Standard General Accuses FCC, Rosenworcel, Dish and Allen of Racism, Conspiracy

Standard General and its founder Soohyung Kim filed a civil complaint Wednesday charging that Allen Media CEO Byron Allen, Dish CEO Charlie Ergen and FCC Chairwoman Jessica Rosenworcel, along with lawmakers, unions and public interest groups, were partners in a conspiracy and race discrimination aimed at sinking Standard's $8.6 billion purchase of Tegna last year (see 2306010077). The filing was made in U.S. District Court for the District of Columbia. “The FCC Chairwoman and her personal staffer blocked the deal at the behest of Mr. Allen, who used business allies and six-figure political donations to destroy Mr. Kim’s chances of acquiring TEGNA,” the complaint said.

The lawsuit names Rosenworcel, the FCC, Allen, Ergen, Dish and Allen Media as defendants, along with Media Bureau Chief Holly Saurer and I Street Advocates attorney David Goodfriend, who represented several groups opposing the Standard/Tegna deal. Goodfriend has also represented Dish, Ergen and Allen. The public interest groups and unions that opposed the deal are also named as defendants: Common Cause, the United Church of Christ Media Justice Office, and both the NewsGuild and National Association of Broadcast Employees and Technicians sectors of the Communications Workers of America.

Kim, a Korean American, is seeking to recover the $136 million breakup fee Standard paid to Tegna plus punitive damages, along with a permanent injunction barring the FCC from discriminating on the basis of race, and a declaration that the FCC, Rosenworcel and Saurer violated Kim’s 5th Amendment right to equal protection because of his race. The lawsuit accuses the defendants of tortious interference, conspiracy, violating the Civil Rights Act and other violations. The breakup of Standard/Tegna led to $1.2 billion in losses for Tegna shareholders when Tegna's stock cratered after the FCC announced that it would designate the deal for hearing, Standard said. It cost Standard, a large shareholder, nearly $85 million, the complaint said. Standard also had to pay Tegna a $136 million breakup fee and transaction costs, financing fees and attorney's fees of roughly $70 million.

The FCC has said it designated Standard/Tegna for hearing over concerns about job losses, increased retransmission consent rates and international hedge funds owning local broadcasters. The FCC is "responsible for determining whether grant of the applications... serves the public interest," said Chairwoman Jessica Rosenworcel in the release announcing the hearing order last year. “That’s why we’re asking for closer review to ensure that this transaction does not anti-competitively raise prices or put jobs in local newsrooms at risk,” she said then.

The complaint alleges that Allen, a major Democratic National Committee donor, used his influence over lawmakers -- through Goodfriend -- to pressure Rosenworcel and Saurer to designate the Standard deal for hearing and thus ultimately kill it. In addition, the complaint alleges the acquisition wasn’t approved because Kim is Asian rather than Black. “Mr. Kim -- an American raised in Queens -- was maligned as a ‘shadowy foreign investor.’ He was not the ‘right type of minority’ for the FCC’s diversity goals,” the complaint said, also quoting a filing from the unions opposing the deal. The public interest groups opposing Standard/Tegna didn’t raise complaints about foreign ownership when hedge fund Apollo bought Cox’s TV stations, the complaint said. “What was different this time around? The new owner of the TEGNA stations would be an Asian American with a foreign-sounding last name,” the complaint said.

The complaint accuses Rosenworcel of conspiring with Allen to block the deal because of his influence with lawmakers and the possibility of then-FCC nominee Gigi Sohn becoming chair. "Chairwoman Rosenworcel and Ms. Saurer knew they had to kill the deal to placate Ms. Sohn’s supporters, including Mr. Allen. Otherwise, Chairwoman Rosenworcel would be out as chair." It also said that Allen called Kim while the Standard deal was under review and suggested Standard divest stations to Allen Media to help it get through the FCC. “In retrospect, Mr. Kim understood Mr. Allen’s call as a threat and as the first indication that the fix was in -- the FCC would not approve the transaction unless it came to include Mr. Allen and his black-owned media company as one of the new station owners,” the complaint said. Sohn didn’t comment.

The complaint said Goodfriend represented Allen's and Ergen’s interests and shared information with them while the proceeding was underway. It was in Dish’s interest to sink the transaction because of the threat of higher retransmission consent fees. Though Goodfriend and Dish didn’t comment on the lawsuit, both have denied similar accusations from Standard in the past.

A former FCC attorney told us that civil suits in district court concerning the agency's decisions are rare and are often viewed by the courts as an attempt to get around the more usual Circuit Court appeals process. The law firm representing Kim, Consovoy McCarthy, has represented conservative causes in a number of recent high-profile cases, including U.S. Supreme Court affirmative action case Students for Fair Admissions v. Harvard, election disputes involving former President Donald Trump, and challenges to the White House’s student debt relief program.

Asked about the lawsuit at a news conference Thursday, Rosenworcel said only that she has shared the complaint with the Office of General Counsel. NewsGuild President Jon Schleuss said the union is reviewing the complaint. The other defendants didn't comment.