Preparing for a sale or merger of stations/networks

[tall_guy1]

This relates to both radio and TV. Do station owners ever communicate with the people they sell to once a deal is approved on what to do before a sale commences, or is it "business as usual." I know over on the TV side Paramount is selling to Skydance, and radio has had many things happen too. Do the old managers do things before the sale to "ready up" things for the new management?

 

[davideduardo]

This relates to both radio and TV. Do station owners ever communicate with the people they sell to once a deal is approved on what to do before a sale commences, or is it "business as usual." I know over on the TV side Paramount is selling to Skydance, and radio has had many things happen too. Do the old managers do things before the sale to "ready up" things for the new management?

There are legal limitations on how much a non-owner, even if the future buyer, can do while the current licensee still owns a station.

This is why, often, owners of stations that are contracted for a sale, enter into an LMA which is essentially a type of lease of the station to a third party so they can operate it while the FCC review of the sale is being done. However, an LMA with a licensed station requires that the licensee continue to be "in control" of its license.

In general, a seller has to be very sure of the buyer's ability to close before handing over the station, particularly if a change in format or staff is involved.

In other types of business where the operation is not mostly valued based on a government license, the buyer might be allowed to integrate itself into the operation of the seller's enterprise, maybe even totally. You mention Skydance and Paramount, which are not predominantly FCC regulated so they can "do whatever they want" within the scope of their agreements.

In radio and TV, each transaction is different, but highly regulated as to who has control over the content and compliance issues. It's not like what might happen if you and I make a deal to buy the coffee shop down at the shopping center when we want to start hanging out there every day to get a feel for the staff and customers and, maybe, start ordering supplies or new stools or the like.

 

[tall_guy1]

There are legal limitations on how much a non-owner, even if the future buyer, can do while the current licensee still owns a station.

This is why, often, owners of stations that are contracted for a sale, enter into an LMA which is essentially a type of lease of the station to a third party so they can operate it while the FCC review of the sale is being done. However, an LMA with a licensed station requires that the licensee continue to be "in control" of its license.

In general, a seller has to be very sure of the buyer's ability to close before handing over the station, particularly if a change in format or staff is involved.

In other types of business where the operation is not mostly valued based on a government license, the buyer might be allowed to integrate itself into the operation of the seller's enterprise, maybe even totally. You mention Skydance and Paramount, which are not predominantly FCC regulated so they can "do whatever they want" within the scope of their agreements.

In radio and TV, each transaction is different, but highly regulated as to who has control over the content and compliance issues. It's not like what might happen if you and I make a deal to buy the coffee shop down at the shopping center when we want to start hanging out there every day to get a feel for the staff and customers and, maybe, start ordering supplies or new stools or the like.

Do LMAs happen much? Also, I remember on TV, TBS and TNT "rebranded" before they were sold to AT&T in 2018 (the sale happened in 2016 and closed then.) Did that have anything to do with it?

 

[Kelly A]

Do LMAs happen much? Also, I remember on TV, TBS and TNT "rebranded" before they were sold to AT&T in 2018 (the sale happened in 2016 and closed then.) Did that have anything to do with it?

LMA's are for call letter TV stations being run and advertising sold by another station or business. The licensee still has responsibility for meeting FCC rules.
Cable networks like TNT or TBS are not licensed by the FCC, so there is no LMA of cable networks.

 

[tall_guy1]

LMA's are for call letter TV stations being run and advertising sold by another station or business. The licensee still has responsibility for meeting FCC rules.
Cable networks like TNT or TBS are not licensed by the FCC, so there is no LMA of cable networks.

I was asking two separate questions. What rights does the licensee have? What I meant in my original question was the pending sale of TBS/TNT if it relates to any kind of change of operations beforehand.

 

[davideduardo]

I was asking two separate questions. What rights does the licensee have? What I meant in my original question was the pending sale of TBS/TNT if it relates to any kind of change of operations beforehand.

With private non-regulated companies, the answer is "whatever the buyer and seller agree on". That's why we have lawyers and contracts and dialogue.

 

[tall_guy1]

With private non-regulated companies, the answer is "whatever the buyer and seller agree on". That's why we have lawyers and contracts and dialogue.

There have been changes over at Time Warner/Warnermedia/WBD which happened after the sales closed. Is there any sense of how the buyers/sellers did things in preparation (Disney and Fox, too.)?

 

[Kelly A]

I was asking two separate questions. What rights does the licensee have? What I meant in my original question was the pending sale of TBS/TNT if it relates to any kind of change of operations beforehand.

Again, TBS and TNT are not licensed nor regulated by the FCC, so the an LMA would not apply. TBS and TNT are cable networks.
As David said; whatever the two organizations want to do and when within business rules in their states apply.

 

[tall_guy1]

Again, TBS and TNT are not licensed nor regulated by the FCC, so the an LMA would not apply. TBS and TNT are cable networks.
As David said; whatever the two organizations want to do and when within business rules in their states apply.

Alright, so it is unknown those properties what goes on. What about stations that are regulated like broadcast stations on TV or radio? Does any agreement allow the new management any kind of say what goes on?

 

[Kelly A]

Alright, so it is unknown those properties what goes on. What about stations that are regulated like broadcast stations on TV or radio? Does any agreement allow the new management any kind of say what goes on?

For call letter TV stations, LMA's have pretty much fallen out of favor because over time a few pushed the limits and got caught running the station as a licensee would.
When the company I worked for was involved in a couple LMA's, the licensee was in serious financial distress so they did an LMA with our company.
We took on all payroll, moving all but two of the station employees over to our payroll. One employee was considered the station General Manager, and the other was the Chief Engineer that remained on the licensee payroll. We sold all the inventory and ran the news department, paying the licensee a lease amount which was a percentage of gross revenue for the stations. The GM and CE was responsible with staying withing the rules, including maintaining OTA transmission. An LMA must be approved by the Commission before anything can be changed. Again, this relates to licensed call letter FCC regulated stations, not cable networks.

 

[boiseengineer]

I've seen "business as usual" evolve to a gutting of staff a few times

Also seen a format & personnel in place months before the legal transfer is done without any LMA. Broadcasting from the new owners studios.