Two weeks ago, comments were filed in the Commission’s proceeding examining whether to adopt a more relaxed view of the foreign ownership provisions of the Communications Act (see our article about that proceeding here). While the Communications Act limits foreign ownership in communications licensees to 20% (or 25% of a licensee holding company), the Act also allows the Commission to allow greater foreign ownership if it would not adversely affect the public interest. In areas other than broadcasting, the Commission has routinely allowed ownership of more than 25% of a communications licensee, but the limit has been strictly enforced in the broadcasting world. Many of the comments filed in response to the Commission’s request made exactly that point – that in a multimedia world, why should a wireless company or a cable programmer be allowed to be foreign owned, while a competing broadcaster can’t have foreign investors holding more than 25% of its equity? In what is perhaps a telling indication of where the FCC is going, the statements of three FCC Commissioners, in connection with a recent FCC decision to further streamline the approval process for alien ownership in excess of the 25% limitations in FCC-regulated areas other than broadcasting, suggested that the relaxation of the limits should also be extended to broadcasting.
Two weeks ago, in relaxing rules on the investment of non-US companies and individuals in common carrier licensees and those in certain other non-broadcast services, the Commission vastly simplified the reporting and approval process for alien ownership in excess of the statutory limits. The Commission already had in place a policy of reviewing potential foreign ownership in non-broadcast companies where, through a petition for declaratory ruling, a company could seek FCC approval for ownership, and even control, of these entities by non-US citizens or companies. In the recent proceeding, the FCC made such investment even easier, in very general terms easing certain reporting requirements for alien ownership where the interest of a specific alien investor was less than 5% (10 % in some instances), and also allowing an alien individual or group, once approved, to increase ownership without further approval (if the interest is a minority ownership interest, to 49%, and if it was controlling, to 100%), as long as the interest in possibly doing so is revealed in the original request for approval. Allowing investments by affiliates of the foreign owner, and allowing the company that is approved to seek additional licenses, all without additional approvals, was also allowed in many instances. All these changes were allowed subject to the FCC’s right to reexamine any holdings if specific issues were raised. But what was most interesting to those in the broadcasting industry were the statements of three of the Commissioners praising these relaxations, and the hopes that the examination of applying these reforms in the broadcast world would move forward quickly.
Two of the Commissioners making such statements – the Chairman and Commissioner Rosenworcel – were slightly more circumspect in their comments, welcoming the examination of the potential relaxation of the foreign ownership rules in the broadcast context. Commissioner Pai was more assertive, not only recognizing that the examination of the broadcast foreign ownership rules was underway, and that the bulk of the comments favored relaxation of the rules, but stating that reply comments were due soon and:
I hope that the Commission will take action soon thereafter. By ending our anachronistic approach to foreign investment, we can bring new vitality to the broadcasting industry. We can increase access to capital. And we can help boost minority ownership.
Comments filed on broadcast ownership were almost all in favor of relaxing the strict limits that have been enforced for broadcasting. Not only was the question of fairness with other media raised, but also the benefits to minority broadcasting that could accrue should foreign capital be attracted to US media companies. Only a limited number of comments suggested that foreign ownership could have an adverse effect on localism, or even pose a security risk. These comments will be weighed by the FCC, and we will all watch for further developments in the near future.