In February 2022, investment firm Standard General announced its $8.6 billion acquisition of TEGNA Inc., which owns 64 television stations in 51 US markets. A year later, however, the deal remains buried deep in the bowels of the Federal Communications Commission (FCC), another invisible victim of the bureaucratic black arts. 

Why is the FCC blocking an unsexy transaction in the local broadcast television world that complies with all the commission’s rules? And with a sly tactic, no less?

The move is bad for not only an already struggling industry—and is not only a roadblock to creative revival of local content—but it could also introduce a broader legal regime that depresses innovation across the communications landscape. 

A brief history.

The internet blew apart the existing communications and content platforms—movies, newspapers, telephones, and TV. The internet globalized news and sports. It unlinked entertainment from time slots. It swallowed up local newspapers and TV channels, as advertising dollars moved wholesale to Google. 

Perhaps no facet of the pre-internet media-sphere was disrupted more than local broadcast television. 

Local TV had already been under assault by cable TV for two decades when the internet accelerated the decline. Likewise, 24-hour cable news had been eroding local newspapers’ centrality in our lives. Then the internet obliterated these cultural institutions. 

Politics and culture were nationalized—and tribalized—while local concerns were often trivialized. Tweets and TikToks give us amazing real-time access to people and events. But the psychedelic streams also overwhelm our senses and our sense-making abilities. We know what’s happening across the world—or at least we think we do—and yet we don’t know what’s happening in our own backyard. 

In a world of streaming, apps, and artificial intelligence, local TV remains a distant memory for many. Local news websites and free paper circulars have attempted to fill the old newspaper void. Stunned by the suddenness of the internet revolution, local TV has not yet adjusted. Broadcasters, however, retain considerable spectrum resources, cable platform access, and local relationships. With enough investment and a new business plan, Standard General believes the moment could be a ripe for a counterintuitive resurgence of local news. 

Only the FCC and their chairwoman, Jessica Rosenworcel, stand in the way of this experiment. In February, the FCC Media Bureau referred the acquisition for an administrative hearing. Although the FCC doesn’t have the authority to block mergers, they can prevent TV license transfers if it’s in the public interest. The unprecedented move will likely block the deal without ever reaching a vote by commissioners. 

The Wall Street Journal wonders whether raw politics is to blame. They note that Byron Allen, a big political donor, had previously bid for Tegna and may have pushed for the FCC to intervene. 

The process is surely unfair to the companies in this instance. The extralegal move could destroy a rare chance to remake local content: 

On Oct. 6, 2022, Mrs. Pelosi and then chairman of the House Energy and Commerce Committee Frank Pallone sent Ms. Rosenworcel a letter praising the agency’s decision to seek more information and urging it to do a ‘more thorough review of the public interest claims.’

[The Federal Election Commission] records show that five days later—a month before the midterm election, as Democrats scrambled to hold their House majority—Mr. Allen donated another $250,000 to the House Majority PAC. Was the timing a coincidence? Were we born yesterday?

If allowed to persist, however, this new bureaucratic tactic—or bureautactic—could upend law, and thus investment and progress, throughout the communications industry. Like other departments and agencies, the FCC cannot act unilaterally or arbitrarily. It must comply with the Administrative Procedure Act, which demands regulators follow basic rules of public notice and comment and clearly explain their decisions, all to ensure transparent and nonpolitical decision-making. 

Its new move is anything but transparent and reeks of politics. If the FCC gets away with this file-drawer veto, it could jeopardize all communications and media transactions—and thus investment—across some of the economy’s most important and innovative sectors.

Blair Levin, a former FCC official and perhaps the dean of communications analysts, is alarmed at the power grab and warns against the broader implications: 

In light of this precedent, we struggle to find any institutional or judicial constraint on any Chair effectively blocking any transaction on any grounds the Chair deems to be in the public interest. Evaluating any potential outcome, therefore, is less about a multiplicity of factual, legal, and policy factors and more about answering the question: what does the Chair want?

If Chair Rosenworcel doesn’t exhume the deal from the media bureau basement and allow a real public airing and vote, we’ll lose an experiment in local content and perhaps many other communications and media investments.

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