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Basch Report
Jax Daily Record Thursday, Oct. 13, 202212:10 AM EST

Tegna buyout is meeting resistance

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The impact on the Jacksonville TV market is one aspect of scrutiny.
by: Mark Basch Contributing Writer

A proposed $8.6 billion buyout of television station operator Tegna Inc. is facing potential opposition from high-level government officials, while its impact on the Jacksonville market has raised concerns from other parties.

Hedge fund Standard General L.P. agreed in February to buy Tegna Inc., operator of 64 U.S. television stations, including two in Jacksonville.

The deal includes an investment by funds managed by Apollo Global Management, which controls two other Jacksonville stations through its majority ownership of Cox Media Group.

That aspect of the deal prompted Graham Media Group Inc., owner of the other two commercial stations in Jacksonville, to file comments with the Federal Communications Commission in June expressing concern about the buyout.

The FCC hasn’t said anything about the Jacksonville market but it did send a letter Sept. 29 to Standard General seeking additional information about the buyout application, including information related to Cox Media.

Meanwhile, U.S. House Speaker Nancy Pelosi (D-Calif.) sent a letter Oct. 6 to FCC Chairwoman Jessica Rosenworcel questioning whether the buyout serves the public interest.

The letter sent jointly with House Energy and Commerce Committee Chairman Frank Pallone (D-N.J.) said potential consolidation of local news outlets should be addressed in the application process.

“After reviewing the public record, we are concerned that this transaction would violate the FCC’s mandate by restricting access to local news coverage, cutting jobs at local television stations, and raising prices on consumers,” it said.

Tegna’s television station group includes Jacksonville NBC network affiliate WTLV TV-12 and ABC affiliate WJXX TV-25.

Cox Media operates Fox affiliate WFOX TV-30 and CBS affiliate WJAX TV-47.

Apollo, through Cox, owns WFOX, while WJAX is owned separately by a former Cox executive. Cox provides programming, sales and other operations services for WJAX.

“If (the Tegna deal is) approved, the two large investment companies financing the Transaction would own and/or operate all four major network affiliates in the Jacksonville market,” Graham said in its comments to the FCC.

“Thus, Graham urges the Commission to pay particular attention to the Jacksonville market when applying the public interest standard to determine whether the Transaction frustrates the Commission’s longstanding objectives to ensure competitive television broadcast markets and robust local programming,” it said.

“In their filings with the FCC, the Applicants do not specifically address or identify how the Transaction would advance Jacksonville’s public interest,” Graham said.

Graham owns Jacksonville independent station WJXT TV-4 and CW network affiliate WCWJ TV-17. Its comments said WJXT in particular would be harmed by the transaction.

“WJXT, as a fully local independent station, will be on one side against all of the major network affiliates, with common financing, on the other. The imbalance will harm WJXT’s ability to fairly compete for viewers, advertising revenue, and local talent,” it said.

Standard General argued in response that Apollo’s interest in the transaction is very limited and it would have no control over the Tegna stations.

“AGM is merely one of the seventeen entities providing funding for Standard General’s acquisition of Tegna,” Standard General said in a July filing with the FCC addressing opposition from Graham and other parties.

Apollo would have “nothing more than a non-voting preferred interest (in Tegna), entirely consistent with its role as a funding source rather than as an owner.”

It said none of the documents filed in the buyout application “provide a scintilla of evidence that AGM will have any influence over post-Transactions Tegna, let alone anything approaching control.”

Standard General also issued a news release Oct. 6 in response to the Pelosi and Pallone letter, saying their concerns are misguided.

The fund was “disappointed to see the FCC petitioners enlist the involvement of Speaker Pelosi and Congressman Pallone by misleading them with the same false statements they have been making to the FCC,” the release said.

“The proposed Tegna transaction complies with all FCC rules without the need for any waivers, divestitures, or special treatment. Standard General seeks nothing from the FCC other than to be treated in the same fashion as other applicants whose transactions were promptly approved in the past two years.”

Reports say Foley completes U.K. soccer deal

Reports from United Kingdom newspapers say Fidelity National Financial Inc. Chairman Bill Foley has completed his acquisition of a British Premier League soccer team.

The Sun reported Oct. 8 that Foley is buying AFC Bournemouth for 120 million British pounds (about $132 million), while the Daily Mail said he is paying 150 million pounds (about $165 million).

The reports came as Foley attended a game at Bournemouth, in the south coastal region of England.

Foley already owns the NHL’s Vegas Golden Knights. He relocated from Jacksonville to Las Vegas when he was awarded that expansion franchise in 2016.

The Bournemouth deal still needs approval from the Premier League, the Daily Mail said.

Foley-related SPACs dissolving

Foley has been known for a wide range of investment deals and was in the spotlight last year for his creation of several special purpose acquisition companies, or SPACs.

However, the SPAC market has cooled considerably this year as the stock market faltered, so two SPACs led by Foley announced Oct. 3 they are going out of business.

SPACs are blank check companies that go public with the intent of finding acquisition targets. Because of Foley’s track record of finding buyout targets, his SPACs received a lot of attention on Wall Street.

However, Austerlitz Acquisition Corporation I and Austerlitz Acquisition Corporation II, both formed in 2021, said they are redeeming their stock and returning their cash to shareholders.

Two news releases from Cannae Holdings Inc., the investment firm spun off from Fidelity, said the two Austerlitz firms failed to find a merger partner.

“Some prospective partners did not meet the Sponsors’ investment criteria, and some pursued other strategic options like an IPO or full or partial sale. Some eventually declined to merge with (Austerlitz) due to poor stock price performance in the SPAC and IPO markets,” both releases said.

Austerlitz II has $1.38 billion in funds held in trust and Austerlitz I has $690 million.

Duos Technologies raises capital

Duos Technologies Group Inc. said Oct. 3 it raised additional capital through a private placement of stock to certain investors.

The Jacksonville-based company, which provides technology solutions for railroads and other industries, said it has already received gross proceeds of about $3.45 million and expects to receive up to $1.5 million more by the end of the month.

Duos said it will use the proceeds to support a business expansion within its target rail market.

Duos also said it still expects revenue of $16.5 million to $18 million this year, about double its 2021 revenue. 

However, supply chain challenges and the impact from Hurricane Ian delayed some revenue expected in the third quarter into the fourth quarter.

Greenshades Software sold

Private equity firm SFW Capital Partners said Oct. 4 it sold Jacksonville-based Greenshades Software Inc. to a group led by Waypoint Capital and Gearbox Capital.

Greenshades, founded in 2002, provides payroll, payroll tax, and human capital management information and software solutions.

SFW said it is retaining a minority stake in the company but terms of the deal were not disclosed.

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