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FCC Grants iHeart Petition on GMEI Foreign Investment

Says the ruling should help incentivize other investments and benefit U.S. trade policy

iHeartMedia, radio stationsThe FCC Media Bureau has okayed a petition from iHeartMedia regarding foreign investors that hold its stock.

iHeart had asked the bureau to approve foreign interests held by Global Media & Entertainment Investments Ltd. and related entities totaling 6.8% equity and 8% voting interests in iHeart. It also asked for advance approval for GMEI and its entities to increase those interests up to 14.99%.

In an earlier 2020 ruling, the bureau had authorized up to 100% overall foreign investment in iHeart; at the time it approved two groups to hold more than the usual limit of 5%. The PIMCO Group could hold up to 32.99% of equity and 19.99% of voting interests while the Invesco Group could hold up to 19.99% of equity and voting. In making those rulings the FCC said iHeart would need its approval for any further foreign investment above 5%.

But then iHeart said it learned last February that GMEI — formerly called Honeycomb Investments Ltd. and based in the Bahamas — had independently acquired about 9.6 million shares of its stock on the NASDAQ exchange, about 6.6% of equity and 8.7% of voting interests.

iHeart notified the FCC and sought approval for those percentages, plus advance approval for GMEI to go up to 14.99%. (GMEI itself asked for approval to go up to 49.99% but later withdrew that request and fell back to the 14.99% figure.) iHeart said this ruling would incentivize foreign investment and benefit U.S. trade policy by encouraging reciprocal investment opportunities for U.S. companies abroad. It also said GMEI represents no national security or law enforcement concerns.

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So in short the latest FCC ruling grants approval for GMEI and its related entities to hold more than 5% of iHeart’s equity and/or voting interest as well as advance approval to increase its interests up to 14.99%. The previous approvals also remain in place: aggregate direct and/or indirect foreign ownership of iHeart above the usual 25% benchmark is allowed up to 100%; (2) approval for the PIMCO Group to hold up to 32.99% of equity and 19.99% of voting interests in the company; and (3) approval for the Invesco Group to hold up to 19.99% of the equity and voting interests.

The Media Bureau took input from a federal advisory committee on foreign participation, which found no concerns. iHeart will still have to obtain approval for additional foreign investors to hold more than 5% (or 10% for certain institutional investors).

iHeart estimated that following the FCC’s approval, direct and indirect foreign ownership of its capital stock would be “at a minimum, approximately 30% as to voting and 40% as to equity.” But that would not be an issue given the FCC’s previous ruling permitting iHeart aggregate foreign ownership up to 100%.

Read the ruling and the commission’s in-depth explanation of the case.

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