Q&A of the Day – The FCC, Audacy & The Soros Fund
Each day I feature a listener question sent by one of these methods.
Email: brianmudd@iheartmedia.com
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Today’s Entry: About a week ago, George Soros, using foreign money, bought over 200 radio stations, many, many of them conservative, and brought them under his control. The foreign money aspect is a violation of law. This action was fast tracked by the Democrat controlled FCC to get it done before the election. That, also, was against the law. This comes not long after Soros bought a number of Hispanic stations in southeast Florida. Conservative reporting and speech is in dire peril of being suppressed. Election interference is coming. Why aren't you reporting on this?
Bottom Line: The primary reason I haven’t addressed this until now is because none of it has actually happened yet (George Soros does not currently own over 200 radio stations) and the FCC vote to allow for the transaction you’re referencing only took place yesterday. There’s been confusion and at times misinformation spread about this situation. Let’s start with what’s happened up to this point.
In January, Audacy, which owns and operates approximately 220 radio stations across the country, filed for bankruptcy due to a balance sheet containing $1.9 billion in debt and negative cash flow from operations driven by debt obligations. During the course of the bankruptcy proceedings, and reorganization plans, the highest outside bidder willing to take on Audacy’s debt obligations was Soros Fund Management – the business arm of George Soros’ ventures which agreed to front $415 million to resolve debt obligations as part of court approved bankruptcy reorganization process. The debt obligation assumed by the Soros Fund would then be converted into an equity position within the company upon the exit from bankruptcy making the Soros Fund the largest shareholder in the company with a potentially controlling stake in the enterprise.
Yesterday with a 3-2 vote by FCC commissioners, along party lines, as cited in today’s note, the FCC formally approved the plan which will allow for the bankruptcy judge to move forward with the previously agreed to terms likely making the Soros Fund a controlling stake holder in the enterprise. Now, one of the contentions is that this transaction is a violation of federal law limiting foreign ownership of US broadcast licenses. So, let’s look at the law.
The law in question is the Communications Act. Under the law, it states that a broadcast license may not be issued for any application of which more than 20% of the equity is directly owned of record or voted by non-US citizens, a foreign government, or an entity organized under the laws of a foreign company. There is also a secondary foreign interest provision that capped a broadcast entity owned within a holding company to 25%.
There are two potential issues with the contention the FCC’s approval and the judge’s decision to allow for this to go through are illegal. The first is that while George Soros, a Hungarian, was the founder of the Soros Fund in 1970, the Soros Fund isn’t a foreign enterprise. It’s headquartered in New York with an American, Dawn Fitzpatrick, as the CEO of the enterprise. For this reason, there’s not necessarily a foreign ownership question that’s in play. But to the extent that there may be foreign interest concerns, even then it still may not be a violation.
Until 2013 there were explicit rules against foreign ownership of American broadcast licenses. In 2013, in a unanimous vote by the FCC, that changed. Under the FCC’s regulatory rule change they stated that all foreign ownership stakes would be taken into consideration on a case-by-case basis to determine if the ownership change would suit the public interest, taking into account national security considerations. With the decision, the FCC stated it’s possible for approval of up to 100% aggregate foreign ownership.
Since the rule change, there have been numerous approvals with foreign interest exceeding the 25% threshold establishing legal precedent. Two well-known companies to receive these approvals were Pandora and Univision. So, really there are two potentially lawfully established lanes under which this transaction is set to take place. As always there are two sides to stories and one side to the facts. Those are the facts.
Now, do I personally like the situation? Not at all. Do I think George Soros’ influence and political agenda could potentially weigh heavily on the operations of many of these stations? Yes. George Soros has spent decades through multiple efforts, most notably MediaMatters, seeking to silence people he disagrees with politically. That’s included coordinated campaigns against my stations and my sponsors previously. People like to throw around the term “threat to democracy” these days. George Soros and his son, who is assuming most of the operations from dear old dad these days, I do believe are a threats, to our Representative Republic given the opportunity.
There are many different things I personally disagree with that are legal. As I always say, elections have consequences. We’ve only had a Republican president for 4 out of the past 16 years. For that reason, the FCC currently has a Democrat majority. If it had a Republican majority, it’s almost a certainty this deal wouldn’t have been approved. That's what really should be the focus for Republicans at this point. If Kamala Harris becomes the next president of the United States, the least of anyone’s concerns will be some crappy Soros-affiliated radio stations.
Also, to the extent that stations may be reprogrammed. A new ownership group can put new programming on the stations, but they can’t force people to listen to them and there are more audio options than ever for listeners to tune into.