An public sale of the Tegna TV-station empire has been thrown into doubt because the company has questioned whether or not a potential sale to a number one bidder would face antitrust concerns from US regulators, The Post has discovered.
The broadcasting big — spun off from newspaper chain Gannett in 2015 as a separate, publicly traded company that now operates 64 TV stations and two radio stations throughout 54 US markets — introduced Sept. 21 it had acquired buyout proposals and that it deliberate to review them.
Nevertheless, greater than per week later Tegna has not begun negotiations with a key bidding bloc that consists of hedge fund Standard General and buyout agency Apollo Global Management, two sources near the state of affairs mentioned. That’s regardless of Standard General and Apollo expressing a willingness to extend their $22-a-share fully-financed provide, which presently values the company at upwards of $4.8 billion, sources mentioned.
Instead, sources mentioned Tegna is asking Standard General and Apollo questions round whether or not their bid can stand up to antitrust scrutiny from the Federal Communications Commission.
“I think there is a 50 to 75 percent chance a deal happens,” a considerably skeptical supply near the state of affairs mentioned.
The possible stumbling block has emerged amid a rocky historical past between Tegna and Standard General — headed by Soo Kim, the savvy hedge-fund mogul who not too long ago has been assembling a US on line casino empire underneath the Bally’s moniker. Earlier this year, Standard General launched an unsuccessful proxy contest to oust Chief Executive David Lougee.
Kim — whose agency had pointed to allegations of discrimination and racial bias in opposition to Tegna in a collection of lawsuits — has no intention of maintaining Lougee if he buys the company, sources mentioned. Standard General, not Apollo, could be the controlling proprietor of the brand new Tegna, sources mentioned.
Tegna over the final month has invited Standard General and Apollo, in addition to the comedian-turned-media-mogul Byron Allen who’s teaming up for a bid with buyout agency Ares Management, into its information room to review its confidential monetary info. In alternate, Tegna received Standard General to signal an settlement it could not have interaction in one other proxy contest for greater than a year, sources mentioned.
As for the antitrust concerns, the FCC’s nationwide media possession rule prohibits any entity from proudly owning business tv stations that attain greater than 39 p.c of US tv households nationwide, with a reduction given to stations working on UHF channel 14 and above.
The proposed buyout, when combining Tegna’s stations with those who Standard General and Apollo already personal, would exceed that quantity. The suitors, nevertheless, declare they don’t seem to be planning to roll most of their present stations into the post-Tegna company, sources mentioned.
Apollo is just contributing one of many 33 tv stations from its Cox Media Group, a supply mentioned. Cox Media Group total says it reaches 52 million households. Standard General solely owns three stations, which might develop into a part of the brand new Tegna, based on the supply. There isn’t any geographic overlap with the 4 tv stations that might be mixed with Tegna, sources mentioned.
Still, Apollo’s Cox owns the ABC affiliate in Atlanta and Tegna an NBC affiliate in Atlanta so the FCC would wish to get snug with a Standard General-owned Tegna during which Apollo owns a stake being actually separate from Cox, a supply mentioned.
Standard General and Apollo sparked the present sale course of round June when Gray Television signed a deal to accumulate Meredith Corp.’s tv stations, taking their foremost bidding rival out of the image.
Presently, Standard General is growing an enormous presence within the sports activities gaming area by means of its possession of the Bally Sports model. Bally has the naming rights for about half the nation’s regional sports activities networks.
If FCC-related concerns derail talks, it could be the third time lately Tegna began a gross sales course of solely to chop it brief. In 2019, Tegna confirmed it rejected a takeover provide from Apollo. In early 2020, Tegna began a gross sales course of getting bids from Gray Television and Apollo at reportedly $20 a share. Tegna cancelled that course of when the COVID pandemic began and debt markets grew to become uneven.
Meanwhile, Byron Allen and his bidding companion Ares Management haven’t give you all of the money to fund their $23-a-share bid, sources mentioned. Allen is discovering it troublesome to lift the popular fairness he wants, and is believed to be greater than $1 billion brief, sources mentioned. Part of the issue is Allen Media owes debt equal to about seven occasions its earnings giving the Weather Channel proprietor little fairness worth, sources mentioned.
Allen in latest weeks has diminished its debt ranges with new programming contracts, and Tegna is learning its difficult provide, which is in higher form than it might need appeared a couple of weeks in the past, a supply mentioned.
Morgan Stanley is Byron Allen’s lender and is predicted to refinance all of Allen Media in the event that they achieve shopping for Tegna, the supply added.
Tegna’s shares closed Wednesday at $21.01, up from $17.52 earlier this month when information of the brand new public sale was first reported.