When the FCC approved the conditional sale of Clear Channel’s 35 TVstations last week, it appeared to be a routine license transfer among major corporate shareholders. However, the deal was approved with “appalling unawareness” that has “chilling” implications for the future, according to commissioner Michael Copps.
The estimated $1.2 billion sale of the Clear Channel stations is to Newport Television, a group of investment funds controlled by Providence Equity Partners, an entity with a financial stake in extensive broadcast properties. In fact, the holdings of the entity are so extensive that the deal violates FCC media ownership limits in nine markets, and the final sale approval requires the significant divestitures of media properties.
After the transaction closes and all divestitures have occurred, Copps revealed, Providence Equity Partners will have attributable interests in 86 television stations and 99 radio stations in the United States, as well as interests in media companies around the world such as MGM studios (largest shareholder), Yes Network, the Hallmark Channel and Warner Music Group.
“What makes this case particularly different than other license transfers from one media giant to another is the fact that this one involves private equity,” Copps noted in his sole dissent on the deal.
Last March, Copps asked the full commission to examine the impact of private equity broadcast station ownership on the public interest. “Unfortunately, that has not happened,” he said. “Instead, we close our eyes and pretend that nothing has changed. We proceed without knowing how segments of the conglomerate are controlled and managed. How, amid such murky shadows, does a regulator protect the public interest? Why doesn’t the Commission have enough curiosity to even ask?”
Copps noted there are few answers about the sale of broadcast stations to private equity firms. “Do such entities usually take the longer view because they are not subject to the pressures of Wall Street, or are we beginning to see more of a ‘strip it and flip it’ pattern? How will a purchaser’s assumption of massive amounts of debt affect its stewardship of the airwaves? For broadcast stations, what happens to newsgathering and other programming of local interest?” he asked.
For those attempting to independently evaluate the impact of the deal, Copps noted that their search of the FCC’s order would be in vain. There is, he said, not “any mention of the scope of Providence’s holdings or how they potentially affect our public interest analysis.”