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FCC Investigates Broadcasts With Reported Ties to China

Chinese-backed firm is under investigation after publication of Reuters report

A California company whose U.S. radio broadcasts reportedly are backed by a broadcast arm of the Chinese government is now being investigated by the Federal Communications Commission and the Justice Department for potential violations of foreign ownership laws.

In a series of investigative articles this week, Reuters reported that a radio network broadcasting programming in more than a dozen American cities — including Washington, Philadelphia, Boston, Houston and San Francisco — is more than 50 percent owned by a Chinese state-run organization. Indeed Reuters said its investigation found at least 33 radio stations in 14 countries that are part of a global radio network controlled by the state-run China Radio International.

CRI has a 60 percent ownership stake in the company G&E Studios Inc., owned by James Su, a naturalized U.S. citizen born in China, whose programming broadcasts on AM station WCRW, located near Washington, D.C. The station is licensed to Potomac Radio LLC (Delaware); the city of license is Leesburg, Va., and the licensee’s mailing address is in Falls Church.

In an interview, Su told Reuters that his company is doing nothing illegal because it simply leases airtime and doesn’t own the stations outright. “It’s like a management company that manages a condominium,” he told Reuters. ”Our U.S. audience and our U.S. public has the choice. They can choose to listen or not listen. I think this is an American value.”

According to Reuters, no licensing complaint has been lodged with the FCC about the CRI-backed network in the United States. But the FCC now has begun looking into the matter. “Based on reports, the FCC will initiate an inquiry into the facts surrounding the foreign ownership issues raised in the stories, including whether the commission’s statutory foreign ownership rules have been violated,” commission spokesman Neil Grace said in a statement.

(Read the Reuters story.)

FCC rules permit a foreign entity to hold up to 20 percent ownership in a station and up to 25 percent in the U.S. parent corporation of a station. While CRI itself doesn’t hold ownership stakes in a U.S. station — the FCC outright prohibits foreign governments from holding a license for a U.S. broadcast station — CRI does have a majority share via a subsidiary in the company that leases WCRW, Reuters reported.

The incident has also raised the attention of the Justice Department, Reuters said. U.S. law requires anyone seeking to influence U.S. public opinion on behalf of foreign agents to register with the department’s Foreign Agents Registration Act.

The Reuters report reported that neither Su nor G&E Studios is registered as foreign agents. Su told Reuters that he is not acting as agents of a foreign government and his lawyers have told him his actions are legal.