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Editorial: Capital Idea

The FCC could do something right now to help out broadcasters, and potentially boost minority and women ownership—or it could at least act much sooner than it has historically moved on other, seemingly obvious ways to help an industry it professes to want to keep strong and vibrant.

The extent to which the commission under the current or a future chair has been, or is, willing to go to bat for broadcasters is a matter for another editorial, but regardless, both the mediaownership rule review and action on minority initiatives tied to that are stalled for the moment, while action on loosening the foreign-ownership rules appears within the FCC’s ready grasp.

We would say the odds are good that the commission will actually vote to loosen the de facto 25% cap on foreign investment in TV and radio stations.

The National Association of Broadcasters, Jessie Jackson’s Rainbow/PUSH Coalition and the National Association of Media Brokers are all on the same page on this one. In fact, a laundry list of minority advocates, many usually on the other side of any move that would deregulate media ownership, have weighed in at the FCC in support of the change (see Washington Watch).

That’s because, for most potential buyers, and for potential minority buyers in particular, access to capital is the biggest obstacle to getting into the business.

If the FCC is serious about leaving a broadcasting business worth buying into at the other end of the spectrum incentive auctions it’s holding to encourage some to sell out, it will make this fairly simple change, one that really only squares with the intent of the foreign-ownership rules, which allow for waivers of the cap if they are in the public interest.

As a practical matter, the 25% has been a ceiling. Only one waiver has ever been granted, and that was ex post facto to Rupert Murdoch, after News Corp. had owned the Metromedia stations for a decade.

Meanwhile, the FCC has no such foreignownership limit on investments in the vaunted wired and wireless broadband sphere—both of which get a lot more attention from the FCC as critical U.S. infrastructure—or telcos or online video providers. That disparity never made much sense and now is only one more way of handicapping broadcasters’ competitive future.

The FCC two weeks ago took steps to make it easier for foreign investment in wireless, so not to follow suit by giving broadcasters at least a little more access to that capital would be a flashing neon sign that the FCC was not serious about its support for broadcasting.

The commission needs to get moving on ownership reform with more urgency—that, too, is another editorial.

Raising the cap doesn’t mean that North Korea would be free to buy up TV stations, or that China could siphon off incentive auction proceeds. There would still be a case-by-case analysis of whether the purchase was in the public interest, and we assume those would not be.

But what it does mean is that broadcasters would get more access to capital if they want to buy, and access to more potential bidders if they want to sell.

The same groups that asked for the foreign-ownership change last week also asked President Obama to nominate a new chair who will make boosting minority ownership a priority. That would apply to an interim chair as well, one who could be in the post for months. Reply comments are due April 30 on the proposal to loosen the de facto cap, so at least theoretically, the FCC could act within the next couple of months.

If that interim chair turns out to be Mignon Clyburn (the senior Democrat on the commission, after exiting chairman Julius Genachowski), it would be a !tting move for the first African- American woman to hold that post.

But whoever is running the FCC, we agree that giving broadcasters the same opportunity to attract international capital as virtually all of its direct competitors have should be high on the to-do list.