After calling off a hedge fund’s buyout of the company, Tegna Inc. held its first conference call with analysts in 18 months and CEO David Lougee said he couldn’t explain why the Federal Communications Commission would not approve the deal.
“I think nobody really knows what the FCC was thinking,” he said in the May 25 call, according to a transcript posted by the television station operator.
Lougee said he and the proposed buyer, Standard General L.P., had little interaction with the regulatory agency before the FCC ordered a hearing on the deal before an administrative law judge.
“The fact that it was sent to a hearing designation order, really with very little interaction with the parties, is a conundrum,” Lougee said.
“I think for the entire industry, people don’t really know what to make of it because of what was a, frankly, unprecedented process,” he said. “I really don’t have a view on what their future view will be of deals.”
Virginia-based Tegna owns 64 television stations, including Jacksonville NBC network affiliate WTLV TV-12 and ABC affiliate WJXX TV-25.
Standard General agreed to buy the company in February 2022 for $8.6 billion.
The buyout faced opposition over several issues, including its impact on the Jacksonville television market.
Apollo Global Management, which agreed to provide funding to Standard General for the deal, controls Cox Media Group, which operates Jacksonville Fox affiliate WFOX TV-30 and CBS affiliate WJAX TV-47 and eight other stations.
That led to concerns that Apollo would have an interest in four of Jacksonville’s six commercial television stations after the buyout. However, Standard General said Apollo was only providing funding and would not have any ownership interest in the Tegna stations.
When the FCC in February 2023 ordered a hearing on the deal, it did not mention the objections raised over the Jacksonville market.
The FCC said the hearing would focus on concerns that the deal could raise prices for consumers and result in job losses at the local stations.
With no indication when the FCC would act on the buyout application, Tegna terminated the agreement May 22.
Standard General has not made any public comments on the collapse of the deal.
Tegna had not held any quarterly conference calls since the third quarter of 2021 before the May 25 call, because of the buyout agreement. Lougee said in the call the company is prepared to go it alone.
“Armed with the knowledge of this possible outcome in recent months, our board of directors and senior management have been very focused on our stand-alone plan so we would hit the ground running post termination of the agreement. The outlook for Tegna is very strong,” he said.
Lougee did say one negative to the long wait for an FCC decision was it made it difficult to hire new staff at the company’s stations.
“Certainly at the local level, it made recruiting harder because of the uncertainty of what was going to happen,” he said.
“But that’s over with now, and we are back as a stand-alone company and back on the offense.”
Black Knight sets regular shareholders meeting in July
Black Knight Inc., another company waiting and waiting for regulators to act on a buyout agreement, filed a proxy statement for a regular annual shareholders meeting.
The Jacksonville-based mortgage technology company agreed to a buyout in May 2022 by Intercontinental Exchange Inc.
The companies had hoped to complete the deal by now but the Federal Trade Commission is challenging the deal over concerns it will give ICE too much control of the U.S. mortgage technology market.
ICE is best known as operator of the New York Stock Exchange but it also has a large mortgage technology subsidiary.
Since the original agreement, Black Knight has held two special shareholder meetings to vote on the deal, one in September and one in April to approve a revised $11.7 billion agreement.
With the approval process dragging on, Black Knight filed an annual report and its proxy statement May 26.
The proxy sets a virtual shareholder meeting for July 12, the same date when hearings are scheduled to begin before an administrative law judge of the FTC.
“During the pendency of the litigation with the FTC, Black Knight will continue to operate business as usual, focused on taking care of our clients, growing our business, investing in our technology, delivering innovative products and integrating our solutions,” CEO Joe Nackashi said in a message to shareholders in the annual report.
Treace Medical buying preoperative planning technology
Treace Medical Concepts Inc. said June 1 it agreed to buy certain assets of a company doing business as RedPoint Medical 3D, a medical technology company.
RPM-3D offers preoperative planning technology to help surgeons correct a patient’s foot deformities.
Ponte Vedra-based Treace provides a process for bunion surgery and a midfoot correction system.
Treace said it is paying $20 million in cash upfront to buy the technology from RPM-3D, with up to $10 million in additional potential milestone payments.
Hinrichs sees value in CSX sick leave agreements
CSX Corp. is spending more money to provide paid sick leave to union members, but CEO Joe Hinrichs believes it’s money well spent.
In a June 1 talk to the Bernstein Strategic Decisions Conference in New York, Hinrichs said the Jacksonville-based railroad company is spending an additional $1 million to $2 million per quarter for paid sick leave.
“The benefit we get for resolving this issue - making it a more desirable workplace to be in, the morale of our employees, the edge of our employees, we think far exceeds the cost that comes with that,” he said.
CSX has announced agreements with 10 unions in recent months to provide paid sick leave and has two more to go, “but we’ll get there,” Hinrichs said.
Hinrichs has made efforts to improve morale at CSX’s operations throughout the eastern half of the U.S. since he joined the company in September, and he thinks those efforts are helping to improve the efficiency of its network.
“Conversely, if they (employees) are feeling disgruntled or not appreciated or not valued or unhappy, they can really slow us down because our network is a service business. It’s all about people,” he said.
“I think it’s critical to understand that having people with the right frame of mind to deliver for the customer and deliver for the company is really critical and resolving this paid sick leave issue and the attendance policies all contribute to that attitude.”
Analyst upgrades CSX to ‘buy’
Also on June 1, UBS analyst Thomas Wadewitz upgraded his rating on CSX from “neutral” to “buy,” saying in his research note the “service performance provides visibility to future growth.”
Wadewitz expects CSX’s intermodal freight volumes to bottom out in the second quarter and industrial-related volumes to eventually bottom out next year. He expects CSX to benefit from its service improvements when volumes turn around.
“With rail stocks typically bottoming several months before volumes bottom and CSX trading at only 15 times on our 2024 estimated EPS, we believe now is an attractive entry point ahead of a potential volume inflection in 2024,” he said.