FCC approves Citadel

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One of the typical radio transaction types we have seen after a merger causes the loss of grandfathered status for an oversized market cluster is the formation of a station trust to sell excess sticks. And in the event of a change in the market, when possible, the entity that established the trust often reels a station back in. In Citadel’s case, a move to do that in Charleston SC was hit with petitions to deny. The FCC took a look at the issue.


The station in question is WMGL-FM Ravenel SC. It was put in the Last Bastion Station Trust under Elliot B. Evers as a result of Citadel’s acquisition of Walt Disney/ABC radio stations.

When Citadel moved another Charleston market station, WNKT-FM, from St. George SC to Eastover SC, that took it out of the market. The company then filed to get WMGL back from Last Bastion and reinstate it into its own local cluster.

That drew petitions to deny from two with radio interests: Thomas B. Daniels and Georgia Eagle Broadcasting. Citadel initially argued that neither had standing in the matter, but the FCC said simply being a competitor in the same market was standing enough, with no need to prove possible harm if the deal is approved. That meant that Daniels, licensee of WJNI(FM), Ladson; WAZS(AM), Summerville; and WZJY(AM), Mount Pleasant had standing. Georgia Eagle, on the other hand, owns WMCD-FM Claxton GA, which is nowhere near Charleston, a fact that resulted in Georgia Eagle being excused from further participation in the matter.

Daniels argued that the contract initially assigning WMGL and 10 other stations to Last Bastion had an improper clause that gave Citadel reversionary ownership privileges in the stations. The FCC actually agreed, suggesting that the agency erred in approving the transaction when it was filed back in 2006.

But the FCC stated that the 2006 contract was not at issue in this case, and noted that the error had been cured, even if inadvertently, by a subsequent 2010 document.

Explaining further, the FCC noted that even if the earlier language was wrong, under the newer language the station is “freely alienable.” The FCC noted that it has approved many similar deals, and that this was the first time that the reversionary interest issue had been raised.

Daniels also said that Last Bastion did not make a vigorous enough attempt to sell the station to a third party, allowing Citadel to bide its time until it could pull back the license. The FCC’s strong encouragement to clear the inventory out of the trust within six months was also cited.

Citadel noted that the trading environment during the period the trust has existed has been hampered by falling station values and lack of available financing, and despite its best efforts, including the search for minority and female buyers, it simply has not been able to sell WMGL. To indicate that its efforts were in good faith, it stated that it did manage to sell three of the 11 stations in the trust.

The FCC added that its six month statement was an encouragement, not a condition.

The petition to deny was itself denied, and the transfer of the station back to Citadel was approved.

The ultimate winner will be Cumulus – the acquisition of the entire Citadel group by Cumulus is currently pending.