The FCC has granted three recent acquisitions by iHeartMedia with conditions.
The acquisitions of Multicultural Radio’s 1320 KXYZ Houston, Mortenson Broadcasting’s 970 KHVN and 1630 KKGM Fort Worth, and Sun and Snow Station Trust’s 100.3 KSNR Fisher MN were approved with conditions on Global’s stock purchase of the company.
The purchase of 8.7 percent of iHeartMedia’s voting interests by Global placed the company in non-compliance with the ruling on foreign ownership granted to the company last year, but because the purchase was done on the public stock market and iHeart timely complied in notifying the FCC, the agency states that “the public interest will be served by grant of the Applications with the following conditions, which are designed to insulate, to the extent possible, the new foreign interests while the remedial PDR seeking specific approval of such interests is pending.”
While awaiting approval of Global’s stock purchase, iHeart must suspend all voting rights associated with any stock held by Global or its primary trustees. No Global investor has the right to serve on iHeartMedia’s Board of Directors, attend a meeting of the board, have any role or communicate with iHeart regarding day-to-day management or station operations, or have a role in any station sale or purchase. All dividends paid to Global must go into escrow until the FCC grants approval to hold more than 5 percent equity in the company.
iHeartMedia has seven days to submit a declaration that it is in compliance with those conditions. The full ruling by the FCC can be read here.
iHeart released the following press release regarding the FCC’s decision:
iHeartMedia, Inc. (Nasdaq:IHRT) today issued the following statement regarding approval of iHeartMedia’s pending applications to acquire certain radio stations, and the temporary shareholder restrictions required by the FCC to be imposed upon Global Media & Entertainment Investments Ltd (“GMEI”) in connection with those approvals:
“iHeartMedia values its shareholder relationships and we welcome all new shareholders to iHeartMedia. However, because GMEI is a foreign shareholder, its recent investment was inconsistent with the FCC’s foreign ownership rules and created an operating issue for us under the FCC’s regulatory framework.
As background, GMEI’s purchase of an 8.7% position in our Class A Common stock, as reported in its Schedule 13D filed with the Securities and Exchange Commission on February 5, 2021, caused a violation of the FCC’s foreign ownership regulations and the FCC’s November 5, 2020 declaratory ruling related to the company’s foreign ownership, both of which limit a foreign investor in GMEI’s position to 5% without prior FCC approval. To address this issue, over which iHeartMedia had no prior knowledge or control, we filed a remedial petition for declaratory ruling requesting FCC approval for GMEI to have the ability to increase its ownership to up to 9.99% (the ‘Petition’).
Notwithstanding the GMEI investment, the FCC has approved iHeartMedia’s acquisitions of certain stations, including stations for BIN: Black Information Network. However, the FCC has required that the company impose temporary shareholder restrictions on GMEI as a condition of approving those radio station acquisitions.
To comply with the FCC order, iHeartMedia’s Board of Directors resolved to take action consistent with the FCC’s conditional requirements. These actions include imposing temporary voting and other shareholder restrictions on GMEI which will apply during the pendency of the Petition and which are described in detail in the FCC’s decision which can be found at https://docs.fcc.gov/public/attachments/DA-21-360A1.pdf and in our 8-K filed Friday, March 26, 2021.
iHeartMedia respects the FCC process and will, as a matter of consistent policy, ensure the company’s compliance with the FCC’s foreign ownership and other regulations.”
