FCC Looks to Promote Broadcast Ownership Diversity

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FCC Looks to Promote Broadcast Ownership Diversity

Dec 19, 2007 3:20 PM

Washington - Dec 18, 2007 - During its Dec. 18 meeting, the Federal Communications Commission adopted a report and order that it hopes will expand opportunities for new entrants and small businesses to own broadcast outlets. The new rules will help eligible entities with access to financing and availability of spectrum.

The order includes these actions:

  • Changes its construction permit deadlines to allow "eligible entities" that acquire expiring construction permits additional time to build out the facility;
  • Revises the Commission's equity/debt plus ("EDP") attribution standard to facilitate investment in eligible entities;
  • Modifies the Commission's distress sale policy to allow a licensee - whose license has been designated for a revocation hearing or whose renewal application has been designated for a hearing on basic qualifications issues - to sell its station to an "eligible entity" prior to the commencement of the hearing;
  • Adopts an Equal Transactional Opportunity Rule that bars race or gender in broadcast transactions;
  • Adopts a "zero-tolerance" policy for ownership fraud and "fast-track" ownership-fraud claims and seek to resolve them within 90 days;
  • Requires broadcasters renewing their licenses to certify that their advertising sales contracts do not discriminate on the basis of race or gender;
  • Encourages local and regional banks to participate in SBA-guaranteed loan programs in order to facilitate broadcast and telecommunications-related transactions;
  • Gives priority to any entity financing or incubating an eligible entity in certain duopoly situations;
  • Considers requests to extend divestiture deadlines in mergers in which applicants have actively solicited bids for divested properties from eligible entities;
  • Convenes an "Access-to-Capital" conference that will focus on the investment banking and private equity communities and opportunities to acquire financing;
  • Plans of a guidebook on diversity that focuses on what companies can do to promote diversity in ownership and contracting;
  • Revises the exception to the prohibition on the assignment or transfer of grandfathered radio station combinations.

For the initiatives of this order, an "eligible entity" is one that would qualify as a small business consistent with Small Business Administration standards for its industry grouping, based on revenue.

In the Notice of Proposed Rulemaking adopted as part of this item, the Commission seeks comment on whether it can or should expand its definition of "eligible entity" to include other businesses. The Commission also seeks comment on how best to improve its collection of data regarding the gender, race, and ethnicity of broadcast licensees. Finally, the Commission seeks comment on a number of additional proposals designed to expand ownership opportunities for new entrants and small businesses.

Radio magazine comment: While this FCC action has good intentions in mind, this is yet another reaction to trying to be politically correct. We doubt anyone would challenge the advantages of diversity in ownership, but while the FCC takes these steps in promoting diversity, it also lifts restrictions in a single company owning a broadcast station and a newspaper in the same market. Perhaps the FCC should go back to the ownership rules in general and reduce the number of stations that a single company can own. This would allow more owners to be involved.

The converse to this, however, is that running a successful station is a business. Many people and groups with a perceived interested in broadcasting quickly learn that it has to be more than a casual hobby to make it work and truly serve the public interest.

Report and Order and Third Further Notice of Proposed Rulemaking (FCC 07-217); Docket 07-294