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Radio deal makers are breathing a sigh of relief now that the Federal Communications Commission has reopened after the longest government shutdown in our nation's history. Even as deal-making continued during the shutdown, and presumably some transactions were filed with the Commission, the Media Bureau has begun processing applications again for the first time since Jan. 3. “It is good to get back to business as usual,” Greg Guy, managing partner of Patrick Communications, told Inside Radio on Monday.

The record-setting 35-day partial shutdown didn’t have a major impact on deal-making. But it certainly slowed the marketplace down and caused a good amount of angst among buyers, sellers and brokers. Deals that had been filed at the Commission sat in limbo. And some dealmakers held off on filing, knowing that no license transfers would be approved by the Media Bureau until the government reopened.

“Anytime you have an artificial roadblock to the approval process of a transfer application it will have a negative impact on the deal market,” said Bob Heymann from the Chicago office of Media Services Group. Calling the standstill a “nuisance,” Greg Guy stopped short of saying it hindered people’s willingness to have conversations or enter into negotiations or contracts.

While the agency's Consolidated Database System, or CDBS, was technically working during the shutdown, any deals that were submitted just sat in the FCC's inbox untouched, waiting to be placed on the routine 30-day public notice period, before the Media Bureau would be able to grant the license transfer. That put deals that had already been signed in a slow-mo limbo. For example, Seven Mountains Media’s $3.9 million deal to buy seven stations and one translator in two markets in New York state’s Southern Tier region from Community Broadcasters has yet to be placed on public notice – three weeks after it was announced.

“You can’t do anything unless it’s approved by the FCC,” said Michael Bergner of the Bergner & Co. brokerage. “You would have had to have your deal filed by late October to have it approved before the shutdown started.”

More than just causing a logjam at the FCC, Bergner says the shutdown caused the whole deal process to slow down. “The mentality was, ‘Why bother? We can’t file it anyway,’” he said. “No one [was] in a rush to get a deal done.”

In addition, parties with signed deals weren’t able to begin a Local Marketing Agreement. And not only were deals hung up at the FCC but station moves, upgrades and other applications fell into a temporary black hole.

Pipeline Catches Up

In the days ahead, dealmakers anticipate a higher than normal volume of filings at the Commission, as deals that have been signed over the last 30 days or so are submitted or begin to move through the process. “There is obviously a backlog of deals that will be filed immediately as soon as the government reopens,” Guy predicts. “Once that backlog is cleared, I would expect a slow steady pace of regular deals.”

Bergner predicts the backlog could be cleared in a few days. “But another five weeks and it would [have been] really bad news,” he added. “We’re controlled by the FCC. We can’t do anything in this business technically, or transactionally, without it.”

And while hundreds of thousands of federal employees returned to work on Monday, lawmakers have only until Feb. 15 to reach a compromise on the GOP request for billions of dollars for a border wall, a prospect that President Donald Trump has said is “less than 50-50” – meaning the government could shut down again in less than three weeks. “As we get closer to that deadline, if there’s not a resolution, I think you’ll see an increased sense of urgency,” Guy said.

And the impact could be greater a second time around. “The longer the shutdown lasts, the greater the likelihood of it impacting prices,” Heymann said. “As I am so fond of saying, “Time kills deals.”

But it wasn’t just the inability to get deals through the FCC that had broadcaster uneasy during the past month. There was also discomfort about the macroeconomic impact. The overall U.S. economy lost at least $6 billion during the partial shutdown, due to lost productivity from furloughed government workers and economic activity lost to outside business, Reuters reported, citing S&P Global Ratings data. “You started to get this increasing uneasiness in the market in general as the shutdown dragged on about what impact it would have on the economy and any number of sectors,” Guy said.

Still, some say pending potential media ownership rule changes are having a bigger impact on the radio deal market than the shutdown did. Guy, for one, expects the market to remain sluggish until broadcasters get a better sense of which way the media ownership winds are blowing in Washington. “My expectation is that the transaction market will continue to be fairly slow until the future of the ownership rules becomes clearer. Some owners are holding off on sale discussions in the hopes of significant relaxation improving the market,” Guy said. But the market won’t wait until the rules are finalized, he added, to get a sense of how far the FCC will go with loosening ownership restrictions.