Standard General's Kim Blasts FCC Silence on Stalled Deal

Standard General received only 15 to 20 minutes' notice from the FCC that the agency was about to issue a hearing designation order, and Standard doesn’t plan to go away if the Tegna deal falls apart, Managing Partner Soohyung Kim said in an interview Monday. “I don’t think a regulator should dislike the industry it regulates,” he told former FCC Commissioner Mike O’Rielly during an onstage Q&A at the NAB Show Tuesday.

Some of the FCC’s only communication with Standard aside from the warning about the HDO was an in-person meeting with Chairwoman Jessica Rosenworcel last year, Kim said. “People make the assumption that this is somehow analogous to other people's treatment,” he said. “But I assure you that no one's ever been treated this way. You know, even the Sinclair Tribune HDO, that was after a long back and forth. We've never had any back or forth,” Kim said. Numerous broadcast attorneys told us they would expect regular engagement and feedback from FCC staff on a deal’s progress in the normal course of a large transaction. Kim said communication with the FCC had cooled late in 2022, but the broadcasters believed their deal was on the right track because it had gotten through both DOJ and Team Telecom (DOD, DOJ and the Department of Homeland Security) review without incident. Kim said the broadcasters were blindsided by the news of the HDO, and FCC officials told us other 10th-floor offices also received little advance notice of the HDO. The FCC didn’t comment.

“It's one thing to say that well, there's some real problems with your deal,” Kim said in an interview. “It's another thing to be, you know, we need to be told what those problems are.” He compared Standard’s announcements of concessions on the deal to flyers air dropped over cities in wartime to communicate with the population, “since no one is actually telling us what they want.” The only information the company had were the union and public interest complaints, so that is what it reacted to, he said. Since Standard is bound by provisions in the merger agreement requiring it to make all reasonable efforts to comply with FCC requirements, it would have had to accede to any FCC conditions on the deal, Kim said. “They knew that, that’s why they didn’t ask us to do anything," he said.

Kim declined to comment on rumors the opposition to the deal was engineered or funded by Allen Media CEO Byron Allen or Dish CEO Charlie Ergen (see 2304050082). During his discussion with O’Rielly, he referenced a letter Rep. Nancy Pelosi, D-Calif., sent to the FCC opposing the deal: “I think the former speaker of the house got her money’s worth.” The shareholders of Tegna -- of which Standard General is the largest -- “will lose $2 billion because of whoever did this,” Kim said.

Both Allen and Ergen have employed attorney and former Locast CEO David Goodfriend, who represents two Communications Workers of America sectors opposing the deal: the NewsGuild and National Association of Broadcast Engineers and Technicians. In an email, Goodfriend said he represents CWA and no other client in this proceeding. “CWA has been my long-time client and they pay my invoices. On the Tegna matter, I represent TNG-CWA and also NABET-CWA (another division of CWA), as reflected on the pleadings.” NewsGuild has just four members affected by the Standard/Tegna deal, while NABET has about 80, Kim said.

Goodfriend “does not lobby for DISH on the Tegna-Standard General merger,” emailed a Dish spokesperson. “DISH does not pay David Goodfriend for any regulatory work in front of the FCC right now.” Dish didn’t ask for this deal to be denied but did support comments from MVPD group the American Television Alliance calling for retransmission consent conditions. Other attorneys representing deal opponents -- the unions’ other counsel Andrew Schwartzman as well as Common Cause’s Yosef Getachew and United Church of Christ Media Justice Center attorney Cheryl Leanza -- are frequent filers and collaborators before the FCC against broadcast combinations, but Goodfriend hasn’t historically been lumped in with that group.

Though the U.S. Court of Appeals for the D.C. Circuit hasn’t acted on Standard’s petition for mandamus, Kim said he went onstage at the NAB Show to discuss the deal because he wants to make everyone aware of how the company was treated. “I think we are doing everything that we can across the board,” Kim said. Several attorneys told us publicly speaking about an ongoing court proceeding isn’t a move they would generally recommend to clients, but they also said Standard has little to lose. “The most important thing is that at any time the Chair can draw this back, or that any three commissioners can ask for a vote,” Kim said. Rosenworcel expressed support for the HDO and Republican Commissioners Nathan Simington and Brendan Carr condemned it, so the vote Standard needs would likely have to come from Democratic Commissioner Geoffrey Starks. He has steadfastly declined to comment on the deal, and isn’t considered likely to push for a vote. The broadcasters asked the D.C. Circuit to rule on the mandamus petition by April 21.

“I think people all make the assumption, Oh, here's a sophisticated investment fund based in New York. They're probably putting one over on the government and the government like, has to snap them back or something,” Kim said Monday. “None of that could be farther from the truth. You have an existing business and operator that's had a long-standing history in this business for over 12 years.” Former FCC Commissioner Mike Copps disagreed. The deal is “predatory” and “another attempt of private equity to take over our nation’s newsrooms,” said Copps in a Benton Institute for Broadband & Society post Tuesday. “It’s one thing, bad as it is, for special interest moguls in other industries, like oil and gas, to wield so much influence in our nation. But media -- news and information -- is the fuel democracy runs on.” Standard/Tegna “runs roughshod over the public interest. It must not be allowed to proceed,” Copps said.

If the deal didn’t have a hard out May 22, Kim is certain the administrative law judge process would absolve the broadcasters, he said. ”Do you think that there's anything that we're afraid of in this ALJ hearing? We're gonna win 100%,” he said. “We've already put more on the table than any other applicant ever. There is no deal that has been scrutinized like our deal.” Due to the economic and interest rate climate in January 2022, compared with now, the financing on the purchase is “irreplaceably cheap” and can’t be extended, Kim said.

Kim declined to say what Standard would do next if the court doesn’t issue a mandamus and there’s no FCC vote on the deal, but he said the matter “isn’t going to go away.” He said the company is focused on trying to get the deal done during the remaining “40 days in the wilderness” before the May 22 breakup date. He said every broadcaster should be concerned about what happened to Standard General. Broadcasters could find receptive ears on Capitol Hill for requests to limit the FCC’s authority to block deals, said O’Rielly. “I don’t know how you can borrow money against your stations or how you can buy something or sell something,” Kim said. “Why have rules or a commission or a notice of proposed rulemaking when those rules don’t matter?”