Journalists Beat Wall Street
The Goodfriend Group represents the Communications Workers of America, including its division of journalists, The NewsGuild-CWA. For years, the NewsGuild’s new, young President, Jon Schleuss, had been warning that hedge funds and private equity funds were undermining local journalism in the U.S. by buying local newspapers, laying off most of the reporters, and then selling the real estate and other assets. But the union was unable to persuade antitrust enforcers to stop any such transactions involving print or digital media.
We advised President Schleuss that transactions involving regulatory review, such as broadcast acquisitions requiring approval from the Federal Communications Commission (“FCC”), would offer a better chance of success. So, when private equity fund Apollo Global Management and hedge fund Standard General sought to acquire TENGA, the second-largest local broadcast TV station group in the U.S., The NewsGuild raised objections to the FCC and the U.S. Department of Justice Antitrust Division. David Goodfriend and one other co-counsel, long-time public interest advocate Andrew Schwartzman, representing the NewsGuild and another division of CWA, the National Association of Broadcast Employees and Technicians (“NABET”), assembled a coalition of consumer advocacy and civil rights groups to join the unions in opposing the transaction.
We focused our attention on the transaction’s potential impact on journalism jobs. When Standard General repeatedly asserted that it “did not intend” to cut jobs, we found confidential financial documents in emails between Standard General and its bankers that showed just the opposite. We also focused on what appeared to be an inherently collusive relationship between Standard General and Apollo; they concocted a complex asset transfer arrangement explicitly designed to raise prices. We worked with our fellow attorneys to draft FCC filings. We generated unusually strong statements of concern or outright opposition from then-House Speaker Nancy Pelosi; then-House Energy and Commerce Committee Chairman Frank Pallone (D-NJ); and especially Sen. Elizabeth Warren (D-MA).
The head of Standard General originally told Wall Street investors that the deal would be approved in six to nine months. However, largely due to our advocacy, the FCC repeatedly ruled in favor of the unions on procedural matters. The Department of Justice Antitrust Division refused to state whether or not it would oppose the transaction. With the deal seemingly stuck, Standard General issued a public statement personally attacking not only NewsGuild President Jon Schleuss, but his lawyers, David Goodfriend and Andrew Schwartzman. That’s when we started to think we might be winning.
On February 24, 2023, more than a year after the Wall Street funds filed their applications for approval, the FCC’s Media Bureau issued a hearing designation order (“HDO”) designating the transaction for a hearing before an Administrative Law Judge (“ALJ”). The order raised issues that reflected the two prongs of our opposition:
First, the HDO stated that there were two different stories about jobs – the unions’ and the applicants’-- and that given this issue of material fact, an ALJ should determine which narrative was accurate. Importantly, the order also stated that the number of local TV station jobs can reflect whether or not the broadcast licensee is serving the public interest with “localism.” For decades, CWA had tried to get the FCC to say that jobs matter. Finally, a formal FCC order said that they do.
Second, the HDO said that there were material issues of fact surrounding the seemingly deliberate effort to structure a deal in order to raise prices. It said that the involvement of a private equity fund mattered in determining whether the public interest was likely to be served. For years, The NewsGuild tried to get government officials to acknowledge the dangers of hedge funds and private equity funds taking over newsrooms. Now, finally, a formal FCC order acknowledged the importance of the issue.
With only three months until TEGNA would have the right to walk away from the deal, the HDO seemed like total victory, but the Wall Street billionaires behind the deal doubled down. They hired an army of lobbyists and secured letters from Sen. Ted Cruz (R-TX) and other Members of Congress criticizing the FCC’s Chairwoman. They hired legions of public relations specialists and got scathing op-eds and stories placed in The Wall Street Journal, New York Post, and trade publications, all designed to put pressure on the FCC to reverse course. They hired even more law firms and appealed the FCC action, first to the ALJ, then to the Commission, and finally to the D.C. Circuit.
We fought back. We secured additional support from Sen. Warren and added other Progressive voices from Congress. We helped our client and a wide array of credible voices to publish their own opinion pieces to counter the manufactured outrage on the other side. We brought in a seasoned expert FCC litigator who knew how to win in front of the ALJ. We filed briefs at the D.C. Circuit in support of the FCC’s action.
At every point, we beat back our better funded opponents. The ALJ refused to act until after TEGNA’s walk-away deadline passed, just to see if Standard General could, in fact, secure alternative financing (they couldn’t). The Commission did not intervene with the ALJ and the circuit court panel unanimously rejected our opponents’ Hail Mary appeal. Most important, the Chairwoman of the FCC remained resolute and did not back away from her bureau’s order.
On Monday, May 22, 2023, TEGNA announced that it was terminating the transaction agreement with Standard General.
We won. Our client received emails from journalists at TEGNA expressing relief and gratitude. The Media Bureau’s order established important factors for examining hedge fund and private equity fund takeovers of broadcast TV stations. Perhaps most important, The NewsGuild, NABET, and all of CWA’s members showed Wall Street that America’s journalists no longer will stand on the sidelines as massive funds disassemble American newsrooms.