FCC Sued In Federal Court Over TEGNA ‘Pocket Veto’

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In perhaps an unprecedented move, Standard General, the New York-based hedge fund led by Soohyung Kim, filed suit on Tuesday (3/28) against the FCC in a Washington, D.C., Federal Appeals Court as part of its desperate efforts to keep its TEGNA privatization effort on track.


As Standard General sees it, the Commission is doing everything it can to derail the acquisition, which involves a significant minority investment in a new TEGNA by Cox Media Group’s majority shareholder, Apollo Global Management.

In fact, Standard General views the decision by Media Bureau Chief Holly Saurer to issue a Hearing Designation Order to the hedge fund, TEGNA and Cox Media Group over lingering questions about the deal’s structure as a “pocket veto.”

Is that a stretch, as the Commission has not rejected the merger and is instead putting the approval process in the hands of a Presiding Judge under the auspices of FCC Administrative Law Judge Jane Hinckley Halprin? 

Some would argue yes, but others may immediately look to the Pai Commission’s July 2018 Hearing Designation Order issued to Sinclair Broadcast Group over serious questions it had pertaining to the planned merger of Sinclair and Tribune Broadcasting. Just weeks after the HDO, Sinclair and Tribune unraveled their agreement, with Nexstar swooping in to buy Tribune.

Across D.C., legal observers are privately saying that a similar scenario for TEGNA, Standard General and CMG is all but inevitable, given the typically lengthy docket timeline a ALJ-led hearing would take. Standard General and TEGNA are on a timetable of weeks; the ALJ’s timetable is in months, and perhaps even as long as two years.

This is likely why Standard General believes the FCC’s Media Bureau has given the merger a “pocket veto,” although that may be hyperbole.

Saying that “unprecedented treatment” of Standard General’s acquisition of TEGNA has been given to a proposed transaction that would create the largest minority-owned and female-led broadcasting company in the U.S., with Deb McDermott succeeding Dave Lougee as CEO, Standard General affirmed that its commitment to “to create one of the nation’s leading local broadcast companies – positioned to invest in and deliver the absolute best local news, weather, sports and entertainment in every community in which it will operate … has not waivered.”

As such, Standard General asserts, “If the FCC Media Bureau succeeds in killing this deal, everyone — viewers, newsrooms, TEGNA employees, American communities, and shareholders — will be worse off.”

For the U.S. Court of Appeals for the District of Columbia Circuit, a ruling however may come down to one simple fact: Did the FCC Media Bureau indeed present the merging parties a “pocket veto” and did its actions all but guarantee the deal was killed, or did legitimate questions about the deal’s structure that are still unresolved trigger what could likely be its ultimate dissolution?

For Scott Flick of Pillsbury Winthrop Shaw Pittman LLP, Kim’s legal counsel, convincing the D.C. Court of Appeals that the FCC hearing order “is both extralegal and unnecessary” is paramount.

In a statement released by Standard General, the company adds that the HDO “flouts the Constitution by assigning the hearing to an administrative law judge who is insulated from presidential control. And it tasks her with considering two issues—retransmission fees and staffing—that are not under threat and beyond the Commission’s authority to address.”

While that may be opinion, and the Commission may interpret that differently, Standard General is convinced that “something is terribly wrong at the FCC Media Bureau.”

It concludes, “Agencies are tasked with serving the public interest in a transparent manner—an obligation the FCC has tried to dodge in this case by utilizing its Media Bureau to order a hearing that will effectively kill the deal without a formal denial. But Standard General will not let this stand. It will continue to pursue every avenue—including doing everything in its power to work with the FCC to timely resolve this matter—both in and out of the courtroom. At any time, three FCC Commissioners can decide to do the right thing and demand a vote.”

Or, they can stick with precedent and long-standing Commission guidelines and have the ALJ move forward with the Hearing Designation Order, deferring to a Bureau chiefly tasked with ensuring that FCC regulatory policy, and authority, is dutifully carried out.


To view the Notice of Appeal filed with the U.S. Court of Appeals for the District of Columbia Circuit, please click here: Notice Of Appeal