On January 26, Nassau, Bahamas-based Honeycomb Investments Ltd. (now named the Global Media & Entertainment Investments Trust) snapped up a total of 9,631,329 shares of iHeartMedia stock.
This gave the entity 8.8% attributable interest in iHeartMedia, leading sleuths to connect one of the key individuals involved in the investment to one of the biggest commercial radio station owners in Great Britain.
Now, this company that boasts such brands as Heart, Capital, Radio X, LBC, Gold and Classic FM wants a greater stake in iHeartMedia. And, its Washington-based counsel has written to the FCC to advance regulatory approval for the purchase.
As RBR+TVBR first reported in February, Monte Carlo-based Trustees James Hill and Simon Groom and beneficiary Michael Tabor are the individuals behind the Honeycomb stock acquisition. Tabor is one of the wealthiest individuals in Britain, and the financial source for U.K.-based media and entertainment giant Global. His son, Ashley Tabor-King, is the founder of Global, the company that owns the aforementioned radio brands found across Britain.
It is now known that the Tabor family wants to obtain more equity interest in iHeart, and has hired Akin Gump attorney Tom W. Davidson to petition the Commission in granting the request.
In a 25-page letter sent March 12 to Audio Division Chief Al Shuldiner, following a March 8 FCC filing by iHeartMedia of a Petition for Declaratory Ruling, Davidson writes on behalf of Global Media & Entertainment Investments Ltd. (GMEI).
The Petition seeks FCC approval for GMEI’s present ownership of 8.7% of the equity
and voting interests in iHeart, and it requests advance approval for GMEI to increase its equity and voting interests in iHeart up to any non-controlling amount not to exceed 9.99%.
However, that’s not what GMEI wanted, based on conversations between the attorneys representing both Global and iHeart. According to Davidson, GMEI provided formal notification to iHeart to seek advance approval for Global to acquire noncontrolling voting and equity interests in iHeart not to exceed 49.99%, as is permitted under FCC
rules.
“Neither GMEI nor its FCC counsel received any objection or further communication
about this request, other than an acknowledgement of receipt,” Davidson noted.
However, a breakdown in communication transpired. On March 4, he said, GMEI’s FCC
counsel called iHeart’s FCC counsel to seek confirmation that iHeart would be honoring GMEI’s request, and to allow iHeart an opportunity to discuss any questions or concerns that it had. According to Davidson, “iHeart’s FCC counsel simply responded that she was not at liberty to discuss the advance approval request.”
Thus, 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%.
Davidson adds that GMEI also was surprised that the FCC petition from iHeart 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.
GMEI, and the Akin Gump attorneys, are still unclear as to why iHeart didn’t follow through on the request. Davidson brings to light the May 6, 2020 adoption of a one-year stockholder rights plan, which states shareholders cannot acquire a beneficial ownership interest in 10% or more of iHeart’s Class A Stock without approval from iHeart’s Board of Directors. As Davidson sees it, “the Rights Plan is not relevant to the Commission’s consideration of the matter.”
Given iHeartMedia’s decision to not honor GMEI’s request for advance approval to obtain up to a 49.99% non-controlling interest in the owner of iHeartRadio, GMEI is now taking the matter into its own hands by seeking FCC approval itself, bypassing iHeart with the request.
“This request is fully compliant with the FCC’s rules, as well as the Commission’s
stated policy goals of providing for the free transferability of the publicly traded stock of a
company like iHeart and promoting increasing cross-border investment in media companies,” Davidson says.
If the FCC grants the request, it would then issue a Notice of Proposed Rulemaking seeking public comment on GMEI’s ask.
As Davidson sees it, whether 49.99% or 9.99% non-controlling interest in iHeart is held by GMEI is inconsequential to any public interest concerns that could arise with the equity stake that Global wants.
Capping GMEI’s permitted ownership of iHeart at 9.99% would require a new remedial declaratory ruling each time GMEI purchased additional shares on the open market.
