FCC Gives Thumbs Up to CBS, Entercom Deal

Divestitures can move forward and temporary waivers issued in select markets

The anticipated merger between CBS Radio and Entercom is one step closer to reality after the Federal Communications Commission gave its formal stamp of approval — though the approval comes with certain conditions.

“We are energized and excited by [the] announcement from the FCC,” said David Field, president and CEO of Entercom on the day the FCC released its order. The merger is expected to close by Nov. 17.

The fine print behind the merger between CBS Radio and Entercom Communications: After CBS Radio is separated from CBS, a wholly owned subsidiary of Entercom will merge with CBS Radio in a move that will impact all of Entercom’s 127 and CBS’s 117 radio stations. To comply with local radio ownership rules, the parties are looking to divest 19 full-power and six associated booster station licenses to comply with current local radio ownership rule.

Entercom did file several waivers of that rule. One is a request for a temporary waiver of the radio-television cross-ownership rule in the San Francisco and Miami markets to permit two temporary directors (Leslie Moonves and Joseph Ianniello) to serve as Entercom directors for a maximum of six months. The other is a waiver of the local radio ownership rule to maintain its current ownership interests in the Kansas City market.

In addition, Entercom currently holds a grandfathered radio combination in the Wilkes-Barre/Scranton, Pa., market. Because the proposed transaction would result in a substantial change of control in Entercom, the parties propose to assign WGGI(FM) in Benton, Pa, to either the newly created Entercom Divestiture Trust or to the Educational Media Foundation.

There have been oppositions to the merger. Two petitioners — Edward R. Stolz II and Deborah J. Naiman — filed Petitions to Deny with the FCC. Among other issues, they argue separately that Entercom’s divestiture applications do not comply with local radio ownership limits in the Sacramento and San Francisco markets, and that the FCC must address unresolved Entercom character issues relating to the death of a contestant at KDND(FM) Sacramento. Among other complaints: that a monologue aired by CBS television by comedian Stephen Colbert in May 2017 was “actionably obscene” as well as claims that other CBS news programs have allowed for “intentional news distortion.”

But the commission disagreed with the oppositions, saying that the public interest will be served through the merger.

The FCC found that CBS and Entercom filed its divestiture amendments correctly, and except for the Kansas City market, all comply with the local radio ownership rules. In the Kansas City market, Entercom holds a wavier on lower band station KKHH(AM) and expanded band station KXTR(AM). Though the commission had tentatively concluded in its AM revitalization initiative that a licensee with a dual standard/expanded band authorization must surrender one of the two authorizations, the issue is still pending before the commission, and so the FCC granted a temporary waiver.

The commission also concluded that the other requested temporary waivers are in the public interest.

“Following consummation of this transaction, there will be more than 50 independently owned-and-operated radio and television voices in the Miami market, and more than 80 in the San Francisco market,” the FCC said. “Based on the large number of independent media voices in each market and the relatively short duration involved, we conclude that a waiver will not unduly limit competition or diversity in these markets.”

When it came to the character issue regarding station KDND, the FCC said that when evaluating assignment applications, in general it does not consider a licensee’s conduct at one station to be relevant to its qualifications to hold another authorization. “Stolz seeks to use isolated incidents to call into question the totality of CBS’s licenses,” the FCC said. “Such a result is not consistent with commission precedent or commission sanctions policy.”

The FCC placed one condition on the deal.

To ensure compliance with the local radio ownership rule, the commission requires that divestiture of the stations occur prior to or simultaneously with the consummation of the merger. The FCC has given six months from the date of the merger to complete the assignment of each of these stations. If Entercom fails to do so, it must provide the detailed explanation of its efforts and provide reports at six-month intervals until all related stations are sold.

If finalized, the merger will give Entercom a nationwide footprint of 235 stations, with coverage of close to 90% of persons aged 12 and older in the top 50 markets, the company said.

 



Receive regular news and technology updates. Sign up for our free newsletter here.

Share This Post