“Broadcast Deal Parties, Beware In-House FCC Hearings” By TLP’s Dennis Corbett, Published in Law 360

Broadcast Deal Parties, Beware In-House FCC Hearings

By Dennis Corbett

Law 360 (June 21, 2023)

Dennis Corbett

In late May, we witnessed the collapse of Standard General LP’s bid to acquire from Tegna Inc. ultimate control of the licenses of 64 full-power television broadcast stations located in markets of varying size throughout the U.S.

The deal could not find its way out of a complicated substantive and procedural maze created by a Federal Communications Commission Media Bureau designation order during a Feb. 24 hearing.

The hearing designation order, set for hearing before the agency’s sole administrative law judge, Jane Hinckley Halprin, considered multiple applications by which Tegna and Standard General sought prior FCC approval of for the transaction, valued at $8.6 billion.

The applications had been pending for approximately a year before release of the hearing order, and Tegna and Standard General had answered several targeted inquiry letters from the Media Bureau along the way.

Rather than designate the applications for a streamlined paper hearing pursuant to new procedures the FCC adopted in 2020, the Media Bureau followed the time-worn path of setting in motion a full-throated ALJ hearing entailing live testimony.

Before the hearing order, Tegna and Standard General had argued, in brief, that:

  • Their deal was consistent with prior FCC-approved transactions involving potential increases in retransmission consent fees through the triggering of so-called after-acquired station clauses in retransmission consent agreements between TV stations and multichannel video programming distributors;
  • Projections relating to post-closing programming and station staffing levels have not triggered hearing designation in the past;
  • The purchaser had in any event made written commitments not to use after-acquired clauses to raise rates and not to reduce journalism staffing levels for at least two years post-closing; and
  •  The deal would increase diversity — Standard General is minority-owned and female-led.

Opponents of the deal, including Common Cause, the National Association of Broadcast Employees and Technicians-CWA, had argued, again in brief, that the deal was artificially structured to take advantage of after-acquired clauses that would increase retransmission consent rates in an anti-competitive manner, and that localism would suffer post-closing through news and other public interest programming and staffing cutbacks.

The issues designated for hearing centered on the retransmission consent rate increase and staffing reduction issues.

While there is ample room to debate the propriety of the FCC’s setting for hearing marketplace-related issues like retransmission consent rates and staffing levels — with related Standard General commitments in place — in contrast to more traditional hearing issues like misrepresentation and lack of candor, the focus here is not on the relative merits of these arguments, but on exploring the hearing order’s practical impact on the deal’s survival.

Broadcast ALJ hearings were once commonplace at the FCC. Before Congress authorized the FCC to auction permits for the construction of new broadcast stations in the mid-90s, such permits were awarded through ALJ-conducted comparative hearings.

Applicants in those scenarios — and there could be many filers in any given case — knew that they were signing up for potentially lengthy and costly hearings, replete with prehearing evidentiary discovery, live cross-examination before an ALJ and a multilayered appellate process.

But ALJ hearings in the context of broadcast station sales have always been extremely rare. Among other factors, such applications rarely raise issues that require resolution in a hearing — issues of agency concern are typically resolved by applicant commitments and FCC imposition of conditions — and the FCC is aware of the time-sensitive nature of transactions.

Almost every deal gives contracting parties a calendar-based, discretionary termination right to prevent deals from spinning indefinitely into the future. That latter reality derives from, among other things, the fact that financing underpinning transactions typically comes with time limits.

When a transaction is set for hearing, it seldom survives, as was the case several years ago when Sinclair Broadcast Group Inc.’s bid to acquire Tribune Broadcasting Company LLC stations drew a hearing order.

An ALJ hearing not only introduces delay, ultimately triggering parties’ termination rights, but it also imposes a new set of risks on the applicants that inevitably attend testimony under oath, both in depositions and before the ALJ.

In this case, Tegna and Standard General contended from the start that the hearing order interposed an insurmountable hurdle between the deal and its consummation — an ALJ-conducted hearing would run well past the May 22 expiration of underlying commitments to finance the deal.

The Sinclair-Tribune application had been set for hearing by the full commission, not by the bureau, as in Tegna-Standard General. This difference at least freed up Tegna and Standard General, faced with the deal deadline they said could not be extended, to try moves on the procedural chessboard not available to Sinclair-Tribune.

But those moves, one by one, foundered on the shoals of a harsh reality — the apparent lack of majority support at the full commission level for modifying the hearing order approach once it was launched. In the end, the ALJ, the full commission and the U.S. Court of Appeals for the D.C. Circuit all refused to change the case’s course.


Tegna and Standard General made their first such move on March 3, when they relied on FCC Rule 1.115(e)(1) to file a request within five days asking Judge Halprin to certify to the full commission an immediate application for review.

Tegna and Standard General posed a series of questions that, they contended, each met Rule 1.115’s test that an issue “involves a controlling question of law as to which there is substantial ground for difference of opinion and that immediate consideration of the question would materially expedite the ultimate resolution of the litigation.”

First, Tegna and Standard General cited case law to support a challenge to the ALJ’s basic authority to render a decision at all in the case. The parties argued that FCC ALJs are unconstitutionally independent, and too far removed from the president’s power under Article II of the U.S. Constitution to remove them from office.

The president, under this argument, would be unlawfully required to wade through multiple layers of for-cause removal protection before terminating Judge Halprin’s services.

Second, Tegna and Standard General contended that each of the two primary questions set for hearing in the designation order — whether consummation of the transaction would anti-competitively increase retransmission consent rates and/or decrease news programming or staffing to the detriment of the public interest — are really not issues appropriate for hearing, particularly where the purchaser made its written commitments to the Media Bureau, noted above.

Not only did Rule 1.115 provide a potential avenue for ALJ certification of an immediate application for review, or AFR, but FCC Rule 1.106(a)(2) governing reconsideration gave the parties 30 days after the hearing designation order’s release to pursue a similar certification pathway governed by a different legal standard.

The parties would ask the ALJ to certify to the commission the question as to “whether, on policy in effect at the time of designation or adopted since designation, and undisputed facts, there is substantial doubt that a hearing should be held.”

While Tegna and Standard General elected not to follow this alternate reconsideration approach, the existence of two different ways to ask an ALJ to certify whether Media Bureau issuance of a hearing order passes legal muster underscores recognition in the FCC’s rules that bureau hearing orders can be issued in error, and ALJs are empowered to give them strict scrutiny.

On March 16, the ALJ denied the Tegna-Standard General request for certification of an immediate AFR to the full commission, finding that the “exceedingly rare avenue of redress” provided by Rule 1.115 was not available.

Among other things, she found that an immediate AFR is not an appropriate way to resolve factual issues. Of course, had the ALJ certified an immediate AFR, that AFR would have likely been consigned to gather dust on the shelves of deadlocked commissioners.

The Media Bureau, after all, would almost certainly not have released the hearing order without Chairwoman Jessica Rosenworcel’s blessing. Commissioner Geoffrey Starks was her presumed ally on this matter, and Commissioners Brendan Carr and Nathan Simington tipped their hand — and signaled deadlock — when they issued a Feb. 24 joint statement questioning the hearing order’s release.

The Commission

Even though Rule 1.115 expressly forbids parties from appealing to the full commission an ALJ’s refusal to certify an immediate AFR — Rule 1.106 has an identical preclusion with respect to an ALJ’s refusal to certify immediate reconsideration — Tegna and Standard General filed a March 17 AFR with the full commission, accompanied by a waiver request, anyway.

They did so with one eye on the deal deadline and the other on the D.C. Circuit. The FCC voting deadlock effectively nullified any real-world chance of commissioner intervention, but it would have been untenable to seek relief from the D.C. Circuit without at least giving the full commission a chance to rule.

The D.C. Circuit

The deal officially entered Hail Mary territory with the Tegna-Standard General filing of two petitions with the D.C. Circuit on March 27, one seeking consideration of an immediate appeal of the hearing order as constituting a de facto denial of the deal parties’ applications, and one seeking a writ of mandamus.

Mandamus is an extraordinary remedy, designed to allow a reviewing court to compel a lower court or federal agency to take an action unlawfully withheld or unreasonably delayed. Here, the D.C. Circuit was the parties’ only appeal and mandamus avenue, as that court has exclusive jurisdiction over appeals relating to FCC broadcast applications.

The judicial lift proved to be too heavy.

On April 3, a three-judge panel of the D.C. Circuit unanimously granted the government’s motion to dismiss Tegna and Standard General’s request that the court hear an immediate appeal, concisely finding the parties’ request to be “incurably premature,” still subject to further FCC proceedings.

On April 21, having ordered and reviewed responses and replies with respect to the mandamus petition, the same court panel, in another terse ruling, unanimously denied mandamus. The court found no unreasonable agency delay and no “‘crystal clear’ agency duty to rule on the applications without resort to a hearing.”

To grant mandamus, the court would have had to effectively overrule at the starting gate Media Bureau’s authority to designate an application for hearing. And, even if Tegna and Standard General had secured a judicial remand, the court could obviously not dictate the outcome of the FCC proceeding, leaving the impasse in place via a different route.

The Last Ditch

Its post-hearing order efforts blunted at every procedural turn, Tegna and Standard General gave it one final effort, supported by the lobbying of former FCC Chairwoman and Commissioner Mignon Clyburn, former Federal Trade Commission Chair Jon Leibowitz, additional letters from public officials like New York City Mayor Eric Adams, and meetings May 10 with Carr and Simington.

The parties also offered new commitments relating to the retransmission consent rate and station staffing issues that were the subject of the hearing designation order. These efforts yielded no movement, and the parties announced the deal’s demise coincident with the deal deadline. The ALJ, who had stayed the hearing pending the arrival of the deal deadline, dismissed the case June 1, finding that it had become an academic exercise.

This review of the administrative record of the Tegna-Standard General deal illustrates the narrowness of the successive needles that parties to a broadcast sale transaction must try to thread to save a deal the FCC has designated for hearing before an ALJ — and why such a designation can effectively constitute de facto denial, without the FCC ever having to make a decision on the merits.

Let the buyer and seller beware a hearing designation order.

Dennis P. Corbett is a member at Telecommunications Law Professionals PLLC.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of their employer, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

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