Apollo Global Management’s proposed buyout of a majority stake in Cox Media Group’s radio portfolio isn’t likely to close anytime soon. That’s because the Department of Justice has formally requested the Federal Communications Commission defer any action on the deal that would give the private equity firm a 77% controlling interest in the company. Cox Enterprises would retain a 23% minority stake under the transaction pending at the FCC. Because of its size, the deal will need to go through an antitrust analysis by DOJ attorneys. But the root of the request has to do with Apollo Global’s request to exceed the 25% cap on foreign ownership.
As Inside Radio reported last week, Apollo says in a petition that although the firm’s current foreign ownership is below the 25% threshold, the Delaware-based company is treated as a foreign-controlled entity. That’s because under the Commission’s foreign ownership analysis, the voting interests of its U.S. owners are held through a Cayman Islands entity. So it’s asking the FCC to exceed the 25% cap, arguing Apollo is not only based in the States but Is controlled by three U.S. citizens: Scott Kleinman, John Suydam and David Sambur.
The Media Bureau has at least begun the process of potentially allowing Apollo Global to secure the waiver. It has given anyone opposed until Aug. 12 to file a petition to deny. Comments on such a petition would then need to be turned in by Aug. 22 with a reply to those due by Aug. 29.
But any action beyond that is now unlikely to occur until the federal government completes its inter-agency review. What’s known as Team Telecom is made up of experts from the Departments of Homeland Security, Defense and Justice which analyze any deals with foreign ownership implications. As Lee Licata, an attorney in the DOJ’s National Security Division, wrote in a letter to the FCC, that’s the process Apollo Global is now going through. “The Agencies currently are reviewing this matter for any national security, law enforcement, and public safety issues, but have not yet completed that effort,” he wrote.
How long the federal government’s review will take is anyone’s guess. In some deals the inter-agency review process has delayed a closing by a year or more.
In a $500 million deal announced last month, Apollo seeks to buy 50 radio stations from Cox Media Group across 11 markets including Atlanta, Miami, Houston, Tampa, Jacksonville, San Antonio, Tulsa, and Nassau-Suffolk, NY. The deal also includes Cox’s national TV rep firm CoxReps and Cox’s Washington, D.C. news bureau operations. Apollo previously struck a $3.1 billion deal to buy Cox’s television station group, including the radio-TV-newspaper combination in Dayton, OH. In order to comply with FCC ownership limits, two stations—alternative “97X” WSUN in Tampa and CHR “Power 95.3” WPYO in Orlando—will be placed in the Elliot Evers-run CXR Stations Trust for sale.