Groups Petition DOJ to Block Any Liberty-iHeartMedia Deal

[Y2kTheNewOldies]

https://news.****************/cgi-bin/rol.exe/headline_id=b16213

Yes this comes at a time when Iheart is facing furloughs and cuts. Also how much media concentration Liberty Media inc has is a concern here in the letter.

Amid reports that the Department of Justice approve the potential acquisition of iHeartMedia by Liberty Media, artist rights and consumer groups have written a letter to the Department of Juctice, along with the U.S. House and Senate Judiciary Committees opposing any deal. The American Economic Liberties Project, the Artist Rights Alliance, the Center for Digital Democracy, the Institute for Local Self-Reliance, the Open Markets Institute and Public Citizen claim that with Liberty's current holdings -- SiriusXM, Pandora and major stake in Ticketmaster-LiveNation -- the company has "too much control over the music ecosystem."

The Center for Journalism and Liberty at the Open Markets Institute is also calling on the DOJ to deny any large-scale deal between Liberty and iHeartMedia. It claims that any such deal would harm American journalism by further concentrating power in local radio markets nationwide, reducing the outlets for news as well as artists, and such a deal would threaten local businesses with higher advertising rates.

 

[TheBigA]

The only problem is there is no Liberty iHeart deal. Seems very strange to send all these letters opposing something that doesn't exist.

 

[PTBoardOp94]

Agree. Sure, write them and have them ready, but filing them pre-emptively seems like the epitome of tilting at windmills.

 

[TheBigA]

Agree. Sure, write them and have them ready, but filing them pre-emptively seems like the epitome of tilting at windmills.

Especially since John Malone is not a stupid guy. He already knows that this would have a tough time passing regulatory hurdles without significant changes. I was surprised there wasn't much opposition to them buying Pandora. They'll likely include some spin-offs before making any offer. Or really, they don't have to BUY iHeart. Just do what some of these activist investors have done. No change in ownership at all, so no regulatory involvement, other than reporting it to the SEC.

The other thing, if you read the letters, is they're making up stuff. Such as "fewer outlets for news." iHeart owns ONE news station. So that's crazy. They say it will result in less outlets for new music. Anyone who follows iHeart knows that they have the most aggressive new artist launch pad among all of the radio owners, and coupling them with Pandora will mean a larger platform for new artists. Just a couple of examples.

 

[umfan]

https://www.billboard.com/articles/...dia-iheartmedia-ownership-doj-music-companies

Apparently the DOJ sees that there is a deal or potential for a deal, and they are asking tough questions.

 

[TheBigA]

Apparently the DOJ sees that there is a deal or potential for a deal, and they are asking tough questions.

That's their job. But a lot of the premises mentioned in this article are either speculative or false. For example:

Merger opponents fear the resulting broadcast powerhouse might streamline the airwaves, cutting costs by reducing playlists to established hits and syndicating content -- just as Clear Channel Communications did in the late 1990s

The size of a playlist has nothing to do with "cutting costs." Radio stations pay the same price regardless of the size of the playlist. So that's a fake fear. The fact is that iHeart and Pandora each have the most aggressive systems for drawing attention to new songs and new music. If the two were combined, it would bring MORE attention, not less, to new music and new artists.

Here's another example:

LaPolt, the music-business attorney, accused Maffei in 2018 of paying lobbyists to kill the Music Modernization Act, which expanded copyright protection for songwriters and artists;

Maffei's objection to the MMA was that it didn't include a performance royalty for AM/FM radio. That would have benefited artists and record labels. So once again, a fake fear. The reason broadcasters should be concerned is that Maffei might use his ownership of iHeart to continue his push for this royalty, which will benefit artists and labels, and hurt broadcasters.

Of all the companies mentioned, the most problematic is Ticketmaster. That company clearly is a monopoly. Something needs to be done about that. But it has nothing to do with iHeart or broadcast radio. The article also assumes Liberty retains ownership in any of the companies mentioned, and that is a fake assumption. Throughout his career, John Malone has bought and sold companies like bagels. No emotional attachment. So a lot of things could change before he actually buys iHeart.

 

[umfan]

Either way, there apparently has been some application for a deal, contrary to what you wrote earlier in this thread, so the DOJ is looking into it. Yes, it is their job, and they may very well find grounds to object to the deal.

Further, the concentration of so much ownership is contrary to antitrust law. It would be appropriate to block the deal on that basis. iHeart's platform does represent an alternative to the streaming platforms owned by Liberty Media. Placing them in the same hands would provide less leverage to content creators and could impact ad rates as well.

In point of fact, your arguments against the points laid out in the article are themselves speculative.

 

[TheBigA]

Either way, there apparently has been some application for a deal, contrary to what you wrote

Where do you see that? It's a completely speculative article. No one says they spoke to the DOJ, and the DOJ didn't comment. So I have no reason to believe the DOJ is even involved at this point. All I see are a bunch of music industry analysts. Based on that, there is no deal, and there is no "application for a deal," whatever that is.

 

[umfan]

The article noted DOJ is investigating the tie-up. Why would they do so absent an application for a deal?

 

[TheBigA]

The article noted DOJ is investigating the tie-up. Why would they do so absent an application for a deal?

The OP says very clearly that a group sent a petition to the DOJ. That's it. But the petition isn't based on any deal or any application for a deal. It's based on rumor. Both Liberty and iHeart are public companies. Show me where either have filed any applications.

 

[umfan]

Big A Wrote: "The OP says very clearly that a group sent a petition to the DOJ. That's it. But the petition isn't based on any deal or any application for a deal. It's based on rumor. Both Liberty and iHeart are public companies. Show me where either have filed any applications. "

https://www.thestreet.com/investing...enge-liberty-media-acquisition-of-iheartmedia

"The U.S. Department of Justice may challenge Liberty Media's attempt to acquire iHeartMedia"

"Liberty owns a 4.8% stake in iHeartMedia through Liberty SiriusXM Group and the transaction under consideration could give it control or outright ownership of the broadcaster."

Even if a formal application had not been filed, clearly the DOJ was asked, likely by either iHeart or Liberty to review the antitrust impact of such a deal. A course of action such as this clearly means a deal is being considered. If you don't think so, you are simply being obtuse. An FCC application would likely come only after the parties had determined that they'd be likely to reach agreement on financial aspects of the deal and that other complications, like antitrust or foreign ownership considerations had been addressed. You incorrectly assert that the absence of an FCC application means there is no tie up in the works. All of the evidence points convincingly to the contrary.

 

[TheBigA]

You incorrectly assert that the absence of an FCC application means there is no tie up in the works. All of the evidence points convincingly to the contrary.

Where did I say that? All I did was ask for you to show me where there is a deal or "application for a deal." You still haven't done that.

Is Liberty looking at iHeart? I believe they are. I said that in the thread about iHeart's foreign ownership waiver application. I compared that to a similar application made by Pandora. So I'm aware of the interest. But as I said, John Malone is no idiot. He's not going to do something that will lead to a long legal fight.

Back in 2018, there were stories that this very same DOJ was going to object to Liberty's purchase of Pandora:

http://www.insideradio.com/free/sir...cle_154b7d0c-ec94-11e8-95f9-0f2da326c6a7.html

The DOJ investigated, and the purchase was approved. That's a tribute to John Malone's research and planning. Perhaps the exact same thing is happening now. The fact is that Liberty can legally continue to enlarge its stake in iHeart without actually taking controlling interest. They've done that with other companies before. They know how to play the game. Let me know when you see something official.

 

[umfan]

Where did I say that? All I did was ask for you to show me where there is a deal or "application for a deal." You still haven't done that.

Umm, pretty sure all of the links I provided clearly demonstrate that. You specifically asserted the absence of an application meant there was no deal and that is in no way accurate.

 

[Kelly A]

Umm, pretty sure all of the links I provided clearly demonstrate that. You specifically asserted the absence of an application meant there was no deal and that is in no way accurate.

Organizations can reach an informal deal in principal only. That could include a Letter of Intent. Depending on the structure(s); could be Boards, Lenders, Lawyers, etc., nothing is official until all the forms are submitted and approved by the various regulatory agencies. Depending on those findings and approvals, any deal in principal could go completely sideways from what was originally negotiated.

 

[TheBigA]

Umm, pretty sure all of the links I provided clearly demonstrate that. You specifically asserted the absence of an application meant there was no deal and that is in no way accurate.

If there's nothing in writing, there is no deal. All I see now is a RUMOR of a deal. The DOJ can investigate a rumor. But it would be a secret, and some might consider that improper, as they do now. The article in the OP refers to "press reports." Some music groups sent a petition to the DOJ based on "press reports." That may be enough to tweak the DOJ and have them open a file. But until someone puts something in writing, there is no deal. Maybe in your world there is. But right now all we have are rumors.

In the meantime, two weeks ago, Saudi Arabia's investment firm bought a 5% stake in Live Nation, which is also partly owned by Liberty.

https://www.latimes.com/entertainme...-of-saudi-arabia-takes-5-stake-in-live-nation

That's about the same size as the investment Liberty has in iHeart. Is foreign ownership a problem? Maybe. The CEO of Live Nation was asked about it, and he says he doesn't control who buys his stock. The Saudis are friends of the current administration. Having them involved may complicate this situation. We'll see. But if I was in the music industry, I'd also take a look at this situation.

 

[umfan]

Note the following, "An affiliate of John Malone’s Liberty Media Corp. is seeking Justice Department permission to buy a larger piece of iHeartMedia Inc., according to people familiar with the matter, a deal that would put the nation’s largest radio broadcaster under the same corporate umbrella as the leading concert promoter and satellite-radio giant SiriusXM"

https://www.wsj.com/articles/libert...-to-increase-stake-in-iheartmedia-11576186062

It's obvious to anyone with any sense that Liberty is clearly interested in acquiring a significantly higher stake in iHeart and is seeking the impact of regulatory thoughts on the matter in order to determine if it will make an offer. I didn't write there was a deal only that Liberty clearly was working towards a deal.

https://www.latimes.com/entertainmen...in-live-nation

That's about the same size as the investment Liberty has in iHeart. Is foreign ownership a problem? Maybe. The CEO of Live Nation was asked about it, and he says he doesn't control who buys his stock. The Saudis are friends of the current administration. Having them involved may complicate this situation. We'll see. But if I was in the music industry, I'd also take a look at this situation.

This is completely pointless. That level of investment is below the threshold where regulators need to approve. It's the fact that Liberty wants to INCREASE it's stake above the level requiring such a blessing that is leading to this discussion.

So to recap, in the most basic terms possible since that apparently is a requirement of any dialogue with you:

--Liberty has a clear interest in owning, either outright or via a controlling stake, iHeart
--Liberty knows it must get regulatory blessing to do this
--As part of determining if it will make an offer, and how to price the offer, it has asked the DOJ for a determination, something it would only do if it intended to make an offer, which is a step in the process to getting a deal
--DOJ has undertaken the review

I am asserting nothing different than the above.

 

[TheBigA]

I am asserting nothing different than the above.

Not true. Here's what you said earlier in this thread:

Apparently the DOJ sees that there is a deal or potential for a deal, and they are asking tough questions.

You kept talking about an "application for a deal." We know of no such thing. This quote makes it sound as though the DOJ initiated the investigation. Now you say Liberty has "ASKED for a determination." Two different things. BTW we have no factual information that they asked for a determination, other than what we see in "media reports" or "people familiar with the matter." We have no way of knowing who those people are, if they represent DOJ, Liberty, iHeart, or a combination. But as I've said, I'm aware of the interest, otherwise why would the company have bought the 5% share several months ago? And I mentioned it in another thread about foreign investment.

 

[umfan]

Why would DOJ be looking into this, supported by the multiple links I have shared, as far back as December, if they didn't believe there was a basis for a merger or investment? DOJ doesn't just look into things if they might happen.

 

[TheBigA]

Why would DOJ be looking into this, supported by the multiple links I have shared, as far back as December, if they didn't believe there was a basis for a merger or investment? DOJ doesn't just look into things if they might happen.

Sure they do. That's a completely different discussion.

But the two reasons I can see in the articles linked in this thread are: #1: They received a petition from some music industry groups, and #2: Liberty ASKED them for a determination. nothing ominous about either of those things. Neither of them mean there is a deal or an application for a deal. Many things can happen at this point. Malone could sell Pandora to a Chinese company or sell the rest of Live Nation to the Saudis. Either of those might eliminate any possible DOJ objections. After that, they would begin the formal process of making the deal. Or given the current economy, and the collapse of advertising in iHeart's business, Liberty could simply walk away, sell their shares, and move on. No harm, no foul, no obligation.

 

[TheBigA]

The DOJ approves Liberty Media owning up to 50% of iHeart Media:

https://news.****************/cgi-bin/rol.exe/headline_id=n39097