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'Sinking in Quicksand'

Unions Call Standard/Tegna 'Dead'; Deal Faces Upcoming Ticking Fee

Unions opposing the Standard General/Tegna deal said Friday the companies' recent document submissions to the Media Bureau show Standard hasn’t been truthful with the FCC about its intention to cut jobs at Tegna, but the buyer said the groups are just rehashing their previous arguments. According to the acquisition agreement, there’s about a month left before -- if the purchase hasn’t been approved -- a “ticking fee” takes effect that will raise the cost per share of Tegna at a rate that increases the longer the deal lingers. The FCC has traditionally sought to avoid being the cause of triggering such provisions, broadcast attorneys told us. Responses from Standard and the other parties to Thursday’s supplementary filings from the unions are due Thursday.

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As the FCC reviews our filings and these documents it will be clear: this deal is already dead,” said Jon Schleuss, president of Communications Workers of America's NewsGuild sector, in a news release Friday. Standard and Tegna’s most recent information submissions show that 12 banks involved in financing the deal were relying on financial information from Standard that projected job cuts at Tegna, and that Tegna hadn’t been planning such cuts prior to the agreement, said the release and a supplementary petition to deny filed Thursday by NewsGuild and the National Association of Broadcast Engineers and Technicians. “These findings leave Standard General’s repeated assertion that it ‘does not intend’ to cut station-level jobs, and its subsequent explanations for those repeated assertions, sinking in quicksand,” said the groups.

The unions made similar claims before the most recent document submission, which demonstrates that they have no evidence, said a Standard General spokesperson in a statement. “After being given unprecedented access to thousands of additional confidential documents, the NewsGuild has responded with only the same disproven and misleading claim,” said the spokesperson. “Standard General has repeatedly confirmed, including in the record under penalty of perjury and directly to the employees of TEGNA, that it has no intention of reducing station news or journalism jobs, or, indeed, station staffing more generally.”

Broadcast attorneys and investment analysts said the transaction’s fate isn’t clear. The review period has now gone beyond the FCC’s traditional but nonbinding 180-day shot clock. A deadlocked FCC and letters against the deal from House Speaker Nancy Pelosi, D-Calif., are factors that could lead to the agency sitting on the matter, which would make it more likely the transaction would be withdrawn as time goes by, industry officials said. “If timing isn’t everything, it certainly can have outcome determinative consequences,” said former FCC Broadcast Bureau Chief Frank Washington in a filing supporting the deal.

Twelve banks, including the Royal Bank of Canada and Goldman Sachs, “appear to have relied on Standard General presentations that showed it would realize prospective cost savings from station-level job cuts,” said the supplementary petition. “This timeline contradicts Standard General’s subsequent effort to say that the intended job cutting had already been implemented by TEGNA.” The unions also countered Standard accusations that opposition to the deal is motivated by the race or gender of Standard’s founder Soo Kim or CEO Deb McDermott. “The petitions to deny in this case do not mention race or gender,” said the filing. “Their discussion of diversity of ownership is framed entirely in terms of the policy goal of having many smaller owners rather than a few large, consolidated owners who can exercise excessive control over national and local media outlets.”

The FCC should designate the transaction for hearing, said the supplementary petition to deny. “Ultimately, the record as recently supplemented by the Applicants provides even more reasons why the pending applications cannot be approved, and that the matter must be designated for hearing before an Administrative Law Judge."