Multiple Ownership Rules

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In a decision released yesterday, the FCC issued a Declaratory Ruling permitting certain identified foreign companies and individuals to own up to 40% of the voting interests in Univision, and allowed aggregate foreign ownership of up to 49% of the equity of the company. This decision noted that it was based not on the new rules for analyzing foreign ownership in broadcast stations approved by the Commission in late September (see our summary here), as those rules were not yet effective as they were only published in the Federal Register last month and certain aspects still needed to undergo analysis under the Paperwork Reduction Act. Instead, the request for the ruling in this case was analyzed under the 2013 Declaratory Ruling on ownership (see our summary here), the same ad hoc analysis used to review and approve Pandora’s acquisition of a radio station in 2015. While technically, the new rules did not apply to this proceeding, it is clear that the analysis of this decision would not be much different, as the Commission specifically refers to the new rules as setting what is reasonable in its ad hoc analysis of the circumstances of this case. Thus, this decision provides a good basis for determining what issues any potential foreign investor in a US broadcast station would face, particularly when investing in a public US company.

Even though the FCC looked to the new rules for guidance, the final conditions look much like those imposed on Pandora. Univision is required to seek specific approval for any acquisition of stock by any foreign shareholder not specifically approved in this order if that investor seeks to acquire an interest (either voting or equity) of greater than 5% of the company. The company must actively monitor its shareholders to assure that no specific foreign shareholder exceeds that 5% threshold and that foreign ownership does not exceed the aggregate 49% limit. The company cannot simply rely on the address of its shareholders in making a determination as to whether or not they are foreign, but instead must use reasonable efforts as defined in the October order (and set out in our summary) to establish the citizenship and ownership of its investors. The company also must insure that its organizational documents provide that, if any foreign owner causes the station to violate one of the restrictions imposed by the Declaratory Ruling, the company can redeem the stock of the owner. The company must also have provisions providing for the right to restrict foreign ownership and the right to require disclosure of citizenship information. The decision also notes that Executive Branch agencies had reviewed the proposal and did not find any potential security issues.
Continue Reading FCC Approves Up to 49% Foreign Ownership of Univision – What Guidance is Provided to Potential Foreign Investors in US Broadcast Stations?

Here we are at the start of a new year, and right away we have numerous regulatory deadlines for broadcasters. By the 10th of the month, all broadcast stations need to have placed in their public inspection files (online for TV and for those radio stations that have already converted to the online public file, and paper for the remaining radio stations), their Quarterly Issues Programs lists, documenting the issues of importance to their communities and the programs broadcast in the last quarter addressing those issues. TV stations have quarterly Children’s Television Reports due to be filed at the FCC by the 10th, addressing the programming that they broadcast to meet the educational and informational needs of children. Commercial TV stations should also add to their public file documentation to demonstrate their compliance with the commercial limits in programming addressed to children.

For TV stations, on the 1st of the year, new obligations became effective for online captioning. “Montages” of clips from TV programs, where all of those clips were captioned when broadcast, also need to be captioned when made available online. By July 1, clips of live and near-live programming must be captioned; however, they may be posted online initially without captions as long as captions are added to clips of live programming within 12 hours and to clips of near-live programming within eight hours after the conclusion of the TV showing of the full-length programming. For more on this requirement, see our article here.
Continue Reading January Regulatory Dates for Broadcasters – Quarterly Issues Programs Lists and Children’s Television Reports, Ownership and EEO Comments, Copyright Issues and More

Tomorrow, the Petitions for Reconsideration of the FCC’s multiple ownership decision is scheduled to be published in the Federal Register (see the pre-publication draft here). This will start the clock on comments on those petitions. If publication occurs as scheduled, comments will be due on Tuesday, January 17 and replies on Friday, January 27 (update: the actual  Federal Register publication states that Replies are due January 24, but we believe that is probably an error, as the FCC rules require 10 days for a reply – watch for a further update). As we wrote here in connection with the comment dates on Petitions for Reconsideration of the abolition of the UHF discount, and here when we commented on the potential impact of the Presidential election of broadcast law, this may be one of the first opportunities where we will be able to assess the meaning of the changes in the membership of the FCC. We will see to what extent the new administration will be willing to roll back the decisions made by the FCC under its old leadership.

The Petitions for Reconsideration raise several issues, both for radio and TV. Questions are raised as to whether the local TV ownership restrictions continue to make sense in today’s economic world – particularly those limiting the co-ownership of any two of the Top 4 stations in a market, and limiting any co-ownership to markets where there will be 8 independently owned and programmed stations.  Attribution of stations that are subject to a Joint Sales Agreement is also questioned. Finally, questions are raised as to whether the FCC is justified in imposing new filing requirements for documents relating to joint operations between TV stations, seemingly looking to collect information in order to impose in the future some sort of restriction on any sort of shared services agreement.
Continue Reading Multiple Ownership Petitions for Reconsideration to be Published in the Federal Register Setting Dates for Public Comment

As we wrote here, the FCC has requested comments on a petition for reconsideration of the elimination of the UHF discount – which had counted UHF stations as reaching only half of their market in assessing an owner’s compliance with the National Ownership Rules for TV.  These rules limit an attributable owner from having…

After months of speculation, Chairman Wheeler today announced that he will step down from the FCC on Inauguration Day. Together with the Senate not confirming the renomination of Commissioner Rosenworcel (as the Senate is effectively on recess and not expected to return before the end of the term, her renomination will almost certainly not be approved in this session of Congress, meaning that she must step down when the Congress adjourns on January 3), that leaves three Commissioners on the FCC. Two are the current Republican commissioners – Pai and O’Rielly – and Democratic Commissioner Mignon Clyburn. What will that mean for broadcasters?

First, it is expected that one of the two Republicans will be named as Acting Chairman to set the agenda for the first few months of the Trump administration, until a permanent Chair is announced (and confirmed by the Senate, if that Chair is not one of the two current Republicans). These commissioners have been vocal in their dissents on several big issues for broadcasters – including the repeal of the UHF discount (about which we wrote earlier this week) and on other issues dealing with the ownership of television stations – including the decision to not repeal the newspaper-broadcast cross-ownership rules, and the decision to reinstate the FCC’s ban on Joint Sales Agreements in TV unless they are done between stations that can be co-owned. We already speculated about these issues being on the Republican agenda soon after the election. What other issues are likely to be considered?
Continue Reading And Then There Were Three – Chairman Wheeler to Step Down on Inauguration Day Leaving a Republican-Controlled FCC – What’s It Mean for Broadcasters?

While several parties went to Court to challenge the FCC’s decision ending the UHF discount, one broadcaster decided instead to ask for reconsideration. That petition for reconsideration has now been published in the Federal Register, giving interested parties until December 27 to comment, and other parties until January 6 to reply to any comments that are filed. This reconsideration petition may give a new Republican-led FCC its first opportunity to revisit the FCC’s multiple ownership rules which have been the subject of several petitions for reconsideration, as we suggested might happen in our review (here) of the impact on communications law of the election of Donald Trump as the new President.

The UHF discount counted only half the audience reached by UHF stations in assessing an owner’s compliance with the 39% national cap on audience. The FCC ended that discount in September (see our summary here), finding that in a digital world, UHF channels were no longer inferior to VHF ones. Given that most TV stations are operating on the UHF band after the digital conversion, the FCC determined that the discount was not justified in the current television marketplace. A number of TV groups argued with that determination, contending that, in today’s media market, there was no reason to impose what was in effect a tightening of the national ownership cap. The elimination of the discount capped acquisitions by several TV groups, and actually put a few over the 39% limit. In addition, broadcasters have argued that the discount was in effect when Congress adopted the 39% cap, so any change would need to be authorized by Congress. While other parties have filed an appeal with the US Court of Appeals, it is likely that the Court will defer to the FCC and allow it to reconsider the abolition of the UHF discount (which the two Republican Commissioners opposed when it was adopted).
Continue Reading Reconsideration of FCC Order on UHF Discount Published in the Federal Register – Starts Clock on Comments and Consideration of the Multiple Ownership Rules by a Republican-Led FCC

While we are into the holiday season, that does not stop the routine regulatory obligations for broadcasters. December 1 brings a host of routine obligations for stations in many states. EEO public file reports must be added to the public files of Commercial and Noncommercial Full-Power and Class A Television Stations and AM and FM Radio Stations in Alabama, Colorado, Connecticut, Georgia, Maine, Massachusetts, Minnesota, Montana, New Hampshire, North Dakota, Rhode Island, South Dakota, and Vermont that are part of an Employment Unit with 5 or more full-time employees. Of course, for TV stations and radio stations that have already converted to the online public file, that will mean uploading those reports to the FCC-hosted public file. For all stations, a link needs to be included on the main page of your station website, if your station has a website, which leads to these reports. Mid-Term EEO Reports on FCC Form 397 must be filed with the FCC by December 1 by radio employment units with 11 or more full-time employees in Colorado, Minnesota, Montana, North Dakota, and South Dakota and television employment units with five or more full-time employees in Alabama and Georgia. For more on these Mid-Term Reports, see our article here.  

A year from now, on December 1, 2017, all broadcast stations are expected to be required to file Biennial Ownership Reports, including noncommercial stations which now have those reports due on the anniversary date of the filing of their license renewal applications. See our article here on the new obligation that will be effective next year, though appeals of that requirement from some noncommercial groups are pending (see our article here). But, until that rule is effective, non-commercial stations need to continue to file on their renewal anniversary dates. Thus, on December 1 of this year, Noncommercial Television Stations in Alabama, Connecticut, Georgia, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont and Noncommercial AM and FM Radio Stations in Colorado, Minnesota, Montana, North Dakota, and South Dakota have the obligation to submit their Biennial Ownership Reports to the FCC.
Continue Reading December Regulatory Dates for Broadcasters – EEO Reports, Ownership and Ancillary Revenue Reports, Ownership Review and Incentive Auction Updates

Early this week, in some of the legal journals that circulate in Washington, there was much speculation as to potential appointees to various government positions after the election. For positions such as the chairman of the FCC, many of these publications listed familiar DC names as likely appointees if, as expected by most pundits, Hillary Clinton was elected president. On the Trump side of the leger, speculation was much vaguer, as few had any real insight into how his administration would implement the broad but, in many cases, imprecise policies that Mr. Trump expounded during the election. Given the results of last night, those speculations are sure to ramp up as everyone tries to guess what will happen with broadcast policy in a Trump administration.

At this point, we can only speculate as to what that election will mean for broadcast policy – particularly at the FCC. One would certainly expect a lessening of the regulatory burden on broadcasters – as lessening burdensome regulations on businesses was a clear plank of the Trump agenda. The make-up of the FCC will likely facilitate such changes, as Republicans will no longer be in the minority at the FCC. A third Republican will join Commissioners Pai and O’Rielly on the FCC. These two Republicans dissented on many issues of importance to broadcasters – including the recently concluded Quadrennial Review of the Ownership Rules. Thus, a third Republican vote could have changed the decisions on many issues.
Continue Reading Looking at the Last Night’s Election Results and the Future of Washington Policy For Broadcasters

Each quarter, my partner David O’Connor and I update a list of the legal and regulatory issues facing TV broadcasters. That list of issues is published by TVNewsCheck and is available on their website, here. This update was published today, and provides a summary of the status of legal and regulatory issues ranging…

At the FCC’s open meeting last week, the Commission adopted new policies for assessing and computing foreign ownership of broadcast companies – particularly such ownership in public companies. The Commission’s Report and Order on this matter is dense reading, dealing with how companies assess compliance with the rules which limit foreign ownership to 20% of a broadcast licensee and 25% of a holding company unless there is a finding by the FCC that the public interest is not harmed by a greater foreign ownership interest. The rules adopted last week were principally an outgrowth of the petition for declaratory ruling filed by Pandora which sought FCC approval, in connection with its acquisition of a radio station, for foreign ownership of greater than 25%. Pandora did not file such a petition because its foreign ownership exceeded that percentage, but instead because, based on the FCC methodology in use at the time, Pandora could not prove that it was in compliance (see our summary of the Pandora petition here). The new rules adopted last week essentially reverse the presumption to which Pandora had to comply – rather than assuming that there was a compliance issue because a company cannot prove that its foreign ownership was less than 25%, the FCC will now conclude that there is an issue only where a company, based on knowledge either that it has or should have, actually knows that there it has a foreign ownership compliance problem.

The order requires that public companies regularly take steps to assess their owners to determine if there are potential foreign ownership issues. A public company should know who certain shareholders are, either because they are insiders (e.g. officers and directors) or because they are otherwise known to the company (e.g. through proxy fights, shareholder lawsuits or because they are in some way doing business with the company). Other shareholders can be determined through an array of filings made at the SEC – including filings made when a shareholder exceeds holdings of 5% of the stock of a company, and other filings made by companies that manage more than $100 million in assets who are required to report on their stockholdings. In addition, there are other public sources of information about funds and other investment companies that buy the stock of broadcast companies, from prospectuses to Internet news stories. Public broadcast companies need to monitor all of these sources of information to see whether they potentially have a problem with foreign ownership. The FCC did not require that these companies take other measures that had been used in the past or suggested in the Notice of Proposed Rulemaking in this proceeding (about which we wrote here).
Continue Reading FCC Updates Foreign Ownership Compliance Policies for Broadcast Companies