Only two weeks ago, we were writing about the FCC’s consideration of TV Joint Sales and Shared Service Agreements (or “side-car arrangements” as some have called them) as being an issue that was just being reviewed at the FCC by the new Chairman and his staff.  Now, according to press reports (including this one), the exploration has quickly moved much further – so far that we apparently will see FCC action in the very near future on these very controversial subjects.  The rumors suggest that the FCC is ready to resolve many of the issues in the current Quadrennial Review of its multiple ownership rules (see our summary of the issues initially raised in that proceeding here) at its March open meeting. According to these rumors, the FCC will prohibit Joint Sales Agreements for television stations in situations where the two stations involved cannot be commonly owned under the FCC’s multiple ownership rules, and at the same time do nothing to relax the broadcast- newspaper cross-ownership restrictions.  This is much the same result on JSAs that was rumored in December 2012, but a harsher result on the cross-ownership issue than the previous FCC Chair was rumored to be ready to take.  In 2012, the proceeding was put on hold to take more comments on the effect of a change in the cross-interest policy on minority ownership (see our article here), and it has sat there since.  This week’s rumors suggest that, as part of the same action (or through a simultaneous action), the FCC will ask about the public interest benefits and harms of Shared Services Agreements in the TV industry.

For investors in television companies and the general public, these rumored actions raise many questions.  How can the FCC take such a decision on the JSA/SSA issue when such agreements have become an integral part of the TV business over the last few years?  What is the difference between a JSA and an SSA?  How can the FCC not recognize that newspapers are in difficult economic times, and some degree of consolidation may well help these economics?  Does the FCC recognize that the media landscape in broadcasting has changed dramatically in the last few years?
Continue Reading TV Shared Service and Joint Sales Agreements Back in the News – Is the FCC Poised to Act Soon, and To Also Reject Relaxation of Broadcast-Newspaper Cross-Ownership?

The FCC this week released a Public Notice announcing comment deadlines on rulemaking proposals relating to the FCC Biennial Ownership Reports. The first set of proposals deals with a Notice of Proposed Rulemaking issued earlier this month, proposing a series of changes to the process for filing these reports. The proposals include a requirement that the all persons with attributable interests in broadcast stations get a unique FCC Registration Number (an "FRN"), which will require filing their Social Security numbers with the FCC. The second proceeding is one released in 2009, but is only now being published in the Federal Register triggering the comment deadline. This proposal suggests that certain nonattributable owners be identified and reported on these Biennial Ownership Reports despite their nonattributable status. Comments on these proposals will be due on February 14, 2013, with reply comments due on March 1, 2013.

The Biennial Ownership report, in its current form, was initially adopted in 2009.  The new reports were to gather information not just about the ownership of broadcasters, but also about their race, ethnicity and gender, so that the FCC could get a better handle on the presence of minority owners in broadcasting.  The first report on the new form was to be filed in November 2009, but that deadline was pushed back to July 2010 when issues with the new form developed.  The second Biennial Ownership report was to have been filed by commercial stations in late 2011 (two years after the original date), and the next is due later this year.  The information in the first two reports was compiled into the information that formed the basis of the FCC’s December request for comments on the impact of proposed changes in the multiple ownership rules on minority ownership

Continue Reading FCC Seeks Comments on Biennial Ownership Report – Seeking Social Security Numbers From All Attributable Owners – and Some Who Are Not

The new FCC Form 323 Ownership Report is expected to be available in the FCC’s CDBS electronic filing database by Wednesday, December 9, according to a Public Notice released by the FCC yesterday – so that commercial broadcasters should have a month to prepare the form in time for the January 11 filing deadline.  As we’ve written before, the form and filing deadline have been much delayed as the Commission struggled to work out kinks in its electronic filing process.  In the Public Notice issued yesterday, the Commission also announced that stations can file their ownership reports on the new form even if each attributable owner of the company has not yet received an FCC Registration Number (an "FRN"), which requires the provision of a Social Security Number (for individuals) or a Taxpayer ID Number (for business entities).  Seemingly, the FCC has recognized that there has been much consternation among shareholders, officers and directors of broadcast companies about providing their Social Security Numbers to companies in which they have interests to in turn be provided to the FCC so that an FRN can be obtained.  So that licensees can have more time to deal with these issues, the provision for a temporary FRN has been adopted.  The FCC Public Notice also indicates that the FCC will host a workshop on December 9 at 2 PM Eastern time to help the public with issues as to the filing of this report.

The Social Security Number issue has perhaps created the most concern about this new form.  While the allowance for the temporary FRN will take some immediate pressure off broadcasters, these temporary numbers should not be viewed as a permanent reprieve from obtaining FRNs from all attributable owners.  The Commission in the revised Questions and Answers on the Form 323 makes clear, the temporary FRN for those holders of attributable interests in broadcast stations is a temporary measure.  Licensees are cautioned that they should use their best efforts to obtain these numbers (or to have the attributable owners, on their own, register for the FRN).  Even if that cannot be accomplished by the January 11 deadline, the licensee has an obligation to keep trying and to amend its filing when it finally obtains the required information as to the permanent FRN of each person or entity holding an attributable interest in the company .  The FCC seems to leave the door open to enforcement actions if a licensee does not obtain that information in a reasonable (though not defined) period of time.

Continue Reading New Form 323 Ownership Report Expected to be Ready This Week – And FCC Provides for Temporary FRN Without Social Security Number

In a Further Notice of Proposed Rulemaking, the FCC last week asked for public comment on a series of initiatives to promote the ownership of broadcast stations by minorities and other Socially Disadvantaged Businesses ("SDBs").  These proposals, which include the potential for the sale without requiring any divestitures of clusters of radio stations which exceed the multiple ownership rules now in effect, and the potential for investors to invest in stations controlled by SDBs, even if such investment would otherwise violate the existing multiple ownership rules.  The Further Notice was issued in response to a petition filed over a year ago by the Minority Media Telecommunications Council, which asked for a withdrawal of the FCC’s Notice of Proposed Rulemaking on the Multiple Ownership Rules (which we summarized here) because that Notice did not address the promotion of minority ownership of broadcast stations.  MMTC claimed that the Third Circuit’s remand of the 2003 Multiple Ownership decision mandated that consideration.  Comments on the Further Notice, which will be resolved as part of the current multiple ownership proceeding, are due on October 1, and replies on October 15

The Notice raises a number of suggestions for regulatory changes to foster the ownership of broadcast stations by minority owners and other SDBs.  In addition to allowing the transfer of grandfathered radio clusters that no longer comply with the multiple ownership rules, these include specific proposals that would accomplish the following:

  • Allowing investment by exiting broadcasters and others with attributable media interests into companies controlled by minorities without the investment being counted against the ownership holdings of the investing company
  • Allowing minority groups to purchase unbuilt construction permits, and get sufficient time to construct those stations, even if the construction permit is otherwise to expire as it has been outstanding and unbuilt for over three years
  • Granting some non-minority owned companies waivers to exceed the multiple ownership limits if they sell stations to SDBs (including a proposal to create tradable credits for creating minority-owned stations)
  • Allowing for the waiver of the alien ownership limits if the investment by foreign companies would assist a minority-owned company in getting into the broadcast business.
  • Revival of the policies permitting minority distress sales (where a broadcaster against whom there were issues pending which could lead to a revocation of a license could sell their station to a minority group and avoid the revocation proceeding) and minority tax credits  (where a broadcaster who sells to a minority group could defer gains on sale if the money was reinvested into any broadcast company in the future)

Continue Reading FCC Proposes Multiple Ownership Exceptions to Foster Minority Ownership