September FCC Open Meeting Items

via Rick Kaplan, General Counsel and Executive Vice President, Legal and Regulatory Affairs, National Association of Broadcasters

There are two items of particular note for broadcasters from the September 29 FCC open meeting. The first, the FCC’s proposal designed to open up the MVPD set-top box marketplace, actually did not result in a vote. While the Chairman had adjusted his initial proposal substantially to meet a number of objections (including from NAB), Commissioner Rosenworcel apparently was still not comfortable with where the draft order was at the time of the meeting, so the Chairman was forced to pull it from the agenda. Commissioner Clyburn supports the Chairman and the two Republican Commissioners whom oppose his plan. The item remains under consideration, although it’s not clear if it will be voted soon or if it will linger for some time.

One proposal that did come to fruition that is a “plus” for broadcasters is the FCC’s order modifying its broadcast foreign ownership rules and policies. While the full text of the order has not yet been released, the meeting presentation and press release indicate that the changes adopted today will permit broadcasters to seek approval for foreign investment using the streamlined processes that are in place for other communications outlets and also will simplify the requirements for compliance with the foreign ownership limits. Below are some of the key modifications adopted:

Foreign Ownership Approval Process

  • Broadcasters can use the same procedures for obtaining approval for foreign investment that have been available to wireless licensees since 2013. The approval process involves the filing of a “Petition for Declaratory Ruling” under Section 310(b)(4).
  • Broadcasters can now file Petitions seeking Commission approval for:
    • up to and including 100 percent aggregate foreign ownership of its controlling U.S. parent;
    • a proposed, controlling foreign investor to increase its equity and/or voting interests in the U.S. parent up to and including 100 percent at some future time without filing a new petition—this applies where the foreign investor would acquire an initial controlling interest of less than 100 percent; and
    • a non-controlling foreign investor named in the petition to increase its equity and/or voting interests in the U.S. parent at some future time, up to and including a non-controlling 49.99 percent equity and/or voting interest.
  • Broadcasters are only required to disclose in their in Petitions for Declaratory Ruling those parties that hold attributable interests.

Calculating Compliance

  • Publicly traded broadcasters are no longer expected to conduct shareholder surveys.
  • Publicly traded broadcasters are now expected to use “reasonable” measures to assess the citizenship of reasonably identifiable shareholders.
  • The Commission has eliminated its existing presumption that all unidentifiable shareholders are wholly foreign. Rather, where citizenship is not and cannot reasonably be known, the Commission’s new standard effectively applies the citizenship ratio of identifiable shareholders.

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