The FCC has approved a reorganized Audacy, and, as expected, the vote followed party lines, with Democratic Commissioners voting 3-2 in favor of the restructure. The deal raised controversy over the stake in the broadcaster with ties to George Soros.
The decision, adopted on September 18, was released on September 30 and allowed Audacy to proceed with its Joint Prepackaged Plan of Reorganization to restructure approximately $1.6 billion of existing debt, which enabled the company to emerge from Chapter 11 bankruptcy protection.
Under the reorganization plan, Audacy will issue new common stock—including Class A and Class B shares—and Special Warrants to former debt holders. Laurel Tree Opportunities Corporation is expected to hold a controlling interest, owning 57% or more of the Class A New Common Stock. Laurel Tree is controlled by FPR Capital Holdings LLC, which in turn is managed by the Soros-funded Fund for Policy Reform.
The decision comes after the Commission considered and denied a petition to deny the application filed by Media Research Center, as well as an informal objection from Ira Warren Patasnik. Both parties raised concerns about potential foreign ownership and the involvement of left-leaning billionaire George Soros. The FCC found that MRC lacked standing and that neither objection raised substantial and material questions of fact warranting denial of the application.
FCC Chairwoman Jessica Rosenworcel commented, “The process we use to facilitate this license transfer is identical to the one recently used by the agency in the bankruptcy proceedings of Cumulus Media in 2018, iHeart Media in 2019, Liberman Television in 2019, Fusion Connect in 2019, Windstream Holdings in 2020, America-CV Station Group in 2021, and Alpha Media in 2021. To suggest otherwise is cynical and wrong, as this precedent clearly demonstrates. Our practice here and in these prior cases is designed to facilitate the prompt and orderly emergence from bankruptcy of a company that is a licensee under the Communications Act.”
In a dissenting statement, Commissioner Brendan Carr remarked, “The Commission’s decision today is unprecedented. Never before has the Commission voted to approve the transfer of a broadcast license – let alone the transfer of broadcast licenses for over 200 radio stations across more than 40 markets – without following the requirements and procedures codified in federal law.1 Not once. And yet the Commission breaks this new ground today without seeking public comment on altering our established regulations, without actually changing the rules on the books, and without seeking the feedback of other federal agencies with relevant equities.”
Commissioner Nathan Simington also dissented, saying, “A Commission eager to fast-track a billion-dollar broadcast media reorganization, disregarding foreign ownership concerns, is the same Commission that has gone back to the well several times to impose and re-impose foreign sponsorship identification rules on our smallest independent broadcast license holders every time they place local church content on the air. Just saying.”
The US House Oversight and Accountability Committee is now investigating the FCC for allegedly fast-tracking approval of a deal that could benefit Soros. Committee Chair James Comer and Rep. Nick Langworthy have requested all communications and documents related to the FCC’s handling of the case, suggesting the expedited decision may be politically motivated.
The Committee has requested related documents from the FCC by October 3.
National Association of Broadcasters President and CEO Curtis LeGeyt weighed in on the matter, calling for transparency and bipartisanship in such FCC dealings for broadcasters. LeGeyt said, “NAB is pleased to learn that the Federal Communications Commission has approved Audacy’s reorganization. While we do not take a position on the merits of this or any particular broadcast transaction, it is essential that the FCC’s regulatory processes are fair and predictable so that broadcasters can innovate and invest in their stations to the benefit of communities across the country.”
“Make no mistake, broadcasters and our current and potential investors continue to watch the Commission closely. To ensure a vibrant future, we need a transparent, fair and predictable regulatory process for broadcast license transfers and renewals – devoid of politics – that allows local radio and television stations a fair chance to compete for the investment capital that is necessary to continue serving the public. Without it, the vital services local stations provide for free to all is in jeopardy.”
Outside of the realm of Soros, the FCC’s approval also includes a temporary and limited waiver permitting Audacy to emerge from bankruptcy before filing a petition for a declaratory ruling regarding foreign ownership interests that may exceed the 25% benchmark set by the Communications Act. Audacy is required to file this petition within 30 days of the transaction’s consummation.
Additionally, the FCC granted a continuation of a waiver allowing Audacy to own an expanded number of radio stations in the Kansas City, Missouri-Kansas Nielsen Audio Market. This waiver permits the company to retain an attributable interest in nine commercial broadcast radio stations in that market, exceeding the typical ownership limits.
How does the c-suite survive the mess they’ve created?
” Commissioner Brendan Carr remarked, “The Commission’s decision today is unprecedented. ”
The thing the commissioner ignores is that it was also unprecedented for a US Senator to demand an approval like this be voted on by the commissioners, rather than by the media bureau. All other radio bankruptcies were handled by the media bureau. So this was a created controversy, orchestrated by republicans who want to deny a citizen his right to due process because they don’t like his politics. This wasn’t an accident.