At its November 14 meeting, the FCC is tentatively scheduled to consider the relaxation of its limits on the ownership of broadcast stations by foreign entities or citizens. Under the current “alien ownership” limitations, US citizens or entities must own 80% of a broadcast licensee, or 75% of a licensee’s parent company. In the broadcast world, the 25% alien ownership limit must be analyzed both as to equity and voting interests. In the modern financial world, where companies are often owned by many diverse investors (or funds with widely diverse ownership), these rules can be very burdensome in assuring compliance and managing the potential investment in US broadcast operations by foreign sources of capital.
Under the governing statute, Section 310(b)(4) of the Communications Act, the FCC can’t allow a licensee in any service that it regulates to be more than 20% foreign owned. But the statute allows a parent company of a licensee to be 25% foreign owned, and even allows that parent company to exceed that “limit” unless the FCC finds that the public interest would be compromised by foreign ownership greater than 25%. Thus, the rules are actually written to presume that the “limit” can be exceeded, unless the FCC sees a problem. The principal concern that would raise a question under the law would be one of national security – the government does not want crucial communications infrastructure, or the means of dissemination of information to the public, to be controlled or unduly influenced, by foreign interests in the event of some emergency. As we wrote just 6 months ago, in non-broadcast services, the FCC has routinely allowed foreign ownership to exceed the 25% threshold, and recently made it easier for companies to demonstrate their compliance with the rules. This clearly shows that national security issues can be addressed in other ways. How about in the broadcast services?
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