NAB Blasts Standard/Tegna HDO, Wants Congressional Action

“It is inappropriate for the bureau staff, without the input of the commissioners, to designate a major transaction for hearing,” said LeGeyt. “This process deprives the commissioners, who are nominated by the president and confirmed by the Senate, the opportunity to participate in decisions of this magnitude, and leaves the parties to the transaction with no practical legal recourse.” Deals that comply with the FCC's rules should presumably be in the public interest, he said. Unlike previous proposed transactions the FCC has blocked, “there is no allegation that this deal violates any FCC rule, nor are any of the parties accused of any inappropriate action or conduct,” said Standard General Monday

LeGeyt said NAB isn’t taking a position on the acquisition's merits. The FCC didn’t comment, but in a release Friday Chairwoman Jessica Rosenworcel said the additional review “will allow us to make a more informed assessment on whether proposed safeguards are sufficient to protect the public interest.” Commissioners Brendan Carr and Nathan Simington condemned the HDO Friday. Commissioner Geoffrey Starks, the only commissioner who hasn’t weighed in, declined to comment Tuesday.

“This establishes a precedent that a Chair can unilaterally send a deal to regulatory purgatory solely on public interest grounds,” emailed Blair Levin of New Street, a former FCC chief of staff. If that precedent stands, stakeholders would need to concentrate on creating deals that would be acceptable to the FCC chair only, rather than on those that would pass muster with a majority of commissioners, Levin said. Broadcasters can no longer be certain a deal is safe, even if it doesn’t contain sidecars or duopolies or other elements that typically draw the FCC’s focus, said Fletcher Heald broadcast attorney Frank Montero. Those with pending deals may have to shift “from thinking mostly about competition to thinking about whatever the Chair is thinking about,” Levin said.

The long-stalled review before issuing the HDO -- Standard General said Monday the deal is nearly the longest reviewed deal in agency history -- shows the agency’s shot clock is “an illusion,” said LeGeyt. The shot clock was at 309 days by the FCC’s count but was stopped Friday with the HDO’s release. “Nothing about the hearing designation required substantially exceeding” the shot clock, LeGeyt said. “The long delay, and now hearing designation, will likely lead to job losses and other damaging cost-cutting measures by the local stations involved to account for the extreme expense of managing the FCC's unwieldy process,” he said. “NAB urges Congress to consider codifying it in law rather than relying on the FCC's current voluntary commitment.”

The case had to be addressed by delegated authority "because there were not three votes for any decision at the Commission level," emailed Andrew Schwartzman, who represents the Communications Workers of America sectors opposed to the deal. Schwartzman is also senior counselor at the Benton Institute for Broadband & Society. “If Chairwoman Rosenworcel had allowed the matter to sit without action, the NAB would have complained about that, too,” said Schwartzman. The long delay in the review “is a direct result of the applicants' repeated failure to provide basic information necessary to reach a decision,” he said. “NAB seems to have abandoned its traditional support for the public interest standard, evidently because it is unhappy when the Commission actually enforces it.”

“This decision confirms that the FCC is using a real public interest standard as part of its decision-making in the transfer of broadcast licenses,” said Charlie Braico, president of the National Association of Broadcast Engineers and Technicians, in a release. “The Bureau order explicitly refers to local TV station jobs as a meaningful indicator of localism under the public interest standard, and acknowledges the concerns we have raised for years about the dangers of private equity and hedge funds acquiring newsrooms,” said NewsGuild-CWA President Jon Schleuss in the same release.

Broadcast attorneys said the HDO is likely to have a chilling effect on future broadcast deals. The order says there are material questions about whether being owned by “a private company owned by an investment fund” has an effect on the localism of the TV stations involved. That could make it harder for future broadcast deals to get financing, attorneys said.

It's also possible the involvement of two hedge funds -- Standard General and Apollo Global Management -- and the agreement's unusual structure make it too specific to create a precedent, industry officials said. Few broadcast deals will feature similar circumstances, they said. “I am skeptical that the legal and policy precedent will have a long life,” said Levin. “Just as the bureau itself discarded some previous bureau positions, future bureaus, Commissions and courts will not feel bound by what happened here.”