Audacy has exited Chapter 11 bankruptcy proceedings, after the FCC on Monday approved the necessary transfer of radio station licenses to the reconstituted company.
Audacy is the second-largest radio company in the United States by revenue. It will continue to be led by David Field, its president and CEO, and its existing management team. Field will also serve on the company’s new board of directors. In conjunction with the completion of its restructuring, Audacy said it plans to become a private company.
The commission voted 3–2 along party lines, with the Democratic majority carrying the day. Republicans Brendan Carr and Nathan Simington dissented.
Philadelphia-based Audacy sheds about 80% of its debt through the process, down to $350 million, according to bankruptcy court filings.
Soros Fund Management will command at least 40% of the stock in the new Audacy, according to the company. The fund is directed by Alex Soros, son of George Soros, the businessman, philanthropist and liberal activist.
The approval process has proven controversial. Critics say the FCC bent its foreign ownership limits to push it ahead. Audacy said previously it designed its transaction to bring in new stockholders in a fashion to maintain compliance and had requested a temporary waiver of FCC foreign-ownership rules.
The company will still need to secure FCC approval to exceed the 25% limit, a process that could take up to 12 months, according to those familiar with the case. Based on previous filings it is not clear how much over the 25% foreign ownership cap Audacy might be.
Chairwoman Jessica Rosenworcel said in a statement Monday that the process the commission used to facilitate the license transfer is identical to the one it used in bankruptcy proceedings for Cumulus Media in 2018; iHeartMedia, Liberman Television and Fusion Connect in 2019; Windstream Holdings and America-CV Station Group in 2021; and Alpha Media in 2021. “To suggest otherwise is cynical and wrong, as this precedent clearly demonstrates,” she said in the statement.
Yet Commissioner Carr described the FCC’s decision to approve the Audacy plan as unprecedented.
“Never before has the commission voted to approve the transfer of a broadcast license — let alone the transfer of broadcast licenses for over 200 radio stations across more than 40 markets — without following the requirements and procedures codified in federal law. Not once,” he insisted.
Carr said the commission broke new ground without seeking public comment on altering its “established regulations, without actually changing the rules on the books, and without seeking the feedback of other federal agencies with relevant equities.”
Carr concluded: “Unless and until the commission changes our rules, I cannot support the special shortcut adopted today.”
Simington in his dissent lamented the lack of review time he received to vet the plan.
“A commission eager to fast-track a billion-dollar broadcast media reorganization, disregarding foreign ownership concerns, is the same commission that has gone back to the well several times to impose and reimpose foreign sponsorship identification rules on our smallest independent broadcast license holders every time they place local church content on the air,” Simington said in his own statement.
Several members of Congress had pressed the FCC for a more thorough review of the approval process. Communications Daily reported last week that House Oversight Committee GOP leaders have launched an investigation into the FCC’s handling of Audacy’s request for a temporary waiver of the foreign-ownership rules.
According to the report, Chairman James Comer, R-Ky., and Rep. Nick Langworthy, R-N.Y., believe the handling of Audacy’s request represents a politicization of the review process shortly before a presidential election. The committee is asking the FCC to turn over documents and communications related to the proceeding.
Audacy was the third of the largest U.S. commercial radio companies to go through a Chapter 11 process in recent years. iHeartMedia’s Chapter 11 proceeding concluded in May 2019. Cumulus emerged from a seven-month process in June 2018.
Audacy worked its way quickly through bankruptcy court earlier this year. By comparison, iHeartMedia’s Chapter 11 proceeding took about 15 months.
The company’s filing and successful reorganization will cancel about $1.9 billion in debt. According to the bankruptcy filings, Laurel Tree is expected to hold the majority of the Class A common stock in the reorganized Audacy. The investment company is partially backed by the Soros Fund Management. It also has an indirect ownership interest in Latino Media Network.
The new company’s second largest shareholder is expected to MBX Commercial Finance, which will hold approximately 9.5% of the new Audacy stock. MBX is controlled by Manoj Bhargava, founder of 5-Hour Energy. Bhargava also has ties to Renew Group Private Ltd., which holds a 10% stake in Cumulus Media and hopes to eventually acquire a 20% stake in that company; Cumulus earlier this year adopted measures to try to prevent Bhargava from doing so.
NAB reacts
The National Association of Broadcasters reacted positively.
“While we do not take a position on the merits of this or any particular broadcast transaction,” said President/CEO Curtis LeGeyt in a statement, “it is essential that the FCC’s regulatory processes are fair and predictable so that broadcasters can innovate and invest in their stations to the benefit of communities across the country.”
LeGeyt continued, “Make no mistake, broadcasters and our current and potential investors continue to watch the commission closely. To ensure a vibrant future, we need a transparent, fair and predictable regulatory process for broadcast license transfers and renewals — devoid of politics — that allows local radio and television stations a fair chance to compete for the investment capital that is necessary to continue serving the public. Without it, the vital services local stations provide for free to all is in jeopardy.”
