Insidious, Misguided...
or just plain stupid?
Limbo:
the first circle of hell in Dante’s Inferno
a place or state of restraint or confinement
a place or state of neglect or oblivion
an intermediate or transitional place or state
a state of uncertainty
For over a year now, the almost 7,000 employees of TEGNA have woken up each morning wondering if they’ll still have a job by day’s end. During that time, the once vibrant media company they work for, which specializes in providing local news to almost 40% of the country through its 64 television stations, has been stuck on a sort of maddening cruise control. Still functioning, but very much in a holding pattern indicative of a company on the precipice of an ownership change.
TEGNA to be Acquired by Standard General
(February 22, 2022) Tysons, VA and New York - TEGNA Inc. and Standard General L.P. today announced that TEGNA and an affiliate of Standard General have entered into a definitive agreement under which TEGNA will be acquired by the Standard General affiliate…
If you’ve experienced that sort of situation you know the internal landscape changes dramatically. The proverbial rug is pulled out from beneath you, and, whether you’re a fan of your employer or not, any sense of security evaporates as questions about your future, or lack thereof, dominate your thought process, not to mention the Slack channels you frequent. That’s Limbo. And It creates an uncomfortable inertia that, over time, destroys individual performance and the institution on the whole. Creativity and growth are replaced by lame-duck concerns about spending a dime more than necessary - a tip-toeing existence motivated by the fear of any misstep that might foul the deal. Positions are left unfilled, raises are minimal, and major capital improvements are generally left for the new folks to deal with. The motivational carrots are removed and the job turns into little more than a (likely) temporary means to an end. It’s unnerving and tedious. And it absolutely messes with your mind.
The Worst of Times…
Of course, this process is taking place at a time unlike any other in the industry’s history. Local journalism, so vitally important to our democracy, is struggling to maintain a relevant presence in cities and towns across the country. Legitimate threats to local broadcasting’s very existence are no longer rumors or prognostications - they are here and very real. In fact, it’s the recognition of the realities of the time that, in part, led TEGNA to agree be sold in the first place. The future for local broadcasters and the companies that own them is murky at best.
All media deals like this one have to go through the process of being approved by the FCC, which is charged with the responsibility of insuring the transaction is in the best interest of the public. In acknowledgement of the fact that said process can be hard and even damaging for a company going through it, the FCC has, historically, set a limit of 180 days to hear from supporters and detractors, and investigate the circumstances and potential ramifications of any transaction. After that, or even sometimes before, a decision is rendered and everybody can resume life as normal.
Soo Kim/Standard General Managing Partner
On the surface, the TEGNA/Standard General merger seemed to be a veritable FCC Wet Dream. You have Soo Kim, the Founding and Managing Partner of Standard General, a South Korean who moved to New York when he was five years old, and Deb McDermott, his chosen CEO for the new venture, who is, herself, a veteran of local broadcasting. The combination would have created the largest minority-owned/ female-led broadcast station group in U.S. history, something the Commission, at least ostensibly, has supported with good reason. According to its latest ownership/diversity report issued in January, Black/African Americans accounted for just 3% of majority ownership, Asian Americans 1%, and female ownership a little over 5%. In other words…white men, overwhelmingly, control the broadcast media.
To the surprise of almost anyone with at least a passing interest, the Commission’s review of the TEGNA/Standard General merger took 309 days and yielded no official conclusion. Instead, apparently still “unclear” as to the potential ramifications, the FCC chose to designate the case for review by an administrative law judge - an additional process that could take many months more and, for all intents and purposes, will kill the deal. Three words come to mind: Cowardly, Cruel, and highly Unusual. Let me be clear. I have no position on whether or not the TEGNA/Standard General merger is good or bad. What I do know, is the behavior of the FCC was unconscionable. Malicious or not, to ignore the worsening condition of the industry, the growing crisis resulting from the loss of local news nationwide, is an action - or inaction in this case - in need of investigation.
In reaching their curious indecision, the FCC claims they were stumped over two issues related to the merger.
A concern that, as a result of a secondary station swap with one of Standard General’s financial partners in the deal, Apollo Global Management, the new TEGNA could command increased retransmission fees from cable operators which could potentially drive up costs to consumers.
A fear that jobs would be lost, based on statements made by Standard General relating to centralizing the production of certain content for the stations.
Obviously, these are not inconsequential issues, but they pale in comparison to the larger crisis posed by the potential loss of the entire industry. Sort of like worrying about the patio furniture as you sit directly in the path of an approaching category 5 hurricane. And, not for nothing, Standard General did offer to address the concerns and make concessions, but, as far as we know, the FCC chose to not to respond.
Any reasonable body familiar with - and sensitive to - the current state of an industry for which they have jurisdiction, would have fast-tracked this deal’s evaluation and decision. Not only that, it would have known full well that any additional time spent in this limbotic purgatory would only make the entire industry’s struggles more acute. Clearly, the current FCC is neither reasonable or knowledgeable about the present state of local media, because its actions were akin to a hospital delaying and finally denying a mortally wounded patient treatment because there was a question about the zip code they had provided on their admission form.
For the record, two of the Commissioners, Brendan Carr and Nathan Simington, opposed the agency’s action which was recommended by its Media Bureau and endorsed by FCC Chairwoman Jessica Rosenworcel.
“Hundreds of local newspapers have shut down over the last few years alone. This trend is part of a broader decline in the investments necessary to sustain the journalists and reporters that are vital to communities across the country. Many of the nation’s local TV stations are trying to step up and expand their news gathering operations. At this moment, the FCC should be working to encourage more of the investment necessary for these local broadcasters to innovate and thrive. It does the opposite today. After a protracted, nearly yearlong review, the Commission should be providing the parties with a decision on the merits—not an uncertain future.” Commissioners Carr & Simington/FCC News
Insidious, Misguided…or just plain stupid?
So now what? The FCC will continue to move through a slowly administered killing of the deal, hiding behind the disingenuous motions of further evaluation. Standard General has little, if any, recourse. Last week, following the Commission’s no decision they demanded an immediate vote of the full FCC, a request that will likely be ignored without consideration. As for TEGNA, they’ll be forced to start all over again and re-evaluate the company’s future in an environment that appears bleaker than it was even a year ago. In other words, limbo will live on for the 7,000, the company itself, and in many ways, the entire industry.
As Congress and the Biden Administration continue to grapple with the filling of the one empty chair on the Commission (Gigi Sohn’s nomination is 16 months old without a vote), I would suggest it might be time to evaluate the entire agency’s ability to do the job intended, and in particular, its understanding of an industry that could very well key to the continued existence of our country.
Full Disclosure: I was an employee of TEGNA for two years (2018/19) and had a consulting relationship with them for almost two years prior to that. I have no current connections, financial or otherwise to the company today.