NO BIG TV DEALS IN WORKS YET UNDER NEW FCC OWNERSHIP RULES
Several factors are holding back early attempts at deal making under the FCC’s new ownership rules adopted June 2 but not yet effective since they haven’t been published in the Federal Register. There’s much uncertainty because of court appeals to come, whether the rules will be stayed as requested by Comrs. Adelstein and Copps, and a Commission freeze on all transfer applications since new forms haven’t been approved by Office of Mgmt. & Budget and aren’t available.
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We're told 2 unidentified radio deals have fallen through because of uncertainty caused by the FCC freeze. “People who want to do deals can’t,” group executive said. “We've made some bids on various companies even before the rules changed… With all the legislative activity [CD June 20 p1], this will be a tumultuous couple of months.”
Executives of most of the large station groups have been reluctant to talk about their plans -- except for some saying they'll be seeking to acquire duopolies in the major markets permitted under the rules. Many said they'll wait “to see what the waiver language says” before engaging in serious discussions. Gerald Fritz, senior vp-Allbritton Communications (10 TVs, all ABC affiliates) would say only that the new rules “provide us with excellent flexibility.”
It’s well known that several major market TV stations are available -- most notably in San Francisco -- which could offer opportunities for duopolies if both stations aren’t rated among the top 4, several lawyers said. Freedom’s 8 medium-to-small market TV stations have been on the block for several weeks and Washington observers have Gannett as the most likely buyer.
As for forming new TV duopolies, some potential partners already are backing off because of rule that no 2 co-owned stations can be in the top 4 category and a lack of duopoly availabilities in smaller markets. In fact, that will be the basis of a petition for reconsideration by NAB and others at the FCC and/or court appeals. “There’s lots of little things going on,” a Washington lawyer told us, “but instead of getting X cash flow [potential sellers] are being offered X minus 4” by buyers seeking to establish duopolies.
Several sources predicted TV-newspaper groups will be very “aggressive” in seeking to establish new cross-ownership situations -- with Gannett (which had no comment) acknowledged by others to be out front. Several radio groups also are expected to be looking for cross-ownership deals -- such as Regent Communications, owner of more than 67 radio stations. Regent Pres. William Stakelin said the company “plans to be active” in seeking newspapers, either as partners or buying them outright.
Executives of TV stations in mid-sized markets said they'll be seeking to buy stations and/or newspapers -- not sell. Cosmos Bcstg. Pres. James Kellor said its subsidiary Liberty (12 TVs) has “a clear balance sheet and we're probably more of an acquirer… We've got to be bigger to compete going forward and there are a number of ways to do that.”
Schurz Communications (4 TVs, several newspapers) CEO Frank Schurz told us “we are in an acquiring mode… We've been looking at some things but there’s nothing definite yet.” As for potential buyers, he said: “We get calls all the time… sometimes more than one a day, but we're not interested in selling.”
Brokers also reported no surge in potential buyers and sellers under the new rules, which were called ambiguous, particularly for radio. There won’t be “an explosion of deals [and] everything is very quiet,” we were told. Until rules become more delineated, “we are in a no man’s land right now,” according to broker Richard Foreman.