5-Hour Energy mogul Manoj Bhargava is causing more problems for Cumulus Media outside of his hostile takeover push. Cumulus is asking for FCC approval around foreign investor stakes as the broadcaster restructures its ownership of radio station licenses.
In February, Cumulus reported to the Audio Division of the Media Bureau that it had discovered an investment making it non-compliant with FCC’s foreign ownership regulations. Bhargava’s Singapore-based Renew Group holds ownership of 9.8% of the equity and 10.01% of Cumulus’ voting rights, holding 1,621,426 shares of the broadcaster’s Class A Common Stock.
Cumulus promptly took steps to address this by filing a petition for a declaratory ruling to regularize the status of its foreign investors, potentially up to 14.99% of equity and/or voting interests.
Now the FCC is preparing to open a public comment period on the remedial petition as part of a broader review to ensure compliance with foreign ownership rules. Al Shuldiner, Chief of the FCC Media Bureau’s Audio Division, announced this upcoming comment period in a Memorandum Opinion and Order.
The Audio Division had previously approved uncontested applications from Cumulus to restructure its ownership of radio station licenses. This restructuring involved transferring licenses from three wholly owned subsidiaries to a newly formed subsidiary, Cumulus License Holding Company II LLC.
This particular change was approved without additional scrutiny but highlighted the need for a thorough review in light of the foreign investment issues.
To manage this situation temporarily, the FCC has set specific conditions to mitigate potential regulatory conflicts. These conditions include suspending all voting rights associated with any stock held by Renew Group Private Limited and other identified investors that could influence more than 5% of Cumulus’s voting stock.
This suspension will remain in effect until the FCC can complete its review and potentially approve the increased foreign ownership stakes. The goal is to ensure that foreign investment does not undermine the FCC’s oversight or the integrity of broadcasting licenses, while also acknowledging the global nature of media financing.
This is not the only concern around foreign ownership in radio on Capitol Hill in recent months. In September, the FCC approved Alpha Media Holdings Inc.’s request to exceed the usual 25% foreign ownership cap.
Within the past week, US Representative Chip Roy (R-TX) urged FCC Chairwoman Jessica Rosenworcel to block what he calls a “Soros shortcut” in Soros Fund Management’s $400 million debt acquisition from Audacy. In a letter dated April 23, Rep. Roy expressed concerns about circumventing standard FCC review processes for foreign ownership.
Soros Fund Management, now Audacy’s largest shareholder amid its Chapter 11 reorganization, has exceeded the 25% foreign ownership cap set by the Communications Act. The Soros group seeks a waiver to delay addressing this issue, hoping to expedite the FCC approval process.
The only waiver that has been filed is from Audacy, not Soros. Soros isn’t the licensee, so it’s not in a position to file for a waiver.
More reporting is needed here. In the Cumulus restructuring Bhargava’s Renew LLC is a Singapore based entity, although Bhargava is an American citizen. Haven’t seen any listing as to what % of Renew is foreign owned. In the Audacy restructuring, the ultimate majority stockholder will be the Open Society Foundation with 57%, which has Andrew Soros and three other American citizens as board members. The other major shareholder will be Bhargava’s wholly owned Michigan based LLC.
While there are considerable policy and political concerns with the Soros family controlling over 200 radio stations, I don’t see the foreign ownership concerns–unless it is with the rump end of stock issued to debt holders out of the chapter 11. Reported totals would have Soros and Bhargava with around 70% of outstanding common stock in the new Audacy corporaton.