The Detroit-based owner of broadcast TV stations led by Catherine Badalamente has filed comments with the FCC expressing their concerns of TEGNA’s privatization plan, which would put ownership of the company in the hands of majority shareholder Standard General and non-voting minority shareholder Apollo Global Management.
This, if allowed, would cause harm in Jacksonville, where Graham Media Group has a presence.
That’s the view of GMG, and it made its opinion known in comments filed with the Commission as part of its consideration of public input in its review of TEGNA’s takeover plan.
One big issue Graham has with the TEGNA privatization effort is the investment in the company by Apollo. It is the majority shareholder of Cox Media Group.
That’s bad news for Jacksonville, and for GMG, it contends. “The proposed transaction would dramatically alter the Jacksonville television broadcast market, reducing competition and threatening the Jacksonville community’s access to critical local news and other programming,” Harris Wiltshire & Grannis LLP attorney Stephanie Weiner and GMG VP/General Counsel Heidi Schmid Whiting said in the 14-page filing.
“If approved, the two large investment companies [Standard General and Apollo Global Management] financing the transaction would own and/or operate all four major network affiliates in the Jacksonville market,” Weiner and Whiting continue. Thus, Graham is urging the Commission to pay particular attention to the Jacksonville market when applying the public interest standard to determine whether the transaction “frustrates” the Commission’s longstanding objectives to ensure competitive television broadcast markets and robust local programming.
If the FCC says yes to the TEGNA plan, Standard General will effectively take over NBC affiliate WTLV and ABC-affiliated WJXX, licensed to TEGNA. Apollo, as GMG sees it, has “de facto control” over Fox-affiliated WFOX through its CMG ownership and also operates CBS affiliate WJAX.
GMG’s WJXT-4 is a highly successful news-focused unaffiliated TV station serving the Jacksonville DMA. It also owns WCWJ-17, the CW Network affiliate in the market.
In its defense, Standard General says the TEGNA transaction would create, “by far,” the country’s “largest minority-owned and female-led TV broadcasting company in U.S. history, increasing diversity in broadcast station ownership and management.”
As the Soo Kim-led Standard General see it, the TEGNA “merger” would increase minority ownership of commercial full-power television stations in the U.S. from 24 to 85, with the number of minority-owned or controlled commercial full-power television stations after the transaction “being well over 300% of the pre-transaction number.”
The investment firm notes, “This merger is not about consolidation. ‘New TEGNA’ will have fewer stations and operate in fewer markets than it does today.”
But what about Apollo Global Management, which seeks approval of a non-voting interest in “New TEGNA.”
Standard General explains in a statement, “Standard General will hold 100% of the common stock of TEGNA and will have full governance and operational control of the company. The proposed transaction will not result in Apollo or Cox Media Group having any influence or control over TEGNA. Apollo is providing a small portion of the financing – none of the twelve lenders, nor the five preferred providers involved in this deal will have any ability to influence TEGNA’s operations or gain access to any competitively sensitive information.”
Then, there is the specter of job cuts. Incoming CEO Deb McDermott wrote an open letter to TEGNA employees last week dismissing such talk. On Thursday, Standard General reiterated those views, noting that it has “a demonstrable historical commitment to local news operations.” As such, it pursued the TEGNA transaction “because it has a vision for growing TEGNA’s presence as a leading local broadcast television company employing state-of-the-art technology to provide trusted local news coverage and programming targeted to local audiences. Standard General has always placed a high value on local journalism and has no intention, and has not had any intention, of reducing news or news staff at TEGNA stations.”
Lastly, Standard General argues that TEGNA’s privatization will make it a “more agile company not bound by constraints of quarterly profit-reporting.” This, Standard General believes, “will enable the company to adapt rapidly to a changing technical and competitive environment. Standard General will be able to — and plans to — make substantial investments for its long-term success.”