The limits on the ownership of broadcast stations by those who are not US citizens is being re-examined by the FCC according to a recent Public Notice. Under Section 310(b)(4) of the Communications Act, foreign ownership of a broadcast licensee is limited to 20% of the company’s stock, or no more than 25% of a parent company of the licensee. Over the years, there has been a significant body of precedent developed about applying these caps to other business organizations, including LLCs and Limited Partnerships. But the caps remain in place, limiting foreign ownership. While the statute gives the FCC discretion to allow greater amounts of "alien ownership", the FCC has not exercised that discretion for broadcast companies (though, for non-broadcast licenses, the FCC has many times found greater percentages of foreign ownership to be permissible). A coalition of broadcast groups last year filed a request asking that the FCC exercise the discretion provided under the Act, and consider on a case-by-case basis whether alien ownership combinations in excess of 25% should be permitted. The Commission has now asked for public comment on that proposal. Comments are due on April 15, with replies due on April 30.
Why is this important? Many broadcasters have pushed for revisions in the alien ownership limits for decades – seeing foreign investors as a potential source of capital to allow new companies to buy stations or existing companies to expand their holdings. Many minority advocacy groups, too, have thought that relaxation of the alien ownership rules would provide more sources of capital for minority owners to get into the broadcast game. Spanish language broadcasters, in particular, see broadcasters and other investors from other Spanish-speaking countries as being likely sources of new investors in broadcast companies or new buyers for US broadcast stations.
Obviously, the FCC is just asking for comments at this point. As the submission leading to this request for comments points out, the media landscape has changed dramatically since broadcast ownership limitations were adopted some 80 years ago. Obviously, there is dramatically more competition now than there was when the law was adopted. Most households already have access to alien controlled media content – whether that be the BBC on cable or any of a myriad of websites that originate from outside the US. As the differences in the public’s use of the broadcast media and its substitutes change over time, proponents of a change in the alien ownership rules suggest that these changes justify a change in the investment rules.
Don’t get too excited, as the rule change may not come quickly. The FCC would have to look at many issues, including what limits would ultimately be imposed. Could a foreign investor control a broadcast company (as has been approved in the wireless industry)? And, if the policy change is applied on a case-by-case basis, it make take several cases before the limits as to what is to be allowed are established. At least one Commissioner, Commissioner Pai, expressed hope that the FCC could move quickly on this matter to remove rules that he called "anachronistic, illogical, and bad for minority ownership." The issues that these proposals raise will no doubt be addressed in the comments filed in this new proceeding. Let’s hope the FCC follow Commissioner Pai’s advice and moves quickly on these proposals.