Wall Street has grown accustomed to getting its way in Washington. So when a pair of Wall Street funds, Standard General and Apollo Global Management, proposed taking over TEGNA, the nation's second-largest local broadcast station owner, they thought it would be smooth sailing.
However, the Federal Communications Commission, under the leadership of Chairwoman Jessica Rosenworcel, takes its responsibility to protect the public interest very seriously. And after reviewing the transaction, the FCC's Media Bureau decided this deal deserved a closer look.
Standard General's leadership reacted with outrage. They put together an opinion piece asserting that the FCC’s careful scrutiny of the takeover’s impact on local journalism and jobs is an “unprecedented overreach of authority.” The hedge fund then pushed duplicates of the piece to six “local” outlets–the New York Daily News, Boston Herald, Chicago Tribune, St. Paul Pioneer Press, Hartford Courant, and The Virginian-Pilot–all owned by fellow Wall Street hedge fund Alden Global Capital, which has gutted several local newspapers. This is no coincidence. This is one hedge fund executive working with another to attack the FCC.
The op-ed, based on an egregious misreading of the FCC’s ruling, is an assault on our country’s democratic institutions and, ironically, reflects just what the FCC was trying to prevent: hedge funds and wealthy Wall Street executives dominating our country’s local news.
Meanwhile, this $8.6 billion deal is being funded in part by the country's largest private equity firm, Apollo Global Management, which already controls another vast local TV chain, Cox Media Group. Behind the scenes, Standard General is going even further, taking its case to federal court to reverse the FCC decision and even question the constitutionality of the FCC's merger review process. The court rejected Standard General’s appeal–and also rejected the hedge fund’s demand that the court instruct the FCC to approve the deal.
The FCC has a duty to consider proposed media acquisitions in the context of the reality of local news in America, where newspapers are being bought and stripped by hedge funds like Standard General, leaving local communities with news deserts and at greater risk of falling victim to the misinformation campaigns that threaten our democracy.
That’s why the FCC is taking a thorough look at this buyout and seeking to hold a hearing to understand the potential impact of this acquisition on local news, including cuts to local jobs and news programming. Its refusal to rubber-stamp Standard General’s proposed TEGNA takeover was the result of repeated failures by the Wall Street funds to prove that their deal served the public interest. Standard General’s attempt to undermine the authority of the FCC in response is dangerous, but it’s really nothing new.
This is exactly what private equity and hedge funds do: challenge the independent institutions that raise questions about the consequences of their relentless drive to extract profits. Wall Street and telecom companies have been emboldened by the success of their shameful campaign to misrepresent Gigi Sohn's record and derail her nomination to the FCC. This is all part of a larger attempt by Wall Street to weaken and discredit the agencies that do their job by protecting workers, consumers, and our communities.
These attacks are dangerous. We shouldn’t be undermining the constitutionality of our country’s democratic institutions, and our elected leaders shouldn’t be taken in by misinformation campaigns and giving in to corporate bullying.
Standard General’s op-ed touts “the power of local news.” Local news is powerful. It’s the most trusted news source in America, and we need to keep it that way. The FCC has taken an important step towards doing just that by closely reviewing Standard General’s TEGNA takeover.
Chris Shelton is the president of Communications Workers of America.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
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