Tegna raises antitrust concerns over possible takeover offer

An auction of the Tegna TV station empire has come into question as the company questioned whether a potential sale to a high-profile bidder would face antitrust concerns from US regulators, a learned The Post.

The broadcasting giant – which emerged from the Gannett newspaper chain in 2015 as a separate, publicly traded company that now operates 64 TV stations and two radio stations in 54 U.S. markets – announced on September 21 that it had received offers to redemption and that he planned to review them. .

Nonetheless, more than a week later, Tegna has not entered into negotiations with a key bidding block made up of hedge fund Standard General and buyout firm Apollo Global Management, said two sources close to the situation. This is despite the fact that Standard General and Apollo have expressed their willingness to increase their fully funded offering to $ 22 a share, which currently values ​​the company at more than $ 4.8 billion, sources said.

Instead, sources said Tegna was asking Standard General and Apollo questions about their offer’s ability to withstand Federal Communications Commission antitrust scrutiny.

“I think there is a 50 to 75% chance of a deal happening,” said a somewhat skeptical source familiar with the situation.

Bally’s casino owner Standard General and its bidding partner Apollo Global Management have expressed willingness to increase their offering, which currently values ​​the company at more than $ 4.8 billion, said sources at The Post.

The possible stumbling block has emerged amid a turbulent history between Tegna and Standard General – led by Soo Kim, the savvy hedge fund mogul who recently built an American casino empire under the moniker Bally. Earlier this year, Standard General launched an unsuccessful proxy race to oust chief executive David Lougee.

Kim – whose cabinet had reported allegations of discrimination and racial prejudice against Tegna in a series of lawsuits – has no plans to keep Lougee if he buys the business, sources said. Standard General, not Apollo, would be the majority owner of the new Tegna, sources said.

Over the past month, Tegna invited Standard General and Apollo, along with comedian-turned media mogul Byron Allen, who is teaming up for a bid with buyout firm Ares Management, into his data room to examine his confidential financial information. . In return, Tegna got Standard General to sign an agreement that she would not engage in another proxy race for more than a year, sources said.

Sooo kim
Tegna’s concerns emerged amid a turbulent history between Tegna and Standard General, led by hedge fund mogul Soo Kim, who made allegations of discrimination and bias against Tegna.

Regarding antitrust issues, the FCC’s National Media Ownership Rule prohibits any entity from owning commercial TV stations that reach over 39% of US TV homes nationwide, with a discount granted. at stations operating on UHF channel 14 and above.

The proposed buyout, by combining Tegna’s stations with those Standard General and Apollo already own, would exceed that number. The suitors, however, say they do not plan to move most of their existing stations to post-Tegna society, sources said.

Apollo only contributes to one of 33 TV channels in its Cox Media group, a source said. Overall, Cox Media Group claims to have reached 52 million homes. Standard General only has three stations, which are said to be part of the new Tegna, according to the source. There is no geographic overlap with the four TV channels that would be combined with Tegna, sources said.

Marc Rowan
Apollo, led by Marc Rowan, would only contribute to one of his Cox Media group’s 33 TV channels in a post-Tegna company, according to a source.

Still, Apollo’s Cox owns the ABC branch in Atlanta and Tegna has an NBC branch in Atlanta, so the FCC should get comfortable with a Standard General-owned Tegna in which Apollo has a really separate stake from Cox, a source said. .

Standard General and Apollo kicked off the current sale process around June when Gray Television signed an agreement to acquire television stations from Meredith Corp., eliminating their main rival.

Currently, Standard General is developing a strong presence in the sports games space through its ownership of the Bally Sports brand. Bally owns the naming rights for about half of the country’s regional sports networks.

If FCC-related issues derail talks, this would be the third time in recent years that Tegna has embarked on a sales process to cut it short. In 2019, Tegna confirmed that he had rejected an offer to buy Apollo. In early 2020, Tegna kicked off a sell-off process by securing offers from Gray Television and Apollo at $ 20 per share. Tegna called off this process when the COVID pandemic began and the debt markets became volatile.

Meanwhile, Byron Allen and his bidding partner Ares Management couldn’t find all the money to fund their $ 23-share bid, sources said. Allen is struggling to raise the preferred shares he needs and would be missing more than $ 1 billion, sources said. Part of the difficulty is that Allen Media has debt equal to roughly seven times its profits, which gives the Weather Channel owner a low net worth, sources said.

Allen has reduced his debts in recent weeks with new programming deals, and Tegna is studying his complicated offer, which is in better shape than it might have looked a few weeks ago, a source said.

Morgan Stanley is Byron Allen’s lender and is expected to refinance all of Allen Media if they are successful in buying Tegna, the source added.

Tegna shares closed at $ 21.01 on Wednesday, down from $ 17.52 earlier this month when news of the new auction first broke.

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