Foreign Radio Investors Gain FCC Attention

 The FCC has taken action to curb the influence of an investor who caused Cumulus Media some apprehension regarding a potential hostile takeover. Manoj Bhargava, the founder of 5-hour Energy drink, has been making waves in the media industry with a series of strategic moves. Let’s delve into the details:

Cumulus Media Stake: Through his company Renew Group Private Ltd., Bhargava acquired 829,618 shares (equivalent to 5.15%) of Cumulus Media in July. This move significantly increased his interest in Cumulus, which had previously been around 5%. Bhargava’s intentions extend further, with plans to raise his ownership to 20%.

Audacy Debt Acquisition: In addition to Cumulus, Bhargava’s Renew Group also acquired $60 million of first-lien Term B debt of Audacy.

Bridge Media Networks and The Arena Group Merger: Bhargava’s Bridge Media Networks announced a merger with The Arena Group Holdings, Inc.. This merger will grant Bridge Media Networks a 66% stake in The Arena Group, which owns brands such as Sports Illustrated, TheStreet, Parade Media, and Men’s Journal. The deal encompasses a diverse portfolio, including stakes in print and online media, television and radio broadcast, production, distribution, and digital advertising delivery1.

Other Ventures: Bhargava’s media interests extend beyond radio and print. His endeavors include: Two national TV networks: SportsNews Highlights and NEWSnet (distributed over-the-air, streaming, and cable). Over 50 over-the-air television stations, along with independent affiliates and streaming outlets.

Bhargava’s strategic moves have caught the industry’s attention and the attention of the FCC. 

FCC’s Decision: Cumulus sought specific approval from the FCC for foreign investors to hold more than 5% of the equity and/or voting interests in the company.

The FCC granted this request with conditions: Suspension of Voting Rights: The FCC has suspended all voting rights of more than 5% of Cumulus’s outstanding voting stock by Renew Group Private Limited, IR Investments, LP, the IR Charitable Trust, and Indu Rawat, or any of their affiliates.

Restrictions on Actions: Until the FCC releases a declaratory ruling granting specific approval, Renew Investors cannot:

• Designate or serve as board members.
• Attend board meetings.
• Receive non-public materials.
• Influence day-to-day management or operations.
• Veto decisions to buy or sell radio stations.
• Be officers, directors, employees, or consultants of Cumulus.

Cumulus’s Defensive Measures:

To deter hostile takeovers, Cumulus earlier this adopted a “Poison Pill” maneuver. This plan penalizes any person or group acquiring 15% or more of the company’s Class A common stock without board approval. The rights plan includes provisions for issuance, exercisability, and potential consequences for acquiring persons. It will expire on February 20, 2025, unless redeemed or exchanged earlier.