[Federal Register: February 21, 2008 (Volume 73, Number 35)]
[Rules and Regulations]
[Page 9481-9492]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21fe08-19]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 73
[MB Docket Nos. 06-121; 02-277; 01-235; 01-317; 00-244; 04-228; 99-360;
FCC 07-216]
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
AGENCY: Federal Communications Commission.
[[Page 9482]]
ACTION: Final rule.
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SUMMARY: This document adopts rule changes that presumptively permit
newspaper/broadcast cross ownership only in the largest markets and
only where there exists competition and numerous voices. The revised
rule balances the need to support the availability and sustainability
of local news while not significantly increasing local concentration or
harming diversity. The Commission generally retains the other broadcast
ownership rules currently in effect.
DATES: Effective March 24, 2008 except for 73.3555(d) which contains
information collection requirements that have not been approved by OMB.
The FCC will publish a document announcing the effective date of that
section.
FOR FURTHER INFORMATION CONTACT: Royce Sherlock, (202) 418-2330; Mania
Baghdadi, (202) 418-2330.
SUPPLEMENTARY INFORMATION: This is a summary of the Federal
Communications Commission's Report and Order and Order on
Reconsideration in MB Docket Nos. 06-121; 02-277; 01-235; 01-317; 00-
244; 04-228; 99-360, FCC 07-216, adopted December 18, 2007, and
released February 4, 2008. The full text of this document is available
for public inspection and copying during regular business hours in the
FCC Reference Center, Federal Communications Commission, 445 12th
Street, SW., CY-A257, Washington, DC 20554. These documents will also
be available via ECFS (http://www.fcc.gov/cgb/ecfs). The complete text
may be purchased from the Commission's copy contractor, 445 12th
Street, SW., Room CY-B402, Washington, DC 20554. To request this
document in accessible formats (computer diskettes, large print, audio
recording and Braille), send an e-mail to fcc504@fcc.gov or call the
FCC's Consumer and Governmental Affairs Bureau at (202) 418-0530
(voice)(202) 418-0432 (TTY).
Summary of the Report and Order
1. This Order was adopted to address the issues raised by the
opinion of the United States Court of Appeals for the Third Circuit in
Prometheus Radio Project v. FCC, and pursuant to Section 202(h) of the
Telecommunications Act of 1996 (``1996 Act''), which requires the
Commission to review its ownership rules (except the national
television ownership limit) every four years and ``determine whether
any of such rules are necessary in the public interest as the result of
competition.''
2. The Report and Order eliminates the 32-year old prohibition on
newspaper-broadcast cross-ownership. The Report and Order revises the
Commission's rules to presumptively permit cross ownership only in the
largest markets and only where there exists competition and numerous
voices. Under the new approach, the Commission presumes a proposed
newspaper-broadcast transaction is not inconsistent with the public
interest if it meets the following test: (1) The market at issue is one
of the 20 largest Nielsen Designated Market Areas (``DMAs''); (2) the
transaction involves the combination of only one major daily newspaper
and only one television or radio station; (3) if the transaction
involves a television station, at least eight independently owned and
operating major media voices (defined to include major newspapers and
full-power TV stations) would remain in the DMA following the
transaction; and (4) if the transaction involves a television station,
that station is not among the top four ranked stations in the DMA.
3. All other proposed newspaper-broadcast transactions generally
would continue to be presumed not to be in the public interest. The
Report and Order identifies two limited circumstances in which this
negative presumption would be reversed:
First, the negative presumption will be reversed if the
newspaper-broadcast combination involves a ``failing'' or ``failed''
newspaper or station. The Report and Order adapts the Commission's
longstanding approach concerning failed or failing station waivers of
the local television ownership limit to newspaper-broadcast
combinations, using the same criteria to define whether an outlet is
``failing'' or has ``failed'' in the newspaper-broadcast context. To be
deemed ``failed,'' the newspaper or broadcast station would have to
have ceased publication or gone dark at least four months before the
filing of an application, or be in bankruptcy proceedings. To be
treated as ``failing,'' the applicant must show that (a) the broadcast
station has had an all-day audience share of 4 percent or lower, (b)
the newspaper or broadcast station has had a negative cash flow for the
previous three years, and (c) the combination will produce public
interest benefits. In addition, the applicant must show that the in-
market buyer is the only reasonably available candidate willing and
able to acquire and operate the newspaper or station.
Second, the negative presumption against a newspaper-
broadcast combination will be reversed when a proposed transaction
results in a new source of local news in a market--to be specific, when
a combination would initiate at least seven hours of new local news
programming per week on a broadcast station that previously has not
aired local newscasts.
4. Under the new rule, parties seeking to overcome a negative
presumption will face high hurdles. In particular, applicants
attempting to overcome a negative presumption about a major newspaper-
television combination will need to demonstrate by clear and convincing
evidence that post-merger, the merged entity will increase the
diversity of independent news outlets (e.g., separate editorial and
news coverage decisions) and increase competition among independent
news sources in the relevant market. The Commission will use the
following factors to inform its evaluation: (1) Whether the combined
entity will significantly increase the amount of local news in the
market; (2) whether the newspaper and the broadcast outlets each will
continue to employ its own staff and each will exercise its own
independent news judgment; (3) the level of concentration in the DMA;
and (4) the financial condition of the newspaper or broadcast station,
and if the newspaper or broadcast station is in financial distress, the
proposed owner's commitment to invest significantly in newsroom
operations.
5. This approach will permit the Commission to balance the needs of
the public for media and viewpoint diversity with its concerns about
the financial health and viability of traditional media outlets and to
do so in the context of each particular transaction.
6. In reaching these decisions, the item reaffirms the Commission's
previous decision to eliminate the blanket ban on newspaper-broadcast
cross-ownership and replace it with a presumption that waivers of the
ban are in the public interest in certain limited circumstances. The
Report and Order observes that the Prometheus court agreed that the ban
is not necessary to promote competition, diversity, or localism. It
concludes that the record contains ample evidence that marketplace
conditions have indeed changed since 1975, when the ban was
established, and thus justifies a recalibration at this time. In
particular, it cites evidence that the largest markets contain a robust
number of diverse media sources and the diversity of viewpoints would
not be jeopardized by certain newspaper-broadcast combinations, and
that newspaper-broadcast combinations can create synergies that result
in more news
[[Page 9483]]
coverage for consumers. Because the modified rule generally presumes
that waivers are in the public interest only for combinations of a
single broadcast outlet and a daily newspaper in the largest markets,
the item reasons that the modified rule will ensure that such synergies
can be captured without impairing diversity.
7. The item explains that newspaper-broadcast cross-ownership in
the 20 largest DMAs in the country generally raises fewer diversity
concerns because such media markets are more vibrant and have more
media outlets. The Commission found notable differences between the top
20 markets and all other DMAs, both in terms of voices and in terms of
television households.
8. The item defines major media voices as full-power commercial and
noncommercial television stations and major newspapers. It acknowledges
that other types of outlets contribute to diversity, but concludes that
other voices are not major sources of local news or information and,
therefore, should not be included as major media voices in determining
whether eight independently owned voices will remain if a combination
is allowed. It explains that the Commission selected the number eight
for the major media voice count because it is comfortable that at least
eight major media voices in the top-20 markets--along with the other
unquantified media outlets that are present in those markets--will
assure that these markets continue to enjoy an adequate diversity of
local news and information sources. The item further explains that the
top-four prohibition is included because the Commission considers daily
newspapers and the top-four stations to be the most influential
providers of local news in markets. Thus, such combinations are likely
to cause a greater harm to diversity in a market.
9. With regard to non-top 20 markets, the item establishes a
general presumption that it is inconsistent with the public interest
for an entity to own, operate or control a combination in such markets
in order to protect competition and media diversity, as these markets
cannot match the robustness in media and outlet diversity found in the
top 20 markets. Nevertheless, the item recognizes the need to consider
factors particular to each market and proposed transaction. Thus,
applicants in markets below DMA 20 may overcome the presumption that a
merger would not be in the public interest by showing countervailing
benefits of the proposed transaction. While the Commission expects such
cases to be rare, it acknowledges that a particular market may have
unique attributes or that the proposed transaction may present unique
advantages. The item explains that the two situations in which the
negative presumption may be reversed--when a newspaper or station has
failed or is failing and when a proposed combination results in a new
source of a significant amount of local news in a market--are grounded
in the Commission's longstanding application of a failed/failing
station model in evaluating local TV waiver criteria for over 25 years,
as well as its recognition of the unique and particular importance of
local news and public affairs programming.
10. The Order does not require divestiture of the combinations
grandfathered in the Commission's 1975 decision implementing a ban on
common ownership of a daily newspaper and a full-power broadcast
station; rather these combinations remain grandfathered. Similarly, all
permanent waivers from the prior rule that previously have been granted
will continue in effect under the new rule.
11. The Order grants five permanent waivers of the rule for the
following: Gannett's combination in Phoenix; Media General's
combinations in Myrtle Beach-Florence, South Carolina; Columbus,
Georgia; Panama City, Florida, and the Tri-Cities, Tennessee/Virginia
DMA.
12. Where a pending waiver request involves an existing combination
consisting of more than one newspaper and/or more than one broadcast
station or an entity has been granted a waiver to hold such a
combination pending the completion of this rulemaking, we will afford
the licensee 90 days after the effective date of this order to either
amend its waiver/renewal request or file a request for permanent
waiver. Such requests will be examined on a case-by-case basis. Pending
waiver requests and renewal applications will be held in abeyance until
the Commission receives an appropriate amendment. Current temporary
waivers that have been granted pending the completion of the rulemaking
proceeding will be temporarily extended pending our action on requests
for permanent waivers. In order to ensure adequate public notice of
pending waiver requests, the Order indicates that the Commission will
flag applications for proposed newspaper/broadcast combinations in its
public notices as seeking waiver of the newspaper/broadcast cross-
ownership rule pursuant to Section 73.3555(d) of the Commission's
rules.
13. With respect to the remaining broadcast ownership rules under
review, including the local television ownership rule, the radio-tv
cross-ownership rule, the local radio ownership rule, and the dual
network rule, the Commission determined that any further relaxation of
ownership rules in the radio or television broadcast markets should not
be allowed and retains the media ownership rules that are currently in
effect. Thus, it retains the changes to the local radio ownership rule
adopted in the 2002 Biennial Review Order, including use of Arbitron
markets to define the relevant radio market and including noncommercial
stations in determining the size of the radio market. The Order also
reaffirms the decision in the 2002 Biennial Review Order to attribute
certain same-market radio Joint Sales Agreements. These rules reaffirm
the Commission's core competition and diversity goals, while
harmonizing these goals with marketplace realities. Finally, the Order
concludes that the Commission is foreclosed from addressing the issue
of the UHF discount in this proceeding by the 2004 Consolidated
Appropriations Act. Accordingly, these rules remain necessary in the
public interest as the result of competition.
14. The Report and Order also reinstates the failed station
solicitation rule, which required an applicant for a waiver of the
local TV ownership rule to provide notice of the sale of a failed,
failing or unbuilt station to potential out-of-market buyers before it
could sell that station to an in-market buyer. The Order states that it
is necessary to ensure that out-of-market buyers, including qualified
minority broadcasters, have notice of, and an opportunity to bid for, a
station before it is combined with an in-market station. A waiver of
the rule should only be permitted when no out-of-market buyer is
willing to purchase the station at a reasonable price.
Report and Order
Final Paperwork Reduction Act of 1995 Analysis
15. This Report and Order contains both new and modified
information collection requirements subject to the Paperwork Reduction
Act of 1995 (PRA), Public Law 104-13. It will be submitted to the
Office of Management and Budget (OMB) for review under Section 3507(d)
of the PRA. OMB, the general public, and other Federal agencies are
invited to comment on the new or modified information collection
requirements contained in this proceeding. In addition, we note that
pursuant to the Small Business Paperwork Relief Act of 2002, Public
[[Page 9484]]
Law 107-198, see 44 U.S.C. 3506(c)(4), we have considered how the
Commission might ``further reduce the information collection burden for
small business concerns with fewer than 25 employees.'' We find that
the modified requirements must apply fully to small entities (as well
as to others) to protect consumers and further other goals, as
described in the Order.
16. In this present document, we have assessed the effects of the
Commission's broadcast ownership rules, as amended, and find that the
effect on businesses with fewer than 25 employees will be minimal.
Final Regulatory Flexibility Analysis
17. As required by the Regulatory Flexibility Act of 1980, as
amended (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was
incorporated in the Notice of Proposed Rulemaking (NPRM) in MB Docket
No. 02-277. The Commission sought written public comment on the
proposals in the NPRM including comment on the IRFA (FCC 02-249, 67 FR
65751, October 28, 2002). The Commission also prepared a Supplemental
Initial Regulatory Flexibility Analysis (Supplemental IRFA) of the
possible significant economic impact on small entities of the proposals
in the Further Notice of Proposed Rulemaking (FNPRM) (FCC 06-93, 71 FR
45511, August 9, 2006; 71 FR 54253, September 14, 2006). The Commission
sought written public comment on the FNPRM, including comment on the
Supplemental IRFA. This present Final Regulatory Flexibility Analysis
(FRFA) conforms to the RFA.
A. Need for, and Objectives of, the Report and Order and Order on
Reconsideration (Order)
18. The Order concludes the Commission's 2006 Quadrennial Review of
the broadcast ownership rules. This review encompasses the newspaper/
broadcast cross-ownership rule, the radio-television cross-ownership
rule, the local television multiple ownership rule, the local radio
ownership rule, and the dual network rule. The rules are reviewed under
Section 202(h) of the Telecommunications Act of 1996 (``1996 Act''),
which requires the Commission to review its ownership rules (except the
national television ownership limit) every four years and ``determine
whether any of such rules are necessary in the public interest as the
result of competition.'' Under Section 202(h), the Commission ``shall
repeal or modify any regulation it determines to be no longer in the
public interest.'' The Commission modifies the newspaper/broadcast
cross-ownership rule and retains the other broadcast ownership rules
currently in effect.
19. The Commission's approach in this Order is a cautious approach
that balances the concerns of many commenters that it not permit
excessive consolidation, with concerns of other commenters that it
afford some relief to assure continued diversity and investment in
local news programming by a modest loosening of the 32 year-old
prohibition on newspaper/broadcast cross-ownership. The Commission
believes that the decisions it adopts in the Order serve our public
interest goals, appropriately take account of the current media
marketplace, and comply with our statutory responsibilities.
B. Legal Basis
20. This Order is adopted pursuant to Sections 1, 2(a), 4(i), 303,
307, 309, and 310 of the Communications Act of 1934, as amended, 47
U.S.C. 151, 152(a), 154(i), 303, 307, 309, and 310, and Section 202(h)
of the Telecommunications Act of 1996.
C. Summary of Significant Issues Raised by Public Comments in Response
to the IRFA and the Supplemental IRFA
21. The Commission received no comments in direct response to the
IRFA and the Supplemental IRFA. However, the Commission received
comments that discuss issues of interest to small entities. These
comments are discussed in the section of this FRFA discussing the steps
taken to minimize significant impact on small entities, and the
significant alternatives considered.
D. Description and Estimate of the Number of Small Entities to Which
the Rules Will Apply
22. 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. 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. In addition, the term
``small business'' has the same meaning as the term ``small business
concern'' under the Small Business Act. 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.
23. 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.''
According to Commission staff review of the BIA Financial Network, Inc.
Media Access Pro Television Database as of December 7, 2007, about 825
(66 percent) of the 1,250 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 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.
24. 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.
25. 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. Business concerns included in this
industry are those ``primarily engaged in broadcasting aural programs
by radio to the public.'' According to Commission staff review of the
BIA Financial Network, Inc. Media Access Radio Analyzer Database as of
December 7, 2007, about 10,500 (95 percent) of 11,050 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 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
[[Page 9485]]
aggregate revenues from affiliated companies.
26. 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.
27. 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. Census Bureau data for 2002 show
that there were 5,159 firms in this category that operated for the
entire year. 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.
E. Description of Projected Reporting, Recordkeeping and Other
Compliance Requirements
28. Broadcasters whose newspaper/broadcast combination is approved
under the presumption that a proposed newspaper broadcast combination
is consistent with the public interest when it initiates the
programming of local newscasts of at least seven hours per week on a
broadcast outlet that otherwise was not offering local newscasts prior
to the combined operations must report to the Commission annually
regarding how they have followed through on their commitment to
initiate at least seven hours a week of local news. The Order modestly
revises the newspaper/broadcast cross-ownership rule and otherwise
retains the broadcast ownership rules currently in effect. With the
exception of the foregoing reporting requirement, the Order imposes no
increased reporting, recordkeeping or other compliance requirements.
F. Steps Taken to Minimize Significant Impact on Small Entities and
Significant Alternatives Considered
29. 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.
30. The Order modestly revises the newspaper/broadcast cross-
ownership rule. Under the new rule, the Commission presumes a proposed
newspaper/broadcast transaction is not inconsistent with the public
interest if it meets the following test: (1) The market at issue is one
of the 20 largest Nielsen Designated Market Areas (``DMAs''); (2) the
transaction involves the combination of only one major daily newspaper
and only one television or radio station; (3) if the transaction
involves a television station, at least eight independently owned and
operating major media voices (defined to include major newspapers and
full-power TV stations) would remain in the DMA following the
transaction; and (4) if the transaction involves a television station,
that station is not among the top four ranked stations in the DMA. All
other proposed newspaper/broadcast transactions would continue to be
presumed not in the public interest.
31. Under the new rule, the negative presumption will be reversed
in two circumstances. First, the newspaper or broadcast station would
have to be considered ``failed'' or ``failing.'' To be deemed
``failed,'' the newspaper or broadcast station would have to have
ceased publication or gone dark at least four months before the filing
of an application, or be in bankruptcy proceedings. To be treated as
``failing,'' the applicant must show that (a) the broadcast station has
had an all-day audience share of 4 percent or lower, (b) the newspaper
or broadcast station has had a negative cash flow for the previous
three years, (c) the combination will produce public interest benefits,
and (d) the in-market buyer is the only reasonably available candidate
willing and able to acquire and operate the newspaper or station.
Second, the negative presumption will be reversed when the combination
is with a broadcast station that was not offering local newscasts prior
to the combination, and the station will initiate at least seven hours
per week of local news programming after the combination. Under the new
rule, the Commission would consider a negative presumption as
establishing a high hurdle as it reviews the transactions on a case-by-
case basis. In particular, applicants attempting to overcome a negative
presumption about a newspaper television combination will need to
demonstrate by clear and convincing evidence that post-merger the
merged entity will increase the diversity of independent news outlets
(e.g., separate editorial and news coverage decisions) and increase
competition among independent news sources in the relevant market. The
Commission will use the following factors to inform its evaluation: (1)
The extent to which cross-ownership will serve to increase the amount
of local news disseminated through the affected media outlets in the
combination; (2) whether each affected media outlet in the combination
will exercise its own independent news judgment; (3) the level of
concentration in the Nielsen DMA; and (4) the financial condition of
the newspaper or broadcast station, and if the newspaper or broadcast
station is in financial distress, the owner's commitment to invest
significantly in newsroom operations. This approach will permit the
Commission to balance the needs of the public for media and viewpoint
diversity with its concerns about the financial health of traditional
media outlets in the context of each particular transaction.
32. The Commission considered other alternatives, but the Order
retains the other media ownership rules currently in effect. The
Commission believes that the decisions it adopts in the Order serve our
public interest goals, appropriately take account of the current media
marketplace, and comply with our statutory responsibilities. It retains
the radio/television cross-ownership rule currently in effect to
provide protection for diversity goals in local markets and thereby
serve the public interest.
33. The Order finds that restrictions on common ownership of
television stations in local markets continue to be necessary in the
public interest to protect competition for viewers and in local
television advertising markets. The Commission concludes that, in order
to preserve adequate levels of competition within local television
markets, the local TV ownership rule as it is
[[Page 9486]]
currently in effect should be retained. Accordingly, an entity may own
two television stations in the same DMA if: (1) The Grade B contours of
the stations do not overlap; or (2) at least one of the stations in the
combination is not ranked among the top four stations in terms of
audience share, and at least eight independently owned and operating
commercial or non-commercial full-power broadcast television stations
would remain in the DMA after the combination. To determine the number
of voices remaining after the merger, the Commission counts those
broadcast television stations whose Grade B signal contours overlap
with the Grade B signal contour of at least one of the stations that
would be commonly owned. With respect to the waiver standard for the
local TV ownership rule, we will reinstate our requirement that a
waiver applicant demonstrate that there is no buyer outside the market
willing to purchase the station at a reasonable price. Reinstating this
requirement will promote the market entry of small businesses,
including minority- and women-owned businesses, because it will
increase the likelihood that they will learn of purchasing
opportunities.
34. The Commission does not revise its decision that DMAs are the
more precise geographic markets. Nonetheless, in the instant Order,
unlike in the 2002 Biennial Review Order, we are not relaxing the local
television ownership rule, and, accordingly, to avoid disruption to
settled expectations, we retain the Grade B overlap provision.
Furthermore, we believe that maintaining the Grade B provision will
promote television service in rural areas by continuing to enable
station owners to build or purchase an additional station in a remote
corner of the DMA, beyond the reach of their Grade B signal, without
regard to the top four/eight voices restriction.
35. The Order concludes that the current local radio ownership rule
remains ``necessary in the public interest'' to protect competition in
local radio markets. As directed by the Prometheus court, the
Commission also provides a reasoned justification for our decision to
retain the existing numerical limits on local radio ownership and the
AM subcaps. In addition, we deny or dismiss a number of pending
petitions for reconsideration of the Commission's action concerning the
local radio ownership rule in the 2002 Biennial Review Order.
Accordingly, an entity may own, operate, or control (1) up to eight
commercial radio stations, not more than five of which are in the same
service (i.e., AM or FM), in a radio market with 45 or more full-power,
commercial and noncommercial radio stations; (2) up to seven commercial
radio stations, not more than four of which are in the same service, in
a radio market with between 30 and 44 (inclusive) full-power,
commercial and noncommercial radio stations; (3) up to six commercial
radio stations, not more than four of which are in the same service, in
a radio market with between 15 and 29 (inclusive) full-power,
commercial and noncommercial radio stations; and (4) up to five
commercial radio stations, not more than three of which are in the same
service, in a radio market with 14 or fewer full-power, commercial and
noncommercial radio stations, except that an entity may not own,
operate, or control more than 50 percent of the stations in such a
market. Retaining the AM subcap serves the public interest because the
relative affordability of radio compared to other mass media makes it a
likely avenue for new entry into the media business, particularly by
small businesses.
36. For the same reasons recited by the Commission in 2002, we
continue to believe that the dual network rule is necessary in the
public interest to promote competition and localism. Accordingly, the
Order retains the dual network rule in its current form. No petitions
were filed asking the Commission to reconsider its decision to retain
the rule, and no challenges were filed in Prometheus. The Commission
sought comment in the FNPRM on whether the dual network rule remains
necessary in the public interest to promote the Commission's policy
goals. Almost all of the few parties commenting on the rule in this
proceeding support retaining the rule in its current form. Other
parties argue that relaxing or eliminating the rule would increase
concentration to the detriment of competition, diversity, and localism.
No specific changes to the dual network rule were proposed, and only
two parties--Fox and CBS--oppose retaining the rule in any form.
Neither of these parties has provided evidence convincing us that a
departure from our 2002 decision to retain the rule in its current form
is warranted.
37. The Order finds that the Commission is foreclosed from
addressing the issue of the UHF discount in this proceeding by the 2004
Consolidated Appropriations Act. Although the Appropriations Act did
not specifically mention the UHF discount, the Prometheus court
observed that the statutory 39 percent national cap would be altered if
the UHF discount were modified. The court observed that the
Appropriations Act amended Section 202(h) to exclude ``any rules
relating to'' the 39 percent national cap, and determined that the UHF
discount was a rule ``relating to'' the national TV cap. The Third
Circuit concluded that Congress ``apparently intended to insulate the
UHF discount from periodic review,'' but left open the possibility that
the Commission may consider the discount in a rulemaking ``outside the
context of Section 202(h).'' Accordingly, the Order concludes that the
UHF discount is insulated from review under Section 202(h).
38. The Order notes that in the pending proceeding entitled Public
Interest Obligations of TV Broadcast Licensees commenters ask the
Commission to impose additional ``public interest'' obligations on
television broadcasters. The Order explains that some of the issues
raised in that proceeding have already been resolved by the Commission.
With respect to other ideas raised in this proceeding such as whether
the agency should establish more specific minimum public interest
requirements for licensees and how broadcasters could improve political
candidates' access to television, the Commission declines to take any
further action at this time. Nevertheless, to the extent that
circumstances change, the Commission agrees to revisit this decision
and initiate proceedings as appropriate.
Congressional Review Act
39. The Commission will send a copy of this Report and Order in a
report to be sent to Congress and the Government Accountability Office
pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).
Ordering Clauses
40. Accordingly, It is ordered, that pursuant to the authority
contained in sections 1, 2(a), 4(i,), 303, 307, 309 and 310 of the
Communications Act of 1934, as amended, 47 U.S.C. 151, 152(a), 154(i),
303, 307, 309 and 310, and Section 202(h) of the Telecommunications Act
of 1996, this Report and Order and Order on Reconsideration and the
rule modifications attached hereto as Appendix A are adopted, effective
thirty (30) days after publication of the text or summary thereof in
the Federal Register, except for those rules and requirements involving
Paperwork Reduction Act burdens, which shall become effective
immediately upon announcement in the Federal Register of OMB approval.
It is our intention in
[[Page 9487]]
adopting these rule changes that, if any of the rules that we retain,
modify or adopt today, or the application thereof to any person or
circumstance, are held to be unlawful, the remaining portions of the
rules not deemed unlawful, and the application of such rules to other
persons or circumstances, shall remain in effect to the fullest extent
permitted by law. Thus, for example, if one of the ownership rules is
held to be unlawful, the other ownership rules shall remain in effect
to the fullest extent permitted by law, each being severable from the
others.
41. It is further ordered, that the Petition for Reconsideration
filed by Office of Communication of the United Church of Christ, Inc.,
Black Citizens for a Fair Media, Philadelphia Lesbian and Gay Task
Force, and Women's Institute for Freedom of the Press; and the Petition
for Reconsideration filed by Minority Media and Telecommunications
Council, Counsel for Diversity and Competition Supporters filed in MB
Docket No. 02-277 are granted to the extent set forth in this Order,
and otherwise are denied. The Petitions for Reconsideration filed in MB
Docket No. 02-277 by National Association of Black Owned Broadcasters,
Inc. and The Rainbow/PUSH Coalition, Inc.; WTCM Radio, Inc.; WJZD,
Inc.; Cumulus Media, Inc.; Galaxy Communications, L.P.; Mt. Wilson FM
Broadcasters; Entercom Communications Corp.; Great Scott Broadcasting;
Treasure and Space Coast Radio; Saga Communications, Inc.; Future of
Music Coalition; National Organization for Women; Mid-West Family
Broadcasting; Monterey Licenses, LLC; LIN Television Corporation and
Raycom Media Inc.; Duff, Ackerman & Goodrich, LLC; Center for the
Creative Community and Association of Independent Video and Filmmakers;
Robert W. McChesney and Josh Silver of Free Press; Nexstar Broadcasting
Group, LLC; Saga Communications, Inc.; Consumers Federation of America
and Consumers Union; Capitol Broadcasting Company, Inc.; Bennco, Inc.;
The Amherst Alliance and the Virginia Center for the Public Press are
dismissed or denied as discussed in this Order.
42. It is further ordered, that as enumerated in paragraph 76 of
the Report and Order and Order on Reconsideration, the grandfathering
or waivers granted in the 1975 newspaper/broadcast cross-ownership
decision, Amendment of Sections 73.34, 73.240, and 73.636 of the
Commission's Rules Relating to Multiple Ownership of Standard, FM, and
Television Broadcast Stations, Docket No. 18110, 50 FCC 2d 1046 (1975)
are continued, and all permanent waivers for the prior newspaper-
broadcast cross ownership rule that have previously been granted are
continued.
43. It is further ordered, that as enumerated in paragraph 77 of
the Report and Order and Order on Reconsideration, waivers are granted
to Gannett Co. Inc.'s combination in Phoenix (The Arizona Republic and
KPNX-TV), Media General Inc.'s combination in Myrtle Beach-Florence,
South Carolina (WBTW(TV) and the Morning News), Media General, Inc.'s
combination in Columbus, Georgia (WRBL(TV) and the Opelika-Auburn
News), Media General, Inc.'s combination in Panama City, Florida
(WMBB(TV) and the Jackson County Floridan), and Media General's
combination in the Tri-Cities, Tennessee/Virginia DMA (WJHL-TV and the
Bristol (Virginia Tennessee) Herald Courier).
44. It is further ordered, that as enumerated in paragraph 78 of
the Report and Order and Order on Reconsideration, licensees with a
pending waiver request that involves an existing station combination
consisting of more than one newspaper and/or more than one broadcast
station will have 90 days after the effective date of the Report and
Order and Order on Reconsideration to either amend their renewal or
waiver requests or file a request for a permanent waiver.
45. It is further ordered, that as enumerated in paragraph 78 of
the Report and Order and Order on Reconsideration, entities that have
been granted a temporary waiver of the newspaper/broadcast cross-
ownership rule pending the completion of this rulemaking will have 90
days after the effective date of the Report and Order to either amend
their renewal or waiver requests or file a request for a permanent
waiver.
46. It is further ordered, that the proceedings in MB Docket No.
06-121, MB Docket No. 02-277, MM Docket No. 01-235, MM Docket No. 01-
317, MM Docket No. 00-244, and MM Docket No. 99-360 are terminated.
47. It is further ordered, that the Commission's Consumer and
Governmental Affairs Bureau, Reference Information Center, shall send a
copy of this Report and Order and Order on Reconsideration, including
the Final Regulatory Flexibility Analysis, to the Chief Counsel for
Advocacy of the Small Business Administration.
List of Subjects in 47 CFR Part 73
Radio, Television.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
Final Rules
0
For the reasons discussed in the preamble, the Federal Communications
Commission amends 47 CFR part 73 as follows:
PART 73--RADIO BROADCAST SERVICES
0
1. The authority citation for part 73 reads as follows:
Authority: 47 U.S.C. 154, 303, 334, 336, and 339.
0
2. Section 73.3555 is revised to read as follows:
Sec. 73.3555 Multiple ownership.
(a)(1) Local radio ownership rule. A person or single entity (or
entities under common control) may have a cognizable interest in
licenses for AM or FM radio broadcast stations in accordance with the
following limits:
(i) In a radio market with 45 or more full-power, commercial and
noncommercial radio stations, not more than 8 commercial radio stations
in total and not more than 5 commercial stations in the same service
(AM or FM);
(ii) In a radio market with between 30 and 44 (inclusive) full-
power, commercial and noncommercial radio stations, not more than 7
commercial radio stations in total and not more than 4 commercial
stations in the same service (AM or FM);
(iii) In a radio market with between 15 and 29 (inclusive) full-
power, commercial and noncommercial radio stations, not more than 6
commercial radio stations in total and not more than 4 commercial
stations in the same service (AM or FM); and
(iv) In a radio market with 14 or fewer full-power, commercial and
noncommercial radio stations, not more than 5 commercial radio stations
in total and not more than 3 commercial stations in the same service
(AM or FM); provided, however, that no person or single entity (or
entities under common control) may have a cognizable interest in more
than 50% of the full-power, commercial and noncommercial radio stations
in such market unless the combination of stations comprises not more
than one AM and one FM station.
(2) Overlap between two stations in different services is
permissible if neither of those two stations overlaps a third station
in the same service.
(b) Local television multiple ownership rule. An entity may
directly or indirectly own, operate, or control two television stations
licensed in the
[[Page 9488]]
same Designated Market Area (DMA) (as determined by Nielsen Media
Research or any successor entity) only under one or more of the
following conditions:
(1) The Grade B contours of the stations (as determined by Sec.
73.684) do not overlap; or
(i) At the time the application to acquire or construct the
station(s) is filed, at least one of the stations is not ranked among
the top four stations in the DMA, based on the most recent all-day (9
a.m.-midnight) audience share, as measured by Nielsen Media Research or
by any comparable professional, accepted audience ratings service; and
(ii) At least 8 independently owned and operating, full-power
commercial and noncommercial TV stations would remain post-merger in
the DMA in which the communities of license of the TV stations in
question are located. Count only those stations the Grade B signal
contours of which overlap with the Grade B signal contour of at least
one of the stations in the proposed combination. In areas where there
is no Nielsen DMA, count the TV stations present in an area that would
be the functional equivalent of a TV market. Count only those TV
stations the Grade B signal contours of which overlap with the Grade B
signal contour of at least one of the stations in the proposed
combination.
(2) [Reserved]
(c) Radio-television cross-ownership rule.
(1) This rule is triggered when: (i) The predicted or measured 1
mV/m contour of an existing or proposed FM station (computed in
accordance with Sec. 73.313) encompasses the entire community of
license of an existing or proposed commonly owned TV broadcast
station(s), or the Grade A contour(s) of the TV broadcast station(s)
(computed in accordance with Sec. 73.684) encompasses the entire
community of license of the FM station; or
(ii) The predicted or measured 2 mV/m groundwave contour of an
existing or proposed AM station (computed in accordance with Sec.
73.183 or Sec. 73.386), encompasses the entire community of license of
an existing or proposed commonly owned TV broadcast station(s), or the
Grade A contour(s) of the TV broadcast station(s) (computed in
accordance with Sec. 73.684) encompass(es) the entire community of
license of the AM station.
(2) An entity may directly or indirectly own, operate, or control
up to two commercial TV stations (if permitted by paragraph (b) of this
section, the local television multiple ownership rule) and 1 commercial
radio station situated as described in paragraph (c)(1) of this
section. An entity may not exceed these numbers, except as follows:
(i) If at least 20 independently owned media voices would remain in
the market post-merger, an entity can directly or indirectly own,
operate, or control up to:
(A) Two commercial TV and six commercial radio stations (to the
extent permitted by paragraph (a) of this section, the local radio
multiple ownership rule); or
(B) One commercial TV and seven commercial radio stations (to the
extent that an entity would be permitted to own two commercial TV and
six commercial radio stations under paragraph (c)(2)(i)(A) of this
section, and to the extent permitted by paragraph (a) of this section,
the local radio multiple ownership rule).
(ii) If at least 10 independently owned media voices would remain
in the market post-merger, an entity can directly or indirectly own,
operate, or control up to two commercial TV and four commercial radio
stations (to the extent permitted by paragraph (a) of this section, the
local radio multiple ownership rule).
(3) To determine how many media voices would remain in the market,
count the following:
(i) TV stations: independently owned and operating full-power
broadcast TV stations within the DMA of the TV station's (or stations')
community (or communities) of license that have Grade B signal contours
that overlap with the Grade B signal contour(s) of the TV station(s) at
issue;
(ii) Radio stations: (A)(1) Independently owned operating primary
broadcast radio stations that are in the radio metro market (as defined
by Arbitron or another nationally recognized audience rating service)
of:
(i) The TV station's (or stations') community (or communities) of
license; or
(ii) The radio station's (or stations') community (or communities)
of license; and
(2) Independently owned out-of-market broadcast radio stations with
a minimum share as reported by Arbitron or another nationally
recognized audience rating service.
(B) When a proposed combination involves stations in different
radio markets, the voice requirement must be met in each market; the
radio stations of different radio metro markets may not be counted
together.
(C) In areas where there is no radio metro market, count the radio
stations present in an area that would be the functional equivalent of
a radio market.
(iii) Newspapers: Newspapers that are published at least four days
a week within the TV station's DMA in the dominant language of the
market and that have a circulation exceeding 5% of the households in
the DMA; and
(iv) One cable system: if cable television is generally available
to households in the DMA. Cable television counts as only one voice in
the DMA, regardless of how many individual cable systems operate in the
DMA.
(d) Daily newspaper cross-ownership rule. (1) No license for an AM,
FM or TV broadcast station shall be granted to any party (including all
parties under common control) if such party directly or indirectly
owns, operates or controls a daily newspaper and the grant of such
license will result in:
(i) The predicted or measured 2 mV/m contour of an AM station,
computed in accordance with Sec. 73.183 or Sec. 73.186, encompassing
the entire community in which such newspaper is published; or
(ii) The predicted 1 mV/m contour for an FM station, computed in
accordance with Sec. 73.313, encompassing the entire community in
which such newspaper is published; or
(iii) The Grade A contour of a TV station, computed in accordance
with Sec. 73.684, encompassing the entire community in which such
newspaper is published.
(2) Paragraph (d)(1) of this section shall not apply in cases where
the Commission makes a finding pursuant to Section 310(d) of the
Communications Act that the public interest, convenience, and necessity
would be served by permitting an entity that owns, operates or controls
a daily newspaper to own, operate or control an AM, FM, or TV broadcast
station whose relevant contour encompasses the entire community in
which such newspaper is published as set forth in paragraph (d)(1) of
this section.
(3) In making a finding under paragraph (d)(2) of this section,
there shall be a presumption that it is not inconsistent with the
public interest, convenience, and necessity for an entity to own,
operate or control a daily newspaper in a top 20 Nielsen DMA and one
commercial AM, FM or TV broadcast station whose relevant contour
encompasses the entire community in which such newspaper is published
as set forth in paragraph (d)(1) of this section, provided that, with
respect to a combination including a commercial TV station,
(i) The station is not ranked among the top four TV stations in the
DMA, based on the most recent all-day (9 a.m.-midnight) audience share,
as measured
[[Page 9489]]
by Nielsen Media Research or by any comparable professional, accepted
audience ratings service; and
(ii) At least 8 independently owned and operating major media
voices would remain in the DMA in which the community of license of the
TV station in question is located (for purposes of this provision major
media voices include full-power TV broadcast stations and major
newspapers).
(4) In making a finding under paragraph (d)(2) of this section,
there shall be a presumption that it is inconsistent with the public
interest, convenience, and necessity for an entity to own, operate or
control a daily newspaper and an AM, FM or TV broadcast station whose
relevant contour encompasses the entire community in which such
newspaper is published as set forth in paragraph (d)(1) of this section
in a DMA other than the top 20 Nielsen DMAs or in any circumstance not
covered under paragraph (d)(3) of this section.
(5) In making a finding under paragraph (d)(2) of this section, the
Commission shall consider:
(i) Whether the combined entity will significantly increase the
amount of local news in the market;
(ii) Whether the newspaper and the broadcast outlets each will
continue to employ its own staff and each will exercise its own
independent news judgment;
(iii) The level of concentration in the Nielsen Designated Market
Area (DMA); and
(iv) The financial condition of the newspaper or broadcast station,
and if the newspaper or broadcast station is in financial distress, the
proposed owner's commitment to invest significantly in newsroom
operations.
(6) In order to overcome the negative presumption set forth in
paragraph (d)(4) of this section with respect to the combination of a
major newspaper and a television station, the applicant must show by
clear and convincing evidence that the co-owned major newspaper and
station will increase the diversity of independent news outlets and
increase competition among independent news sources in the market, and
the factors set forth above in paragraph (d)(5) of this section will
inform this decision.
(7) The negative presumption set forth in paragraph (d)(4) of this
section shall be reversed under the following two circumstances:
(i) The newspaper or broadcast station is failed or failing; or
(ii) The combination is with a broadcast station that was not
offering local newscasts prior to the combination, and the station will
initiate at least seven hours per week of local news programming after
the combination.
(e) National television multiple ownership rule. (1) No license for
a commercial television broadcast station shall be granted, transferred
or assigned to any party (including all parties under common control)
if the grant, transfer or assignment of such license would result in
such party or any of its stockholders, partners, members, officers or
directors having a cognizable interest in television stations which
have an aggregate national audience reach exceeding thirty-nine (39)
percent.
(2) For purposes of this paragraph (e):
(i) National audience reach means the total number of television
households in the Nielsen Designated Market Areas (DMAs) in which the
relevant stations are located divided by the total national television
households as measured by DMA data at the time of a grant, transfer, or
assignment of a license. For purposes of making this calculation, UHF
television stations shall be attributed with 50 percent of the
television households in their DMA market.
(ii) No market shall be counted more than once in making this
calculation.
(3) Divestiture. A person or entity that exceeds the thirty-nine
(39) percent national audience reach limitation for television stations
in paragraph (e)(1) of this section through grant, transfer, or
assignment of an additional license for a commercial television
broadcast station shall have not more than 2 years after exceeding such
limitation to come into compliance with such limitation. This
divestiture requirement shall not apply to persons or entities that
exceed the 39 percent national audience reach limitation through
population growth.
(f) The ownership limits of this section are not applicable to
noncommercial educational FM and noncommercial educational TV stations.
However, the attribution standards set forth in the Notes to this
section will be used to determine attribution for noncommercial
educational FM and TV applicants, such as in evaluating mutually
exclusive applications pursuant to subpart K of part 73.
Note 1 to Sec. 73.3555: The words ``cognizable interest'' as
used herein include any interest, direct or indirect, that allows a
person or entity to own, operate or control, or that otherwise
provides an attributable interest in, a broadcast station.
Note 2 to Sec. 73.3555: In applying the provisions of this
section, ownership and other interests in broadcast licensees, cable
television systems and daily newspapers will be attributed to their
holders and deemed cognizable pursuant to the following criteria:
a. Except as otherwise provided herein, partnership and direct
ownership interests and any voting stock interest amounting to 5% or
more of the outstanding voting stock of a corporate broadcast licensee,
cable television system or daily newspaper will be cognizable;
b. Investment companies, as defined in 15 U.S.C. 80a-3, insurance
companies and banks holding stock through their trust departments in
trust accounts will be considered to have a cognizable interest only if
they hold 20% or more of the outstanding voting stock of a corporate
broadcast licensee, cable television system or daily newspaper, or if
any of the officers or directors of the broadcast licensee, cable
television system or daily newspaper are representatives of the
investment company, insurance company or bank concerned. Holdings by a
bank or insurance company will be aggregated if the bank or insurance
company has any right to determine how the stock will be voted.
Holdings by investment companies will be aggregated if under common
management.
c. Attribution of ownership interests in a broadcast licensee,
cable television system or daily newspaper that are held indirectly by
any party through one or more intervening corporations will be
determined by successive multiplication of the ownership percentages
for each link in the vertical ownership chain and application of the
relevant attribution benchmark to the resulting product, except that
wherever the ownership percentage for any link in the chain exceeds
50%, it shall not be included for purposes of this multiplication. For
purposes of paragraph i. of this note, attribution of ownership
interests in a broadcast licensee, cable television system or daily
newspaper that are held indirectly by any party through one or more
intervening organizations will be determined by successive
multiplication of the ownership percentages for each link in the
vertical ownership chain and application of the relevant attribution
benchmark to the resulting product, and the ownership percentage for
any link in the chain that exceeds 50% shall be included for purposes
of this multiplication. [For example, except for purposes of paragraph
(i) of this note, if A owns 10% of company X, which owns 60% of company
Y, which owns 25% of ``Licensee,'' then X's interest in ``Licensee''
would be 25% (the same as Y's interest because X's interest in Y
exceeds 50%), and A's interest in ``Licensee'' would be 2.5% (0.1 x
0.25). Under the 5% attribution benchmark, X's interest in ``Licensee''
would be cognizable, while A's interest would not
[[Page 9490]]
be cognizable. For purposes of paragraph i. of this note, X's interest
in ``Licensee'' would be 15% (0.6 x 0.25) and A's interest in
``Licensee'' would be 1.5% (0.1 x 0.6 x 0.25). Neither interest would
be attributed under paragraph i. of this note.]
d. Voting stock interests held in trust shall be attributed to any
person who holds or shares the power to vote such stock, to any person
who has the sole power to sell such stock, and to any person who has
the right to revoke the trust at will or to replace the trustee at
will. If the trustee has a familial, personal or extra-trust business
relationship to the grantor or the beneficiary, the grantor or
beneficiary, as appropriate, will be attributed with the stock
interests held in trust. An otherwise qualified trust will be
ineffective to insulate the grantor or beneficiary from attribution
with the trust's assets unless all voting stock interests held by the
grantor or beneficiary in the relevant broadcast licensee, cable
television system or daily newspaper are subject to said trust.
e. Subject to paragraph i. of this note, holders of non-voting
stock shall not be attributed an interest in the issuing entity.
Subject to paragraph i. of this note, holders of debt and instruments
such as warrants, convertible debentures, options or other non-voting
interests with rights of conversion to voting interests shall not be
attributed unless and until conversion is effected.
f. 1. A limited partnership interest shall be attributed to a
limited partner unless that partner is not materially involved,
directly or indirectly, in the management or operation of the media-
related activities of the partnership and the licensee or system so
certifies. An interest in a Limited Liability Company (``LLC'') or
Registered Limited Liability Partnership (``RLLP'') shall be attributed
to the interest holder unless that interest holder is not materially
involved, directly or indirectly, in the management or operation of the
media-related activities of the partnership and the licensee or system
so certifies.
2. For a licensee or system that is a limited partnership to make
the certification set forth in paragraph f. 1. of this note, it must
verify that the partnership agreement or certificate of limited
partnership, with respect to the particular limited partner exempt from
attribution, establishes that the exempt limited partner has no
material involvement, directly or indirectly, in the management or
operation of the media activities of the partnership. For a licensee or
system that is an LLC or RLLP to make the certification set forth in
paragraph f. 1. of this note, it must verify that the organizational
document, with respect to the particular interest holder exempt from
attribution, establishes that the exempt interest holder has no
material involvement, directly or indirectly, in the management or
operation of the media activities of the LLC or RLLP. The criteria
which would assume adequate insulation for purposes of this
certification are described in the Memorandum Opinion and Order in MM
Docket No. 83-46, FCC 85-252 (released June 24, 1985), as modified on
reconsideration in the Memorandum Opinion and Order in MM Docket No.
83-46, FCC 86-410 (released November 28, 1986). Irrespective of the
terms of the certificate of limited partnership or partnership
agreement, or other organizational document in the case of an LLC or
RLLP, however, no such certification shall be made if the individual or
entity making the certification has actual knowledge of any material
involvement of the limited partners, or other interest holders in the
case of an LLC or RLLP, in the management or operation of the media-
related businesses of the partnership or LLC or RLLP.
3. In the case of an LLC or RLLP, the licensee or system seeking
insulation shall certify, in addition, that the relevant state statute
authorizing LLCs permits an LLC member to insulate itself as required
by our criteria.
g. Officers and directors of a broadcast licensee, cable television
system or daily newspaper are considered to have a cognizable interest
in the entity with which they are so associated. If any such entity
engages in businesses in addition to its primary business of
broadcasting, cable television service or newspaper publication, it may
request the Commission to waive attribution for any officer or director
whose duties and responsibilities are wholly unrelated to its primary
business. The officers and directors of a parent company of a broadcast
licensee, cable television system or daily newspaper, with an
attributable interest in any such subsidiary entity, shall be deemed to
have a cognizable interest in the subsidiary unless the duties and
responsibilities of the officer or director involved are wholly
unrelated to the broadcast licensee, cable television system or daily
newspaper subsidiary, and a statement properly documenting this fact is
submitted to the Commission. [This statement may be included on the
appropriate Ownership Report.] The officers and directors of a sister
corporation of a broadcast licensee, cable television system or daily
newspaper shall not be attributed with ownership of these entities by
virtue of such status.
h. Discrete ownership interests will be aggregated in determining
whether or not an interest is cognizable under this section. An
individual or entity will be deemed to have a cognizable investment if:
1. The sum of the interests held by or through ``passive
investors'' is equal to or exceeds 20 percent; or
2. The sum of the interests other than those held by or through
``passive investors'' is equal to or exceeds 5 percent; or
3. The sum of the interests computed under paragraph h. 1. of this
note plus the sum of the interests computed under paragraph h. 2. of
this note is equal to or exceeds 20 percent.
i. Notwithstanding paragraphs e. and f. of this note, the holder of
an equity or debt interest or interests in a broadcast licensee, cable
television system, daily newspaper, or other media outlet subject to
the broadcast multiple ownership or cross-ownership rules (``interest
holder'') shall have that interest attributed if:
1. The equity (including all stockholdings, whether voting or
nonvoting, common or preferred) and debt interest or interests, in the
aggregate, exceed 33 percent of the total asset value, defined as the
aggregate of all equity plus all debt, of that media outlet; and
2. i. The interest holder also holds an interest in a broadcast
licensee, cable television system, newspaper, or other media outlet
operating in the same market that is subject to the broadcast multiple
ownership or cross-ownership rules and is attributable under paragraphs
of this note other than this paragraph (i); or
ii. The interest holder supplies over fifteen percent of the total
weekly broadcast programming hours of the station in which the interest
is held. For purposes of applying this paragraph, the term, ``market,''
will be defined as it is defined under the specific multiple or cross-
ownership rule that is being applied, except that for television
stations, the term ``market,'' will be defined by reference to the
definition contained in the local television multiple ownership rule
contained in paragraph (b) of this section.
j. ``Time brokerage'' (also known as ``local marketing'') is the
sale by a licensee of discrete blocks of time to a ``broker'' that
supplies the programming to fill that time and sells the commercial
spot announcements in it.
1. Where two radio stations are both located in the same market, as
defined
[[Page 9491]]
for purposes of the local radio ownership rule contained in paragraph
(a) of this section, and a party (including all parties under common
control) with a cognizable interest in one such station brokers more
than 15 percent of the broadcast time per week of the other such
station, that party shall be treated as if it has an interest in the
brokered station subject to the limitations set forth in paragraphs
(a), (c), and (d) of this section. This limitation shall apply
regardless of the source of the brokered programming supplied by the
party to the brokered station.
2. Where two television stations are both located in the same
market, as defined in the local television ownership rule contained in
paragraph (b) of this section, and a party (including all parties under
common control) with a cognizable interest in one such station brokers
more than 15 percent of the broadcast time per week of the other such
station, that party shall be treated as if it has an interest in the
brokered station subject to the limitations set forth in paragraphs
(b), (c), (d) and (e) of this section. This limitation shall apply
regardless of the source of the brokered programming supplied by the
party to the brokered station.
3. Every time brokerage agreement of the type described in this
Note shall be undertaken only pursuant to a signed written agreement
that shall contain a certification by the licensee or permittee of the
brokered station verifying that it maintains ultimate control over the
station's facilities including, specifically, control over station
finances, personnel and programming, and by the brokering station that
the agreement complies with the provisions of paragraphs (b), (c), and
(d) of this section if the brokering station is a television station or
with paragraphs (a), (c), and (d) of this section if the brokering
station is a radio station.
k. ``Joint Sales Agreement'' is an agreement with a licensee of a
``brokered station'' that authorizes a ``broker'' to sell advertising
time for the ``brokered station.''
1. Where two radio stations are both located in the same market, as
defined for purposes of the local radio ownership rule contained in
paragraph (a) of this section, and a party (including all parties under
common control) with a cognizable interest in one such station sells
more than 15 percent of the advertising time per week of the other such
station, that party shall be treated as if it has an interest in the
brokered station subject to the limitations set forth in paragraphs
(a), (c), and (d) of this section.
2. Every joint sales agreement of the type described in this Note
shall be undertaken only pursuant to a signed written agreement that
shall contain a certification by the licensee or permittee of the
brokered station verifying that it maintains ultimate control over the
station's facilities, including, specifically, control over station
finances, personnel and programming, and by the brokering station that
the agreement complies with the limitations set forth in paragraphs
(a), (c), and (d) of this section.
Note 3 to Sec. 73.3555: In cases where record and beneficial
ownership of voting stock is not identical (e.g., bank nominees
holding stock as record owners for the benefit of mutual funds,
brokerage houses holding stock in street names for the benefit of
customers, investment advisors holding stock in their own names for
the benefit of clients, and insurance companies holding stock), the
party having the right to determine how the stock will be voted will
be considered to own it for purposes of these rules.
Note 4 to Sec. 73.3555: Paragraphs (a) through (d) of this
section will not be applied so as to require divestiture, by any
licensee, of existing facilities, and will not apply to applications
for assignment of license or transfer of control filed in accordance
with Sec. 73.3540(f) or Sec. 73.3541(b), or to applications for
assignment of license or transfer of control to heirs or legatees by
will or intestacy, if no new or increased concentration of ownership
would be created among commonly owned, operated or controlled media
properties. Paragraphs (a) through (d) of this section will apply to
all applications for new stations, to all other applications for
assignment or transfer, to all applications for major changes to
existing stations, and to applications for minor changes to existing
stations that implement an approved change in an FM radio station's
community of license or create new or increased concentration of
ownership among commonly owned, operated or controlled media
properties. Commonly owned, operated or controlled media properties
that do not comply with paragraphs (a) through (d) of this section
may not be assigned or transferred to a single person, group or
entity, except as provided in this Note or in the Report and Order
in Docket No. 02-277, released July 2, 2003 (FCC 02-127).
Note 5 to Sec. 73.3555: Paragraphs (b) through (e) of this
section will not be applied to cases involving television stations
that are ``satellite'' operations. Such cases will be considered in
accordance with the analysis set forth in the Report and Order in MM
Docket No. 87-8, FCC 91-182 (released July 8, 1991), in order to
determine whether common ownership, operation, or control of the
stations in question would be in the public interest. An authorized
and operating ``satellite'' television station, the Grade B contour
of which overlaps that of a commonly owned, operated, or controlled
``non-satellite'' parent television broadcast station, or the Grade
A contour of which completely encompasses the community of
publication of a commonly owned, operated, or controlled daily
newspaper, or the community of license of a commonly owned,
operated, or controlled AM or FM broadcast station, or the community
of license of which is completely encompassed by the 2 mV/m contour
of such AM broadcast station or the 1 mV/m contour of such FM
broadcast station, may subsequently become a ``non-satellite''
station under the circumstances described in the aforementioned
Report and Order in MM Docket No. 87-8. However, such commonly
owned, operated, or controlled ``non-satellite'' television stations
and AM or FM stations with the aforementioned community
encompassment, may not be transferred or assigned to a single
person, group, or entity except as provided in Note 4 of this
section. Nor shall any application for assignment or transfer
concerning such ``non-satellite'' stations be granted if the
assignment or transfer would be to the same person, group or entity
to which the commonly owned, operated, or controlled newspaper is
proposed to be transferred, except as provided in Note 4 of this
section.
Note 6 to Sec. 73.3555: For purposes of this section a daily
newspaper is one which is published four or more days per week,
which is in the dominant language in the market, and which is
circulated generally in the community of publication. A college
newspaper is not considered as being circulated generally.
Note 7 to Sec. 73.3555: The Commission will entertain
applications to waive the restrictions in paragraph (b) and (c) of
this section (the local television ownership rule and the radio/
television cross-ownership rule) on a case-by-case basis. In each
case, we will require a showing that the in-market buyer is the only
entity ready, willing, and able to operate the station, that sale to
an out-of-market applicant would result in an artificially depressed
price, and that the waiver applicant does not already directly or
indirectly own, operate, or control interest in two television
stations within the relevant DMA. One way to satisfy these criteria
would be to provide an affidavit from an independent broker
affirming that active and serious efforts have been made to sell the
permit, and that no reasonable offer from an entity outside the
market has been received.
We will entertain waiver requests as follows:
1. If one of the broadcast stations involved is a ``failed''
station that has not been in operation due to financial distress for
at least four consecutive months immediately prior to the
application, or is a debtor in an involuntary bankruptcy or
insolvency proceeding at the time of the application.
2. For paragraph (b) of this section only, if one of the
television stations involved is a ``failing'' station that has an
all-day audience share of no more than four per cent; the station
has had negative cash flow for three consecutive years immediately
prior to the application; and consolidation of the two stations
would result in tangible and
[[Page 9492]]
verifiable public interest benefits that outweigh any harm to
competition and diversity.
3. For paragraph (b) of this section only, if the combination
will result in the construction of an unbuilt station. The permittee
of the unbuilt station must demonstrate that it has made reasonable
efforts to construct but has been unable to do so.
Note 8 to Sec. 73.3555: Paragraph (a)(1) of this section will
not apply to an application for an AM station license in the 535-
1605 kHz band where grant of such application will result in the
overlap of 5 mV/m groundwave contours of the proposed station and
that of another AM station in the 535-1605 kHz band that is commonly
owned, operated or controlled if the applicant shows that a
significant reduction in interference to adjacent or co-channel
stations would accompany such common ownership. Such AM overlap
cases will be considered on a case-by-case basis to determine
whether common ownership, operation or control of the stations in
question would be in the public interest. Applicants in such cases
must submit a contingent application of the major or minor
facilities change needed to achieve the interference reduction along
with the application which seeks to create the 5 mV/m overlap
situation.
Note 9 to Sec. 73.3555: Paragraph (a)(1) of this section will
not apply to an application for an AM station license in the 1605-
1705 kHz band where grant of such application will result in the
overlap of the 5 mV/m groundwave contours of the proposed station
and that of another AM station in the 535-1605 kHz band that is
commonly owned, operated or controlled. Paragraphs (d)(1)(i) and
(d)(1)(ii) of this section will not apply to an application for an
AM station license in the 1605-1705 kHz band by an entity that owns,
operates, controls or has a cognizable interest in AM radio stations
in the 535-1605 kHz band.
Note 10 to Sec. 73.3555: Authority for joint ownership granted
pursuant to Note 9 will expire at 3 a.m. local time on the fifth
anniversary for the date of issuance of a construction permit for an
AM radio station in the 1605-1705 kHz band.
[FR Doc. E8-3133 Filed 2-20-08; 8:45 am]
BILLING CODE 6712-01-P