Standard General’s Soo Kim Defends His Delayed $8.6 Billion Tegna Acquisition

Soohyung Kim, founding partner of Standard General, on Monday defended the company’s proposed $8.6 billion acquisition of Tegna as opposition filings mount at the FCC and Standard General faces increasing “ticking fees” as the approval process drags on.

Standard General agreed to acquire Tegna last February but approval of the deal has lagged as the Senate fails to approve a fifth commissioner, causing the split FCC to languish. The Democratic Biden administration and Department of Justice also seem disinclined to approve big media mergers, at least with any kind of alacrity.

The delays are allowing the opposition and the fees to pile on. Standard General faced a “ticking fee” once the deal passed the nine-month mark. That fee will increase again after Feb. 22, Kim told reporters during a press call on Monday. While Kim would not say how long Standard General would continue to try to wrestle the deal to the ground, Tegna will only get more expensive as time goes on. Meanwhile, Tegna’s share price dropped 2.7% on Monday to close at $19.74.

“We’re optimistic and obviously would prefer economically to get this done during the current ticking fee that’s in place today,” Kim said.

In December, Dish Network accused Apollo Global Management (AGM), which owns Cox Media Group (CMG) and is one of the funders of Standard General’s acquisition of Tegna, of trying to include Tegna stations that CMG does not yet own in retransmission consent negotiations with Dish. In addition, Dish complained that AGM and CMG were trying to increase those fees by 75% even though viewership of those TV stations has declined since the last time Dish and Cox negotiated retransmission-consent fees three years ago.

Should Standard Media acquire Tegna, it has agreed to spin off five of its stations in Texas — KVUE Austin, WFAA and KMPX Dallas and KHOU and KTBU Houston — to Cox Media Group in order to comply with FCC broadcast ownership rules. Conversely, Cox will sell WTXF Boston to Standard Media.

According to a Jan. 20 letter to the FCC, CMG was merely trying to future-proof its retransmission consent negotiations with Dish in the event that it eventually owns those five Texas stations: “[T]he CMG proposal was not an effort to negotiate for ‘another company’s stations;’ it was a variation on a standard industry solution to after-acquired station issues,” wrote Michael Basile, counsel to CMG.

Kim called the letters from Dish and other entities “a commercial dispute between two parties that is tangentially related to the deal. I don’t believe our FCC approval process should be the place where those commercial disputes should happen. Parties should not use the regulatory process for their own commercial advantage. Before the commission is a deal that is approvable on its own merits.”

That said, the complicated ownership structure between Apollo Global Management and Standard General raises eyebrows among deal-watchers, especially because the lines between the two entities do not seem to be especially bright. During the press call, Kim was adamant that AGM and Standard General would operate separately when it came to the two station groups.

“AGM [has] helped provide us with important capital so we can purchase a company as large as Tegna, as did the 13 banks. [AGM is] one of six preferred investors, most of which have put a larger quantum of capital into allowing us purchases,” Kim said.

“No one really questions the other credit investors, who are fixed income investors,” he continued. “We would look at them very similarly, partly because they also have other broadcast interests. We are the sole equity holder … of New Tegna. We will make all the decisions, we are the sole attributable owner. I don’t think those fears are warranted, there’s no substance to it. It’s the strangest form of misperception — every time we say that Standard General is buying Tegna for $24, they say it must not be Deb and Soo and there must be someone behind them.”

Kim also restated that should Standard General complete its acquisition of Tegna, it will create the largest Asian-American-owned and female-led broadcaster in the U.S.

Deb McDermott, Standard Media CEO, is standing by to run the new Standard Media with the Tegna assets incorporated. McDermott has a long history with Standard General and Kim. She was running Young Broadcasting when Standard General acquired it in 2010 and then transitioned to Media General as chief operating officer when Standard General bought that company in 2013 and merged it with Young. In 2014, Media General bought LIN Media, and that combined company was acquired by Nexstar for $4.6 billion in 2016.

Through the course of trying to close the deal, Standard Media has committed to not reducing staffing at any of the stations it’s acquiring for at least two years and says it plans to increase local news production in those markets.

“We have never reduced local content investment,” Kim said on the call. “We’ve increased newsroom staffing by 28% overall and we’ve added more than 40,000 hours of local news at the stations we operate.”

Still, concerns persist that the deal won’t close by Feb. 22, when previously it had been expected to close by the end of last year.

“We would prefer to get this done sooner not later,” Kim said. “I wouldn’t say that we are that focused on what happens if we extend. We are very focused on getting it done in the here and now.”