Standard/Tegna Concession Likely Not Enough, Say Industry Officials

Standard told the FCC Friday it will “irrevocably waive” retransmission contract terms that would use after-acquired clauses to apply current retrans rates for Cox Media Group stations to any current Tegna station that will be transferred to Standard. Critics argued the transaction included an unusual sequence of transfers between Standard, Tegna and Cox Media Group to purposefully trigger such clauses, which would have increased the Tegna stations' retrans earnings. Cox is owned by Apollo Global Management, which is also financing Standard’s purchase. The impact of the deal on retrans fees “is not central to Standard General’s thesis for the proposed Transactions,” said Kim’s letter. He said the concession is “in light of the cost of continued delay to the closing of the Transactions” and “consistent with the terms of the Agreement and Plan of Merger.” Standard and the FCC declined to comment on the review process.

That concession doesn’t go far enough and doesn’t address other issues with the proposed deal, such as the possibility of information sharing between Standard and Apollo, said ATVA. “The pending transaction will ‘intertwine’ Apollo’s Cox Media, Standard General, and TEGNA in a way that permits the parties to collude -- resulting in higher prices all around,” said an ATVA spokesperson. “The FCC should look closely at the transaction and do whatever it takes to prevent big broadcast from colluding.” Kim’s letter also doesn’t address the job issues that have been a focus of objections from the NewsGuild and National Association of Broadcast Engineers and Technicians sectors of the Communications Workers of America, said New Street Research’s Blair Levin in an email to subscribers.

The waiver of the retrans after-acquired clauses isn’t likely to be seen by deal opponents as much of a concession because retrans contracts last a maximum of three years, broadcast attorneys said. The contracts for the stations involved in the deal are likely with a host of different MVPDs and have varying terms, and some could expire in months, an attorney said.

Levin said the overture is likely the start of a negotiation that probably will lead to more concessions. “For the first time in the proceeding, we have seen evidence of a proposed condition and a counter-offer. We think the process is far from done but at least that begins a process.” Kim’s statement suggested the concession may have been a response to DOJ or FCC officials. “The regulatory authorities have expressed concerns to us that our transaction could result in negative impacts on cable and satellite TV consumers in an environment where the government has a heightened focus on inflation,” Kim said. The waiver is intended “to address these concerns in a manner consistent with our obligations under our merger agreement.” he said. The merger agreement contains language requiring the parties to use “reasonable best efforts” to obtain regulatory approvals.

Newsguild and NABET have repeatedly said no concessions or merger conditions can make the deal acceptable, but ATVA laid out a multi-item list of proposed conditions, in a recent filing, focused on preventing information sharing between Cox and Standard. Information sharing would create “considerable new leverage in the next round of retransmission consent negotiations,” said ATVA. The MVPD group also suggested the FCC require the new company to offer a single six-month extension on retrans agreements to any requesting MVPD. “Staggering termination dates would eliminate the additional leverage caused by the unique and complicated transaction structure Applicants have chosen,” ATVA said.