[Federal Register: August 8, 2007 (Volume 72, Number 152)]
[Proposed Rules]
[Page 44457-44466]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08au07-25]
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FEDERAL COMMUNICATIONS COMMISSION
[MB Docket Nos. 06-121, 02-277, 04-228; MM Docket Nos. 01-235, 01-317,
00-244; FCC 07-136]
47 CFR Part 73
2006 Quadrennial Regulatory Review
AGENCY: Federal Communications Commission.
ACTION: Notice of proposed rulemaking.
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SUMMARY: This document seeks comment on various proposals to promote
minority and female ownership in the media industry. It also addresses
a motion to withdraw, revise, and republish the Commission's Further
Notice of Proposed Rulemaking in its media ownership review.
DATES: The agency must receive comments on or before October 1, 2007
and reply comments on or before October 16, 2007.
ADDRESSES: Comments may be filed electronically using the Internet by
accessing the Electronic Comment Filing System, http://www.fcc.gov/cgb/ecfs/, or the Federal eRulemaking Portal, http://www.regulations.gov.
The Commission's contractor will receive hand-delivered or messenger-
delivered paper filings for the Commission's Secretary at 236
Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. Commercial
overnight mail (other than U.S. Postal Service Express Mail and
Priority Mail) must be sent to 9300 East Hampton Drive, Capitol
Heights, MD 20743. U.S. Postal Service first-class, Express, and
Priority mail should be addressed to 445 12th Street, SW., Washington,
DC 20554.
FOR FURTHER INFORMATION CONTACT: The Media Bureau contacts for this
proceeding are Mania Baghdadi and Jamila Bess Johnson, both at (202)
418-7200. Press inquiries should be directed to Mary Diamond at (202)
418-2388.
SUPPLEMENTARY INFORMATION:
I. Introduction
1. The Commission has before it the ``Motion for Withdrawal of the
Further Notice of Proposed Rulemaking and for the Issuance of a Revised
Further Notice'' filed on August 23, 2006 (the ``Motion for
Withdrawal'') by the Diversity and Competition Supporters
(collectively, ``MMTC''). MMTC states that the Commission's Further
Notice of Proposed Rule Making (FNPRM) in the media ownership
proceeding, 71 FR 45511, August 9, 2006, is flawed and should be
withdrawn, revised, and republished. The FNPRM invited comment on the
several media ownership rules adopted by the Commission in its 2002
Biennial Review Order, 68 FR 46286, August 5, 2003, and the pending
petitions for reconsideration of the 2002 Biennial Review Order, and
initiates the statutorily mandated 2006 quadrennial review of the
Commission's media ownership rules. Specifically, MMTC asserts that the
FNPRM is deficient because it fails to: (1) Identify and describe
MMTC's minority ownership proposals remanded by the court in Prometheus
Radio Project, et al. v. FCC, 373 F.3d 372 (3d Cir. 2004); (2) refer to
or seek comment on a definition of a socially and economically
disadvantaged business (``SDB''); and (3) identify section 257 of the
Telecommunications Act of 1996 as a central legal basis for minority
ownership relief. MMTC requests that the Commission restart the
ownership proceeding.
2. The FNPRM sought comment on MMTC's various proposals, as well as
on the general issue of fostering minority and female ownership. We
urged commenters to explain the effects, if any, that their rule
proposals would have on ownership of broadcast outlets by minorities,
women and small businesses. Given the impact of these issues on our
comprehensive ownership review, we believe it would be beneficial to
issue this Second FNPRM to set forth in greater detail the proposals
MMTC identified in its Motion for Withdrawal and to clarify the record
as requested by MMTC. Thus, in this Second FNPRM, we seek comment on
the proposals MMTC submitted in the 2002 biennial review proceeding, as
they are described in Appendix A, as well as on the proposals submitted
to the Commission by the Advisory Committee on Diversity for
Communications in the Digital Age (``Diversity Committee''), which are
also described in Appendix A and are set forth more fully in the
Committee's recommendations to the Commission. See http://www.fcc.gov/DiversityFAC/
for a full listing of Diversity Committee meetings,
recommendations and white papers. In order to consider fully the issues
raised by MMTC, as discussed further below, we consolidate our ongoing
section 257 proceeding with this proceeding.
3. We find it unnecessary to adopt the specific approach suggested
by MMTC that we rescind and reissue the FNPRM in its entirety. The
approach we take, in conjunction with the initial FNPRM, provides ample
notice to the commenting public on the specific issues germane to our
media ownership review, including those raised by MMTC relating to
ownership diversity.
II. Background
4. In comments filed in the Commission's 2002 biennial review
proceeding, MMTC proposed numerous measures to promote minority
broadcast ownership. In the subsequent 2002
[[Page 44458]]
Biennial Review Order, the Commission listed 13 of MMTC's proposals, in
addition to describing proposals other commenters submitted. The
Commission stated that, because a ``more thorough exploration'' of
those comments was warranted, it would initiate a separate proceeding
to address MMTC's 13 proposals and the other comments regarding
minority and female broadcast ownership. Responding to MMTC's concern
that minorities lack equal transactional opportunities, the Commission
also stated that it would create a federal advisory committee to study
minority and female ownership issues. In addition, the Commission
adopted a transfer policy (the so-called ``small business cluster
transfer policy'') intended to promote diversity of ownership, based
largely on a proposal submitted by MMTC, which permits sales of
grandfathered combinations that exceed the ownership limits to and by
certain ``eligible entities.'' Entities may transfer control of or
assign an existing grandfathered combination to ``eligible entities,''
defined as entities that would qualify as a small business consistent
with Small Business Administration (``SBA'') standards for its industry
grouping. In addition, eligible entities may sell existing
grandfathered combinations without restriction.
5. In the 2002 Biennial Review Order, the Commission repealed its
failed station solicitation rule (``FSSR''), which is part of the
Commission's waiver standard under the local television ownership rule.
That waiver standard permits a television station purchaser to exceed
local television ownership limits if the acquired station is failed,
failing, or unbuilt. See 47 CFR 73.3555 Note 7. Under the FSSR, a
waiver applicant was required to demonstrate that serious efforts had
been made to secure an out-of-market buyer for the troubled station. A
waiver was not granted unless the applicant could show that the in-
market buyer was the ``only reasonably available entity willing and
able to operate the station'' and that an out-of-market sale would
result in an ``artificially depressed price.'' In the 2002 Biennial
Review Order, the Commission retained the waiver standard, but
eliminated the FSSR requirement.
6. On review, the U.S. Court of Appeals for the Third Circuit
remanded the Commission's decision to address MMTC's 13 proposals in a
separate rulemaking and ordered the Commission to address those
proposals at the same time that it addresses the other remanded issues.
The court also remanded the Commission's decision to repeal the FSSR
because the Commission did not address the potential impact of the
repeal on minority television station ownership.
III. Discussion
A. Minority and Female Ownership Initiatives
1. Socially and Economically Disadvantaged Businesses (``SDBs'')
7. MMTC argues that the Commission erred in the FNPRM by failing to
seek specific comment on how to define SDBs, adding that the concept of
SDBs is central to most of the minority ownership initiatives proposed
in the 2002 biennial review proceeding. MMTC states that the Prometheus
opinion recognizes the importance of establishing a definition for SDBs
because, in approving the small business cluster transfer policy, the
court indicated that, by the next quadrennial review, the Commission
would have the benefit of a stable definition of SDBs as well as
implementation experience in order to reevaluate whether an SDB-based
waiver policy would better promote the Commission's diversity
objectives. MMTC maintains that, without a definition for SDBs, the
Commission cannot effectively evaluate the existing small business
cluster transfer policy or its other proposals, as remanded by the
Prometheus court.
8. MMTC states that the issue of the SDB definition has already
been fully briefed in the Commission's proceeding examining market
entry barriers. In that proceeding, initiated in 2004, the public was
invited to comment on constitutionally permissible ways to further the
mandate of section 257 of the Telecommunications Act of 1996, which
directs the Commission to identify and eliminate market entry barriers
for small telecommunications businesses, and section 309(j) of the
Communications Act of 1934, as amended (``the Act''), which requires
the Commission to further opportunities in the allocation of spectrum-
based services for small and rural businesses and businesses owned by
women and minorities. See 69 FR 34672, June 22, 2004. The Media Bureau
also asked commenters to provide specific recommendations for building
on the series of market entry barrier studies that the Commission
released in December 2000. The studies are available on the
Commission's Web site at http://www.fcc.gov/opportunity/meb_study/ and
http://www.fcc.gov/Bureaus/Mass_Media/Informal/ad=study/.
9. We invite comment on MMTC's proposal that the Commission define
SDBs for purposes of analyzing policy initiatives in support of media
ownership diversity. We ask that commenters address whether use of a
proposed definition raises any constitutional concerns, practical
concerns, or other considerations unique to the Commission's policy
objectives, and we invite comment on its impact on small entities. To
ensure full consideration of this issue, we will consolidate the MB
Docket No. 04-228 proceeding commenced in 2004 with our review of the
media ownership rules.
2. MMTC Proposals
10. We seek comment on the various proposals for increasing
minority and female broadcast ownership identified by MMTC. As MMTC
suggests, we have attached its description of these proposals as
Appendix A.\1\ The proposals include: (1) those that MMTC submitted for
consideration in the 2002 biennial review proceeding; (2) the MMTC
proposals the Commission listed in the 2002 Biennial Review Order,
which the Third Circuit ordered the Commission to address on remand;
and (3) media-related recommendations of the Diversity Committee.\2\ In
discussing these proposals, commenters should address the various
questions and issues set forth below.
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\1\ We have included the text of Appendix B to MMTC's Motion for
Withdrawal as Appendix A hereto. Although we have modified the MMTC
Appendix to eliminate a non-substantive footnote and to correct a
few apparent minor typographical errors, we have not altered the
descriptions, assessments, or legal analyses of the proposals, as
submitted by MMTC. By incorporating these materials, we do not adopt
any such descriptions, assessments, or analyses as official
Commission policy; we are providing them only to specifically invite
public comment on them.
\2\ The descriptions of the Diversity Committee recommendations
are provided by MMTC, which is a member of the Diversity Committee
but which does not represent the Diversity Committee as a whole.
Although the Diversity Committee recommendations are not subject to
the Third Circuit's remand, we are seeking comment on them to ensure
a more complete record.
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11. In addition, as MMTC requests, we also seek comment on the
efficacy of the FSSR in promoting minority and female broadcast
ownership. When out-of-market purchasers for a station are unavailable,
the Commission permits ownership rule waivers for failed, failing and
unbuilt stations because the in-market purchase of such stations is
preferable to having frequencies go unused, even where the combination
would violate the local television ownership rule. In the 2002 Biennial
Review Order, the Commission determined that applicants seeking a
[[Page 44459]]
waiver of the local television ownership rule no longer needed to
comply with the FSSR requirement that they must first demonstrate the
unwillingness of out-of-market buyers to offer a reasonable price for
the failed, failing, or unbuilt station. In eliminating the FSSR
requirement, the Commission found that the efficiencies associated with
the operation of two same-market stations, absent unusual
circumstances, will always result in the buyer being the owner of
another station in the same market. In remanding the Commission's
repeal of the FSSR, the Third Circuit stated that the purpose of the
FSSR was to ensure that minority broadcasters received notification of
these station sales. The Third Circuit found that the Commission's
decision was arbitrary and capricious because it failed to discuss the
effect of the repeal on minority ownership.
12. We invite comment on the extent to which the FSSR or another
construction of the rule could promote minority and female ownership.
We ask commenters to provide concrete evidence rather than generalized
assertions.
B. Constitutional Issues
13. Any measures to facilitate minority and female broadcast entry
that are based on racial or gender classifications must satisfy the
heightened constitutional standards that apply to governmental
preferences for minorities and women under the Equal Protection Clause.
The Supreme Court's ruling in Adarand Constructors, Inc. v. Pena, 515
U.S. 200 (1995), requires that governmental classifications based on
race must be analyzed under strict scrutiny, and are constitutional
only if such classifications are narrowly tailored measures that
further a compelling governmental interest. Gender classifications are
subject to intermediate scrutiny, under which the government's action
must be substantially related to the achievement of an important
objective. In discussing a proposal targeted or designed to promote
minority and female broadcast ownership, commenters should describe,
consistent with relevant case law, how the proposal would satisfy
constitutional standards. In particular, proponents of initiatives that
rely on a definition of SDBs should explain in detail whether and how
the definition would satisfy constitutional standards.
C. Statutory Authority
14. We also seek further comment on the Commission's statutory
authority to address issues of minority and female ownership. Section
257 of the Act requires the Commission to identify and eliminate
``market entry barriers for entrepreneurs and other small businesses in
the provision and ownership of telecommunications services and
information services.'' Despite the apparent limitation of 47 U.S.C.
257(a) to telecommunications and information services, the
congressional directive to promote ``the policies and purposes of this
Act favoring diversity of media voices'' in implementing section 257(a)
arguably brings broadcasting within the scope of section 257. We invite
comment on this interpretation of the statute. The statutory provision
also specifically directs the Commission to ``promote the policies and
purposes of this Act favoring diversity of media voices'' in carrying
out its section 257 responsibilities. In addition, in 1996, Congress
amended section 1 of the Act to make it clear that the Commission's
mandate is to regulate interstate and foreign communications services
so that they are ``available, so far as possible, to all people of the
United States, without discrimination on the basis of race, color,
religion, national origin or sex * * *'' We ask commenters to address
whether and how these statutory provisions support the Commission's
efforts to promote media ownership diversity.
15. Further, section 309(j) of the Act requires the Commission to
promote the dissemination of licenses to a wide variety of applicants,
including members of minority groups and women. Section 309(j) directs
the Commission to ``ensure that * * * businesses owned by members of
minority groups and women are given the opportunity to participate in
the provision of spectrum-based services.'' In addition, section
309(j)(3)(B) requires the Commission, in establishing eligibility
criteria and bidding methodologies, to promote ``economic opportunity
and competition * * * by avoiding excessive concentration of licenses
and by disseminating licenses among a wide variety of applicants,
including small businesses, rural telephone companies, and businesses
owned by members of minority groups and women.''
16. We invite comment on the Commission's statutory authority to
facilitate the licensing of spectrum-based services to a diversity of
entities, including businesses owned by minority groups and women.
Commenters should also address the limitations of these statutory
provisions in light of recent court decisions regarding equal
protection. We also solicit comment on any further statutory provisions
that would enable the Commission to address ownership diversity,
particularly in terms of fostering diversity of ownership among
minorities and women.
IV. Procedural Matters
A. Comment Information
17. Pursuant to sections 1.415 and 1.419 of the Commission's rules,
47 CFR 1.415, 1.419, interested parties may file comments and reply
comments on or before the dates indicated above. Comments may be filed
using: (1) The Commission's Electronic Comment Filing System (ECFS);
(2) the Federal Government's eRulemaking Portal; or (3) by filing paper
copies. See Electronic Filing of Documents in Rulemaking Proceedings,
63 FR 24121, May 1, 1998.
Electronic Filers: Comments may be filed electronically
using the Internet by accessing the ECFS: http://www.fcc.gov/cgb/ecfs/ or the Federal eRulemaking Portal: http://www.regulations.gov. Filers
should follow the instructions provided on the Web site for submitting
comments.
For ECFS filers, if multiple docket or rulemaking numbers
appear in the caption of this proceeding, filers must transmit one
electronic copy of the comments for each docket or rulemaking number
referenced in the caption. In completing the transmittal screen, filers
should include their full name, U.S. Postal Service mailing address,
and the applicable docket or rulemaking number. Parties may also submit
an electronic comment by Internet e-mail. To get filing instructions,
filers should send an e-mail to ecfs@fcc.gov, and include the following
words in the body of the message, ``get form.'' A sample form and
directions will be sent in response.
Paper Filers: Parties who choose to file by paper must
file an original and four copies of each filing. If more than one
docket or rulemaking number appears in the caption of this proceeding,
filers must submit two additional copies for each additional docket or
rulemaking number.
Filings can be sent by hand or messenger delivery, by commercial
overnight courier, or by first-class or overnight U.S. Postal Service
mail (although we continue to experience delays in receiving U.S.
Postal Service mail). All filings must be addressed to the Commission's
Secretary, Office of the Secretary, Federal Communications Commission.
The Commission's contractor will receive hand-delivered or
messenger-delivered paper filings for the Commission's Secretary at 236
[[Page 44460]]
Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. The filing
hours at this location are 8 a.m. to 7 p.m. All hand deliveries must be
held together with rubber bands or fasteners. Any envelopes must be
disposed of before entering the building.
Commercial overnight mail (other than U.S. Postal Service
Express Mail and Priority Mail) must be sent to 9300 East Hampton
Drive, Capitol Heights, MD 20743.
U.S. Postal Service First-Class, Express, and Priority
mail should be addressed to 445 12th Street, SW., Washington, DC 20554.
People with Disabilities: To request materials in accessible
formats for people with disabilities (Braille, large print, electronic
files, audio format) send an e-mail to fcc504@fcc.gov or call the
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-
418-0432 (tty).
B. Regulatory Flexibility Act
18. As required by the Regulatory Flexibility Act, 5 U.S.C. 603,
the Commission prepared an Initial Regulatory Flexibility Analysis
(``IRFA'') in the initial Notice of Proposed Rulemaking in the media
ownership proceeding and a Supplemental Initial Regulatory Flexibility
Analysis Act (``Supplemental IRFA'') in the initial Further Notice of
Proposed Rulemaking in the media ownership proceeding. We have now
prepared a Second Supplemental IRFA, which is set forth in Appendix B.
Written public comments are requested on the Second Supplemental IRFA.
These comments must be filed in accordance with the same filing
deadlines for comments on the Second FNPRM, and should have a separate
and distinct heading designating them as responses to the Second
Supplemental IRFA.
C. Paperwork Reduction Act
19. This document does not contain proposed information collections
subject to the Paperwork Reduction Act of 1995 (``PRA''), Pub. L. No.
104-13, 109 Stat. 163 (1995). Therefore, it does not contain any
proposed new or modified information collection burden for small
business concerns with fewer than 25 employees, pursuant to the Small
Business Paperwork Relief Act of 2002, Pub. L. No. 107-198, 116 Stat.
729 (2002). However, depending on the rules adopted as a result of this
Second FNPRM, the report and order ultimately adopted in this
proceeding may contain information collections. The Commission will
provide a period for public comment on any PRA burdens contained in the
report and order and will submit such burdens to the Office of
Management and Budget for approval when the report and order is adopted
and released.
D. Ex Parte Information
20. This is a permit-but-disclose notice and comment rulemaking
proceeding. Ex parte presentations are permitted, except during the
Sunshine Agenda period, provided that they are disclosed as provided in
the Commission's rules.
21. Contact Information. The Media Bureau contacts for this
proceeding are Mania Baghdadi and Jamila Bess Johnson, both at (202)
418-7200. Press inquiries should be directed to Mary Diamond at (202)
418-2388.
V. Ordering Clauses
22. Accordingly, it is ordered, that pursuant to the authority
contained in sections 1, 2(a), 4(i), 257, 303, 307, 309, 310, and 613
of the Communications Act of 1934, as amended, 47 U.S.C. 151, 152(a),
154(i), 257, 303, 307, 309, 310, and 533, and section 202(h) of the
Telecommunications Act of 1996, this Second Further Notice of Proposed
Rulemaking is adopted.
23. It is further ordered that, pursuant to the authority contained
in sections 1, 2(a), 4(i), 257, 303, 307, 309, 310, and 613 of the
Communications Act of 1934, as amended, 47 U.S.C. 151, 152(a), 154(i),
257, 303, 307, 309, 310, and 533, and section 202(h) of the
Telecommunications Act of 1996, notice is hereby given of the proposals
described in this Second Further Notice of Proposed Rulemaking.
24. It is further ordered that MB Docket No. 04-228 shall be
consolidated with MB Docket No. 06-121 et al.
25. It is further ordered that MMTC's Motion for Withdrawal of the
Further Notice of Proposed Rulemaking and for the Issuance of a Revised
Further Notice is granted to the extent described herein, and in all
other respects, denied.
26. It is further ordered that MMTC's Request for Ruling on its
Motion for Withdrawal of the Further Notice of Proposed Rulemaking and
for the Issuance of a Revised Further Notice is granted to the extent
described herein, and in all other respects, denied.
27. It is further ordered that comments and reply comments with
regard to those matters raised in this Second Further Notice of
Proposed Rulemaking will be due October 1, 2007 and October 16, 2007,
respectively.
28. It is further ordered that the Commission's Consumer and
Governmental Affairs Bureau, Reference Information Center, shall send a
copy of this Second Further Notice of Proposed Rulemaking, including
the Second Supplemental Initial Regulatory Flexibility Analysis, to the
Chief Counsel for Advocacy of the Small Business Administration.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
Appendix A--Minority Ownership Proposals and Suggestions \3\
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\3\ This Appendix is a verbatim copy of Appendix B to MMTC's
Motion for Withdrawal, except that this Appendix reflects minor
typographical corrections and the omission of a non-substantive
footnote.
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Section I (items 1-14) contains the 14 proposals of the
Diversity and Competition Supporters (``MMTC'') in MM Docket No. 02-
277. The FCC's Advisory Committee on Diversity for Communications in
the Digital Age (``Diversity Committee'') also proposed eight of
these items, as noted therein.
Section II (items 15-26) contains 12 informal suggestions made
by the Minority Media and Telecommunications Council at a November
6, 2002 meeting of stakeholders at the Commerce Department. These
were not the Diversity and Competition Supporters' proposals in the
media ownership proceeding; rather, they were the Minority Media and
Telecommunications Council's informal suggestions to stakeholders.
The Diversity Committee also proposed one of these items, as noted
therein.
Section III (items 27-34) contains recommendations issued by the
Diversity Committee that do not track the proposals or suggestions
in items 1-26. Among these, items 27-30 are nonregulatory
recommendations, and items 31-34 are regulatory recommendations. The
Diversity Committee has propounded 17 recommendations germane to
media ownership: Eight tracking items in Section I, one tracking an
item in Section II, and the eight items in Section III.
Section I: MMTC Proposals in MM Docket 02-277
1. Equal transactional opportunity policy--barring
discrimination on the basis of race or gender in broadcast
transactions.
Location(s) in Record: Initial Comments of Diversity and
Competition Supporters, MB Docket No. 02-277 (filed January 2, 2003)
(``MMTC 2003 Comments''), pp. 115-120; MMTC Letter to Hon. Michael
Powell, MM Docket No. 02-277 (April 28, 2003) (``MMTC April 28, 2003
Ex Parte''), pp. 11-19.
Nature of Item: Formal rulemaking proposal.
Summary of Item: Race and gender discrimination in the sale of
broadcast stations would be banned, consistent with 47 U.S.C. 151.
The seller would certify compliance by checking a box on a Form 314
or Form 315 application.
Year First Proposed: 1994.
Parallel Recommendation of Diversity Committee: Transactional
Transparency Recommendations, May 14, 2004, p. 4; White
[[Page 44461]]
Paper on Equal Transactional Opportunity, April 29, 2004.
Relevance of SDB Definition: No.
2. Transfer Restriction of Grandfathered Clusters to SDBs.
Location(s) in Record: MMTC 2003 Comments, pp. 107-109.
Nature of Item: Formal rulemaking proposal.
?>Summary of Item: The seller of a grandfathered cluster would
not have to break it up if it were sold to an SDB. In the 2002
Biennial Review, the Commission adopted a provision for the transfer
intact of a grandfathered cluster, but decided that small
businesses, rather than SDBs, would constitute the class of eligible
buyers. MMTC seeks to develop a definition of ``socially and
economically disadvantaged business'' (SDB) that would be
appropriate for broadcasting and be constitutionally sound. SDBs are
a subset of small businesses. Like other small businesses, they are
economically disadvantaged; but unlike other small businesses, they
are also socially disadvantaged. Their social disadvantage stems
from individualized factors or from their membership in a class
(such as a racial group in a particular industry) for which
discrimination has inhibited entry and financing. An SDB definition
is desirable because it would be less dilute in its impact on
minorities by omitting, for example, the children of millionaires
who, as new entrants, can qualify as small businesses although they
have never been disadvantaged.
Year First Proposed: 2003.
Parallel Recommendation of Diversity Committee: none.
Relevance of SDB Definition: Yes.
3. Structural rule waiver for selling a station to an SDB, where
the sale to the SDB is ancillary to a transaction that otherwise
would be barred by an ownership rule.
Location(s) in Record: MMTC 2003 Comments, p. 103.
Nature of Item: Formal rulemaking proposal.
Summary of Item: A company contemplating a transaction that
would otherwise be barred by an ownership rule (perhaps one that
would qualify in the future, e.g., if the Commission adopted a
staged implementation of deregulation program; see item 13 infra)
would be permitted to complete the transaction if it sells stations
to SDBs.
Year First Proposed: 1995 (concept originally advanced by NTIA
in 1977).
Parallel Recommendation of Diversity Committee: Financial Issues
Recommendations, June 14, 2004, pp. 17-18; White Paper on Incentive-
Based Regulations, May 23, 2004, pp. 5-6.
Relevance of SDB Definition: Yes.
4. Tolling buildout deadlines for selling expiring construction
permits to SDBs.
Location(s) in Record: MMTC 2003 Comments, pp. 112-115
(originally a petition for rulemaking filed by Entravision Holdings
LLC, RM-9567 (filed March 10, 1998)).
Nature of Item: Formal rulemaking proposal.
Summary of Item: In 1998, Entravision submitted a petition for
rulemaking which sought to revise the construction permit expiration
standard established pursuant to 47 U.S.C. 319(a)-(b) and
implemented in 47 CFR 73.3598. Entravision proposed that the
Commission allow holders of expiring construction permits to sell
them to entities in which minorities own at least 20% of the equity,
or to entities which commit to serve the programming needs of
minority or foreign language groups for at least 80% of their
operating time. MMTC proposed a modification of Entravision's
concept to make it applicable to all SDBs.
Year First Proposed: 1998.
Parallel Recommendation of Diversity Committee: Financial
Issues. Recommendations, June 14, 2004, pp. 17-18; White Paper on
Incentive-Based Regulations, May 23, 2004, pp. 9-10.
Relevance of SDB Definition: Yes.
5. Structural rule waivers for creating incubator programs.
Location(s) in Record: MMTC 2003 Comments, pp. 104-105.
Nature of Item: Formal rulemaking proposal.
Summary of Item: The Commission would act on still-pending
incubator plans developed in 1992 by Chairman Sikes and by NABOB.
With constitutionally required modifications, these plans would
allow a company to acquire more than the otherwise-allowable number
of stations in a market if the company establishes a program that
substantially promotes ownership by disadvantaged businesses. The
incubator programs could encompass management or technical
assistance, loan guarantees, direct financial assistance through
loans or equity investment, training and business planning
assistance.
Year First Proposed: 1992.
Parallel Recommendation of Diversity Committee: Financial Issues
Recommendations, June 14, 2004, pp. 17-18; White Paper on Incentive-
Based Regulations, May 23, 2004, pp. 6-7.
Relevance of SDB Definition: Yes.
6. Bifurcation of channels for share-times with SDBs.
Location(s) in Record: Comments of the Minority Media and
Telecommunications Council in MB Docket 01-317 (Radio Ownership)
(filed March 19, 2002) (``MMTC 2002 Comments''), pp. 111-173; Reply
Comments of the Minority Media and Telecommunications Council in MB
Docket 01-317 (Radio Ownership) (filed May 8, 2002) (``MMTC 2002
Reply Comments''), pp. 6-10; MMTC 2003 Comments, pp. 106-107.
Nature of Item: Formal rulemaking proposal.
Summary of Item: The Commission would create a new class of
``Free Speech Stations.'' They would be independently owned by SDBs,
have at least 20 non-nighttime hours per week of airtime, and be
primarily devoted to non-entertainment programming. A Free Speech
Station would share time on the same channel with a largely
deregulated ``Entertainment Station.'' A cluster owner that
bifurcates a channel to accommodate a Free Speech Station and an
Entertainment Station could buy another fulltime station in the
market by taking advantage of section 202(b)(2) of the
Telecommunications Act, which allows for an exception to the local
radio ownership rule when a new station is created. That additional
fulltime station would also be bifurcated into a Free Speech and an
Entertainment Station. In this way, a cluster could grow steadily up
to the limits allowed by antitrust law.
Year First Proposed: 2002.
Parallel Recommendation of Diversity Committee: Financial Issues
Recommendations, June 14, 2004, pp. 17-18; White Paper on Incentive-
Based Regulations, May 23, 2004, pp. 7-8.
Relevance of SDB Definition: Yes.
7. Structural rule waivers for financing construction of an
SDB's unbuilt station.
Location(s) in Record: MMTC 2003 Comments, pp. 109-110.
Nature of Item: Formal rulemaking proposal.
Summary of Item: When a broadcaster provides an SDB with an
equity/debt plus interest (``EDP Interest'') that enables the SDB to
build out an unbuilt permit, (1) the EDP Interest should be deemed
nonattributable, and (2) the entity providing the EDP Interest
should be reserved a place in line to subsequently duopolize or
crossown another same-market station. This reserved place in the
queue, in markets where only a limited number of new combinations
can be created under the local ownership rules, would provide an
incentive to broadcasters to assist SDBs to build out their unbuilt
permits.
Year First Proposed: 1999.
Parallel Recommendation of Diversity Committee: none.
Relevance of SDB Definition: Yes.
8. Grandfathering of nonattribution of EDP (equity debt-plus)
interests in SDBs.
Location(s) in Record: MMTC 2003 Comments, pp. 110-112.
Nature of Item: Formal rulemaking proposal.
Summary of Item: The nonattributable nature of EDP Interests in
SDBs would be grandfathered, irrespective of whether the entity
providing the EDP Interest (the ``EDP Provider'') subsequently
acquires other properties which otherwise would cause the EDP
Interest to be attributable to the EDP Provider. These arrangements
would be permissible where (1) the EDP Provider merges with,
acquires, or is acquired by a company unrelated to the company
holding a nonattributable EDP Interest in an SDB (an ``Unrelated
Transaction''); (2) the Unrelated Transaction occurs at least a year
after the EDP relationship was formed; (3) the Unrelated Transaction
would otherwise cause the EDP Provider's EDP Interest in the SDB to
become attributable; and (4) the EDP Provider and the SDB make an
affirmative showing that the EDP Provider does not exercise undue
influence over the SDB.
Year First Proposed: 1999.
Parallel Recommendation of Diversity Committee: Financial Issues
Recommendations, June 14, 2004, pp. 17-18; White Paper on Incentive-
Based Regulations, May 23, 2004, pp. 8-9.
Relevance of SDB Definition: Yes.
9. Mathematical touchstones: Tipping points for the nonviability
of independently owned radio stations in a consolidating market, and
quantifying source diversity.
[[Page 44462]]
Location(s) in Record: MMTC 2002 Reply Comments, pp. 22-27; MMTC
Reply Comments, pp. 17-24; MMTC April 28, 2003 Ex Parte, pp. 6-7.
Nature of Item: Formal rulemaking proposal.
Summary of Item: MMTC offered two formulas suitable for crafting
and implementing rules to promote diversity: (1) The ``Tipping Point
Formula'' established how the Commission could ensure that local
radio markets could preserve independent owners. This formula was
based on the premise that independent owners each need determinable
and quantifiable revenue streams in order to stay afloat and provide
service to the public. The formula acknowledges the existence of a
tipping point in the distribution of radio revenue in a market
between cluster owners and independents. When the combined revenues
of a market's cluster owners exceed this tipping point, the
independents can no longer survive. By identifying this tipping
point, the formula provides a rational basis for determining whether
a transaction would limit diversity. (2) The ``Source Diversity
Formula'' expresses consumers' utility derived from marginal
increases in source diversity. The Source Diversity Formula is based
on the premise that increases in consumer utility flow from their
access to additional sources, with diminishing returns to scale.
This formula would require field-testing before it could be applied
in practice to measure source diversity.
Year First Proposed: 2002.
Parallel Recommendation of Diversity Committee: None.
Relevance of SDB Definition: Yes.
10. Zero tolerance for ownership rule abuse.
Location(s) in Record: MMTC 2003 Comments, pp. 123-127.
Nature of Item: Formal rulemaking proposal.
Summary of Item: Structural abuse is endemic due to limited
enforcement resources, the ease of concealing abuse, and the high
financial rewards for rule breaking. Structural rule relaxation
would be easier to accept if the Commission holds the line on abuse
through a Zero Tolerance Policy focused on clear standards, pro-
active investigations, evidentiary hearings, and strict penalties
for rule violations.
Year First Proposed: 2003.
Parallel Recommendation of Diversity Committee: None.
Relevance of SDB Definition: No.
11. Use of Joint Operating Agreements (JOAs) as an alternative
to Local Marketing Agreements (LMAs) and Joint Sales Agreements
(JSAs).
Location(s) in Record: Comments of the Communications Workers of
America (CWA) in MB Docket 02-277 (filed January 2, 2003), pp. 4-5
and 48; MMTC Reply Comments, pp. 15-16.
Nature of Item: Formal rulemaking proposal.
Summary of Item: The Commission requires ownership attribution
of most JSAs and LMAs. While this step promotes diversity, it also
reduces the options available to financially troubled facilities
seeking to survive. CWA proposed that JOAs, such as those used in
the newspaper industry, could be used to help companies survive and
to promote diversity at the same time. A JOA adapted to broadcasting
would leave each station's program creation, program organization
and distribution, and sales strategy and implementation in the hands
of each station's licensees. At the same time, a genuine JOA allows
both stations to take advantage of operational synergies for non-
program, non-sales related functions, such as accounting,
engineering, and physical plant management. A JOA would not be
attributable.
Year First Proposed: 2003.
Parallel Recommendation of Diversity Committee: None.
Relevance of SDB Definition: No.
12. Opening FM spectrum for new entrants.
Location(s) in Record: MMTC 2003 Comments, pp. 128-141; MMTC
April 28, 2003.
Ex Parte, pp. 10-11.
Nature of Item: Formal rulemaking proposal.
Summary of Item: The Commission has systematically broadened
spectrum availability as a means of balancing consolidation with new
entry. MMTC proposed three methods by which the FCC could open the
FM radio spectrum to new entrants: (1) create two new classes of FM
stations suitable for serving small communities; (2) perform a
comprehensive engineering search of the FM spectrum to identify the
most-needed new drop-in opportunities; and (3) replace FM station
classes with pure interference-based criteria.
Year First Proposed: 2003.
Parallel Recommendation of Diversity Committee: Recommendation
on Diversifying Ownership in the Commercial FM Radio Band, October
4, 2004, as amplified by the Recommendations of the Subcommittee on
New Technologies, June 11, 2004, containing eight relevant subparts:
(1) Create medium power FM stations; (2) replace the FM Table with
interference-based allotment criteria; (3) allow Class A stations to
use low towers and higher-than-standard power while retaining
appropriate ERP levels; (4) conduct a comprehensive channel search
for new FM allotments; (5) harmonize regional interference
protection standards; (6) repeal the third-adjacent FM contour
rules; (7) relax the community of license and transmitter site
rules; and (8) authorize interference agreements.
Relevance of SDB Definition: No.
13. Staged implementation of deregulation, coupled with a
negotiated rulemaking.
Location(s) in Record: MMTC 2003 Comments, pp. 84-101 and 145-
147; Comments of Paxson Communications Corporation, MB Docket 02-277
(filed January 3, 2003), pp. 6-14; MMTC Reply Comments, pp. 25-32.
Nature of Item: Formal rulemaking proposal.
Summary of Item: By implementing deregulation in stages, the
Commission could measure the impact of deregulation while it is
underway, and implement mid-course corrections when needed to
protect diversity, competition, localism and minority ownership.
MMTC proposed that the Commission would implement its new ownership
rules over a ten-year period in five two-year stages. In even-
numbered years, the Commission would use quantitative tests to
measure diversity, competition, localism and minority ownership. If
these tests showed ill health on any of these four factors, the
Commission would take corrective steps in the odd-numbered years. If
a subsequent even-year measurement showed continued ill health, the
Commission could apply the brakes until market conditions change.
Paxson Communications offered a similar proposal. The coefficients
of a staged implementation plan could be worked out in a negotiated
rulemaking involving representatives of all of the stakeholders in
the proceeding.
Year First Proposed: 2003.
Parallel Recommendation of Diversity Committee: None.
Relevance of SDB Definition: Yes.
14. Market-based, tradable diversity credits as an alternative
to voice tests.
Location(s) in Record: MMTC Reply Comments, pp. 34-38; MMTC
April 28, 2003. Ex Parte, pp. 8-10.
Nature of Item: Formal rulemaking proposal.
Summary of Item: A system of market-based diversity credits
would be created as an alternative to voice tests. A quantity of
diversity credits would be given to SDBs, commensurate with the
extent of their social and economic disadvantages. Diversity credits
would also be given to the seller at the closing of a transaction
that would result in greater structural diversity. If a transaction
would add to concentration, the buyer would return a number of
diversity credits to the Commission when the transaction closes.
Finally, companies could buy or sell diversity credits to one
another, thereby providing a market-based source of access to
capital for SDBs. A similar paradigm used by the EPA has replaced
much command-and-control environmental regulation. Diversity credits
would (1) incentivize diversity, (2) disincentivize consolidation,
(3) place on the beneficiaries of consolidation the responsibility
of paying for the remediation of some of consolidation's ill
effects, (4) serve as a mechanism to provide access to capital to
SDBs, (5) capture the measure of diversity more precisely than an
inherently approximate voice test, and (6) allow for easier
administration than a system of voice tests and waivers.
Year First Proposed: 2003.
Parallel Recommendation of Diversity Committee: Transactional
Transparency Recommendations, May 14, 2004, p. 3; White Paper on
Diversity Credits, May 22, 2004.
Relevance of SDB Definition: Yes.
Section II: MMTC's Informal Suggestions to Stakeholders
15. Equity for specific and contemplated future acquisitions.
Location(s) in Record: MMTC, Background Materials: Omnibus Media
Ownership Proceeding Stakeholders Meeting, U.S. Department of
Commerce, November 6, 2002, Tab 10 (``Twelve Minority Ownership
Solutions'').
[[Page 44463]]
Nature of Item: Private industry initiative; but see item 29
infra, proposing collaborative role for FCC in creating a fund or
funds).
Summary of Item: Broadcast companies would collaborate with one
another and with institutional investors to create new targeted
funds specializing in providing equity for broadcast new entrants.
Year First Proposed: 1977.
Parallel Recommendation of the Diversity Committee: None (but
see item 29 infra).
Relevance of SDB Definition: No.
16. Debt on favorable terms--enhanced outreach and access to
debt financing by major financial institutions.
Location(s) in Record: Twelve Minority Ownership Solutions.
Nature of Item: Private industry initiative (but see items 28
and 29 infra, proposing collaborative role for FCC).
Summary of Item: Broadcast companies would solicit commitments
from large institutional lenders to work with new entrants in
providing debt financing for acquisitions, with or without the
participation of the SBA as a guarantor.
Year First Proposed: 1977.
Parallel Recommendation of Diversity Committee: None (but see
items 28 and 29 infra).
Relevance of SDB Definition: No.
17. Investments in institutions specializing in minority and
small business financing.
Location(s) in Record: Twelve Minority Ownership Solutions.
Nature of Item: Private industry initiative.
Summary of Item: Broadcast companies would invest in existing
funds with proven track records of success as participants in the
financing of new entrants. The Quetzal/J.P. Morgan Fund, the
Telecommunications Development Fund (TDF), the Broadcast Capital
Fund and other Small Business Investment Corporations (SBICs) are
examples of these funds.
Year First Proposed: 1976.
Parallel Recommendation of Diversity Committee: None.
Relevance of SDB Definition: No.
18. Assistance--cash and in-kind--to institutions that train
future minority media owners.
Location(s) in Record: Twelve Minority Ownership Solutions.
Nature of Item: Private industry initiative.
Summary of Item: Media institutions would provide assistance to
colleges and other programs that provide minorities the skill sets
needed to transition from management to ownership. Examples of these
institutions are Historically Black Colleges and Universities
(HBCUs), Hispanic Serving Institutions (HSIs) and other programs,
particularly the National Association of Broadcasters Education
Fund's (NABEF's) Broadcast Leadership Training (BLT) Program.
Year First Proposed: 1992.
Parallel Recommendation of Diversity Committee: None.
Relevance of SDB Definition: No.
19. Creation of business planning centers.
Location(s) in Record: Twelve Minority Ownership Solutions.
Nature of Item: Private industry initiative.
Summary of Item: Business planning centers, typically affiliated
with universities, would work one-on-one with minority entrepreneurs
as they develop business plans and strategies, seek financing and
pursue acquisitions.
Year First Proposed: 1992.
Parallel Recommendation of Diversity Committee: None.
Relevance of SDB Definition: No.
20. Executive loans, and engineers on loan to minority owned
companies and applicants.
Location(s) in Record: Twelve Minority Ownership Solutions.
Nature of Item: Private industry initiative.
Summary of Item: The broadcasting industry would create an
executive loan program, following the examples of similar programs
in other industries. Loaned executives or engineers would work on
the staffs of minority broadcasters fulltime for six months to two
years.
Year First Proposed: 1992.
Parallel Recommendation of Diversity Committee: None.
Relevance of SDB Definition: No.
21. Enhanced access to broadcast transactions.
Location(s) in Record: Twelve Minority Ownership Solutions.
Nature of Item: Private industry initiative.
Summary of Item: Sellers would give minority new entrants a
first look at their properties, allowing them a headstart for due
diligence and financing.
Year First Proposed: 2002.
Parallel Recommendation of Diversity Committee: None.
Relevance of SDB Definition: No.
22. Nondiscrimination provisions in advertising sales contracts,
designed to expressly avoid such practices as ``no urban/no
Spanish'' dictates.
Location(s) in Record: Twelve Minority Ownership Solutions.
Nature of Item: Contemplates FCC or FTC policy statement or
rule.
Summary of Item: Rep firms, ad agencies, broadcasters and
advertisers would agree to use a standard provision in advertising
sales contracts that would confirm that the parties to these
contracts will not participate in a scheme to restrict advertising
because of the membership in a minority group of the targets of the
foregone advertising. The FTC or FCC would obtain certifications
that this contract provision is always used in ad sales contracts.
Year First Proposed: 1984.
Parallel Recommendation of Diversity Committee: None.
Relevance of SDB Definition: No.
23. In-house incubation and mentoring programs for future
minority owners.
Location(s) in Record: Twelve Minority Ownership Solutions.
Nature of Item: Private industry initiative.
Summary of Item: Established media companies would develop their
own in-house programs to incubate and mentor future minority owners,
including their own executives who might wish to transition into
ownership. These initiatives would have no regulatory tie-ins.
Year First Proposed: 1976.
Parallel Recommendation of Diversity Committee: None.
Relevance of SDB Definition: No.
24. Enactment of tax deferral legislation designed, to the
extent possible, to foster minority ownership.
Location(s) in Record: Twelve Minority Ownership Solutions.
Nature of Item: Legislation; FCC has recommended it to Congress
several times.
Summary of Item: The Commission would continue to recommend to
Congress the adoption of a tax deferral program to replace the
former Tax Certificate Policy, under which a seller was able to
defer capital gains taxes on the sale of a media property to a
minority controlled firm. The new program would be focused on SDBs
rather than only on minorities, and it would be extended to
telecommunications. In recent years, Senator John McCain,
Congressman Charles Rangel and Congressman Bobby Rush have each
introduced legislation along these lines.
Year First Proposed: 1977; in effect from 1978-1995 as the Tax
Certificate Policy (see 68 FCC2d 979 (1978)); repealed by Congress
in 1995; restoration often proposed since 1995.
Parallel Recommendation of Diversity Committee: Financial Issues
Recommendations, June 14, 2004, pp. 14-15; Transactional
Transparency Recommendations, May 14, 2004, pp. 2-3.
Relevance of SDB Definition: Yes (included in bills sponsored by
Senator John McCain and by Congressman Bobby Rush).
25. Examination of how to promote minority ownership as an
integral part of all FCC general media rulemaking proceedings.
Location(s) in Record: Twelve Minority Ownership Solutions.
Nature of Item: Contemplates FCC policy statement or procedural
rule.
Summary of Item: All general mass media rulemaking proceedings
(except individual FM or TV allotment proceedings) would include a
request for comment on how the proposed rules affected minority
entrepreneurship or could be tailored to have a positive impact on
minority entrepreneurship.
Year First Proposed: 1973.
Parallel Recommendation of Diversity Committee: None.
Relevance of SDB Definition: No.
26. Ongoing longitudinal research on minority and female
ownership trends.
Location(s) in Record: Twelve Minority Ownership Solutions.
Nature of Item: FCC or NTIA research initiative.
Summary of Item: The FCC or NTIA would conduct an annual,
authoritative survey of minority and female ownership trends. As a
longitudinal instrument, it could track this data over time,
enabling scholars to examine the impact of rule changes on minority
and female ownership.
Year First Proposed: 1995.
Parallel Recommendation of Diversity Committee: none.
Relevance of SDB Definition: Yes.
Section III: Proposals Sponsored by the Diversity Committee
27. Clearinghouse through which licensees could announce
availability of stations for sale.
[[Page 44464]]
Location(s) in Record: Diversity Committee, Financial Issues.
Recommendations, June 14, 2004, pp. 13-14.
Nature of Item: Private industry initiative.
Summary of Item: The National Association of Broadcasters and/or
the National Association of Media Brokers could create a website or
other clearinghouse through which licensees with stations for sale
could seek minority buyers.
Year First Proposed: 2004.
Relevance of SDB Definition: No.
28. Extension of the Community Reinvestment Act (CRA) to
encourage financial institutions to provide debt financing to
broadcasters.
Location(s) in Record: Diversity Committee, Financial Issues
Recommendations, June 14, 2004, p. 15.
Nature of Item: Recommendation for FCC to propose rule revisions
to the Treasury Department.
Summary of Item: The FCC would work with the Treasury Department
to expand the application of the CRA credit to encourage financial
institutions to place capital in private equity funds led by
minority and female entrepreneurs, or in funds that invest in
communities of color. A similar incentive mechanism could be
explored with the appropriate regulatory agencies to encourage
pension funds, insurance companies and other financial institutions
to place monies with such equity funds.
Year First Proposed: 2004.
Relevance of SDB Definition: No.
29. Encourage more local and regional banks to participate in
SBA guaranteed loan programs for broadcast and telecom ventures.
Location(s) in Record: Diversity Committee, Financial Issues
Recommendations, June 14, 2004, p. 16.
Nature of Item: Recommendation for FCC and SBA to expand
outreach to banks.
Summary of Item: The FCC would work closely with the SBA to
educate and encourage more local and regional banks (which have not
been heavily involved in broadcast or telecom lending) to make loans
through the SBA's 7(a) or 504 programs.
Year First Proposed: 2004.
Relevance of SDB Definition: No.
30. Establishment of a fund of funds.
Location(s) in Record: Diversity Committee, Financial Issues
Recommendations, June 14, 2004, pp. 16-17.
Nature of Item: Private industry initiative.
Summary of Item: The FCC would initiate discussions with the
major pension funds to encourage the establishment of a fund of
funds that would place capital with minority focused private equity
funds such as those belonging to the National Association of
Investment Companies (NAIC), which are led by minority management
and which invest in opportunities led by women and minority
entrepreneurs and/or in opportunities in underserved markets.
Year First Proposed: 2004.
Relevance of SDB Definition: No.
31. Revision of the Distress Sale Policy to institute case-by-
case review of purchasers' qualifications.
Location(s) in Record: Diversity Committee, Recommendation on
the Distress Sale Policy, June 1, 2004; Financial Issues
Recommendations, June 14, 2004, pp. 18-19.
Nature of Item: Rulemaking recommendation.
Summary of Item: The Distress Sale Policy, in existence since
1978 but seldom used recently, would be revised to ensure that it
satisfies the narrow tailoring prong of strict scrutiny. In
particular, a potential buyer, of any race, would demonstrate that
its proposed service to the community would address needs unmet by
existing media. Service to minority audiences could be an unmet
need.
Year First Proposed: 2004.
Relevance of SDB Definition: No.
32. Reservation, for a company that finances or incubates an
SDB, of first place in the queue to form a duopoly in a market for
which only a limited number of duopolies are permissible.
Location(s) in Record: Diversity Committee, Financial Issues
Recommendations, June 14, 2004, pp. 17-18; White Paper on Incentive-
Based Regulations, May 23, 2004, p. 9.
Nature of Item: Rulemaking recommendation.
Summary of Item: When the local market voice test limits how
many LMAs may be created, a company wishing to have its application
to create an LMA considered first could reserve a place in the
application queue by financing or incubating an SDB.
Year First Proposed: 1999.
Relevance of SDB Definition: Yes.
33. Relaxation of foreign ownership restrictions (see 47 U.S.C.
310(b)(4)).
Location(s) in Record: Diversity Committee, Adoption of a
Declaratory Ruling on Section 310(b) (4) Waivers, December 10, 2004.
Nature of Item: Recommendation for rulemaking or policy
statement.
Summary of Item: The Commission would consider whether a
noncontrolling investment from foreigners (e.g. up to 49%) could be
permitted where the investment would help eliminate a barrier to
access to capital for domestic minority owned broadcasters as
contemplated by 47 U.S.C. 257.
Year First Proposed: 2004.
Relevance of SDB Definition: Yes.
34. Extension of divestiture deadlines in mergers where
applicants have actively solicited bids for spin-off properties from
SDBs.
Location(s) in Record: Diversity Committee, Recommendation on
Merger Review, October 15, 2004.
Nature of Item: Recommendation for rulemaking or policy
statement.
Summary of Item: The Commission has recognized that minorities,
especially new entrants, often need additional time to line up
financing. Therefore, the Commission would announce a policy of
generally affording more time for divestitures where the applicants
solicit bids from SDBs for spinoff properties.
Year First Proposed: 1999.
Relevance of SDB Definition: Yes.
Appendix B--Second Supplemental Initial Regulatory Flexibility Analysis
1. As required by the Regulatory Flexibility Act, as amended
(``RFA'') \4\ the Commission has prepared this Second Supplemental
Initial Regulatory Flexibility Analysis (``Second Supplemental
IRFA'') of the possible significant economic impact on a substantial
number of small entities of the policies and rules considered in the
Second Further Notice of Proposed Rule Making (``Second FNPRM'').
Written public comments are requested on this Second Supplemental
IRFA. Comments must be identified as responses to the Second
Supplemental IRFA and must be filed by the deadlines for comments on
the Second FNPRM. The Commission will send a copy of the Second
FNPRM, including this Second Supplemental IRFA, to the Chief Counsel
for Advocacy of the Small Business Administration (``SBA'').\5\ In
addition, the Second FNPRM and the Second Supplemental IRFA (or
summaries thereof) will be published in the Federal Register.\6\
---------------------------------------------------------------------------
\4\ See 5 U.S.C. 603. The RFA, see 5 U.S.C. 601-612, has been
amended by the Contract With America Advancement Act of 1996, Pub.
L. No. 104-121, 110 Stat. 847 (1996) (``CWAAA''). Title II of the
CWAAA is the Small Business Regulatory Enforcement Fairness Act of
1996 (``SBREFA'').
\5\ See 5 U.S.C. 603(a).
\6\ See id.
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A. Need for, and Objectives of, the Proposed Rules
2. The Further Notice of Proposed Rule Making in MB Docket Nos.
06-121, et al.,\7\ invites comment on how to address the issues
raised by the opinion of the U.S. Court of Appeals for the Third
Circuit in Prometheus Radio Project v. FCC,\8\ and, pursuant to
section 202(h) of the Telecommunications Act of 1996, on whether the
media ownership rules are ``necessary in the public interest as the
result of competition.'' \9\ In Prometheus, the court affirmed some
Commission decisions and
[[Page 44465]]
remanded others for further Commission justification or
modification.\10\ In the Second FNPRM, we seek additional comment on
specific proposals advocated by the Diversity and Competition
Supporters (collectively, ``MMTC'') to foster minority and female
ownership. In addition, the Commission will consolidate into the
broadcast ownership proceeding the record established in MB Docket
No. 04-228, in which the Commission solicited public comment on
constitutionally permissible ways to further the mandates of Section
257 of the Telecommunications Act of 1996,\11\ which directs the
Commission to identify and eliminate market entry barriers for small
telecommunications businesses, and Section 309(j) of the
Communications Act of 1934, as amended (the ``Act''),\12\ which
requires the Commission to further opportunities in the allocation
of spectrum-based services for small businesses and businesses owned
by women and minorities. The Commission previously published a
Supplemental IRFA in connection with the FNPRM. We issue this Second
Supplemental IRFA in order to invite comment on the effects on small
entities, including minorities and women, of the proposals
identified in this Second FNPRM. We particularly solicit comment
from all small business entities, including minority-owned and
women-owned small businesses.
---------------------------------------------------------------------------
\7\ 2006 Quadrennial Regulatory Review--Review of the
Commission's Broadcast Ownership Rules and Other Rules Adopted
Pursuant to Section 202 of the Telecommunications Act of 1996,
Further Notice of Proposed Rule Making, 71 FR 45511, August 9, 2006
(``FNPRM'').
\8\ Prometheus Radio Project, et al. v. F.C.C., 373 F.3d 372
(2004) (``Prometheus''), stay modified on rehearing, No. 03-3388 (3d
Cir. Sept. 3, 2004) (``Prometheus Rehearing Order''), cert. denied,
73 U.S.L.W. 3466 (U.S. June 13, 2005) (Nos. 04-1020, 04-1033, 04-
1036, 04-1045, 04-1168 and 04-1177); see also 2002 Biennial
Regulatory Review--Review of the Commission's Broadcast Ownership
Rules and Other Rules Adopted Pursuant to Section 202 of the
Telecommunications Act of 1996, 68 FR 46286, August 5, 2003 (``2002
Biennial Review Order'').
\9\ See Telecommunications Act of 1996, Pub. L. No. 104-104, 110
Stat. 56, sec. 202(h) (1996) (``1996 Act''); Consolidated
Appropriations Act, 2004, Pub. L. No. 108-199, sec. 629, 118 Stat. 3
(2004) (``Appropriations Act'') (amending sections 202(c) and 202(h)
of the 1996 Act). Section 202(h) requires the Commission to
periodically review its media ownership rules to determine ``whether
any of such rules are necessary in the public interest as the result
of competition'' and to ``repeal or modify any regulation it
determines to be no longer in the public interest.''
\10\ See Prometheus Rehearing Order. Accordingly, except for
revisions to the local radio ownership rule, the rule changes made
in the 2002 Biennial Review Order remain stayed, and the preexisting
ownership rules remain in effect.
\11\ 47 U.S.C. 257.
\12\ 47 U.S.C. 309(j).
---------------------------------------------------------------------------
B. Legal Basis
3. The Second FNPRM is adopted pursuant to sections 1, 2(a),
4(i), 257, 303, 307, 309, 310 and 613 of the Act, as amended, 47
U.S.C. 151, 152(a), 154(i), 257, 303, 307, 309, 310, and 533, and
Section 202(h) of the Telecommunications Act of 1996.
C. Description and Estimate of the Number of Small Entities To Which
the Proposed Rules Will Apply
4. The RFA directs agencies to provide a description of, and,
where feasible, an estimate of the number of small entities that may
be affected by the proposed rules, if adopted.\13\ The RFA defines
the term ``small entity'' as having the same meaning as the terms
``small business,'' ``small organization,'' and ``small governmental
entity'' under Section 3 of the Small Business Act.\14\ In addition,
the term ``small business'' has the same meaning as the term ``small
business concern'' under the Small Business Act.\15\ A small
business concern is one which: (1) Is independently owned and
operated; (2) is not dominant in its field of operation; and (3)
satisfies any additional criteria established by the SBA.\16\
---------------------------------------------------------------------------
\13\ 5 U.S.C. 603(b)(3).
\14\ Id. sec. 601(3) (incorporating by reference the definition
of ``small business concern'' in 15 U.S.C. 632). Pursuant to the
RFA, the statutory definition of a small business applies, ``unless
an agency, after consultation with the Office of Advocacy of the
Small Business Administration and after opportunity for public
comment, establishes one or more definitions of such term which are
appropriate to the activities of the agency and publishes such
definition(s) in the Federal Register.''
\15\ Id.
\16\ 15 U.S.C. 632.
---------------------------------------------------------------------------
5. Television Broadcasting. In this context, the application of
the statutory definition to television stations is of concern. The
Small Business Administration defines a television broadcasting
station that has no more than $13 million in annual receipts as a
small business. Business concerns included in this industry are
those ``primarily engaged in broadcasting images together with
sound.'' \17\ According to Commission staff review of the BIA
Financial Network, Inc. Media Access Pro Television Database as of
July 10, 2007, about 880 (68 percent) of the 1,300 commercial
television stations in the United States have revenues of $13
million or less. However, in assessing whether a business entity
qualifies as small under the above definition, business control
affiliations \18\ must be included. Our estimate, therefore, likely
overstates the number of small entities that might be affected by
any changes to the ownership rules, because the revenue figures on
which this estimate is based do not include or aggregate revenues
from affiliated companies.
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\17\ OMB, North American Industry Classification System: United
States, 1997, at 508-09 (1997) (NAICS Code 513120, which was changed
to 515120 in October 2002). This category description continues,
``These establishments also produce or transmit visual programming
to affiliated broadcast television stations, which in turn broadcast
the programs to the public on a predetermined schedule. Programming
may originate in their own studio, from an affiliated network, or
from external sources.'' Separate census categories pertain to
businesses primarily engaged in produced programming. See id. at
502-505, NAICS Code 512110, Motion Picture and Video Production;
Code 512120, Motion Picture and Video Distribution; Code 512191,
Teleproduction and Other Post-Production Services; and Code 512199,
Other Motion Picture and Video Industries.
\18\ ``[Business concerns] are affiliates of each other when one
[business concern] controls or has the power to control the other,
or a third party or parties controls or has the power to control
both.'' 13 CFR 121.103(a)(1).
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6. An element of the definition of ``small business'' is that
the entity not be dominant in its field of operation. The Commission
is unable at this time and in this context to define or quantify the
criteria that would establish whether a specific television station
is dominant in its market of operation. Accordingly, the foregoing
estimate of small businesses to which the rules may apply does not
exclude any television stations from the definition of a small
business on this basis and is therefore over-inclusive to that
extent. An additional element of the definition of ``small
business'' is that the entity must be independently owned and
operated. It is difficult at times to assess these criteria in the
context of media entities, and our estimates of small businesses to
which they apply may be over-inclusive to this extent.
7. Radio Broadcasting. The Small Business Administration defines
a radio broadcasting entity that has $6.5 million or less in annual
receipts as a small business.\19\ Business concerns included in this
industry are those ``primarily engaged in broadcasting aural
programs by radio to the public.'' \20\ According to Commission
staff review of the BIA Financial Network, Inc. Media Access Radio
Analyzer Database as of July 10, 2007, about 10,520 (95 percent) of
11,055 commercial radio stations in the United States have revenues
of $6.5 million or less. We note, however, that in assessing whether
a business entity qualifies as small under the above definition,
business control affiliations \21\ must be included. Our estimate,
therefore, likely overstates the number of small entities that might
be affected by any changes to the ownership rules, because the
revenue figures on which this estimate is based do not include or
aggregate revenues from affiliated companies.
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\19\ 13 CFR 121.201.
\20\ See NAICS Code 515112.
\21\ ``[Business concerns] are affiliates of each other when one
[business concern] controls or has the power to control the other,
or a third party or parties controls or has the power to control
both.'' 13 CFR 121.103(a)(1).
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8. In this context, the application of the statutory definition
to radio stations is of concern. An element of the definition of
``small business'' is that the entity not be dominant in its field
of operation. We are unable at this time and in this context to
define or quantify the criteria that would establish whether a
specific radio station is dominant in its field of operation.
Accordingly, the foregoing estimate of small businesses to which the
rules may apply does not exclude any radio station from the
definition of a small business on this basis and is therefore over-
inclusive to that extent. An additional element of the definition of
``small business'' is that the entity must be independently owned
and operated. We note that it is difficult at times to assess these
criteria in the context of media entities, and our estimates of
small businesses to which they apply may be over-inclusive to this
extent.
9. Daily Newspapers. The SBA has developed a small business size
standard for the census category of Newspaper Publishers; that size
standard is 500 or fewer employees.\22\ Census Bureau data for 2002
show that there were 5,159 firms in this category that operated for
the entire year.\23\ Of this total, 5,065 firms had employment of
499 or fewer employees, and an additional 42 firms had employment of
500 to 999 employees. Therefore, we estimate that the majority of
Newspaper Publishers are small entities that might be affected by
our action.
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\22\ 13 CFR 121.201; NAICS Code 511110.
\23\ U.S. Census Bureau, 2002 Economic Census, Subject Series:
Information, ``Establishment and Firm Size (Including Legal Form of
Organization),'' Table 5, NAICS Code 511110 (issued Nov. 2005).
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D. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements
10. Depending on the rules adopted as a result of this Second
FNPRM, the Report and Order (R&O) ultimately adopted in this
proceeding may contain new or modified information collections. We
anticipate that none of the changes would result in an increase to
the reporting and recordkeeping requirements of broadcast stations,
[[Page 44466]]
newspapers, or applicants for licenses. As noted above, we invite
small business entities to comment in response to the Second FNPRM.
E. Steps Taken To Minimize Significant Impact on Small Entities, and
Significant Alternatives Considered
11. The RFA requires an agency to describe any significant
alternatives that it has considered in reaching its proposed
approach, which may include the following four alternatives (among
others): (1) The establishment of differing compliance or reporting
requirements or timetables that take into account the resources
available to small entities; (2) the clarification, consolidation,
or simplification of compliance or reporting requirements under the
rule for small entities; (3) the use of performance, rather than
design, standards; and (4) an exemption from coverage of the rule,
or any part thereof, for small entities.\24\
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\24\ 5 U.S.C. 603(c).
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12. We are directed under law to describe any alternatives we
consider, including alternatives not explicitly listed above.\25\
The Second FNPRM describes and seeks comment on the minority
ownership proposals made by MMTC in comments in the 2002 biennial
ownership proceeding, as well as the recommendations of the
Diversity Committee, and consolidates the record developed in MB
Docket No. 04-228 with the record in MB Docket Nos. 06-121, et al.
The proposals are intended to promote minority and female ownership,
and we seek comment on the extent to which they would benefit small
businesses, including those owned by minorities and women. We
especially encourage small entities to comment on the proposals
under consideration in this consolidated proceeding. We do not
propose specific rules in the Second FNRPM but rather seek comment
on a number of different proposals that could have an impact on
small entities. Accordingly, we will describe the steps taken to
minimize the significant impact on small entities and the
significant alternatives that we consider in the Final Regulatory
Flexibility Analysis.
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\25\ 5 U.S.C. 603(b).
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F. Federal Rules That May Duplicate, Overlap, or Conflict With the
Proposed Rules
None.
[FR Doc. E7-15456 Filed 8-7-07; 8:45 am]
BILLING CODE 6712-01-P