Now that CDBS is finally working again....

[Garrett Wollman]

<<On Thu, 17 Aug 2006 21:35:34 -0400, "Doug Drown" <revdoug1@verizon.net> said:

> Is that how it's worded?   Interesting.  Does Nassau plan to operate Charles
> River Broadcasting separately, as a subsidiary?

Nassau won't get the corporate entity, "Charles River Broadcasting",
at all.  One of the standard ways that these sorts of deals are
structured is that the seller segregates all the assets to be sold
into a distinct corporate entity (I think in this case it's Charles
River Broadcasting Company, Inc.).  The buyer creates a subsidiary of
its own (often called something like "MergerCo" or "Xyz Acquisition
Sub" and usually structured as an LLC).  The parties agree that, upon
consummation, the buyer's subsidiary will merge "with and into" the
seller's subsidiary, with the seller's subsidiary the surviving
company.  The buyer then purchases the seller's remaining interest in
the subsidiary.  That's apparently how Greater is buying Charles
River.

I have no idea why it's done this way, but as this is standard for
many sorts of corporate transactions -- not just in broadcasting -- I
assume it's a tax dodge of some sort.  It's only for sales of entire
public companies and for FCC licensees that you normally see the
actual contracts made public, but I'd bet it's very common.

Companies that operate in more than one state frequently create
seemingly bizarre structures in order to shield from each state's
taxation their operations in other states.  (Many states with
corporate income taxes subject a company's entire earnings to state
taxes, regardless of where that income was earned, or according to an
unfavorable allocation formula.)  As you look through the FCC filings,
you'll often see things like:

	Bloggs Broadcasting Iowa Licenses LLC is the licensee of
	stations KXQW and KBBB-FM, Podunk, Iowa.  The sole member of
	Bloggs Broadcasting Iowa Licenses LLC is Bloggs Broadcasting,
	Inc. ("BBI").  BBI also owns Bloggs Podunk Media, LLC, which
	publishes the Podunk Weekly Advertiser and fifteen other local
	weekly newspapers.

	Bloggs Broadcasting WBBB License Corp. is the licensee of
	stations WBBB and WBBB-FM, Anytown, New York.  Bloggs
	Broadcasting WBBB License Corp. is wholly owned by Bloggs
	Broadcasting (New York), L.P., in which BBI owns a 99%
	interest and Bloggs Broadcasting LLC ("BBLLC") owns a 1%
	interest and is sole general partner.

	BBI is the sole member of Bloggs Broadcasting LLC ("BBLLC").

	Joe Bloggs and Jane Randolph Bloggs are sole trustees of Joe
	Bloggs Family Trust, Jane Bloggs Family Trust, Joe and Jane
	Bloggs 1984 Trust, and Bloggs Nevada Charitable Trust (1997)
	("the Bloggs Trusts").

	The Bloggs Trusts collectively control a 25% economic interest
	and a 95% voting interest in BBI.  No other parties have an
	attributable interest in BBI.

-GAWollman