On January 22, The Honorable Marvin Isgur, a U.S. Bankruptcy Judge since February 1, 2004, serving the Southern District of Texas, put his signature on a 210-page redlined version of iHeartMedia‘s reorganization plan, putting the No. 1 owner of radio stations and the parent of the iHeartRadio brand on the fast-track to its emergence from debtor-in-possession status.
Fast-forward to April 3, when iHeart said in an SEC filing that it will issue new Class A and Class B shares.
Just when will iHeart emerge from debtor-in-possession status? It could happen at any moment, thanks to the FCC’s approval of a divestiture plan involving two markets where it will be over Commission ownership limits once a reconstituted iHeart begins operations.
Under the court-approved Joint Plan of Reorganization, iHeart proposes to cancel existing debt and to issue securities in reorganized iHeart.
Upon iHeart’s emergence from bankruptcy, all of the existing capital stock of iHeart will be cancelled, and all of the new stock will be distributed to holders of debt and other creditors of iHeart and/or their designees.
With this exit from debtor-in-possession status, iHeart will lose grandfathered status in two markets where it presently exceeds FCC ownership limits.
These markets are Grand Forks, N.D., and Brunswick, Ga.
As such, iHeart in October 2018 assigned two stations in these markets into a newly formed trust to be led by Barry Drake, the former President/CEO of Jacksonville-based Backyard Broadcasting.
Sun and Snow Station Trust LLC is to receive the licenses of the following iHeart properties:
- Class C1 KSNR-FM 100.3 in Fisher, Minn., serving the Grand Forks, N. Dakota, market.
- Class C2 WHFX-FM 107.7 in Darien, Ga., serving Brunswick, Ga.
This was pending Commission approval, and that has just been granted. Now, the Trust has two years to find a buyer.
It then looked at the entire bankruptcy plan, and signaled its approval.
“We have reviewed the proposed transaction, the Applications, and related comments,” the Media Bureau’s Audio Division Chief, Albert Shuldiner, declared. “We conclude that the applicants are fully qualified and that grant of the Assignment and Transfer Applications and the Divestiture Applications, subject to the conditions set forth herein, complies with all
pertinent statutory and regulatory requirements (including the local radio ownership provisions of Section 73.3555(a)(1) of the Rules in each pertinent market) and will serve the public interest, convenience, and necessity.”
Meanwhile, iHeart stands to lose “a number of applications” for new FM translators filed in Auction 100. Five remain mutually exclusive with other applicants:
BNPFT-20180130AEN (Anchorage, AK)
BNPFT-20180130AEV (Mobile, AL)
BNPFT-20180130AFU (Louisville, KY)
BNPFT-20180130AED (Jackson, MS)
BNPFT-20180130AGK (Columbus, OH)
Section 1.2105(b)(2) of the Rules provides that an auction applicant that undertakes a major change, including a change of ownership that would constitute an assignment or
transfer of control, after the short-form application deadline will be disqualified from participating in bidding.
“Accordingly,” Shuldiner says, “to the extent that these applications remain pending after the transaction approved here has been consummated, they are subject to dismissal.”
Additionally, one iHeart Auction 100 application is subject to a petition to deny: BPNFT-20181102AAJ in Modesto, Calif.