Dade Hayes
Dave Lougee, CEO of local TV giant Tegna, said FCC Chair Jessica Rosenworcel and the Biden Administration have put “a restriction around our neck” with their enforcement of “antiquated” regulations.
The exec was asked about the proposed acquisition of Tegna by private equity firm Standard General during an appearance Thursday at Gabelli Funds’ annual Media & Entertainment Symposium. The $8.6 billion transaction was terminated by the companies last year after scrutiny by the FCC. The commission is now led by Democrats, in keeping with the custom of the political party in the White House dictating the makeup of regulatory agencies. Along with the Standard General deal, the FCC has targeted “sidecar” deals used by Nexstar and otherwise put local broadcasters on notice about their strict stance.
“We don’t imagine a scenario where for us there’s going to be any specific M&A opportunities in the broadcast space” during the current FCC/Administration setup, Lougee said. The FCC’s ownership cap, which bars any single owner from controlling stations collectively reaching more than 39% of U.S. households, “is effectively a constraint around our neck.”
There is “tremendous frustration in the ecosystem, and appropriately so, about an incredibly antiquated regulatory structure that has been doubled down on by this particular chair, and I guess I would say Administration as well,” Lougee continued. “The lack of reality of that” will become apparent soon, he predicted. Smaller groups, especially those that are “over-leveraged or don’t have the balance sheets,” the exec added, could “start to go under in a few years,” which will “accelerate changes in the regulatory system.”
As far as how Tegna is coping with the regulatory concerns, Lougee said local TV M&A is “off the table” for the near term. But he noted this fall’s election, which will be a milestone for the operating environment in local TV. “You tell me what the outcome of the election is and then I’ll start to triangulate that, but we might as well just wait to see and then, depending on which party’s in power, we’ll start to triangulate under that party,” he said.
Prior to Lougee’s comments, Sinclair CFO Lucy Rutishauser at the same conference articulated similar criticism about the ownership cap, noting that other media and tech sectors are not limited in terms of their reach to consumers.