FCC Approves Foreign Ownership NPRM

The FCC has unanimously voted to propose streamlining the FCC's foreign ownership rules for broadcasters looking to exceed the current 25% stake that triggers FCC vetting.

The proposal essentially extends the streamlining applied to common carriers to TV and radio stations.

The item codifies that broadcasters can request that a controlling parent company have up to 100% foreign ownership of a broadcast property subject to the FCC's public interest review, as well as the "team telecom" review, an interagency review team vetting foreign ownership deals for national security issues.

The item also allows a non-controlling foreign ownership stake be able to be raised to 49.99% without having to petition the FCC.

It also does not require FCC approval of noncontrolling foreign interests of 5% or less, or 20% in certain circumstances. There were complaints about the difficulty of tracking down and identifying all shareholders to make that determination.

FCC chairman Tom Wheeler earlier this month circulated the notice in an effort to simplify the process for exceeding the FCC's 25% trigger for further review of the proposed foreign ownership of a U.S. broadcast property, aligning the broadcast review more with the way it handles common carrier requests for foreign ownership above 25%.

The item voted Thursday (Oct. 22), would, if adopted in a final order:

• "Affirm and codify in the rules our current policy of allowing a broadcast licensee to request Commission approval for its controlling U.S. parent to have up to and including 100 percent foreign ownership, subject to the Commission’s public interest review;

• "Allow the licensee to request that a proposed controlling foreign investor, once approved by the Commission, be permitted to increase its ownership to 100 percent in the future without filing a new petition;

•  "Extend to broadcast licensees our current practice of allowing the licensee to request that any non-controlling named foreign investor, once approved by the Commission, be permitted to increase its interest in the U.S. parent up to and including a non-controlling interest of 49.99 percent in the future without filing a new petition;

•  "Lessen regulatory burdens on broadcast licensees by not requiring the licensee to request approval of a non-controlling foreign investor with an interest of 5 percent or less (or 10 percent in certain circumstances); and

•   "Allow broadcast licensees to continue to use the broadcast attribution rules to disclose their principal U.S. and foreign owners and to rely on broadcast insulation rules."

It also seeks additional info on how it should calculate foreign ownership.

In part the decision stems from a FCC declaratory decision earlier this month upholding its decision allowing Pandora's investment in a radio station.

The item does not change the prohibition on foreign government ownership in broadcast stations, or the 20% cap on direct foreign investments, or the fact that the FCC has to coordinate with other agencies in the "team telecom" review.

The FCC voted unanimously in November 2013 to clarify that its 25% limit on foreign ownership of broadcast properties is not a hard cap, but a trigger for case-by-case review.

Diversity advocates have argued that loosening foreign ownership rules can free up more minority and small business access to capital.

Wheeler gave commissioner Michael O'Rielly credit for advancing the timetable on the item. For his part, O'Rielly took the opportunity to criticize the "team telecom" review, saying it had become a "black hole" and that he would talk to Congress about stepping with a statute to govern team telecom reviews.

"NAB applauds the FCC for opening a rulemaking exploring opportunities for easing foreign investment in local radio and TV stations," said National Association of Broadcasters spokesman Dennis Wharton in a statement. "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."

“The FCC has taken an important step to see how to inject new investment and provide greater regulatory certainty which will in turn strengthen the broadcast industry,” said Rep. Anna Eshoo (D-Calif.), ranking member of the House Communiations Subcommitee. “Establishing a standardized process for broadcasters, just as the FCC does for other segments of the telecommunications industry, may more easily attract foreign investors. Consideration of this issue makes common sense, and is consistent with the Communications Act’s core principles of promoting diversity, localism and competition.”

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.