FCC Clarifies It Would Consider Letting Foreigners Own More than 25% of Broadcasters
Foreigners could own more than 25 percent of U.S. broadcasters if the FCC grants a licensee’s petition for declaratory ruling, clarified a draft that circulated for a vote at the agency’s next meeting, said commission and industry officials in interviews Thursday, the day the item described as concise and straightforward circulated for the Nov. 14 meeting. The declaratory ruling would clarify what some in the industry and at the agency said they had considered a de facto ban on such ownership. The item said there’s not such a ban, said agency and industry officials.
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They said the neither the commission nor the Media Bureau ever issued an outright ban. But it’s thought that no broadcast licensee has in recent years sought to exceed the 25 percent foreign ownership threshold because bureau and other staff have indicated such requests would never be approved. Mergers and acquisitions would need to be approved by national security agencies that already review telecom and other deals involving foreign-owned companies, said a broadcast industry official. Those agencies include the Department of Homeland Security, FBI and Justice Department.
The FCC would consider M&A or stakes above the 25 percent threshold on the merits on a case-by-case basis under the draft, said industry and FCC officials. Some said the item doesn’t do much to describe what those considerations might be. They said the possible goal of not making such a description of what public-interest showings are needed is that actual rulings would demonstrate what the showings need to be made to exceed the limit.
Some said they thought a point of the declaratory ruling is to show waivers need not be sought to exceed the 25 percent ownership threshold. The draft said those filing a petition for declaratory ruling must show why under Section 310(b)(4) of the Communications Act such a deal is in the public interest. That section says a licensee can exceed 25 percent foreign ownership unless the commission rules otherwise, said industry lawyers including Covington & Burling broadcast lawyer Mace Rosenstein, representing the coalition that sought the clarification. The draft order, if approved, would signal that broadcasters could seek such deals, just as many other types of FCC licensees in other industries can, said industry and agency officials. Some portrayed it as an issue of fairness, as comments on the coalition’s request had said.
The draft order would grant last year’s request by a coalition of broadcasters including CBS and Disney and some advocacy groups for minorities, said industry officials. No substantive comments in docket 13-50 (http://bit.ly/12mGzj3) opposed the Coalition for Broadcast Investment’s Aug. 31, 2012, request for clarification (CD May 2 p5, April 17 p7). One reason the commission can approve the current draft without going through a rulemaking process is that the change the coalition sought wasn’t a new rule, said agency and industry officials. “Because they already have the authority, this is just in the nature of a clarification or procedural clarification, not a rule change,” so no NPRM is needed, said Rosenstein. The commission has always had authority to allow exceeding 25 percent foreign ownership for broadcasters, it just hasn’t exercised it, said Rosenstein and others.
Acting FCC Chairwoman Mignon Clyburn said the declaratory ruling “clears the way for increased access to capital and potential new investors for the broadcast sector.” Approving the item “will clarify the Commission’s intention to review, on a case-by-case basis,” deals exceeding the 25 percent threshold, she said in a written statement (http://fcc.us/1doChCa). Commissioner Ajit Pai, who has pushed for such a clarification, said a foreign company “can indirectly hold more than a one-quarter stake in our nation’s largest wireless carriers, cable operators, cable programmers, and Internet backbone providers,” but not stations. “This disparity makes no sense, especially considering the difficult financial circumstances facing many broadcasters,” he said (http://fcc.us/Hentsc).
The item would be “fundamentally fair” and serve the public interest,” said NAB CEO Gordon Smith (http://bit.ly/17fZYc2). The National Association of Black Owned Broadcasters will remain neutral on whether to allow such foreign ownership, said Executive Director Jim Winston in an email. He and some other minorities in broadcasting had previously expressed some concerns. The coalition that sought the clarification said it would “permit broadcast foreign investment that is consistent with the public interest and our national security.” The group also includes Clear Channel, Hearst Television, Univision, the League of United Latin American Citizens, U.S. Hispanic Chamber of Commerce, National Black Chamber of Commerce and National Puerto Rican Chamber of Commerce.