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

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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

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