FCC Approves Audacy's Reorganization Plan from Bankruptcy

RADIO ONLINE | Monday, September 30, 2024

Audacy

The FCC has granted approval for Audacy License LLC to transfer its broadcast licenses as part of its restructuring plan to emerge from bankruptcy, according to the decision issued on September 30. This move allows Audacy to proceed with a Joint Prepackaged Plan of Reorganization, enabling the company to cancel approximately $1.6 billion in debt and issue new common stock to creditors, who will become shareholders of the reorganized entity. The licenses affected by the transfer include over 200 radio outlets across more than 40 markets.

Audacy Inc. and its subsidiary, Audacy License LLC, had filed for bankruptcy earlier this year under Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas. The approved reorganization plan confirms that Audacy's existing common stock will be canceled, and new shares in the reorganized company will be distributed to creditors. The company's broadcast licenses will be assigned to the newly reorganized Audacy License LLC as part of this plan.

Chairwoman Jessica Rosenworcel emphasized that this approach follows the same procedures previously used for media companies such as Cumulus Media and iHeartMedia during their bankruptcies. "Our practice here is designed to facilitate the prompt and orderly emergence from bankruptcy," Rosenworcel stated, defending the FCC's approval against dissenting opinions," said Rosenworcel.

One point of contention in the proceedings was the foreign ownership of Audacy. Under the Communications Act, foreign entities cannot own more than 25% of a U.S. broadcast company. To comply with this, Audacy requested a waiver that would allow it to temporarily exceed this threshold while the reorganization is completed. The FCC granted this waiver, on the condition that Audacy must file a petition for a declaratory ruling on foreign ownership within 30 days of completing the transaction.

However, FCC Commissioners Brendan Carr and Nathan Simington dissented from the decision. Commissioner Carr argued that granting the waiver without requiring the simultaneous filing of a petition for foreign ownership approval broke with standard FCC procedures. Carr expressed concerns over national security implications and criticized the fast-tracked approval process as being unprecedented.

Audacy's reorganization has also attracted public and political attention. Media watchdog group Media Research Center (MRC) filed a petition to deny the license transfer, raising concerns about potential foreign influence on U.S. media through George Soros' Open Society Foundations, which holds a financial interest in the transaction. The FCC rejected these concerns, treating the MRC's petition as an informal objection and dismissing it as lacking standing.

Audacy now has a pathway to emerge from bankruptcy, with the company's new financial structure poised to enhance its operations and continue serving its local radio markets without disruption.

NAB President and CEO Curtis LeGeyt said in a statement, "NAB is pleased to learn that the Federal Communications Commission has approved Audacy's reorganization. While we do not take a position on the merits of this or any particular broadcast transaction, it is essential that the FCC's regulatory processes are fair and predictable so that broadcasters can innovate and invest in their stations to the benefit of communities across the country."

He added, "Make no mistake, broadcasters and our current and potential investors continue to watch the Commission closely. To ensure a vibrant future, we need a transparent, fair and predictable regulatory process for broadcast license transfers and renewals - devoid of politics - that allows local radio and television stations a fair chance to compete for the investment capital that is necessary to continue serving the public. Without it, the vital services local stations provide for free to all is in jeopardy."