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Tom Perez: We Cannot Allow Wall Street to Undermine Regulatory Bodies Like the FCC


Tom Perez: We Cannot Allow Wall Street to Undermine Regulatory Bodies Like the FCC

May 22, 2023 | 6:30 am ET
By Guest Commentary
Tom Perez: We Cannot Allow Wall Street to Undermine Regulatory Bodies Like the FCC
Stock.adobe.com photo by Anna Quelhas.

By Tom Perez

The writer is former U.S. Secretary of Labor, former Chair of the Democratic National Committee, and a 2022 Democratic candidate for governor. 

In recent years, across America, we have witnessed substantial consolidation of broadcast and print media. Time after time, hedge funds and other firms have bought up and decimated local news outlets and local newspapers. The result has been layoffs, shuttered newspapers, scaled back operations, diminution of program content, and increased costs for cable subscribers. This is not in the public interest, has not been healthy for the Baltimore region, and is not healthy for our democracy.

The latest battle involves an effort by hedge fund Standard General to acquire TEGNA, the second largest broadcast station owner in the United States, with 61 local TV news stations across the country. The deal is being financed by the biggest private equity firm in the country, Apollo Global Management.

Apollo already controls another major local television group, Cox Media Group. Hedge funds and private equity firms already control half of U.S. daily newspapers, including those under Tribune, McClatchy and MediaNews Group. Now they have local television in their sights.

The deal is under review by the Federal Communications Commission, which has called for a hearing to uncover more about the powerful firms’ plans for TEGNA’s stations, such as whether they intend to raise prices on consumers or lay off local journalists and rely on packaged news content from outside the community.

This review is entirely appropriate. Licensed television stations have an obligation to serve the public interest, and the FCC, under the leadership of Chairwoman Jessica Rosenworcel, is making sure that they do.

Instead of cooperating with the FCC’s Media Bureau as it carries out its duty to conduct a fair investigation, Standard General tried to convince a federal judge intervene to force the FCC to approve the deal. The hedge fund’s case was dismissed out of court.

Some influential voices that these financial behemoths have seemingly enlisted to sway opinions, such as Senator Ted Cruz, have suggested that the review process is unfair. Former Republican Commissioner Michael O’Reilly wants regulators, elected officials and the public to believe that this transaction is simply a “transfer of licenses” for a few broadcast television and radio stations. It is not. Standard General’s executives and their allies have questioned the constitutionality of the FCC’s process, and, by extension, similar review procedures at other agencies that serve the public welfare.

As U.S. secretary of Labor under President Obama, charged with protecting America’s workers from health and safety hazards, wage theft, and threats to a secure retirement, my job was to safeguard the public interest.  I have grave concerns about whether this purchase is in the public interest.  We have been to this movie before in the media context.  There is a very high probability that if this deal is approved, they will lay off journalists, reduce programming, and raise fees for consumers. I am not surprised that another hedge fund, Alden Capital, pushed an op-ed accusing the FCC of “unprecedented overreach” to a half dozen of its papers. If Standard General is successful, we will see further diminution of the critical fourth branch of government.

In this case, the public good is the health of our democracy. The role of a vibrant and free press in preserving liberty and holding government and other powerful institutions accountable was so vital to our country’s founders that they enshrined it in our Constitution. The consolidation of local news into the hands of a few rich and powerful elites has coincided with the rise of misinformation and increased mistrust. Since 2004, over 2,000 newspapers in the United States have closed, leaving some 1,800 communities that had at least one newspaper with none.

Before I began my service in the federal government, I was a member of the Montgomery County Maryland County Council. In the years since, I have seen my state’s robust news ecosystem become a shell of its former self, and the effects that has had on the community.

In 2013, when Jeff Bezos purchased The Gazette as part of his $250 million buyout of The Washington Post and its media holdings, the newspaper published 10 different weekly community editions with news about towns in four Maryland counties. Just two years later, in 2015, The Gazette shut down after nearly 60 years of publication.

News deserts mean residents have less and less insight into the decisions and dealings of their elected officials, their police, their school boards — and therefore little way to hold them accountable. Residents are forced to turn to social media for local insights, which can often breed the spread of misinformation. Voter participation declines, and generally, people feel less connected to their communities.

Rigorous FCC oversight of media acquisitions is not unprecedented and is critical to prevent further deterioration of local news. When Sinclair Broadcast Group, based in Maryland, attempted to purchase Tribune Media in 2020, an FCC investigation resulted in a $48 million fine after Sinclair was found to be misleading regulators, and failing to identify its right-leaning sponsored content to consumer viewers.

Even then-FCC Chair Ajit Pai, a Republican, called Sinclair’s conduct “completely unacceptable,” and noted the substantial fine “should serve as a cautionary tale to other licensees seeking Commission approval of a transaction in the future.”

Our democracy is under assault in unprecedented ways. We need a robust broadcast, print, and digital media to serve as a bulwark. With a potential sale of Gannett on the table, as well as other newspapers continuing to struggle amid an uncertain economic climate, it’s critical we reaffirm the legitimacy, credibility and jurisdiction of our FCC. Let the FCC do its work.