Current company: Garvey Schubert Barer
Position: Partner and Co-Chair, Communications Group
Location: Washington, DC
Born: Brooklyn, NY
Bred: Fall River, MA (“City of Hills, Mills and Unpaid Bills”)
Personal Info: Jane Gasperini (wife), children: Michael Krasnow, Cathy Holmes, Andrea Viener Filipelli (step daughter), Jack Filipelli (grandchild), granddaughter expected in late April.:
Colleges: Boston University, BA, Harvard Law School, JD, Georgetown University Law Center, LL.M
Favorite movies: Man on Wire; The Artist; Spring, Summer, Fall, Winter
Favorite Mexican Telecom Company: Taco Bell
Sports Team Preferences: Washington Redskins, Washington Nationals
Hobbies/Passions: Painting Canvases with Yellow Pad as Theme
Best Travel: Two trips to South Africa funded by USIA (while there, co-founded the National Association of Broadcasters of South Africa)
Causes/Charities: Library of American Broadcasting; Minority Media & Telecommunications Council; Broadcasters Foundation of America
Questions:
1. How did you get selected as General Counsel of the National Association of Broadcasters?
Out of the blue, I got a call from Vince Wasilewski, then President of the NAB, offering me the position. He told me that he had read a book that I coauthored, “The Politics of Broadcast Regulation,” as well as several of my articles on communications law topics. He also commented that the NAB could put to good use my experience as Administrative Assistant to Congressman Torbert MacDonald, Chair of the House Communications and Power Subcommittee, and as a partner in a law firm (Kirkland & Ellis) that represented the Tribune Company, Clear Channel Broadcasting Service and various broadcast groups. Looking back, it was “a marriage made in heaven.”
2. From your legal vantage point, does it look like the station trading environment is beginning to open up, and what types of deals are coming down the pipe?
Station trading appears to be opening up … but ever so slightly. It’s unlikely to be a land rush and nothing like the gold old days (if you pardon the humor, when the multiple was eight times legal fees). I expect that buyers mainly will be established broadcasters and entrepreneurs looking for strategic opportunities to regroup assets (e.g., Connoisseur) or to buy cash flow at low multiples.
3. What is the state of financing these days, for deals large and small, and what are the best alternatives to getting a deal done without traditional financial backing?
Unfortunately, the banks, finance companies and private equity funds that were once the lifeblood of the business are gone … and won’t likely be back, certainly any time soon. Large gold-plated deals with a minimum of $10 million in Broadcast Cash Flow will still get done — at low multiples. Otherwise, prospective buyers will be forced to look at seller financing (a/k/a seller paper), funds from “friends and family” and local banks.
4. What is the biggest pitfall station buyers/sellers face if they use local counsel rather than an attorney specializing in communications and FCC law?
They say that a little knowledge is a dangerous thing. I find it frustrating dealing with local counsel for sellers who, because of their lack of familiarity with broadcast transactions, resist the inclusion of reps and warranties that are standard (indeed, boiler plate) in broadcast station acquisition agreements. As a result, the contract negotiation process tends to drag on. When local counsel represents the buyer, they often are unaware of the safeguards that need to be included in the transaction documents to protect their client from unpleasant surprises.
5. What do you see as the most likely broadcast law and regulation changes coming out of Washington this year?
Relaxation of the limits on foreign investment in broadcasting. The FCC has issued a Public Notice seeking comment on a widely-supported proposal to allow the Media Bureau to grant applications involving companies having more than a 25% foreign ownership stake. In light of the constraints on access to domestic capital, the Commission should allow foreign investors to enter the market — just as the agency has allowed foreign investors to enter the cable and telecom markets.
6. The push for more diversity of ownership has been front and center so far this year – what is your prescription to make headway in this area?
Former FCC Commissioners Michael Copps and Deborah Taylor have asked the FCC to rule, every month, on some of MMTC’s 71 pending minority ownership proposals, most of which are deregulatory and nearly all of which are unopposed. They are right. The nation is losing minority owners — and the FCC ought to intervene.
7. Why didn’t you mention passage of minority tax certificate legislation?
It’s not because I don’t fully support the concept of a minority tax certificate. I do. There are two types of FCC regulation: “Jewish mother” and “positive incentive.” The all-too-familiar Jewish mother approach relies on raised eyebrows, guilt and punishment, whereas positive incentive is permissive and offers rewards to encourage certain types of behavior. The minority tax certificate was an example of the latter. It used the market-based incentive of deferral of capital gains to encourage owners of broadcast and cable properties to sell them to minorities; tax certificates were also issued to investors who provided start-up capital to minority-controlled companies.
Jim Winston, my brother-in-the-law, predicted the passage of minority tax certificate legislation “if we can educate members of Congress who don’t understand its value.” See “Five Questions with Jim Winston,” RBR/TVBR, February 6, 2013. I respectfully disagree. In my opinion, the chances of passage of minority tax certificate legislation are very slim. Despite the broad support of tax deferral legislation by the FCC, the NAB, major broadcasters and consumer groups, no congressional hearings have been held during the 17 years since the repeal of minority tax certificates. Court decisions pose high hurdles to passage of legislation that would limit benefits to minorities. More importantly, at a time of record deficit-spending and sequestered funds, it is unrealistic to predict that Congress would pass tax deferral legislation to benefit socially-disadvantaged businesses.
