The FCC's Quiet Power Grab
The communications regulator is sneakily blocking a TV broadcast merger. The implications may be surprisingly huge.
In February 2022, investment firm Standard General announced its $8.6 billion acquisition of Tegna, the owner of 64 television stations in 51 U.S. markets. A year later, however, the deal remains buried deep in the bowels of the Federal Communications Commission, the invisible victim of bureaucratic black arts.
Why is the FCC blocking an unsexy transaction in the local broadcast television world which complies with all the commission’s rules? And with a sly tactic, no less?
The move is not only bad for an already-struggling industry; and not only a roadblock to creative revival of local content; it could also introduce a broader legal regime which 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 de-linked 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. Twenty-four hour cable news likewise had been eroding the local newspaper’s 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 toks 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, local TV has not yet adjusted to the Internet revolution. Broadcasters, however, retain considerable spectrum resources, access to cable platforms, 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 its 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 authority to block mergers, it 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 donor, had previously bid for Tegna and may have pushed for FCC to intervene.
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.”
FEC 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?
The process is surely unfair to the companies in this instance. The extralegal move could destroy a rare chance to remake local content.
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 Procedures Act, which demands regulators follow basic rules of public notice and comment and clearly explain their decisions, all to ensure transparent and non-political decision-making.
Its new move is anything but transparent and wreaks 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.