September 2012

Crown Castle and T-Mobile USA Announce $2.4 Billion Tower Transaction

Crown Castle will acquire rights to approximately 7,200 T-Mobile towers for $2.4 billion in cash at closing (subject to certain adjustments).

Under the definitive agreements, Crown Castle will have the exclusive right to lease and operate the T-Mobile towers for a weighted average term of approximately 28 years. In addition, Crown Castle will have the option to purchase such towers at the end of the respective lease terms for aggregate option payments of approximately $2.4 billion, which payments, if exercised would be primarily between 2025 and 2048. The transaction is expected to close in fourth quarter 2012. Deutsche Telekom will use the proceeds from the transaction to retire corporate debt and strengthen its financial position to provide for funding of growth investments, including T-Mobile’s Challenger strategy. Following the contemplated transaction, Crown Castle will continue to be the largest wireless infrastructure operator in the US with approximately 30,000 towers and extensive small cell operations in over 50 markets. T-Mobile’s nationwide network remains unchanged today, consisting of approximately 51,000 cell sites, the vast majority of which are leased from third parties, as is common in the industry across the US. Crown Castle estimates the T-Mobile towers will produce approximately $125 million to $130 million in adjusted funds from operations (“AFFO”) before financing costs in 2013, and have sufficient capacity to accommodate at least one additional tenant per tower without significant incremental capital. T-Mobile has committed to maintain its communications facilities on the towers from Crown Castle for a minimum of 10 years with annual rent escalation provisions tied to the consumer price index. Further, T-Mobile’s rent includes the rights, subject to certain limitations, to complete its current network modernization on these sites.

Comcast Gives FTTH a Shot

Comcast is using the fiber-to-the-home (FTTH) capabilities of its Metro Ethernet platform to power a new residential broadband service with a maximum downstream speed of 305 Mbit/s and a potential 65 Mbit/s upstream. The cable operator is using Docsis 3.0 technology for its widely deployed 105Mbit/s (downstream) high-speed Internet residential service, and has even demonstrated how that service could ultimately achieve speeds of more than 1 Gbit/s on live cable plant. Despite that potential, Comcast is keeping Docsis 3.0 on the sidelines for its newest, fastest residential broadband tier, called Extreme 305, which is being offered in several major markets in the Northeastern U.S., including Boston, Philadelphia, Baltimore and Washington (DC).

Maine's 1,100 Mile Three Ring Binder high-speed Internet Network is Complete

Maine state, congressional, business and community leaders gathered in Brunswick to celebrate the ahead-of-schedule, on budget completion of Maine Fiber Company's 1,100 mile fiber optic network highlighting the economic benefits already being felt and the tremendous economic development potential going forward.

"Maine's Three Ring Binder network is complete and open for business," said Maine Fiber Company CEO Dwight Allison. "As of today, any qualified company that wants access to fiber optic infrastructure to expand true high-speed Internet service to consumers and businesses across Maine can get access to fiber at affordable, non-discriminatory rates. That is good news for Maine's economy and we are here today to say thank you to all of our state and congressional leaders, to the leaders at the U.S. Department of Commerce and the NTIA, and to our local business partners. This day would not have been possible without support from all of the people who saw the economic development potential of this network."

The Murdochs’ scandal-plagued media company has proved surprisingly resilient

“The most humble day of my life,” is how Rupert Murdoch, the boss of News Corporation, described his experience being excoriated by British parliamentarians in July 2011. Accusations of phone hacking, police bribery and negligence involving Murdoch’s News of the World (which he had just shut down) were so grave that it seemed News Corp’s share price would be humbled too. Some even predicted the media group’s implosion. However, to the surprise of skeptics and supporters alike, News Corp is flying high again. Its share price has climbed by 53% in the past year to nearly $25, a peak not reached since 2007, before the financial crisis. The firm continues to face police probes and civil lawsuits. More than 80 people have been arrested in connection with phone hacking, including Rebekah Brooks, a former boss of News International, its British newspaper division, who appeared in a London court on September 26th on conspiracy charges. Yet investors are more excited than anxious.

Universal Closes on EMI Deal, Becoming, by Far, Biggest of Remaining Big Three

The Universal Music Group closed on its $1.9 billion acquisition of EMI Music, a week after receiving regulatory clearance in Europe and the United States and more than 10 months after it first made the deal with Citigroup. As a condition of approval, Universal will be forced to sell off about a third of EMI’s assets to other music companies. Even so, it will be the largest, by far, of the three remaining major record companies, with a global market share of about 36 percent.

With more control over campaign cash, Obama gets more discounts on advertising

As the presidential campaigns step up the pace of their multimillion-dollar spending sprees, President Barack Obama has a little-noticed strategic advantage that gives him more control over the money he has raised.

While Mitt Romney relies heavily on massive amounts of cash held by the Republican Party and interest groups, President Obama has more funds in his own campaign coffers. That allows him to make decisions about where and how to spend the money and to take better advantage of discounted ad rates, which candidates receive under federal law. In one Ohio ad buy slated to run just before the election, for example, President Obama is paying $125 for a spot that is costing a conservative super PAC $900. The imbalance could prove crucial over the next six weeks, when the candidates and their allies are expected to burn through about $1 billion worth of advertising in battleground states and deploy thousands of staffers and volunteers to drum up votes. With $1.5 billion already spent on the White House race, the final barrage will help determine whether Romney can turn around his fortunes and defeat the incumbent.

FCC Political Ad Rules Call for Balancing Act

[Commentary] This political season, the biggest legal and practical issue for many stations so far has been the need to accommodate competing demands for air time from everyone from bona fide candidates to Super PACs to regular commercial advertisers. Staying out of hot water at the Federal Communications Commission involves knowing the rules and balancing those demands.

Political Ads Now Filling the Air in Roanoke

Like a lot of other swing state markets, Roanoke (VA) is enjoying a windfall in political advertising this election season, even as viewers complain about the incessant spots. Jeffrey Marks, GM of CBS affiliate WDBJ, says the market is now expecting to get more than double the $5 million originally forecast from the presidential contest alone.

First and foremost, stations must assure adequate inventory to accommodate federal candidates’ unique right to reasonable access to air time prior to the election.
Stations have much more flexibility with state and local candidate ads.
Also problematic now is the proliferation of political ads that contain false statements, and whether stations can be held responsible for them.

Apple's Cook handling of 'mapgate' better than Jobs' 'antennagate'?

Apple CEO Tim Cook admitted that the company's new Maps app is flawed and actually suggested people turn to alternatives until the software improves.

Naturally, this brings back memories of one of the great public relations failures of the Steve Jobs' era: the iPhone 4 "antennagate." Unlike Cook, Jobs never actually apologized for the antenna flaw. Rather, the letter was signed by the company, not Jobs, and in it, the company blamed the poor reception on software, said the issue is one that plagues many other phones and never once said sorry.

FCC Won't Close Proceeding on Joint Sales Agreements Attribution

The Federal Communications Commission has decided not to terminate its open proceeding on television station joint sales agreements and the FCC's attribution rules. The FCC said that "further action may be necessary," it decided not to close the proceeding "at this time." A number of critics of coordinated retransmission negotiations, including the American Cable Association, have complained that the joint agreements are a way to skirt the FCC's local market ownership limits. The FCC also decided -- on second thought and after comment from the Benton Foundation, Free Press, United Church of Christ and others – not to close a proceeding on whether broadcasters should provide clearer notice of their proposals to sell stations.

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