Back in March, it came to light that Global Media & Entertainment Investments (GMEI) planned to increase its stake in iHeartMedia (NASDAQ: IHRT) to a maximum of 49.99 percent – an intention that elicited pushback. Now, Global has officially received FCC approval to buy as much as 14.99 percent of the iHeartRadio owner’s equity.
The Federal Communications Commission (FCC) just recently gave the green light to GMEI’s plans to buy up to 14.99 percent of iHeartMedia, in a Media Bureau ruling on a petition that iHeartMedia filed shortly after the aforementioned attempt to purchase 49.99 percent of IHRT shares.
In brief, the multifaceted episode initiated in November of 2020, according to FCC documents, when the government agency’s Media Bureau “specifically approved” the requests of two foreign entities, the PIMCO Group and the Invesco Group, to obtain double-digit iHeart equity and voting stakes.
Nevertheless, iHeartMedia must “obtain Commission approval for any new or additional foreign” investment above five percent equity or voting interests, officials said.
Bearing in mind this stipulation, Bahamas-organized GMEI (formerly Honeycomb Investments Limited) in February submitted to the SEC a Schedule 13D “to report its acquisition of 9,631,329 shares,” which at the time represented 6.6 percent of iHeartMedia’s equity and 8.7 percent of voting rights. The prospective buyer also doubled down on the previously highlighted plans to scoop up as much as 49.99 percent of the company, and the already-executed stock purchase “was not known to iHeart before or at the time it occurred,” higher-ups said.
Notwithstanding some purported behind-the-scenes conversations between iHeartMedia and Global, the former entity asked the FCC to approve an up to 9.99 percent equity purchase (far from the requested 49.99 percent, of course) on the latter business’s end – a “unilateral” decision that “frustrated” Global.
As a pertinent aside, GMEI’s “sole shareholder is the Global Media & Entertainment Investments Trust,” the lone beneficiary of which is businessman Michael Tabor, per the FCC ruling. Michael’s son, Ashley Tabor-King, is the founder and president of Global Media & Entertainment, which owns a number of European radio stations.
Back to the FCC’s ruling, however, November then saw GMEI withdraw its request to buy 49.99 percent of iHeartMedia, instead voicing support for the 14.99 percent ceiling, which the government agency has now approved.
Signing off on the corresponding petition “is in the public interest,” the approval document states, including because it will “enable iHeart greater flexibility to access foreign investment capital” and “potentially encourage reciprocal investment opportunities for U.S. companies in foreign markets.”
The purchasing party can now secure “up to a non-controlling amount not to exceed 14.99%,” the text likewise makes clear – albeit while driving home the requirement for approval when other foreign investors intend to purchase iHeartMedia stakes moving forward.
“We emphasize that iHeart must obtain Commission approval for any new or additional foreign individual, entity, or group of such individuals or entities to hold, directly and/or indirectly, more than 5% (or more than 10% for certain institutional investors) of the equity and/or voting interests, or a controlling interest, in the company,” the relevant section of the declaratory ruling reads.
When the market closed today, iHeartMedia stock (NASDAQ: IHRT, once again) was worth $21.18 per share – a small gain from Friday and a nearly 10 percent boost across the last five trading days. Notwithstanding award shows’ long-running viewership decline, iHeartMedia earlier this month announced a “multi-year exclusive broadcast and streaming agreement” with The CW, which will continue to air the iHeartRadio Music Festival as well as the iHeartRadio Jingle Ball.
