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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 5, 1997
MOBILEMEDIA CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-26320 22-3253006
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
65 Challenger Road, Ridgefield Park, New Jersey 07660
(Address of principal executive offices)
(Zip Code)
(201) 440-8400
(Registrant's telephone number, including area code)
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(Former name or former address, if changed since last report)
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INFORMATION TO BE INCLUDED IN THE REPORT
Item 1. Changes in Control of Registrant
Not Applicable.
Item 2. Acquisition or Disposition of Assets.
Not Applicable.
Item 3. Bankruptcy or Receivership
Item 4. Changes in Registrant's Certifying Accountant
Not Applicable.
Item 5. Other Events.
On May 5, 1997, an Administrative Law Judge issued
the Memorandum Opinion and Order attached hereto as
Exhibit 99.1, all of the terms of which are
incorporated by reference herein.
On May 5, 1997, MobileMedia Corporation issued the
press release attached hereto as Exhibit 99.2, all of
the terms of which are incorporated by reference
herein.
On May 5, 1997, MobileMedia Corporation issued the
press release attached hereto as Exhibit 99.3, all of
the terms of which are incorporated by reference
herein.
Item 6. Resignations of Registrants Directors.
Not Applicable
Item 7. Financial Statements and Exhibits.
Not Applicable
Item 8. Change in Fiscal Year.
Not Applicable
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Pursuant to the requirements of the Securities Exchange
Act of 1934, as amended, the registrant has duly caused this
report to be signed on its behalf by the undersigned hereunto duly
authorized.
MOBILEMEDIA CORPORATION,
a Delaware corporation
Date: May 6, 1997 By: /s/ Santo J. Pittsman
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Santo J. Pittsman
Senior Vice President and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit Page
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Exhibit 99.1 -- Memorandum Opinion and Order
Exhibit 99.2 -- Press Release
Exhibit 99.3 -- Press Release
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EXHIBIT 99.1
Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554
In the Matter of ) WT DOCKET NO. 97-115
)
MOBILEMEDIA CORPORATION, et al. )
)
Applicant for Authorizations and Licensee )
of Certain Stations in Various Services )
MEMORANDUM OPINION AND ORDER
Issued: May 5, 1997 Released: May 7, 1997
1. Under consideration are "Emergency Motion For Special Relief And
Stay of Proceedings Regarding MobileMedia Corporation" filed April 23, 1997;
Comments In Support Of Emergency Motion For Special Relief And Stay Of
Proceedings Regarding MobileMedia Corporation filed April 29, 1997 by the
Official Committee of Unsecured Creditors of MobileMedia Corporation
(Unsecured Creditors); Comments Of David Bayer Concerning Motion For Special
Relief And Stay Of Proceedings Regarding MobileMedia Corporation filed April
29, 1997; Comments On Emergency Motion For Special Relief And Stay Of
Proceedings Regarding MobileMedia Corporation filed April 29, 1997 by Hellman
& Friedman Capital Partners II, L.P. (Hellman & Friedman); "Motion Of Secured
Lenders For Leave to File Comments In Support Of Emergency Motion Of
MobileMedia For Stay Of Proceedings" filed April 29, 1997 by The Chase
Manhattan Bank; Comments Of Secured Lenders In Support Of Emergency Motion Of
MobileMedia For Stay Of Proceedings filed April 29, 1997 by The Chase
Manhattan Bank; (1) and Wireless Telecommunications Bureau's Comments On
Emergency Motion filed April 29, 1997.
2. By ORDER TO SHOW CAUSE, HEARING DESIGNATION ORDER, AND NOTICE OF
OPPORTUNITY FOR HEARING FOR FORFEITURE (HDO) released April 8, 1997 (FCC
97-124) the Commission designated for hearing the pending applications of
MobileMedia Corporation and its various subsidiary and associated
organizations (MobileMedia). MobileMedia was also directed to show cause why
its licenses should not be revoked. As recited in the HDO the Commission's
action stemmed from the results of an investigation by the Wireless
Telecommunications Bureau (Bureau) into apparent FCC-related misconduct by
MobileMedia which "raised substantial and material questions of fact as to
whether MobileMedia is basically qualified to be and remain a Commission
license". (Paragraph 1).
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(1) None of the Commenters are named parties or have sought intervention.
They, therefore, have no standing to file Comments and the motion for leave
to file comments filed by The Chase Manhattan Bank will be denied.
Nevertheless, since their comments are of assistance to the Presiding Judge
in ruling on this matter and in the absence of an objection by the Bureau,
their views have been considered.
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3. As reflected in the HDO, "[t]he Bureau's investigation found that
between the third quarter of 1993, when MobileMedia was formed, and the third
quarter of 1996, MobileMedia filed with the Commission at least 289 FCC Forms
489 wherein the Company apparently misrepresented that otherwise
unconstructed stations were constructed, operating, and providing service to
subscribers." Also, MobileMedia "filed with the Commission at least 94
`40-mile Rule' applications for new paging facilities that were predicated
upon unbuilt facilities." (Paragraph 5).
4. In its "Discussion" setting forth reasons why a hearing was
required, the Commission stated, among other things, that "[t]he information
before us suggests that MobileMedia repeatedly engaged in the practice of
misrepresenting the status of construction of its paging stations in FCC
Forms 489 in a deliberate scheme to prevent valuable paging authorizations
from automatically terminating." Further, "the evidence before us suggests
that MobileMedia repeatedly filed false `40-mile Rule' applications with the
Commission in a calculated attempt to obtain `40-mile Rule' authorizations to
which the Company was not otherwise lawfully entitled." The Commission also
found "[e]qually significant, it appears that several individuals at the
highest levels of the Company -- including corporate officers and members of
MobileMedia's Board of Directors -- either orchestrated, affirmatively
approved, tacitly condoned, or were at least cognizant of the ongoing
practices." (Paragraph 8).
5. The Commission recognized that MobileMedia "has admitted to many
of the facts at issue here." Nevertheless, it concluded that a hearing was
compelled because "this case appears to be unprecedented at the Commission
in terms of the sheer number of false filings involved." Also, because it did
not have the relevant facts. In this connection, the Commission recited that
"despite the Bureau's investigation and certain admissions by MobileMedia,
including that certain former member of MobileMedia's senior management were
actively involved in the misbehavior, it was unclear which other officers,
directors and senior managers knew about or condoned the wide-scale pattern
of misbehavior." (Paragraph 12). The designated issues, among other things,
seeks to identify company officials involved in the "wide-scale pattern of
misbehavior." (2)
6. In determining that the public interest required a hearing, the
Commission was aware that MobileMedia, a public company whose stock is traded
on the Nasdaq Stock Exchange, had filed a voluntary petition for protection
under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for
the District of Delaware. (Paragraph 2). It was also "cognizant of the
company's financial situation and the potential impact that a protracted
hearing proceeding might have on the vast number of subscribers who rely on
MobileMedia for their paging services as well as the Company's creditors and
investors." For that reason, it directed
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(2) The HDO makes clear that MobileMedia may "enter into a stipulation as
to relevant facts or waive its right to a hearing." (Paragraph 12).
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the Presiding Judge to issue his recommended decision (3) within six months
of the release of the HDO. (Paragraph 13). Consistent with the Commission's
expressed wish, the Presiding Judge has established an expedited hearing
schedule calling for a prehearing conference on May 6 and the hearing on June
10, 1997. (See ORDER PRIOR TO PREHEARING CONFERENCE, FCC 97M-61, released
April 21, 1997).
7. Now before the Presiding Judge is a motion for special relief
filed by MobileMedia. MobileMedia requests (1) an immediate finding that a
solution consistent with the Commission's SECOND THURSDAY precedent (SECOND
THURSDAY CORP., 22 FCC 2d 515 (1970) is available and may be pursued by
MobileMedia; and (2) a 10 month stay of further proceedings to permit
MobileMedia to pursue and finalize a transfer or assignment of the subject
authorizations and applications through a sale of MobileMedia to a third
party or through a plan of reorganization that transfers ownership of
MobileMedia to its creditors. MobileMedia's requests for relief will not be
granted.
8. The SECOND THURDAY policy is an exception to the rule that a
licensee may not freely transfer its station while there are unresolved
questions concerning its qualifications to be a licensee. Under SECOND
THURSDAY, a bankrupt licensee, whose character qualifications are in
hearing may transfer its station license if the individuals charged with
misconduct (a) will have no part in the future operations of the licensed
facilities and (b) will derive no benefit from the grant of the assignment or
transfer application, or will receive only a minor benefit which is
outweighed by equitable considerations in favor of innocent creditors. SECOND
THURSDAY CORP., 22 FCC 515, 516 (1970). The SECOND THURSDAY policy
"accommodates the policies of the federal policies of the federal bankruptcy
law with those of the Communications Act." LA ROSE v. FCC, 494 F.2d 1145,
1147 n. 2 (D.C. Cir. 1974).
9. MobileMedia acknowledges that the Commission has typically
granted relief under the Second Thursday doctrine to privately-held licenses
of broadcast authorizations. In contrast, MobileMedia is a large publicly
traded licensee of common carrier paging authorizations. No cases are cited
by MobileMedia where the Second Thursday doctrine has been applied to a
publicly traded licensee. In theory, there may be no reason to limit the
Second Thursday doctrine to privately held corporations, as suggested by the
Bureau. However, realistically, there is a fundamental difference between
privately held and publicly traded corporations which necessarily bar its
application to publicly traded licensees such as MobileMedia.
10. One of the essential prongs of Second Thursday is a showing that
individuals charged with misconduct will not derive a benefit from favorable
action on the application. In
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(3) The Commission has directed the Presiding Judge to limited his
recommended decision to the factual matters at issue, including relevant
demeanor and credibility findings. The decision as to the conclusions of law
and appropriate sanctions or disposition are left to the Commission.
(Paragraph 13).
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the case of a private corporation, the funds received from a transfer of the
company can be controlled so as to insure that the wrongdoer holding stock in
the company receives no financial enrichment. However, this may not be true
where a wrongdoer holds stock in a publicly traded company. Specifically, it
has not been shown that there is a mechanism to prevent that indivudal from
enriching himself from the sale of his stock at an increased price. In the
instant case, MobileMedia's stock is traded on the Nasdaq Stock Exchange. Its
current stock price (as of May 2, 1997) is 17/32 of a dollar; its 52 week
high was 21 1/4. MobileMedia seeks, under Second Thursday, to transfer to a
third party or its creditors all its assets intact including the facilities
it admits it obtained by deceit. (4) In this connection, The Secured Lenders
also want the Commission to "expressly reassure the marketplace that, if
MobileMedia satisfies the SECOND THURSDAY criteria, its licenses will not be
revoked and the qualification issues identified in the hearing designation
order will not be considered in connection with its pending or future
applications." (Comments of The Chase Manhattan Bank, p. 4). Assuming the
Commission grants the relief sought here, it would appear that the price of
MobileMedia publicly traded stock will increase, perhaps substantially,
redounding to the benefit of MobileMedia's stockholders including those
involved in the misconduct discussed SUPRA. Such unavoidable financial
enrichment runs completely counter to Second Thursday and compels the denial
of relief sought here.
11. There is a further compelling reason for denying Second Thursday
relief. In order to insure that a wrongdoer will not benefit from the
transfer, it is necessary to first identify all the wrongdoers. It is not
possible to do so on the basis of the present record. In fact, the Commission
has made clear in the HDO that "it remains unclear what other officers,
directors, and senior managers knew about or condoned the wide-scale pattern
of misbehavior." (Paragraph 12). One of the principal purposes of the hearing
is to identify the individuals who were involved in the misconduct. The
issues designated by the Commission seek to obtain that information. Thus,
even assuming Second Thursday was applicable to a public traded licensee,
such as MobileMedia, the grant of such relief necessarily must await a
determination as to who are the transgressors. In its Comments supporting
MobileMedia's motion, the Bureau recognizes the problem. It urges that the
problem "may be resolved through further investigations or in other
adjudicatory proceedings" (Bureau Comments, Paragraph 4). The Bureau's
proposed solution is difficult to comprehend, since there is a forum readily
at hand to obtain that information, namely the expedited hearing ordered by
the Commission. It would appear that the current hearing provides a more
expeditious and less cumbersome procedure to obtain the information sought
by the Commission than the further investigations or other adjudicatory
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(4) A separate question, assuming Second Thursday is applicable, is
whether MobileMedia should be allowed to transfer paging authorizations for
unconstructed facilities which it should have properly relinquished as well as
"40-mile Rule authorizations" to which MobileMedia was not lawfully entitled.
As noted by the Commission, "had MobileMedia properly relinquished its
unconstructed paging authorizations rather than filing false FCC Forms 489 to
cover them, MobileMedia recognized that it may have been compelled to bid at
auction in the event it desired to reacquire the forfeited authorizations."
(HDO, Paragraph 8).
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proceedings suggested by the Bureau. In this connection, as the Commission
made clear, MobileMedia and the Bureau can, of course, enter into
stipulations of relevant fact which will further speed up the completion of
this proceeding. (5)
12. For all of the foregoing reasons, the motion for special relief
will be denied. The further request for a 10 month stay to permit MobileMedia
to attempt a Second Thursday showing is moot and will also be denied.
Accordingly, IT IS ORDERED, That the "Motion Of Secured Lenders For
Leave To File Comments In Support Of Emergency Motion of MobileMedia For Stay
of Proceedings" filed April 29, 1997 by The Chase Manhattan Bank IS DENIED.
IT IS FURTHER ORDERED, That the "Emergency Motion For Special Relief
And Stay Of Proceedings Regarding MobileMedia Corporation" filed April 23,
1997 IS DENIED.
FEDERAL COMMUNICATIONS COMMISSION
/s/ Joseph Chachkin
Joseph Chachkin
Administrative Law Judge
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(5) The need for the hearing is further indicated by the Comments of David
Bayer, an outside director of MobileMedia and that of Hellman & Friedman,
also MobileMedia directors. Both claim to be innocent of the misconduct
discussed in the HDO and seek a procedure which would afford them and outside
directors an opportunity to resolve any issues relevant to them. The hearing
ordered by the Commission provides that forum. The Comments filed by the
outside directors provides further reasons for proceeding with the hearing.
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EXHIBIT 99.2
[MOBILEMEDIA LETTERHEAD]
FOR IMMEDIATE RELEASE
FOR: MOBILEMEDIA CORPORATION
Media Contact: Krista Grossman -- 212/445-8226
Investor Contact: Laura Wilker -- 201/462-4959
[LOGO]
MobileMedia
MOBILEMEDIA'S REQUEST FOR STAY OF FCC HEARING DENIED
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RIDGEFIELD PARK, NEW JERSEY, MAY 5, 1997 -- MobileMedia Corporation
[Nasdaq: MBLQE] announced today that its request to stay the hearing
proceeding instituted by the Federal Communications Commission (FCC) order
entered April 7, 1997 has been denied by an Administrative Law Judge (ALJ).
As previously announced, MobileMedia filed a motion on April 23, 1997 with
the FCC seeking a stay of the hearing proceeding. The FCC hearing relates to
misrepresentations made to the FCC by the Company in applications for certain
paging licenses.
The Company will seek to appeal the ALJ's decision. However, there can be no
assurance that an appeal is available or whether it will be successful.
Absent a reversal of the ALJ's decision, the Company will proceed with the
hearing process initiated by the FCC order.
The Memorandum Opinion and Order of the ALJ has been filed in a Current Report
on Form 8-K with the Securities and Exchange Commission.
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EXHIBIT 99.3
[MobileMedia Letterhead]
FOR IMMEDIATE RELEASE
FOR: MOBILEMEDIA CORPORATION
Media Contact: Krista Grossman -- 212/445-8226
Investor Contact: Laura Wilker -- 201/462-4959
[LOGO]
MobileMedia
MOBILEMEDIA GAINS ACCESS TO REMAINING
$100 MILLION OF DIP FINANCING
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RIDGEFIELD PARK, NEW JERSEY, MAY 5, 1997 -- MobileMedia Corporation
[Nasdaq: MBLQE] announced today that it has gained access to the remaining
$100 million of debtor-in-possession ("DIP") financing provided by its
post-petition bank group. As previously announced, the Company had entered
into an agreement providing for a total of $200 million of DIP financing from
a consortium of banks led by The Chase Manhattan Bank and had received access
to $100 million of the funds. One of the conditions to receiving the
remaining $100 million was that the Company deliver a business plan by April
15, 1997 that would be found satisfactory by the banks' financial advisor.
The Company said the business plan had been found satisfactory and that the
remaining funds had become available.
The Company said it would use the DIP financing to fund normal business
operations and other cash needs.
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