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UK’s Global seeks to buy 49.99% of iHeartMedia

UK-based radio and technology behemoth Global is attempting to acquire 49.9% of iHeartMedia, the largest commercial radio group in the U.S. Doing so would require exemption from U.S. government rules that regulate foreign ownership of U.S. broadcasting companies. Global is seeking that exemption now, as reported in the UK publication Radio Today and confirmed by Bloomberg.

This dramatic development follows an 8% buy-in from Global one month ago, as we reported HERE.

The U.S. Federal Communications Commission (FCC) is the rule-setting body which has established limits on foreign ownership of a radio license, and limits to stakeholding. The limit to license holding is zero — foreign entities may not hold a U.S. radio license. Global’s quest is to own a stake of a U.S. license holder (iHeartMedia), and the current FCC law limits potential foreign ownership to 20%.

It is in that context that a law firm representing Global has delivered a letter to Albert Shuldinger, Chief, Audio Division in the Media  Bureau of the FCC, petitioning for an exemption.

It’s worth noting that at least one exemption has been granted before: In February, 2017, the FCC allowed a small Australian holding company to acquire a cluster of American stations: seven AMs, eight FMs, and 13 FM translators. Broadcast law attorney David Oxenford detailed that case at the time.

A more pertinent example was described by Oxenford one month before that, when the FCC allowed “aggregate foreign ownership” amounting to 49% of Univision.

The March 12 letter from Global’s lawyer to the FCC is interesting inasmuch as it seeks to correct what it calls a “remedial Petition for Declaratory Rulings” filed by iHeartMedia on March 8. That petition sought permission for a 9.99% acquired interest, according to the letter from Global’s lawyer. Global’s petition a few days later expresses bafflement at the apparent miscommunication between the two companies. Here, the issue is laid out (“GMEI” is Global Media Entertainment & Investments Trust):

“GMEI was frustrated to learn that iHeart’s advance approval request in the Petition only requested approval for non-controlling voting and equity ownership interests of no greater than 9.99%. GMEI also was surprised that the Petition did not reference GMEI’s request to seek advance approval for a non-controlling interest not to exceed 49.99%, nor did the Petition attempt to explain the basis for iHeart’s unilateral decision to limit the advance approval to 9.99% despite GMEI’s request.”

The letter goes on to directly request “advance approval” to negotiate a 49.99% non-controlling interest.

According to existing reporting, iHeartMedia was informed by Global on February 18, after the 8% investment, that Global would seek a larger share in a pursuit characterized as “non-hostile.”

(Thanks to Lee Cornell.)

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Brad Hill

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