The FCC’s Administrative Law Judge has affirmed a Media Bureau decision to issue a Hearing Designation Order to consider concerns raised by the proposed acquisition of TEGNA by Standard General, putting the privatization effort led by Soohyung Kim in a precarious situation.
Standard General, TEGNA and Cox Media Group, which is majority-owned by Apollo Global Management, which would take a significant minority stake in a “new TEGNA,” wanted the ALJ to certify to the full Commission an immediate application for review of the Order.
That will not happen, and the ruling from ALJ Jane Hinckley Halprin at the FCC could present innumerable challenges to the acquisition of TEGNA.
The Media Bureau issued its HDO on February 23, and on March 5 TEGNA, Standard General and CMG requested that Halprin certify an immediate appeal of the Media Bureau’s order that designates the proposed transaction for a hearing.
Standard General is represented by veteran D.C. communications attorney Scott Flick of Pillsbury Law, assisted by Jessica Nyman.
TEGNA’s counsel is Jennifer Johnson and Jocelyn Jezierny of Covington & Burley LLP, while CMG is using the services of Henry Wendel and Michael Basile of Cooley LLP.
In short, the attorneys claimed the Media Bureau’s Order requiring the ALJ hearing violated the Constitution, various statutes, and the full Commission’s own rules and precedent.
Does Article II of the Constitution prevent the Presiding Judge from conducting
the hearing? It’s a question the attorneys presented in its Application for Review. “[T]he Presiding Judge cannot constitutionally adjudicate this matter because the statute improperly isolates her office from Presidential control under three levels of for-cause tenure protection,” the counsel argued.
The counsel also stated that the Media Bureau lacks the authority to block a transaction based on the possibility that retransmission fees could increase under arms-length contracts previously negotiated by sophisticated market participants — not that this is going to happen as Standard General “irrevocably waived enforcement of after-acquired clauses that could have otherwise increased retransmission fees for the TEGNA stations it acquires, so that even if the Media Bureau had authority to investigate these fees, no investigation—or hearing—can be justified here.”
Furthermore, the counsel stated the Media Bureau has no authority to block a transaction based on nondiscriminatory staffing concerns.
While the attorneys representing TEGNA, Standard General and CMG made their case, on March 9 oppositions were filed by The NewsGuild-CWA and National Association of Broadcast Employees and Technicians-CWA (TNG/NABET-CWA), which has been fiercely trying to block the deal, and by the FCC’s Enforcement Bureau.
Halprin’s decision? “The TEGNA/SGCI/TMG Motion does not present justification under section 1.115(e)(1) to bypass the hearing process on these factual issues.”
She then dismissed the constitutional issues raised by the counsel for Standard General, TEGNA and CMG.
What’s next for Soo Kim, TEGNA and Apollo Global Management?
Contacted by RBR+TVBR for comment, a Standard General spokesperson said, “We are disappointed by this ALJ finding, which we believe to be erroneous. We remain committed to seeking all available avenues to both vindicate our rights, and promote the public interest which is best served through a full Commission vote to approve this transaction which any three Commissioners can request. We urge the FCC to act swiftly since in this matter a decision delayed is a decision denied.”
