Tegna Stays in Standard Deal; Outcome Still Unclear
Tegna’s announcement Tuesday that it would pass on Wednesday's chance to exit the long-stalled $8.6 billion Standard/Tegna deal and stay in for an additional three months is considered an indication the acquisition has a chance, but the final result is far from certain, broadcast industry officials told us. DOJ also allowed the transaction’s Hart-Scott-Rodino waiting period to expire without objecting to the deal, said a Tegna news release. Standard General founder Soohyung Kim said in January he was “optimistic” the deal would close before Tegna’s merger agreement-enshrined exit ramp (see 2301230063), but that didn't happen. Tegna told the SEC Tuesday “the Merger is expected to close in March or April of 2023.” The FCC’s tracker lists the deal as being at Day 307, which is 127 days over the agency’s 180-day shot clock.
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Wednesday was listed in the Standard/Tegna agreement as “the outside date,” the date when Tegna could choose to exit the deal if it hadn't received regulatory approval. Tegna instead extended the outside date to May 22, which under the agreement also increases the ongoing ticking fee, raising the purchase price for each day the deal isn’t closed. Kim said in January ticking fees had then increased Tegna’s price by $22 million.
Neither Standard nor Tegna commented on the reasons for extending the deal, but broadcast officials said it's likely an indication Tegna believes the acquisition has a chance at being completed. Tegna staying in the transaction is an even more positive omen than it would be for other companies because Tegna and Standard have a historically contentious relationship, a media broker said. Before the current transaction, Standard twice initiated proxy fights against Tegna’s leadership, seeking to get its own slate of representatives onto the Tegna board (see 2105060069).
The deal’s path to being approved is still far from clear, broadcast officials said. The transaction wasn’t listed as an item on the March agenda in Chairwoman Jessica Rosenworcel’s preview note Wednesday, and wasn’t listed as having been circulated to other commissioners in Friday’s release. It's unclear if there’s enough time to ready it for the April agenda, one attorney said. DOJ allowing the HSR period to expire also doesn’t necessarily mean DOJ won’t block the deal, attorneys and analysts said. In previous broadcast acquisitions, a DOJ decision allowing a deal to proceed has been followed relatively quickly by an FCC approval. In 2021, DOJ's sign-off on Gray's buy of Quincy's station was followed less than a week later by Media Bureau approval (see 2108020064).
Broadcast attorneys disagree whether the deal would be voted on circulation or approved at the staff level on delegated authority -- the involvement of Apollo could be seen as new and novel, and historically a number of commissioners objecting could require a delegated item to be kicked up to the full FCC. If a full FCC vote is required, the absence or presence of a fifth commissioner would likely affect what sort of conditions might be placed on the deal, broadcast attorneys said.
Standard/Tegna’s unique circumstances, the lack of previous rulings from the Rosenworcel FCC on transactions like this, and the 2-2 agency make the deal’s future especially hard to predict, a broadcast executive said.