Control of OneWeb at Heart of NGSO Application Transfer Brawl
Who runs OneWeb is increasingly being debated before the FCC. Corporate governance experts told us corporate law on the answer is vague, despite assertions by some non-geostationary orbit (NGSO) operators that Executive Chairman Greg Wyler controls the company. But satellite lawyers said corporate governance rules are irrelevant since FCC rules precisely spell out who's deemed to have control and Wyler fits that bill. Various satellite operators opposed Boeing's request to transfer two of its NGSO applications to Wyler and his new company, SOM1101, on the grounds FCC rules prohibit one entity from holding attributable interests in two pending NGSO systems (see 1802130019).
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The question of corporate control is frequently gray and often requires a judgment call or case-by-case determination, said University of Rochester business professor Cliff Smith. "There's no bright-line rule," echoed University of Pennsylvania Law School professor Jill Fisch, saying the answer depends largely on how much decision-making power a person exercises and who else also potentially controls the company. Fisch said an executive chairman typically isn't viewed as having control when there's a CEO; OneWeb's CEO is Eric Beranger. That Wyler is also OneWeb's founder, however, clouds the issue, since it could give him more control or influence than a chairman who comes from the outside, Fisch said. OneWeb, Wyler and SOM1101 outside counsel didn't comment Thursday.
Most corporate law cases put the ownership threshold at 35 percent or more, well above the nearly 12 percent of outstanding OneWeb shares Wyler owns, emailed George Washington University law professor Lawrence Cunningham. Even that amount "is nontrivial" and certainly produces influence, he said.
Pointing to Section 25.159(b) rules, which regard limits on pending applications and unbuilt constellations, a satellite company outside counsel said the FCC clearly uses the competitive auction standard for defining controlling interest in a company -- that an officer or director is deemed to have controlling interest.
As just one of several OneWeb board members and owning a relatively small percentage of voting shares, Wyler doesn't control the company, SOM1101 said in an International Bureau filing this week in opposition to the petitions to deny. It disputed that Wyler's making public representations on behalf of OneWeb, such as being quoted in news releases, is indicative of control. SOM1101 said the proposed amendments to Boeing's NGSO applications doesn't qualify as a major amendment under Section 25.116 -- which governs amendments to applications. It said it and Boeing could get the same end result through a more-laborious multistage transaction of transferring the applications to a Boeing entity and transferring control of that entity to Boeing.
Even if the agency decides Wyler has control of OneWeb, there's "good cause" to waive Section 25.159(b) rules and allow Wyler involvement given his track record in broadband NGSO systems, Boeing said in a similar opposition this week. It said other operators wouldn't be hurt by any such substitution. The company said the objections were anticompetitive. And it said Section 25.159(b) is "outmoded" given the bond and milestone requirements also in place to prevent spectrum speculation and warehousing.