WASHINGTON, D.C. — In a largely symbolic Declaratory Ruling released late last week by the FCC, the Commission gave its blessing to allowing foreign investors to own up to 100% of the entity being created by the merger of Cox Media Group‘s radio and TV properties and Brian Brady‘s Northwest Broadcasting.
The Declaratory Ruling came alongside a formal Memorandum Opinion and Order that signaled the FCC’s OK of deals giving majority ownership of the broadcast media properties to Apollo Global Management.
“We find that grant of these applications, as conditioned, will serve the public interest, convenience and necessity,” Media Bureau Chief Michelle Carey wrote in a Order distributed following the broadcast media symposium it hosted at the Commission on Thursday.
The decision culminates a 12-month process, highlighted by the February 15 confirmation that a majority interest in Cox Media Group’s TV; the Dayton Daily News; and CMG’s Miami Valley radio properties, comprised of Country WHKO-FM “K99.1,” a market leader in the Nielsen Audio ratings; Classic Hits WZLR-FM 95.3 in Xenia, Ohio, heard in Dayton at 101.1 MHz on W266BG; and News/Talk simulcast WHIO-AM 1290 & WHIO-FM 95.7; would be taken by Apollo in a $3.1 billion transaction.
The Cox Media Group TV stations included in this deal are as follows:
- ATLANTA: WSB-2 (ABC)
- BOSTON: WFXT-25 (FOX)
- CHARLOTTE: WSOC-9 (ABC) and WAXN-64 (Unaffiliated)
- DAYTON: WHIO-7 (CBS)
- JACKSONVILLE: WFOX-30 (FOX)
- MEMPHIS: WHBQ-13 (FOX)
- ORLANDO: WFTV-9 (ABC) and WRDQ-27 (Unaffiliated)
- PITTSBURGH: WPXI-11 (NBC)
- SEATTLE-TACOMA: KIRO-7 (CBS)
- TULSA: KOKI-23 (FOX) and KMYT (MyNetwork TV)
The first deal dates to Dec. 3, 2018. That’s when Apollo teamed up with Brian Brady’s Northwest Broadcasting in a now-failed bid to acquire Tribune Broadcasting.
The third prong of the Apollo transactions arrived, after weeks of rumors, in late June 2019. That’s when Cox Enterprises formally announced it reached an agreement to sell Cox Media Group’s radio station portfolio — as well as its CoxReps and Gamut national advertising businesses — to a new broadcasting company that is substantially owned by private equity funds managed by affiliates of Apollo Global Management.
That would be Terrier Media. However, the “Cox Media Group” name will live on as the “doing business as” brand.
Cox Media Group’s AM and FM holdings are located in Tampa, Jacksonville, Orlando and Miami, Fla.; Atlanta and Athens, Ga.; Tulsa; San Antonio; Nassau-Suffolk; and Houston.
To comply with FCC ownership limits, the buyer will need to divest two FM stations, one each in Orlando and Tampa. These stations were identified as WPYO-FM 95.3 in Maitland, Fla., serving Orlando, and WSUN-FM 97.1, a Tampa-St. Petersburg station branded as “97X.”
Once the deal closes, WPYO and WSUN will shift into a trust headed by Elliot B. Evers, the co-founder of San Francisco-based MVP Capital.
A set-up fee of $10,000 is being paid to Evers, as trustee, by Terrier/CMG. He’ll also get a $5,000 monthly fee, multiplied by the number of geographic markets in which there are radio stations held by the Trustee.
In addition, Evers is getting reimbursed for CXR Radio’s COO, who he gets to select, with fees of up to $2,500 for the first calendar month of the Trust Agreement’s term and $1,000 for each subsequent month.
Handling the transfer of WPYO, known as “Party 95.3,” and 97X as legal counsel are Michael Basile of Cooley LLP, for Terrier/CMG, and David Burns of Lerman Senter PLLC for Evers’ entity.
The shedding of the two FMs, which must be completed in Q4 2021, isn’t the only move Apollo had to make in order to meet regulatory approval. With the Third Circuit remand of the FCC’s media cross-ownership rule rewrite by the Pai Commission, and last week’s refusal by the federal appeals court to honor the FCC’s en banc hearing request, Cox has no choice but to reduce the number of days each week the Dayton Daily News, Springfield News-Sun and Journal-News in the cities of Hamilton and Middletown, Ohio.
Already suffering from rapidly declining circulation, the publications will now offer print editions three days per week on a “temporary” basis. What’s needed to resume seven-day printing of the newspapers is a waiver, or a sale back to Cox Enterprises. That would result in a separation of the newspapers from Cox Media Group’s state-of-the-air multimedia operations center in Dayton, where CBS affiliate WHIO-7 has built a commanding presence.
The trimming of the newspaper’s publication schedule and the divestment of two FMs in Florida aren’t the only things Cox and Apollo needed to resolve in order to gain Media Bureau approval of their deal.
In Syracuse, the transfer of an existing duopoly would not comply with the Eight Voices Test of the Local Television Ownership Rule.
Down in Yuma, Ariz., Apollo would be in violation of the Top-Four Prohibition of the local TV rule.
What does this mean? “As necessary, Northwest will surrender the licenses for one of its stations in Syracuse and Yuma not acquired by Terrier Media and will transfer all of the programming to the corresponding acquired station in each market to be carried on a primary or multicast channel,” the memorandum opinion and order approved by Carey states.
Market speculation has FOX affiliate WSYT-68 taking the programming of MyNetwork TV affiliate WNYS-43 in Syracuse, and placing it on a digital multicast channel, with WNYS’s license surrendered to the Commission.
In Yuma, Ariz.-El Centro, Calif., CBS affiliate KSWT-13 presently offers the LBI Media-owned Spanish-language network Estrella TV on KSWT-13.2; NBC affiliate KYMA-11 could very well bump that to DT3 or take the position itself, with KYMA’s license being surrendered.
Lastly, there is the Commission’s Newspaper/Broadcast Cross-Ownership Rule. Once reinstated, it presents an issue to Terrier. To address this concern, Terrier Media
and Cox proposed to restructure the transaction with the intention that Cox’s parent will have a nonattributable ownership interest in Terrier, which has a single majority shareholder. Specifically, Cox’s parent will have a 19.9% voting interest in Terrier Holdings and a right to appoint one or more observers to Terrier Holdings’ board of directors, along with certain minority investor protections.
This passed muster with the Media Bureau.
While no parties had a beef with the radio transactions, the TV transactions stirred the ire of the American Television Alliance (ATVA), which questioned the public interest concerns of the deal while also saying it would harm the public in the former of increased retransmission consent prices.
Harm to localism and viewpoint diversity were cited as reasons Common Cause and the United Church of Christ teamed up for another pleading.
The challenges were denied.
“We conclude that ATVA’s allegations regarding retransmission consent do not raise a substantial and material question of fact as to whether grant of the Television Applications would serve the public interest,” the Bureau declared.