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FCC Proposals Would Streamline Foreign Ownership Rules

The FCC is taking on the issue of foreign broadcast ownership, proposing to streamline the process of determining who can own a broadcast station.

In its October open meeting, the commission proposed new guidelines in a Notice of Proposed Rulemaking that would create a new process for applicants looking to exceed the established 25% ownership rule. As things stand now, the Communications Act sets out a 25% statutory benchmark for foreign ownership in a broadcast licensee, and any applicant looking to exceed that benchmark must submit to a case-by-case public interest review.

The NAB expressed support.

With today’s notice, a standardized process is being proposed that will also:

● Allow a licensee to request that a proposed controlling foreign investor be permitted to increase its ownership to 100% without filing a new petition
● Allow a broadcast licensee to request that any non-controlling foreign investor be allowed to increase its interest in the U.S. parent up to a non-controlling interest of 49.99% without filing a new petition
● Allow broadcasters to continue to use the broadcast attribution rules to disclose their principal U.S. and foreign owners
● Excuse a broadcast licensee from requesting official approval of a noncontrolling foreign investor with an interest of 5% or less (or 10% in certain circumstances)

In many ways, the changes mirror policies and procedures the FCC follows for common carrier licensees and their foreign-based investors. In 2013, the commission streamlined policies for common carriers but did not extend the policies to broadcast licensees.

The NPRM is designed to spur investment from new sources of capital as well as provide the broadcast sector with greater transparency and predictability, and reduce regulatory burdens and costs.

“This item represents another positive, although incremental, step toward expanding permissible foreign investment by non-government entities in U.S. broadcast companies,” said Commissioner Michael O’Rielly in a statement. “Extending the streamlined foreign ownership rules … would certainly multiply potential funding options available to broadcasters.”

Action on this issue was accelerated at O’Rielly’s urging. Fellow Republican Commissioner Ajit Pai pointed to an example of an FM station in South Dakota that waited two years to learn whether a company with more than 25% percent foreign ownership should be allowed to purchase the station.

“What made that case all the more absurd is that foreign interests almost certainly did not own more than 25% of Pandora, the company at issue in that state,” Pai said. “The commission could not acknowledge that fact. Why? Because of our outdated methodology. The Pandora cases highlighted the need for the commission to reform its need to review for investment and I am pleased that we are doing just that.”

Pai says the commission should be concentrating on two key objectives: leveling the regulatory playing field and enabling greater foreign investments in the broadcast industry.

The NPRM seeks comment on additional reforms that could streamline the review of foreign ownership, including a proposal supported by Commissioner O’Rielly that would establish a new foreign ownership threshold of 50% or a higher before triggering commission scrutiny.

The NAB has expressed its support. “We share the commissioners’ belief that relaxing these ownership regulations will spur new investment in broadcasting leading to job creation, increased production of locally oriented programming and greater public service to communities,” said NAB Executive Vice President of Communications Dennis Wharton.