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According to reports, Standard General and Apollo are closing in on a $9 billion Tegna acquisition

According to people close to the matter, Standard General and Apollo Global Management are nearing a $9 billion agreement for Tegna, the owner of television stations.

The purchasers and Tegna have removed a major stumbling hurdle, according to sources: how much the Standard General-Apollo combination will have to pay if the deal takes more than a year to clear the FCC and other authorities.

Tegna had demanded a $500 million break-up fee if the agreement isn’t completed one year after it’s signed — even if regulators aren’t to blame for a potential no-deal scenario.

But, according to reports, the TV behemoth has just backed down on that point. “Now it’s just about pricing,” a source familiar with the issue stated.

The FCC currently has only four commissioners, rather than the usual five, which could result in a deadlock.

Meanwhile, there is still a $1 or $2 per share price difference, so a transaction is still only a 50-50 probability, according to a person close to the situation. The prospects of a deal happening a month ago were likely closer to 20%, according to the source.

After bidding $22.65, Standard General and Apollo would likely need to pay at least $24 per share for Tegna, according to sources. According to insiders, the purchasers appear willing to raise their offer a second time.

According to a source acquainted with the situation, the prospects of a deal are 50/50.

Tegna’s stock has gained steadily over the last five trading days, from $18.69 to $19.28 on Tuesday afternoon, thanks to market speculation.

The fundamental concern surrounding the possible merger is whether or not a Standard General-Apollo transaction will pass antitrust investigation. The Federal Communications Commission’s national media ownership regulation prevents any organisation from holding commercial television stations that reach more than 39% of US television households.

Tegna’s stations, together with those currently owned by Apollo, would exceed that limit. However, Apollo intends to keep all of its present stations apart from a new Tegna, with the exception of one. According to sources, Apollo would only be a minority shareholder in the new Tegna.

As part of its Cox Media Group, Apollo controls 33 television stations. Cox Media Group claims to reach 52 million households in total. Tegna, which was spun off from newspaper conglomerate Gannett in 2015, has 64 television stations and two radio stations in 54 US areas.

If Cox and Tegna were the same person, there would be some overlap.

Tegna headquarters

Tegna began as a Gannett spinoff and now owns a variety of media enterprises.

The ABC affiliate in Atlanta, for example, is owned by Apollo’s Cox. Tegna also owns the local NBC affiliate, so the FCC would have to get used to a Standard General-owned Tegna — in which Apollo has a share — and the claim that it would be run completely independently of Cox, according to a source.

Apollo stations charge cable operators more-than-average retransmission fees, and even if Apollo only contributes one station to Tegna, Tegna can charge higher retransmission prices across the board. A station owner typically charges the highest cost to all cable carriers.

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Akanksha Jain

Akanksha Jain love to learn new stuff every day. With a background in computer science and a passion for writing, she loves writing for Startup, Business sections of Editorials99.

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