$5.4B Tegna sale is terminated

The deadline has expired on hedge fund Standard General LP’s $5.4 billion bid to acquire Tysons-based publicly traded broadcasting giant Tegna Inc. The largest owner of NBC affiliates, Tegna has 64 television stations in 51 U.S. markets and reaches 39% of all television households nationwide.

The stalled agreement was terminated after the acquisition’s deadline expired Monday, announced Tegna, whose holdings include CBS affiliate WUSA in Washington, D.C., and WVEC 13, the ABC affiliate in Hampton Roads.

The New York hedge fund, which had planned to acquire Tegna through affiliate Standard Media, now stands to pay Tegna a $136 million termination fee. Shares of Tegna were down 2.78% on Monday afternoon, trading at $15.73. Tegna shares have been on a general decline since reaching a one-year high of $21.84 per share in February.

Tegna reached the ill-fated deal with Standard General in February 2022. But interest rates and the outlook for financing were different then, Standard General founding partner Soo Kim said on a press call earlier in May, noting that Standard General didn’t appear likely now to secure “reasonable” financing for the deal, which was still pending review by an administrative law judge and approval by the Federal Communications Commission. Speaking at the time about the deal’s May 22 termination deadline, Kim said, “It’s midnight for Cinderella.”

In February, the FCC referred the review of the proposed merger to an administrative judge, a move industry analysts said may have scuttled the deal. Tegna and Standard General had hoped to have the matter heard before the full FCC panel. The FCC’s Media Bureau had expressed concerns about the deal resulting in employee layoffs and higher prices for consumers through higher retransmission consent fees. The deal would also have seen Tegna become a private company and Standard General sell three major Tegna TV stations in Texas to Cox Media Group.

In response to the scrapped sale, Tegna is moving to return excess capital to shareholders. It is conducting a $300 million accelerated share repurchase program with JPMorgan Chase & Co. and is increasing its quarterly dividend by 20%. Tegna’s board of directors and management are also reviewing returning to shareholders other excess capital that accumulated during the merger, according to a news release from the company.

“These initial actions reflect the board’s continuing commitment to enhance shareholder value,” said Howard D. Elias, chairman of Tegna’s board, in a statement. “We are taking the first step of immediately returning a significant portion of the excess capital accumulated during the pendency of the Standard General transaction. We are actively reviewing Tegna’s capital allocation strategy and look forward to our engagement with investors over the coming months.”

Expected to be completed before the fourth quarter of this year, Tegna’s share repurchasing program will be funded by the company’s cash on hand, which was $683 million at the close of the first quarter. Tegna’s board also approved a 20% increase in the quarterly dividend from 9.5 cents to 11.375 cents per share. On May 25, Tegna will hold an investor call to discuss its first quarter 2023 earnings results and to provide guidance for the year ahead.

“I am extremely proud of our Tegna colleagues for remaining focused on our business despite the distractions of a long-pending transaction. Their hard work and dedication have maintained strong business momentum, building on record total company revenue, subscription revenue, net income, free cash flow and adjusted EBITDA in 2022,” Tegna President and CEO Dave Lougee said in a statement. “As we look ahead, we are confident that Tegna is well-positioned to continue serving all our stakeholders based on our portfolio of leading broadcast assets and innovative digital brands, our delivery of high-quality, trusted news and content in the markets where we operate, and our continued focus on fostering a culture of diversity and inclusivity.”

Tegna was created in 2015 as a publicly-traded company after McLean-based Gannett Co. Inc., the nation’s largest newspaper publisher, spun off its broadcast and digital media divisions.