Radio Company Heads to Bankruptcy Court After FCC Agreement #

A major radio company is set to appear in bankruptcy court following an agreement with the Federal Communications Commission (FCC) to conduct a foreign-ownership review of the company’s post-bankruptcy structure. This development comes after months of delays and controversy surrounding the acquisition of the company’s debt by an investment fund.

The radio company filed for Chapter 11 bankruptcy in January, disclosing a restructuring agreement to reduce its debt from approximately $1.9 billion to $350 million. An investment fund subsequently acquired over $400 million of the company’s debt, becoming the largest contributor among a group of lenders looking to exchange loans for stock.

In March, the radio company approached the FCC requesting a full foreign-ownership review while asking for a delay until after its bankruptcy court appearance. The company estimated that about 22% of its post-bankruptcy structure would be foreign-owned, prompting the review request out of caution.

The radio conglomerate operates hundreds of music, news, and sports radio stations across the United States. Founded in 1968, it merged with another major radio entity in 2017 and rebranded in 2021.

US broadcast ownership rules require the FCC to review foreign investments in radio station licenses, with a 25% benchmark for investments from foreign individuals, governments, and corporations. Foreign investors can acquire up to 100% of a US broadcaster or radio station, subject to FCC approval and public interest considerations.

The situation has attracted attention from politicians and media outlets, with some alleging preferential treatment in the review process. However, the FCC has clarified that the license transfer process is identical to those used in previous similar cases involving other radio companies.

The FCC has faced accusations of politicization from various quarters since April, with some lawmakers calling for rigorous oversight of the transaction. In response to the scrutiny, the FCC chair approved a full commission vote in August, adding an extra step to the process.

On September 18, the FCC’s commissioners approved the assignment of licenses held by the radio company to its post-bankruptcy version, allowing it to temporarily bypass the commission’s review as it presents its new slate of investors before a Texas bankruptcy court.

Following the bankruptcy court appointment, the new version of the radio company will need to file paperwork with the FCC to take ownership of the stations. This will trigger a 30-day window for providing information required for a full foreign ownership review, a process that typically takes between six months and a year.

The radio company has confirmed the FCC approval and expects to emerge from bankruptcy in the coming days, with more details to be shared as the process unfolds.