Martin's public thoughts on private equity


One of the ramifications of the Democratic takeover of Congress was renewed activity on the oversight front, a fact of life to which the commissioners at the FCC can attest personally, particularly Chairman Kevin Martin. He has recently responded to the Democratic leadership of the House Energy & Commerce Committee – John Dingell (D-MI) – and its key Subcommittee on Telecommunications and the Internet – Ed Markey (D-MA), who expressed concerns about the sudden influx of private equity groups into broadcast ownership.

Martin acknowledged the concerns, but said the trend is in fact too new to have a history. And as far as transactions recently completed or in the pipeline, the FCC has no choice but to treat them the same as any other transaction which they must approve or deny. He noted that despite concerns about private equity ownership in some quarters, there were others who argued that it may offer advantages beneficial to the public that may be realized by getting divorcing corporate decision making from Wall Street’s quarterly treadmill.

As for public obligations, he noted that private equity firms are subject to the same rules as every other type of ownership organization. "In the interim," he concluded, "we will carefully consider private equity transactions that come before us, including any alleged benefits or harms of private equity ownership and control, to make sure they are in the public interest."

RBR/TVBR observation: Martin is absolutely correct that all in all it is too early to draw any conclusions about the desirability of this type of ownership structure, which isn’t new to broadcasting at all, but has recently become much more prominent. We know from experience, however, that such organizations will do well to make sure they have seasoned, competent and experienced broadcast executives running the show, not traders, investors and accountants. Many believe that the ultimate benefit may come when actual broadcasters are back at the helm of broadcasting companies. And we wouldn’t be upset if such groups recoup their investments by breaking the groups up via sales to smaller, broadcaster-led companies once we get past this current credit crunch. Let’s hope something like that happens before too many of broadcasting’s best and brightest are playing shuffleboard near the beach in Florida.