Some 48 weeks ago, one of the biggest broadcast television industry transactions in recent times failed to proceed, resulting in a non-consummation. Today, that company has confidently kept its CEO, Dave Lougee, in place while the entity that had hoped to replace him with Deb McDermott contemplated its next move.
On Wednesday, that action happened. Standard General and its head, Soohyung Kim, have sued the FCC and its Chairwoman and Media Bureau Chief, as well as key deal detractors who spoke out against the transaction in front of the Commission. While there are several factors that ultimately led to the FCC’s decision to designate the deal for a hearing in front of an Administrative Law Judge, Kim believes the failure to win Commission approval comes down to one thing: race discrimination at the FCC.
On September 21, 2021, TEGNA confirmed that Apollo Global Management — the controlling party of Cox Media Group — had teamed up with dissident investor Standard General, led by Soohyjng Kim — on a binding acquisition bid valued at upward of $8 billion.
The deal never received FCC approval, and on May 22, 2023, the funding deadline to consummate the transaction arrived, leading to the termination of a transaction that Kim and Standard General’s chief legal counsel, Scott Flick, desperately tried to get completed.
The FCC played a significant role in preventing the transaction from closing, as Media Bureau Chief Holly Saurer send the proposed billion-dollar deal to the Commission’s Administrative Law Judge for a hearing — a death knell action, as seen in recent years from the FCC. Among the players that were dead-set against the TEGNA deal were veteran communications attorney Arthur V. Belendiuk, public interest attorney Andrew Jay Schwartzman and David Goodfriend, who served as a deputy White House staff secretary to President Bill Clinton.
The three notable deal detractors appeared on behalf of The News Guild-CWA and National Association of Broadcast Employees and Engineers-CWA, and Common Cause Education Fund. A significant non-voting minority stake going to Cox Media Group parent Apollo Global Management was one issue.
That’s not at all how Soo Kim and Standard General see it. In a 120-page filing seeking a jury trial in U.S. District Court for the District of Columbia, attorney Tyler Green of Salt Lake City-based Consovoy McCarthy PLLC makes it clear in the very first paragraph of the complaint that, in Soo’s view, not getting the TEGNA transaction completed comes down to racism.
In this case, Green writes, “advancing equity” meant “killing the chance for a Korean
American” — Mr. Kim — to buy TEGNA’s more than 60 television stations “because Byron Allen wanted them for his Black-owned media company.”
Discussions involving Allen’s desire to seek a majority interest in TEGNA first surfaced in February 2022. However, little if any public comment had been offered regarding a bid from the media mogul who owns Allen Media Group and such entities as The Weather Channel and TheGrio.
Yet, Soo’s attorney claims, “As far as the FCC’s diversity policies and practices were concerned, being Asian did not count. Mr. Kim’s race was used against him with pernicious stereotypes.”
He then asserts that Allen “never had a problem getting the FCC to quickly approve his license applications for his Black-owned media company — the right kind of diversity, according to Mr. Allen.” This leads one to believe that Soo Kim is comparing the complex TEGNA transaction to those involving Allen, which did not involve the presence of a majority minority investor, which was the case when Standard General teamed with Apollo Global Management to bid for TEGNA.
Nevertheless, calls of racism permeate the complaint, which also makes FCC Chairwoman Jessica Rosenworcel complicit in it, as she “had her staffer kill the deal with a pocket veto [the Hearing Designation Order] without ever putting it before the other Senate-confirmed FCC Commissioners.”
After that statement was made, Soo’s attorney continued, “Mr. Kim—an
American raised in Queens—was maligned as a ‘shadowy foreign investor.’ He was not
the ‘right type of minority’ for the FCC’s diversity goals.”
MONEY TALKS, SOO KIM BALKS
While race discrimination, in Soo’s mind, prevented him from merging Standard General with TEGNA, perhaps the financial hit taken with the non-consummation is also a key catalyst for his lawsuit against the FCC.
Standard General lost nearly $85 million based on its 10.6 million shares owned when the deal died, Soo’s attorney states in the complaint. Then, there is the $136 million break-up fee Standard General paid, as well as $70 million in fees and transactions costs.
Soo blames Saurer, Rosenworcel … and Byron Allen.
“The FCC chairwoman and her personal staffer blocked the deal at the behest of Mr. Allen, who used business allies and six-figure political donations to destroy Mr. Kim’s chances of acquiring TEGNA—to the tune of over $200 million in losses to Standard General and Mr. Kim and nearly $2 billion in losses to TEGNA shareholders,” Soo claims.
TEGNA shares were priced at $13.64 as of 12:50pm on April 25. This compares to trading in the $22 range two years ago.
With vitriol and finger-pointing at Allen, he is also named as a defendant in the lawsuit, as are his Allen Media Group. So are Dish, United Church of Christ and Common Cause.
Yet, it is clear that the focus of Soo Kim’s racism claims is on the argument that Chairwoman Rosenworcel “put the imprimatur of the federal government on Mr. Allen and his straw objectors’ race-based attacks.”
Why is David Goodfriend a defendant? Soo Kim claims he “orchestrated objections to the Standard General-TEGNA transaction by labor unions and public interest groups at the FCC. But on information and belief, Mr. Goodfriend’s real clients were Mr. Allen and his other longtime client Dish and its chairman Charlie Ergen, who also wanted the deal dead.”
Kim also seeks to tie donations made by Allen to a Democratic Congressional SuperPAC in 2022 to letters filed with the FCC from Sen. Elizabeth Warren and Rep. Nancy Pelosi, respectively, that expressed “serious concerns” about the TEGNA deal.
When all is said and done, a violation of Equal Protection against the FCC, Rosenworcel and Saurer is being brought to the court by Soo, as well as a violation of the Civil Rights Act of 1866 against Allen Media Group, Dish, Goodfriend, NewsGuilt, NABET, UCC, Mr. Allen, and Ergen.
Additionally, a charge of a violation of the Enforcement Act of 1871 is being brought against Rosenworcel, Saurer, The Allen Group, Dish, NewsGuild, NABET, UCC, Common Cause, Allen, Ergen and Goodfriend. Then, there is a tortious interference charge lobbed against Allen Group, DISH, Goodfriend, NewsGuilt, NABET, UCC, Common Cause, Allen, and Ergen.
WHAT SOO KIM WANTS
So, what is the “Prayer for Relief” from filing the lawsuit?
Soo Kim wants a declaration that the FCC, Chairwoman Rosenworcel, and Media Bureau Chief Saurer violated the equal protection guarantee of the Fifth Amendment in their handling of Standard General’s license-transfer applications because of Kim’s race—namely, by not approving Standard General’s applications; by subjecting Standard General to an “unprecedented, unjustified, and unexplained delay” culminating in the pretextual HDO; and by not considering and ruling on the applications in good faith.
A permanent injunction ordering the FCC, Rosenworcel and Saurer to refrain from discriminating on the basis of race, from treating certain applicants less favorably than others because of race, and using race as a stereotype or negative consideration against any applicant, is also sought.
Damages in an amount to be proven at trial are also requested, along with attorney’s fees and costs.
