There are as many ways that regulations impact the economy as there are regulations themselves. U.S. regulators have an enormous impact on our economy – whether through intended or unintended consequences. From paperwork burdens to training mandates to mandatory capital expenditures to meet the requirements of new or amended rules, businesses of all sizes grapple with all manner of regulations coming out of federal agencies.
Among the worst kinds of regulatory hurdles are those requiring the imprimatur of agency action or approval before some kind of business act can proceed—especially when rent seeking is involved where a competitor to that business (or those businesses) can impact that decision-making process and have a substantive say in whether the agency’s approval is granted.
We often see competitors misuse the regulatory approval process for their own advantage during merger and acquisition reviews. A recent action by the Federal Communications Commission (FCC) in Standard General’s acquisition of TEGNA is the latest signal to opportunistic rent seekers that the U.S. Government is open for business.
After reviewing this transaction for more than a year and requiring three public comment periods, the FCC’s Media Bureau has unilaterally decided to institute a hearing before an administrative law judge, with the clear goal of killing the transaction. It’s seems that unelected and unaccountable Media Bureau employees now have the power to decide who can own media assets in the United States.
This FCC action is the culmination of an extremely flawed review process. Special interests led the opposition to the transaction and used the FCC to gain a competitive edge. It’s been reported that Byron Allen and his political allies in Washington are working together to oppose the Standard General deal. Allen, a former television presenter and now a media mogul in his own right, at one time also tried to buy TEGNA himself, a conflict of interest that one cannot ignore. Lawyers representing labor in opposing this deal are also representing other big money corporate interests that were not disclosed.
By allowing special interests to distract it from the facts of this transaction, the FCC is making a historic mistake that will shape the broadcast industry for years to come making it impossible for anyone to enter the media space unless FCC bureaucrats agree.
This transaction should have been cleared long ago because it will help preserve local broadcast news. Like a great many issues facing the U.S. economy, the future of delivery of media to local communities has become one of great concern—from local television to local radio to the local press. The decline in local news has been well documented, but Standard General has committed to expanding local news in TEGNA markets and also to modernizing the way that news is delivered as we are seeing new and innovative ways to get local content to America’s smallest communities.
But that innovation is nothing without experienced leadership and a commitment to providing capital. Standard General has committed to supporting these outlets and making changes with the aim of creating thriving local media stations.
Despite the benefits this transaction will bring to local broadcasting, it’s now mired in regulatory purgatory and facing an uncertain future after a year-long review that most industry observers believe should have taken only months to approve. Allowing a decision of this magnitude to be effectively decided at the Media Bureau level without even a vote from the Commissioners is the textbook definition of bad regulatory precedent.
The economic consequences of delay are real. Instead of investing in local newsrooms and new technologies, regulatory hurdles have forced the companies to divert valuable resources away from productive investments as the regulatory process drags on and on. The FCC has brought on air of uncertainty by the transaction’s unnecessary delay that casts a pall over the dozens of news stations in TEGNA’s footprint across the country.
For too long regulatory agencies have allowed those who are trying to use the power of the regulatory state to game the system and harm their competitors. The FCC should act and approve Standard General’s acquisition of TEGNA and allow the companies to begin investing in the future of local news and the broadcasting industry. Money much better spent than special interest handouts.
Andrew Langer is President of the Institute for Liberty
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