HOBE SOUND, FLA. — Until now, a licensee of radio stations in Upstate New York and the South has seen the involvement of two principal owner-operators and the investment of a Palm Beach County-based private equity and growth-oriented entity “that provides patient capital to exceptional management teams.”
It seems this investment has proven to be a smart one, and puts Jim Leven and Bruce Mittman in a positive light. They have filed paperwork to buy out this equity investor’s stake in their company, Community Broadcasters.
Paperwork has been filed with the FCC that will see Community Broadcasters’ Leven increase his interest in the company to 58%, from 13.9%.
Concurrently, Mittman will substantially increase his stake in Community Broadcasters to 42%, from 3.6%.
The result: Mittman and Leven will have full ownership of the company, as Northwood Ventures and affiliate Northwood Capital Partners LLC are shedding their combined 82.3% interest in the company.
Northwood had 50% voting rights in Community, with Leven and Mittman each holding 25%.
Northwood is controlled by Paul Homer and Jana Homer. And, it played a key role in the founding of Community Broadcasters with acquisition financing in 2006. This financial backing helped Community obtain an AM and two FMs serving the Ogdensburg, N.Y., area, roughly one hour south of Ottawa (with an open Canada-U.S. border). Those stations were expected to be sold for $350,000 in November 2019; the transaction never closed.
The planned sale came some seven months after Community Broadcasters successfully completed its $3.9 million divestment of a group of radio stations in Olean, N.Y., and Corning-Elmira, N.Y., to Seven Mountains Media. Those stations were acquired in May 2013 from Barry Drake-led Backyard Broadcasting for $3.6 million in a deal brokered by Kalil & Co.
Meanwhile, after entering the Fort Walton Beach-Destin, Fla., market in summer 2016 for $5.9 million, Community Broadcasters at the end of 2020 agreed to spin them to JVC Media, the broadcast company doing business as “JVC Broadcasting” led by John Caracciolo. The sale price: $2,268,839.
Some questioned the transaction value at the time of the deal. However, it was not fully made known that Northwood also happens to be a current investor in JVC Media. As such, the deal was, in some aspects, an investor switch.
Today, Community Broadcasters owns radio stations in South Carolina and in Watertown, N.Y.
GRANDFATHER GRANT REQUEST
With Francisco Montero of Fletcher, Heald & Hildreth serving as legal counsel in this transaction, the “LLC Membership Unit Purchase Agreement” was codified on May 7.
What’s the buyout amount? Leven and Mittman paid $2,849,369 to Northwood, liking using the proceeds from the JVC transaction to fuel the transaction. In fact, terms call for Mittman and Leven to hand Northwood all remaining payments in a Consulting Agreement dated Feb. 1, 2021 between Community Broadcasters and JVC Media of Florida, initially equal to $190,000.
While the Northwood buyout is anticipated to go smoothly, it will come with the submission to the Commission of a waiver request. Why?
Of Community Broadcasters’ 24 radio stations, its presence in Market No. 207 — Florence, S.C. — is in need of an explanation. In 2016, when Community Broadcasters entered the market, a change in the stations listed as “home” to Florence was made. The result: Community is over the FCC’s local ownership limits by one station.
With three AMs and four FMs in Florence, Community wants the FCC to grandfather this group of properties. With a waiver, the public interest will be served “by not interrupting Community’s five years of exemplary service to the communities of central South Carolina.” Community, through Montero, stresses that its non-compliance occurred as a result of changes in the definition of the market and not as a result of any purchases by Community of additional stations in the market.”
Should the FCC decline to give Community Broadcasters grandfathered status, what would transpire?
“The alternatives, if this waiver is not granted, would be for Community to sell or donate, or surrender to the FCC the license for one station in the Florence, S.C. market,” Montero says.
That said, “The most likely options and expeditious course of action for Community would be to surrender an AM station license, because the current reality for AM stations in small markets is that there are no buyers and finding a donee qualified to operate a stand-alone AM station is very difficult. A grant of this waiver request, therefore, would serve the public by keeping all of Community’s current stations on-the-air and continuing to serve the local community.”
