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4 Comm. Law. 1 (1986)

handle is hein.journals/comlaw4 and id is 1 raw text is: 00 immunications Quarterly publication of the Forum Committee on Communications Law American Bar Association Volume 4, Number 1, Winter 1986 Unfriendly Takeovers from the Target Media Company's Perspective BY ARTHUR B. GOODKIND There is little doubt at this time about the status of unfriendly take- over attempts before the FCC. While a Notice of Inquiry pro- posing to set definitive Corn- / mission policy remains out- standing (FCC 85-349), a ma- jority of FCC Commissioners < has already made its position clear: The Commission majori- ty intends to permit proxy con- tests and hostile tender offers in- volving broadcast companies to move forward under time sched- ules no different than would be the case if there were no Communica- tions Act. Apart from other federal and state regulatory constraints, those time schedules will be dic- tated by the parties seeking to ob- tain control. In a series of three radical deci- sions, the FCC has held that it will not let the timing of proxy contests or tender offers be affected by Com- mission processes. Recent Actions of the FCC The Storer case' involved a hostile proxy contest in which a dissident shareholder group sought to re- place Storer's existing Board of Directors with new directors com- mitted to a policy of selling off the company's assets and liquidating the company. Storer protested ve- hemently to the FCC that any such change would be a de facto transfer of control, and that it could not be accomplished without the prior fil- ing and grant of a long-form transfer of control application and full com- for members of the public to partic- ipate in the transfer process. Following an accelerated ex- change of pleadings by the par- \ ties, the FCC rejected Storer's pliance with the procedures speci- fied in Section 309 of the Act. Those procedures require that the Com- mission issue a public notice report- ing the filing of the transfer applica- tion and that parties in interest be afforded a thirty-day period follow- ing issuance of the public notice within which to file petitions to deny the application. Several mi- nority and public citizens' organiza- tions joined Storer in urging this position before the FCC, arguing that a failure to follow procedures required by Section 309 of the Fed- eral Communications Act would ef- fectively eliminate any opportunity 6 6 6 6 position. The Commission ruled that even though a change in the Board of Directors on these facts would be a transfer of control re- quiring prior approval under Section 310(d) of the Act, the transfer would not be a sub- stantial one because ultimate voting power remained with the company's stockholders, most of whom would not change. The Commission con- cluded, therefore, that a modi- fied short-form application could be filed and granted v n- der abbreviated procedures permitted by Section 309(c)(2) (B) of the Act with respect to applications not involving a substantial change in owner- ship or control. Since Storer's annual meet- ing of stockholders was immi- nent, it sought and was granted an expedited hearing before the U.S. Court of Appeals for Continued on page 28 -:~'V: :'. L .., . .. G ,..: - : .

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