Claro was retained by outside counsel to a television and radio broadcasting company and its management (“Company”) for business strategy, valuation, and expert services in a case brought by minority shareholders under an investor rights agreement. The minority shareholders were challenging the Company’s right to participate in the FCC’s wireless spectrum auction and management’s proposed auction participation strategy. The impending FCC auction left Claro with two weeks to perform its analyses and provide written opinions, which included issuing affirmative and rebuttal reports.
Claro’s analyses included evaluation of the auction participation strategies proposed by both management and the minority shareholders, evaluation of likely auction proceeds under each strategy and valuations of the Company under each scenario. Management’s strategy included participating in the FCC auction, subject to a channel-sharing agreement, which allowed the Company to retain “must-carry” rights and to continue broadcasting its television networks in the relevant markets. In contrast, the minority shareholders’ strategy sought to maximize auction proceeds by not entering into channel-sharing agreements and relinquishing the Company’s “must-carry” rights.
Claro’s expert concluded:
- The Company’s participation in the FCC’s wireless spectrum auction did not constitute a “material change” in the Company’s business strategy, which would have required prior approval from the minority shareholders under the investment rights agreement;
- The Company, and its minority and majority shareholders, would be financially better-off by participating in the auction regardless of the participation strategy adopted; and
- Management’s proposed strategy would result in a higher valuation of the Company than the minority shareholders’ proposed strategy.
Claro also provided a rebuttal report that challenged the opinions of the minority shareholders’ financial expert. The points raised in Claro’s rebuttal report ultimately led to the minority shareholders’ expert admitting during deposition testimony that his analysis was incomplete.
Claro’s ability to perform complex analyses under extraordinarily tight deadlines, and our ability to build cross-functional teams with the relevant expertise, allows us to deliver superior value in sophisticated disputes. For example, in this engagement Claro’s depth of resources allowed Claro to add an academic affiliate to the team who is considered one of the world’s pre-eminent auction experts and who quickly and efficiently assisted in evaluating the feasible outcomes (in terms of proceeds from wireless spectrum sales) of the FCC wireless spectrum auction under different participatory strategies. Claro’s unique “one firm” approach allows us to identify and add the right professionals to any engagement team in a very short time frame. It is one of the things that differentiates Claro from our competitors.