Andrew Harnik/AP Photo
White House adviser Cedric Richmond boards Air Force One at Andrews Air Force Base, Maryland, July 21, 2021.
On March 29th, The Baltimore Sun ran a “guest commentary” op-ed that condemned a recent FCC ruling that had effectively blocked a hedge fund from buying a group of 60 local television stations. The reason, the author alleged, was the FCC’s abrupt opposition to diversity in media ownership, inasmuch as the hedge fund, Standard General, was owned by Soo Kim, a Korean American. “For years, FCC commissioners have spoken of their commitment to diversity in media ownership,” he wrote. Rather than give the applicants “a fair hearing,” he continued, “shockingly, the opposite happened.”
Whether shockingly or not, the author of the piece, former Louisiana Democratic Rep. Cedric Richmond, omitted from his author ID that ran at the conclusion of the piece his current employer: the Democratic National Committee, where, as its one and only “senior adviser,” he holds one of the DNC’s highest-ranking positions. And perhaps just as shockingly, he neglected to state the actual reasons behind the FCC’s decision: that the increasingly pervasive ownership of news media by a handful of private equity and hedge fund companies is creating a level of concentration and a dearth of local coverage that’s inimical to the preservation of an informed public, and that such concentration almost invariably also results in the mass layoffs of reporters, editors, and, at TV stations, other members of the news crews.
Given that omission, it is less surprising that Richmond’s piece also neglected to mention the opposition of those news crews’ and reporters’ unions—the National Association of Broadcast Employees and Technicians (NABET), and the Newspaper Guild, respectively—that voiced their members’ fears of the damage the purchase could do to journalists and journalism. It neglected to mention the opposition of such freedom-of-speech advocates as Common Cause. It neglected to mention the opposition of such leading Democrats as former Speaker Nancy Pelosi and Sen. Elizabeth Warren. (It is, however, supported by Sen. Ted Cruz.)
In October of last year, Pelosi and Democratic Rep. Frank Pallone, then the chair of the House Energy and Commerce Committee, sent a letter to the FCC saying that a Standard General takeover of the stations “would violate the FCC’s mandate by restricting access to local news coverage, cutting jobs at local television stations, and raising prices on consumers.” They referenced a filing issued by Standard General in 2020, during a previous attempt to buy the company, that argued that Tegna’s stations had “too many employees.” Tegna, Standard General’s filing asserted, had “2x the number of employees per station compared to peers, and lags its closest local broadcasting peers on EBITDA margin”—that is, in earnings before interest, taxes, depreciation, and amortization.
In plainer English, too many reporters, editors, new crews, and their ilk were reducing the company’s profits.
As Standard General’s current bid began to encounter opposition, the hedge fund scrambled to dispel whatever apprehensions that its 2x = Lousy EBITDA equation had somehow created. Deb McDermott, Standard General’s CEO, sent a letter to Tegna employees affirming the hedge fund’s support for local journalism and journalists. It failed to quiet fears. Perhaps that inspired the new argumentative tack that actually, preventing corporate rollups of local news is somehow racist.
In late February, the FCC referred Standard General’s proposed purchase to one of the agency’s administrative judges. Once a case goes to a judge, it takes many months for the judge to assess the facts and issue a ruling. As the financing that Standard General obtained for the purchase expires in late May, the FCC’s referral to the judge thus amounts to a de facto rejection of the proposed takeover.
Standard General wasn’t the only party behind its proposal. It also had the backing of private equity giant Apollo Global Management, which owns the Cox chain of local television stations. The growing control of media outlets by private equity and hedge funds has not been a happy experience for the outlets they buy, or the readers and viewers who rely on them for news. The acknowledged leader in destroying such outlets remains Alden Global Capital, which has all but destroyed such well-respected newspapers as The Denver Post and the San Jose Mercury News, among many others, through crippling reductions in staff. Gannett, the nation’s largest newspaper chain, managed to fend off a death-sentence purchase by Alden, but it did so through a merger with another chain, GateHouse, which was financed by a loan from Apollo. Unfortunately for the thousands of employees and the millions of readers of Gannett’s and GateHouse’s hundreds of newspapers, the interest rate on the Apollo loan was 11.5 percent. The only way the merged company could pay down that loan at that interest rate was through decimating its staff.
According to the journalism monitor Nieman Lab, just before the two chains entered merger talks, in November 2019, they employed roughly 24,338 journalists in the United States (and a small number abroad). By the end of 2019, the newly merged company, according to its year-end report to the SEC, employed 21,255 in the U.S. Subsequent year-end SEC reports show the toll that those interest payments have taken. At the end of 2020, it had 18,141 U.S. employees; at the end of 2021, 13,800; and last December, just 11,200.
Whatever apprehensions such numbers engender in newsrooms and among news consumers, Cedric Richmond is plainly immune to such concerns. He can’t claim, however, to be ignorant of the generally pro-labor and antitrust sentiments of the current administration. Richmond co-chaired Joe Biden’s 2020 presidential campaign and served during Biden’s first year in the Oval Office as the head of his Office of Public Engagement, then departing for his current gig at the DNC. It would be surprising if he genuinely believes that the nation’s journalist unions, Biden’s appointees at the FCC, and the Democratic House Speaker under whom he served are really seeking to discourage minority ownership of major companies. If he really does believe that, however, it’s not entirely clear why he’s working at the Democratic National Committee. If he actually doesn’t believe that, the reasons for his opposition have yet to be found.
