The FCC has approved the Chapter 11 bankruptcy restructuring of Audacy allowing the company to complete the process.
Upon closing two parties will hold attributable stakes in the new Audacy. Laurel Tree Opportunities Corporation will hold at 57% controlling stake in the company. Led by trustees Leonard Benardo, Maryann Canfield, Alexander Soros, and Michael Vachon, the company is financed by the George Soros founded Fund for Policy Reform. Five Hour Energy founder Manoj Bhargava, who recently attempted a hostile takeover of Cumulus Media, will hold 9.5% through his MBX Commercial Finance LLC.
Audacy was also granted a temporary waiver to exceed the permitted limit on foreign investment stating that the aggregate foreign ownership of the entities with the right to obtain New Common Stock in Reorganized Audacy at emergence would exceed the 25 percent limit. To ensure the aggregate foreign ownership will not exceed the 25% limit, company will insert an Equity Allocation Mechanism to convert some of their holdings to Class B Common Stock and/or Special Warrants that will cap foreign ownership on an equity or voting basis at 22.5% at most. Another waiver allows the company to continue to hold nine licenses (4 AM and 5 FM) in Kansas City MO due to 1660 KWOD Kansas City being the expanded band descendent of 1250 KYYS. KYYS is leased to another operator.
Conservative commissioners Brendan Carr and Nathan Simington dissented claiming the commission is fast-tracking the process on political grounds. Carr added, “The FCC’s decision today rests on several additional errors that warrant reversal on appeal. For one, the decision cannot be squared with the agency’s current approach to transaction reviews. For instance, in the Standard General-TEGNA proceeding, the agency found that it could not approve the requested license transfers because the applicants in that case failed to persuade the agency that they would not layoff or cut newsroom and other jobs. Under Goose v. Gander, the FCC must ding these Applicants for the same reason.18 Indeed, the Applicants in this case have made no jobs showing or commitment at all. If job losses are relevant to the FCC’s transaction review analysis, then the agency cannot approve this takeover.” Simington claims that he was not given the ability to review to transaction at all..
FCC Chair Jessica Rosenworcel issued a statement in response to the Conservative commissioners and politicians claiming they gave preferential treatment and fast-tracked the transaction because of the involvement of George Soros writing, “In this decision, we approve the assignment of licenses held by Audacy, which has been under the control of a bankruptcy court, to the new Audacy, so that the company can emerge from bankruptcy proceedings. The process we use to facilitate this license transfer is identical to the one recently used by the agency in the bankruptcy proceedings of Cumulus Media in 2018, iHeart Media in 2019, Liberman Television in 2019, Fusion Connect in 2019, Windstream Holdings in 2020, America-CV Station Group in 2021, and Alpha Media in 2021. To suggest otherwise is cynical and wrong, as this precedent clearly demonstrates. Our practice here and in these prior cases is designed to facilitate the prompt and orderly emergence from bankruptcy of a company that is a licensee under the Communications Act.”
