Before the Federal Communications Commission Washington, D.C
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Before the Federal Communications Commission Washington, D.C. 20554 In re Applications of Lead File No. 0000138519 Alpha Media Licensee LLC Debtor in Lead Call Sign: KAAN Possession for Assignment of Authorization to Alpha Media Licensee LLC Lead File No: 0000138678 Lead Call Sign: KHAR -and- In re Applications of Lead File No. 0000138727 Lead Call Sign: KATE Alpha 3E Licensee LLC Debtor in Possession for Assignment of Authorization to Alpha 3E Lead File No: 0000138774 Licensee LLC Lead Call Sign: KFOR To: Office of the Secretary Attn: Audio Division, Media Bureau PETITION TO DENY ON BEHALF OF LAWRENCE R. WILSON Mark J. Prak Patrick Cross BROOKS, PIERCE, MCLENDON, HUMPHREY & LEONARD, L.L.P. Wells Fargo Capitol Center, Suite 1700 Raleigh, N.C. 27601 Telephone: (919) 839-0300 Facsimile: (919) 839-0304 [email protected] [email protected] Counsel for Petitioner April 14, 2021 SUMMARY Petitioner Lawrence R. Wilson is a minority shareholder of Alpha Media Holdings, LLC (“Alpha”), the parent company of the two assignors/applicants listed in the above-captioned applications. Petitioner founded Alpha’s predecessor company, Alpha Broadcasting, and served as its Chief Executive Officer and as a member and Chairman of Alpha’s Board of Directors until several years ago. The present case involves two private equity funds usurping control of a privately held broadcast licensee from its Board of Directors, running the company into the ground by attempting to cut costs to achieve profitability, and then promoting a prepackaged bankruptcy plan that would erase the obligations owed to secured and unsecured creditors and minority stockholders, while advantaging management and the private equity funds, and swapping out minority stockholders who are domestic U.S. citizens all in favor of proposed foreign-owned lenders and stockholders. This plan is an affront to the Communications Act of 1934, as amended, and to the FCC’s right to expect candor and forthright behavior from its broadcast licensees. Mr. Wilson’s status within the company has provided him with unique insight into the various legal violations and derogations of duty Alpha has committed over the past several years, including: (1) making false certifications on multiple FCC applications; (2) purporting to adopt changes to Alpha’s governing documents in a post-hoc effort to cover up past misdeeds and to remove nearly all duties owed by Alpha’s directors to the company and its shareholders; (3) transferring control of fundamental aspects of Alpha’s business operations to various persons and entities without the requisite Board authorization to effect such transfers, and, most recently, further delegating substantial control of the company to a “Special Independent Committee,” all - i - without publicly disclosing such transfers of control to the FCC and requesting prior Commission approval of such transfers of control; and, finally, (4) pursuing a foreign ownership structure set out in the above-captioned applications with the purpose and intent to freeze the current Alpha domestic shareholders out of the company and for the sole benefit of Alpha management, private equity investors, and foreign entities. Many of these actions by Alpha officers and directors involve misrepresentations and demonstrations of a lack of candor to the Commission. All of these facts reveal fundamental character defects that call into question the applicant’s qualifications as a broadcast licensee—and, concomitantly, the applicant’s ability to satisfy its mandate to serve the public interest. Although the FCC is not the guarantor of its privately held licensees’ corporate governance compliance, where, as here, a licensee violates fundamental principles of corporate governance and its own governing documents—and where such violations result in the licensee making false statements and transferring de facto control of the licensee without seeking prior FCC approval—the Commission must act to ensure that the recalcitrant licensee possesses the requisite character to continue to serve the public interest as a broadcast licensee. This crucial FCC oversight role takes on heightened importance when the licensee is a private company such as Alpha, given that typical governmental oversight for corporate misdeeds committed by publicly traded companies overseen by the Securities and Exchange Commission are unavailable to safeguard the public interest here. In undersigned counsel’s more than 40 years of practice before the Commission, we have never encountered such: (1) blatant, unlawful self-dealing by directors of a privately held licensee; (2) flippant false certifications to the FCC; and (3) unauthorized transfers of control. - ii - There is more than smoke presented here. Alpha is on fire as a result of the facts and misdeeds set forth in this Petition. Petitioner therefore respectfully requests that the Commission deny the above-captioned applications or, in the alternative, designate the applications for a hearing on the issues specified in this Petition. - iii - TABLE OF CONTENTS I. Background ........................................................................................................................ 4 II. Alpha Falsely Certified that Its Representative Was “Authorized” and that the Information in Its Prior Applications was True and Correct, Did So With Knowledge that the Information Was False, and Therefore Made Misrepresentations to and Lacked Candor with the Commission ................................... 14 III. Alpha Has Undergone Multiple Unauthorized Transfers of Control, Including Through Unilateral Actions by Board Members Strauss and Mansour, Through the Delegation of Significant Power and Authority to Two Members of a “Special Independent Committee,” And Likely Through the Actions of ICG............................... 18 IV. Alpha’s Foreign Ownership Structure Must Be Viewed Against Alpha’s History of Legal Violations and Dereliction of Corporate Governance Obligation, and is Therefore Unnecessary and Does Nothing More than Line the Pockets of the Select Few Who Are Running Alpha’s Restructuring for Their Own Benefit ................ 21 CONCLUSION ............................................................................................................................ 26 Before the Federal Communications Commission Washington, D.C. 20554 In re Applications of Lead File No. 0000138519 Alpha Media Licensee LLC Debtor in Lead Call Sign: KAAN Possession for Assignment of Authorization to Alpha Media Licensee LLC Lead File No: 0000138678 Lead Call Sign: KHAR -and- In re Applications of Lead File No. 0000138727 Lead Call Sign: KATE Alpha 3E Licensee LLC Debtor in Possession for Assignment of Authorization to Alpha 3E Lead File No: 0000138774 Licensee LLC Lead Call Sign: KFOR PETITION TO DENY Lawrence R. Wilson, currently one of the minority shareholders (the “Minority Shareholders”)1 of Alpha Media Holdings LLC, by his attorneys and pursuant to Rule Sections 1.939 and 73.3584, files this Petition to Deny the various above-captioned applications2 of Alpha 1 Although Mr. Wilson is the named Petitioner, this Petition seeks to safeguard the interests of all of Alpha’s Minority Shareholders, many of whom invested in Alpha on the belief that it would be managed in the same, legally compliant manner as Mr. Wilson’s prior radio broadcast companies. In particular, Petitioner has communicated with each of the following Minority Shareholders, who have indicated their support for this Petition: Steve Cody Bertholf (whose Declaration, in addition to Mr. Wilson’s, accompanies this Petition); Mary L. Moffitt; Julie A. Moffitt; John H. Moffitt; and Ricki Salsburg. As indicated in the attached Certificate of Service, Petitioner is contemporaneously serving each of the foregoing individuals with this Petition. 2 As indicated in the caption of this Petition, four relevant assignment applications have been filed by two distinct entities. Alpha Media Licensee LLC Debtor in Possession has filed one application primarily dealing with its AM and FM stations (see LMS File No. 0000138519, Lead Call Sign KAAN(AM)) and one application primarily dealing with its FM Translators (see LMS (. continued) Media Licensee LLC Debtor in Possession and Alpha 3E Licensee LLC Debtor in Possession (collectively, “Alpha”) to assign the authorizations for approximately 254 FM, AM, and FM Translator Stations. By virtue of their positions within and relationships to the company, the Minority Alpha Shareholders have—and Mr. Wilson in particular has—had unique access and corresponding insight into the deficient legal processes Alpha’s Directors have employed through their attempts to restructure the overall business to the benefit of only a few parties. Since mid-2018, Alpha has failed to comply in multiple, material respects with its corporate governing documents, including by failing to call required meetings of the Board of Directors, failing to acquire votes necessary to sell stations and other assets, and filing various FCC applications with false certifications. Alpha has further attempted to absolve all Directors of their core fiduciary responsibilities (and corresponding liability) to the corporation and its shareholders, such that Alpha’s Directors believe that they are under no obligation to pursue and safeguard the best interests of the corporation and its shareholders. In line with these derelictions of core corporate duties, Alpha has, on multiple occasions, transferred control of the company to various persons or