(Bloomberg) – Tegna Inc. Key’s proposed buyout of Standard General LP bled to a quiet death on Monday, evaporating amid a lengthy regulatory review, an outcome that could dampen appetite for broadcast deals.
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The $5.4 billion transaction for the TV broadcaster has yet to be approved by the Federal Communications Commission, which in February sent the deal to a hearing for consideration. A judge halted the hearing after determining that even preliminary cases could not be finished by May 22 – a date identified by Standard General as a funding deadline.
Standard General Managing Partner Soo Kim has repeatedly asked for a vote by the FCC, and now the agency’s lack of a decision appears to have left her without the award she has long sought. The hedge fund did not respond to a request for comment Monday afternoon.
Wall Street banks that committed to finance the buyout are losing liability as the deal falls through. According to a revised filing from April 2022, a syndicate led by Royal Bank of Canada provided loans of up to $8.2 billion, including a $500 million revolving credit facility.
That debt was likely written on terms that would be difficult to sell to investors today as the cost of borrowing has skyrocketed in leveraged finance markets. Banks that wrote down commitments to fund deals last year have been forced to sell debt at deep discounts, which could lead to fees or even outright losses.
The FCC went to lengthy hearings without public discussion or a vote by the agency’s four commissioners. The course taken under chairwoman Jessica Rosenworcel is seen as “making all deals more unpredictable” and “negative for capital violations in broadcasting,” Blair Levin, an analyst at New Street Research, said in a note Monday. Is.
Still, Levin said, “we do not rule out the possibility of another attempt to buy Tegna, including Standard General.”
The FCC and Tegna did not respond to requests for comment. Royal Bank of Canada also did not respond to a request for comment.
If the deal goes through, Tegna will be free to communicate with Wall Street, Daniel Kurnos, an analyst with Benchmark Company, said in a May 11 note.
“We think the space is not favorable given recession fears, but fully expect Tegna will implement an aggressive buyback when/if the deal closes,” Kurnos said.
McLean, Virginia-based Tegna has 64 TV stations in 51 markets. The FCC has said the proposed transaction in February 2022 could trigger price increases for consumers as TV stations raise fees for cable providers, and could also reduce local content on TV stations.
The initial proposed deal is subject to a $136 million breakup fee.
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