Apollo Global

A federal appeals court decision that invalidated the newspaper-broadcast and TV-radio cross-ownership bans is already causing headaches for Apollo Global Management. Private equity funds managed by affiliates of Apollo are buying Cox Enterprises’ TV and radio stations. And now Apollo also wants to finance the merger of the two largest newspaper companies, which could be a violation of the recently reinstituted cross-ownership ban.

After cutting a deal in February to sell off its 13-station TV station group, Cox in June reached an agreement to divest its entire 63-station radio group to the same buyer. An investor group led by Apollo is forming a new broadcasting company to house the stations, with Cox retaining a minority interest.

Now Apollo wants to finance New Media Investment’s planned purchase of Gannett Co., publisher of USA Today. New Media’s Gatehouse Media owns around 700 papers across 39 states.

The FCC is concerned that the $1.8 billion loan Apollo plans to make to finance the newspaper merger could violate the revived cross-ownership ban, which forbids common ownership of a daily print newspaper and a TV station in the same market.

According to the New York Post, the FCC held a meeting with the private equity firm to ask questions about the newspaper deal, which was inked before the Third Circuit Court of Appeals brought back the cross-ownership ban. The FCC is expected to request an “en banc” hearing with the Third Circuit that would allow the case to be heard by a much larger group of judges. But short of the court decision being overturned, Apollo may have to decide between radio and TV – or newspapers. “If Apollo is forced to choose, it’s expected to buy the TV stations and drop the newspaper deal” the Post says, citing unnamed sources.

But the FCC could greenlight Apollo to make both investments. “When the private equity company run by Leon Black met with the FCC earlier this week, it told the regulator that the money for the two separate deals were coming out of different funds and serving different investors,” per the Post.

The Third Circuit Court of Appeals ruled in late September that the changes adopted by the FCC in November 2017 – which included abolishing the newspaper-broadcast and TV-radio cross-ownership bans and relaxing several television ownership restrictions – were not adequately justified in the rulemaking process that spanned two administrations. Judge Thomas Ambro said the agency’s analysis that led to the regulatory rollback was “so insubstantial” that it failed to provide to the Philadelphia court a “reliable foundation” supporting the conclusions.