FCC Consent Closing Condition Clauses

Summary

These FCC Consent Closing Condition Clauses provide varying approaches to deal with the risk of rescission or withdrawal of the consent of the Federal Communications Commission (FCC) to a merger and acquisition transaction under its jurisdiction. These clauses include practical guidance, drafting notes, and alternate clauses. The FCC must approve the transfer of an FCC license or transfer of control of any holder of an FCC license in a merger or acquisition. In most cases, an application for the FCC's approval is required and subject to a review process that includes public notice and comment. Following this process, and assuming the FCC approves the transaction, the FCC will grant the application and consent to the transaction. The closing of the transaction can occur with this grant of FCC consent. This FCC consent, however, is considered an initial action and does not become final until at least 40 days after public notice is released. If a third party files a petition for reconsideration, or if the FCC determines on its own initiative that it will reconsider the transaction, then there will be ongoing litigation and the final order will take significantly longer. In addition, there is a possibility that the FCC may rescind its previously granted consent, even for a transaction that has been consummated. Generally there are three approaches to deal with the risk of FCC rescission in an M&A transaction: 1. The parties assume the risk of rescission and proceed to closing after the initial grant of FCC consent. 2. The parties do not assume the risk of rescission and proceed to closing only after initial grant of the FCC consent becomes a final order. 3. The parties assume the risk of rescission and proceed to closing after initial grant of FCC consent, but only if there has not been an objection by a third party to the transaction or, if there has been such an objection, the objection is determined to be unlikely to result in a rescission of the FCC consent. These approaches are typically embodied in the purchase agreement in the form of conditions to the buyer's obligation to close. Sample language for option (1) is contained in Section below. Sample language for options (2) and (3) are contained in First Alternate Clause Section and Second Alternate Clause Section , respectively. For more detailed information about FCC consents in media transactions, see Media Industry M&A Trends 2023/24 — Key Regulatory Considerations. See also Media M&A Transactions and Telecom M&A Transactions for related content.