FCC Approves Univision $13.7 Billion Deal
The FCC unanimously approved Univision’s $13.7 billion takeover by 5 leveraged buyout firms, as expected (CD March 19 p10). Democratic commissioners wrote concurrences expressing concerns that may anticipate issues in reviews of future broadcast mergers. Comr. Copps said a reason he concurred was because the FCC failed to address how debt issued to take the publicly traded broadcaster private will affect the company. “The Commission has never analyzed the consequences of this type of transaction,” he said in prepared comments: “I, for one, have some real questions about how the assumption of massive amounts of debt will affect a media company’s stewardship.”
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Most commissioners found something to like about the deal. Copps and Comrs. Adelstein and Tate praised an FCC record $24 million kids TV fine against Univision. They said the fine shows all broadcasters must follow requirements for stations to air at least 3 hours weekly of informational or educational programs. “These requirements are not optional,” Chmn. Martin said in prepared remarks: “Broadcasters also enjoy special privileges such as carriage on cable systems. In exchange for their use of the airwaves and other rights, broadcasters are responsible for serving the public interest, including children.”
Univision agreed to a consent decree ending an FCC inquiry into allegations that the company violated the kids TV rules by airing Spanish soap operas as if they were children’s programming. The company “agreed to a detailed plan that will ensure future compliance with the Children’s TV Act,” an FCC news release said. Univision claimed the telenovelas aired were educational. It said the deal to take it private will be done this month, as analysts and investors hope. The company got 6 months to divest properties that don’t comply with FCC ownership limits.
Purchase of a large Spanish programmer was Copps’ 2nd point of concern, because, he said, the Commission hasn’t decided if the market for such programming is separate from that for English-language TV. Adelstein said the fine doesn’t do enough, because the FCC hasn’t issued a public notice on whether broadcasters generally adhere to the Children’s TV Act. In Sept. 2004, the agency said it would issue such a rulemaking, Adelstein said: “The Commission needs to enforce its programming rules much more diligently.”
The deal was voted on nearly 2 weeks ago (CD March 17 p1), but results weren’t made public until Tues. The delay was due in part to last-minute 8th floor negotiations over the text of the rulemaking approving the license transfer, FCC sources have said. Commissioner concerns included the effect on the company of transfer to private control, an FCC official said, calling the issue insignificant. Copps wants answers to his privatization concerns, he said: “I hope we address these questions in a Commission-level report in the coming months. From what I can tell, the flood of private equity into media is just beginning.”