Lenders Make Pitch to FCC to Loosen Media Ownership Rules

At a January 12 Federal Communications Commission media ownership workshop, lenders urged the FCC to loosen media ownership rules, saying that it was just about the only way to make broadcasters more attractive to the capital they will need to be competitive in the marketplace. Lenders on the panel point to the "perfect storm" of a down economy that hammered overleveraged broadcasters and Internet competition that continues to drain advertising dollars away from the sector. James Cotter, head of M&A at Sun Trust Bank, said that while the financial sector used to lend on double-digit multiples to an industry with strong cash flow and the insurance policy of a recoverable "stick" value in the broadcast license, the multiple is down to between zero and four. He said the FCC needed to consider letting broadcasters combine in new ways to figure out a business model that will draw investment back to the sector. He said the explosion of digital media means the public policy threat of concentration of ownership or monopolization of voices is greatly diminished. The bigger threat to a healthy media, he suggested, is just the opposite, the availability of free material that threatens the business model.