FCC Set to Approve $2.7 Billion Citadel-ABC Radio Deal
Commissioners are poised to approve a $2.7 billion merger of Citadel and ABC Radio (CD Feb 7/06 p10) provided the companies divest 11 stations in as little as 6 months, agency and industry sources said late Mon. The divestitures will keep the new company inside FCC broadcast ownership limits, they said. Commissioners are expected to approve creation of an independent trust to divest the stations. The trust, to be run independently of Citadel, will seek to gauge interest in the stations and sell them, Media Venture Partners Managing Dir. Elliot Evers said. He'll be the trustee, said company documents filed with the FCC. Commissioners are set to vote on the deal at the Thurs. agenda meeting.
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The merger may win unanimous backing because some on the FCC seem to believe trusts are a better way to ensure buyers of broadcast properties dispose of excess stations, said Commission and industry sources. Some regulators see trusts as a way to increase chances a buyer actually sells properties within the time commissioners specify, said broadcast lawyers. Another way to meet FCC ownership rules - - temporary ownership waivers -- can be extended, a possible concern to some commissioners, we're told. Regulators discussed a similar trust for Univision’s $13.7 billion going-private transaction (CD March 16 p1), which was approved 5-0 late last week. Commissioners agreed to let Univision decide how to comply with ownership rules, said FCC officials last week. Officials at ABC and Citadel didn’t comment right away.
Media Venture Partners will market stations to be divested following FCC approval of the deal, said Evers. The broker will gauge minority interest in buying the stations, as a good-faith gesture to diversify media ownership, he said. Clear Channel also is working to generate interest among minorities and women for 448 smaller-market radio stations it has on the block. The company is seeking FCC approval for a $26.7 billion sale to 2 leveraged buyout firms.
Citadel set up the trust so the merged company wouldn’t own more stations in 7 markets than FCC rules permit, a company FCC filing said: “The trustee is directed to sell the stations assigned to the trust to third parties and pending such sales to operate the stations as independent voices… The Commission has approved the use of similar trusts for such purposes in the past, affirming that such trusts can be a ‘legitimate means to avoid attribution of a broadcast interest under the Commission’s multiple ownership rules.'” To be folded into the trust: WCLZ(FM) Brunswick, Me.; WCYI(FM) Lewiston, Me.; WWLZ(AM) Pinconning, Mich.; KNEK(FM) Washington, La.; WMGL(FM) Ravenel, S.C.; in Ark. KVLO(FM) Humnoke, KPZK(FM) Cabot, KARN(FM) Sheridan; KBZU(FM) Albuquerque and KINB(FM) Kingfisher, Okla.
Approval of the deal won’t stop one Citadel critic from pressing for FCC action on payola and other alleged violations. Red Wolf Bcstg. probably will sue the FCC in U.S. Appeals Court, D.C., if the transaction is approved, said Arthur Belendiuk, an attorney for the small broadcaster. In addition to making payola violations, Belendiuk said Citadel gave the FCC misleading information in trying to block Red Wolf’s request for an FM translator station. “If this was a small little AM station somewhere, their license would have been gone,” he said: “They lied to the FCC.”