Draft FCC Order Helps Clear Way for Clear Channel Sale
A draft FCC order clears the way for a $26.7 billion takeover of Clear Channel, which the commission announced last Thursday was approved 5-0, agency officials said. The draft lets one of two leveraged buyout firms set to acquire the company keep stakes in two other media companies yet adhere to provisions of last week’s Clear Channel order relating to Univision, agency and industry sources said. They said the Thomas Lee firm can keep its investments in Univision and in Cumulus Media Partners. That lets Lee take part in buying Clear Channel without having to sell its stake in Cumulus, getting rid of a possible obstacle to completing the deal, said industry attorneys.
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In approving Lee and Bain’s purchase of Clear Channel, the FCC said Lee must satisfy conditions of a 2007 agency approval of the firm’s $13.7 billion purchase of Univision with Providence Equity Partners. Under the new order, Lee’s stake in Cumulus Media Partners, an owner of radio stations, won’t count against FCC media ownership limits, commission and industry sources said. That means Lee won’t have to divest the stake to comply with the Univision order.
FCC Chairman Kevin Martin circulated the order Jan. 22, according to an agency list of items on the commission’s top floor. He was the only commissioner to vote immediately for the item. Martin indicated he wants colleagues to act soon, two commission sources said. He didn’t set a voting deadline, the sources said. An FCC spokeswoman didn’t respond right away to a request for comment. A Univision spokesman declined to comment.
Lee restructured its stake in Univision in October so it would be passive and “nonattributable,” the company said in an FCC filing that month. Lee exchanged voting shares in Univision’s parent for nonvoting stock and gave up its right to nominate company directors. The leveraged buyout firm said the restructuring met a condition of the FCC Univision order.
Providence, the other company that bought Univision, may get its stake in newspaper publisher and broadcaster Freedom Communications considered nonattributable in the new order, said agency and industry sources. That would let Providence keep the investment and its Univision stake without forcing Univision to sell stations so the buyout firm meets ownership rules. Lee and Providence representatives didn’t immediately respond to requests for comment. Providence agreed to buy Clear Channel’s TV stations for more than $1 billion, a deal commissioners approved 4-1 in November. But Clear Channel investors think the prices for that deal and for the company’s privatization may be cut, or that both deals could fall apart altogether. Such fear has caused the broadcaster’s stock to drop.