The FCC has denied CXR Radio’s request for a one year extension to divest CHR “Power 95.3” WPYO Maitland/Orlando and Alternative “97X” 97.1 WSUN Holiday/Tampa FL as required from Apollo Global Management’s 2019 purchase of Cox Media Group.
The agency has instead given the Elliot Evers led CXR Radio LLC divestiture trust a 60 day extension until February 15, 2022 to file divestitures to an unaffiliated buyer. The agency states, “The Bureau may, in its discretion, adjust divestiture deadlines as circumstances warrant and grant individual requests for modification of deadlines for good cause. We believe that this extension will provide CXR with sufficient time to complete a marketing process and reach a final agreement to sell the Stations. After careful consideration of the record, we conclude that it is in the public interest to grant CXR this limited extension to provide additional time in which to complete its pledge to divest the Stations and ensure long-term compliance with the Local Radio Ownership Rule. Moreover, we believe that a 60-day extension is consistent with the “limited” extension to which SBS, the only opponent, does not object.”
The agency continues, “We do not find persuasive the justification that market conditions made it appropriate for CXR to wait until early 2022 to begin a meaningful marketing process for the sale of the Stations. CXR’s decision to hold off on any meaningful efforts to market the Stations to prospective purchasers is contrary to its express commitment, submitted with the divestiture applications and relied upon by the Commission in the Divestiture Order, to “consummate a sale of each Station as soon as reasonably practicable after the Closing . . . at prices that render to [Cox Radio, Inc.,] the maximum consideration reasonably attainable.” The Trust Agreement language concerning the “maximum consideration reasonably attainable” is a forward-looking reasonableness standard that does not include station prices that may have been attainable at some previous point in time under market conditions that no longer exist. CXR must take the market as CXR finds it, not as CXR wishes it to be.”
“Similarly, CXR admits that despite not having engaged in any meaningful effort to market the Stations to potential buyers, it still received—but rejected—offers for the Stations because it considered them to be “far below what would have been marketplace offers at the time that the Trust was established and below what the Stations likely will be able to sell for as the radio market and greater economy continue to recover from the COVID-19 pandemic.” CXR states that as a fiduciary, it has an obligation to fully market the Stations and to attempt to receive fair market value for them. However, “fair market value” is not the subjective value of the Stations to CXR or Cox Radio but the value of those stations to prospective third party buyers who may not enjoy the similar economies of scale and/or joint operation. CXR’s rejection of SBS’s offers, and its decision to delay meaningful efforts to market the Stations until 2022, are voluntary business decisions that CXR made despite (1) its previous representation to the Commission that it would “consummate a sale of each Station as soon as reasonably practicable,” (2) the Divestiture Order’s express condition requiring that CXR assign the licenses and authorizations for the Stations to an unrelated third party within two years, and (3) the possibility that we would not grant a request to extend the divesture deadline for the Stations. In making those decisions, CXR assumed the risk that it would have little time left to solicit offers and complete the required divestitures before the deadline. We decline to grant CXR a one-year extension of the divestiture deadline so that it can make up for time lost due to its own business decisions or based on its speculation that market conditions could soon return to what they were in 2019.”
Original Report 11/10: When Apollo Global Management was granted FCC approval to acquire Cox Media Group in 2019, one of the conditions was that the company must sell CHR “Power 95.3” WPYO Maitland/Orlando and Alternative “97X” 97.1 WSUN Holiday/Tampa FL from the Elliot Evers led CXR Radio LLC divestiture trust to new owners by December 17, 2021.
Now CXR Radio LLC has requested a one year extension of the requirement to December 2022. In its petition CXR states, “Marketplace conditions resulting from the pandemic, and turbulence in the economy overall, in critical advertising verticals (such as automotive), an on the media industry in particular have combined to create a singular set of challenges that have directly impacted the market for terrestrial radio. These conditions have existed — and persisted — for 21 of the 24 months that the trust has been in place.”
The filing admits that revenues at WPYO were down 38.3% in 2020, while WSUN was down over 70%. Projected revenues for 2021 will be down 38% and 65% at the two stations respectively. CXR also notes that outside of iHeartMedia’s purchases of small AMs for launching the Black Information Network, none of the major commercial radio operators has purchased more than one station since the start of the pandemic.
CXR trustee Elliot Evers also notes that he, as trustee for Cumulus Media’s Mainstay Trust was granted a similar one year extension in 2020 to complete its divestitures.
WPYO and WSUN were required to be divested as Cox lost the grandfathered status it held in each market with the transfer of control to Apollo.
