction could further threaten competition down the road through higher consumer prices, employee layoffs, and easier collusion, which all could violate antitrust laws. 

The parties to the transaction have attempted to preempt charges that this deal would be anticompetitive with a so-called “fix-it-first” approach: they have voluntarily committed to remedy the most troubling aspects regarding their proposed acquisition. Through a series of letters submitted to the FCC in December 2022, the parties have promised that after the deal is completed, (i) they will irrevocably leave in place the retransmission fees that apply to any Tegna station; (ii) they will not lay off any journalism or newsroom staff for a minimum of two years; and (iii) Standard General and Tegna, on the one hand, and Apollo, on the other hand, will not share any nonpublic competitively sensitive information or enter sidecar agreements with each other. The Senator doubted that these promises would actually protect competition based on historical evidence regarding the ineffectiveness of behavioral remedies such as these.

“In light of the poor track record of both structural and behavioral remedies with regard to protecting competition, Federal Trade Commission (FTC) Chair Lina Khan recently expressed her belief that “agencies should more frequently consider opposing problematic deals outright” rather than imposing remedies of any sort,” continued the Senator.

Traditionally, the Department of Justice (DOJ) or the FTC reviews announced mergers and acquisitions, and if those agencies find that a deal would likely result in anticompetitive effects, they can sue to block the deal in federal court under our antitrust laws. (The DOJ is currently conducting its own investigation into Standard General’s potential acquisition of Tegna.) However, the Senator explained that the FCC has a separate authority under section 310(d) of the Communications Act to block – through administrative action – any telecommunications deals that do not serve “the public interest, convenience, and necessity” . Among other factors, serving the public interest includes “preserving and enhancing competition in relevant markets.”

“You have an enormous opportunity to protect workers and consumers nationwide by using this authority aggressively in this matter,” concluded the Senator.