By Diane Dalton Warren and Erwin G. Krasnow, Esq.
Broadcast station transactions are often plagued by the following four of Murphy’s Laws: (1) if anything can go wrong, it will; (2) if anything could not possibly go wrong, it will anyway; (3) nothing is as easy as it looks; and (4) it always takes longer than you think. (A battle-scarred veteran of broadcast transactions quipped that Murphy must have been an optimist!) By wisely using information technology, however, transactions can be cost-efficient and transparent for everyone involved in the process. In this article, we will discuss how you can maximize technology to assure that those engaged in the transaction see the right information, communicate in a timely manner and complete the deal with relative ease. While we are unable to guarantee a transaction free of Excedrin headaches, here are some tips that might make the deal-making process go smoothly.
1. Prepare a Who’s Who List
Distribute electronically a list of all of the parties at the outset of the transaction. The list should contain the full names, titles, mail and e-mail addresses, land-line and mobile phone telephone numbers, etc. of the buyer, the seller and their lawyers and brokers. We find it surprising how seldom this information is shared. Also, remember to update the list as necessary.
2. Online Research
Use technology to conduct initial due diligence. Using tools such as Google, LinkedIn, Facebook, the FCC’s database, EDGAR (www.sec.gov/edgar), business sites, etc., do a search of all of the parties involved in the transaction — it’s much more effective to work with folks when you know a bit about their educational background, their employment record and their priorities.
3. Virtual Due Diligence Files
The seller should prepare relevant materials for the buyer in an electronic file format, ideally in an on-line shared file location. Make sure it’s easy to sort through the information and that backup is provided to allow the buyer to review the necessary detail. The buyer will need to access this information in a secure format and be able to use the electronic documents to do its analysis. Consider setting up an electronic or virtual data room (VDR) using a secured website that can only be accessed by a special password. The secured server enables the website to be protected against anyone other than those logging in with the correct usernames and passwords.
4. Be Connected
The entire process will be more efficient if, in addition to an electronic data room, each of the parties to the transaction has 24/7 access to e-mail on a smartphone. Everyone should have the tools to make the exchange of files easy. Both the seller and the buyer should update their software in preparation for the transaction so as to be able to open documents coming from diverse sources. Be sure to have Adobe Acrobat to open PDF files. We recommend that you use the full Acrobat edition because while anyone can open Acrobat files for free with Adobe Acrobat Reader, they cannot edit them without the paid version. Also, before sending large word or other files, verify that they are not too large to be sent from your server or to be received by the recipient’s server.
5. Listen and Watch Online
Be sure to check out online the station that is the target of the transaction. You can tell a lot about a station from its website and the social networking done by members of the station’s staff. The seller can make sure its “pitch” is reflected in the station’s site so the buyer is seeing a consistent message. The buyer should check to see what listeners or viewers are saying and how they are engaging with the station on its website. By using Google Analytics, buyers will be able to find out who is visiting the station’s website. This information can provide insight on the market value of the station and will help determine the type of provisions that need to be included in the asset purchase agreement.
6. Use Photography and Share Photos
Just as you are able to make an online visit of the station you are purchasing, make sure that you maximize the use of photographs and videos for engineering, equipment and facility due diligence. Photos and videos can be shared in e-mails or a cloud-based, photo-sharing website. Sharing allows you to secure expert advice in a much more efficient and cost-saving manner. Also, videos and photos can be displayed in a VDR.
7. Use Technology for Closing the Deal
Take advantage of technology when preparing for and participating in the closing of the transaction. In transactions where the purchase price is sent by wire, send wiring instructions at least ten days in advance and find out the deadline for wires to ensure that they are received on the deadline date. Where possible, use the Internet to obtain closing documents — with a couple of strokes on your computer, you can conduct online lien searches and obtain a wide variety of closing documents, ranging from good standing certificates to business licenses and permits. Consider using electronic signatures for some closing documents: Adobe Acrobat allows for electronic signatures that verify that the sender is the owner of the software. Put together an electronic version of the closing binder in the form of a CD-ROM or a USB thumb drive.
8. Supplement In-Person with Electronic Communication
Use technology both at the start of and after the closing of the transaction to make introductions. Skype and FaceTime enable the seller and the buyer to have face-to-face conversations. In addition to in-person communication, consider using e-mails in advance of the filing of the assignment application with the FCC and shortly after the closing to make introductions to employees, vendors and (perhaps) competitors. The seller might consider using e-mails to explain why it is selling the station and to express confidence in the buyer. The buyer might in turn use e-mails, the station’s website and social media tools to make smooth introductions to advertisers and vendors.
If you use technology effectively, Yhprum’s Law might be an apt way of describing the ease and efficiency of your transaction. Yhprum’s Law is the opposite of Murphy’s Law (Yhprum = Murphy backwards). According to Yhprum’s Law: “Everything that can work, will work.”
Erwin G. Krasnow, the co-chair of the Communications Group of Garvey Schubert Barer, is a former General Counsel of the National Association of Broadcasters and currently serves as Washington counsel to the Media Financial Management Association. He has been described as “a dean of the Washington communications bar” by the Legal Times and as a “superlawyer of communications” by American Film magazine. He can be reached at [email protected] and (202) 298-2161.
Diane Dalton Warren manages broadcast deals in her capacity as MMTC’s Media Broker and Broadcast Consultant. In 2009, she founded www.BounceOLOGY.com , a project consultant firm that helps broadcast, technology and non-profit clients capitalize on opportunities. In 1996, she founded RadioAE.com, the first on-line subscription interactive website for sellers of radio stations. After Clear Channel bought this company in 1998, she ran CC’s corporate marketing and communication’s operation for 10 years, including the launch of its intranet (CCRC) and international branding. Diane has overseen operations for the HD Digital Radio Alliance (www.HDRadio.com) and works on the marketing and launch of ZoneCasting, a new technology providing a local advertising strategy for radio. Diane has been named as one of the “Most Influential Women in Radio” in 2009, 2010, 2011 and 2012.
