Commissioner Michael Copps concurred in the Clear Channel vote but did so with reluctance; he described his decision on the deal as a “close call,” one he approached with mixed feelings.
He said the transaction could lead to some deconsolidation. “But there is another side to this transaction, and it’s one that concerns me greatly. I have repeatedly called for the commission to examine the potential impact of private equity on our ability to ensure that broadcast licensees protect, serve and sustain the public interest. Unfortunately, that has not happened.”
Copps noted a previous announcement by Standard & Poor’s that the transaction will cut the firm’s ratings on Clear Channel “two notches deeper into ‘junk’ territory — and may cut them further — due to the subordination of existing debt to new bank debt,” Copps stated. “What is the market trying to tell us? How stable is the new company and what are the chances, given the jittery markets, that it could slip into bankruptcy? If it does, what impact would that have on its ability to serve the public interest?”
Commissioner Jonathan Adelstein, meanwhile, said he supported the order in general but he highlighted his concern about alleged anticompetitive practices in radio advertising.
“The largest station in each radio market has, on average, 46 percent of the market’s total radio advertising revenue. The two largest stations in each market command 74 percent of the market’s radio advertising revenue. These figures are troubling, especially in light of the fact that radio advertising rates have nearly doubled since 1996,” Adelstein wrote.
