PRIVATE COX WOULD STILL HAVE TO REPORT TO FCC
Little would change for Cox in terms of FCC reporting requirements if the company were to go private, officials told us. Cox Enterprises (CEI) announced it was proposing to take the company private by buying out the publicly held minority interest (38%)for $32 per share, or about $7.9 billion. Cox CEO James Robbins and other top industry officials have been saying for some time that cable stocks are trading at depressed levels. CEI said in a statement that it wanted to make additional infrastructure investments as the business grows increasingly competitive, and many on Wall St. would prefer immediate returns to more investment and possibly delayed returns.
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The decision would also reduce the company’s SEC filing requirements. However, Cox would still remain under the scrutiny of the FCC, we were told. NCTA Senior Vp.-Law & Regulatory Policy Daniel Brenner said the only potential complication, as far as the FCC is concerned, is that FCC officials who rely on SEC filings for public information on subscriber numbers and other data, would instead have to request the information from the company itself. “To the extent that the FCC relies on publicly available 10-Ks and 10-Qs to help round out its knowledge of the industry, obviously those materials wouldn’t be available,” Brenner said.
There are a host of other state and federal reporting requirements, including to the Equal Employment Opportunity Commission (EEOC), that don’t hinge on whether a company is publicly or privately held, Brenner said. And if CEI were to do a major acquisition or merger, that would be reviewed by DoJ for antitrust concerns, Brenner said.
CEI Senior Vp-Public Policy Alex Netchvolodoff said he doesn’t anticipate any FCC issues being affected by taking the company private, aside from some “immaterial regulatory matters,” such as reporting a change in ownership. Those include pro forma filings, he said, and some consents from state regulatory commissions on franchise agreements would be required as well. “I don’t think we anticipate any FCC issues,” he said. Reporting requirements to the FCC would remain virtually unchanged, he said.
One FCC official said the agency would only be involved in the change if there were a de facto transfer of control of the company, though Netchvolodoff said there would be none. Without license transfers, the FCC official said the regulation of the company would remain the same. “We regulate what they do, not who owns them,” the official said.
CEI owns about 62% of the company’s equity and has a 73% voting interest. After the transaction, Cox Communications would become a wholly owned subsidiary of CEI. Cox Communications’ board said it would appoint a special committee of independent directors to review CEI’s proposal with the help of financial and legal advisors.