FCC Seen as LooseningForeign Ownership Cap

Broadcasters have been waiting a long time to get some help from the FCC on media-ownership rules. And while certain major issues remain off the table, recent reports indicate that broadcasters may soon be able to pull a bottle of bubbly from the cellar, at least in regard to foreign ownership.

Currently, commission rules have a soft cap of 25% foreign ownership in a TV or radio station. That, however, has morphed into a de facto hard cap that cuts off a potential new source of capital infusion at a time when broadcasters could really use it.

Two weeks ago, the FCC voted unanimously to make it easier for wireless companies to access foreign capital, signaling it might be ready to do the same for broadcasters, as the Coalition for Broadcast Investment petitioned it to do.

Minority ownership advocates are on the same page, since the biggest impediment to boosting their business, they argue, is access to capital.

That one proviso would be regarded as an across-the-board win-win for broadcasters big and small. Many minority broadcasters have urged the FCC not to loosen local-ownership caps—at least not before more analysis; meanwhile, the National Association of Broadcasters affiliate groups and others have pushed for swift action. Both sides, however, are in full agreement when it comes to more wiggle room on foreign investment, and they have backing from FCC commissioners on both sides of the aisle.

A communications attorney who has been following the FCC procedure says he thinks the commission will agree to loosen what has been a de facto ban. He points out that the commission has only issued one waiver of the 25% cap in the past. That was to Rupert Murdoch, whose News Corp. purchased Metromedia stations in the mid-1980s but failed to inform the FCC it represented a 99% foreign-ownership purchase. Ten years later, the FCC retroactively granted the waiver.

The attorney concedes one byproduct of the change could be that foreign companies get to share the government payout if they decide to do some spectrum speculating in advance of the upcoming incentive auctions.

As broadcasters have long pointed out, a similar restriction has not been placed on foreign investments in telcos, cable or satellite companies, or Internet video competitors.

The FCC is expected now to take a case-by-case approach to deals involving more than 25% foreign ownership. That could boost the pool of potential buyers for TV stations and groups and potentially increase the price to station sellers.

Media Brokers’ FYI to the FCC

Not surprisingly, the National Association of Media Brokers has made sure the FCC knows it is all for the change. In fact, while others were pitching the FCC on loosening the newspaper/broadcast cross-ownership rules, NAMB has been arguing that the lack of access to capital has been the big obstacle.

“While most of the other portions of the telecommunications industry in the United States have seen significant foreign investment—including investments in the wireless carriers and, in the past, in the cable television industry— broadcasting remains an island where the opportunities for foreign investment have, thus far, been limited,” the NAMB told the FCC last week.

The association also says that minority-targeted stations are especially likely to benefit from new sources of funding if the restrictions are relaxed.

Broadcasters have bipartisan support for FCC action, and strong support from Republican commissioner Ajit Pai for loosening the limits.

The FCC two weeks ago voted unanimously to reduce the regulatory costs and burdens of foreign ownership on common carriers, and as the FCC order said, to “facilitate investment from new sources of capital at a time of growing need for capital investment in this sector of our nation’s economy.” Broadcasters want them to share some of that love.

Commissioner Pai agrees, and in his public statement, went off-script to turn the issue to broadcast and foreign ownership.

“By ending our anachronistic approach to foreign investment,” he said, “we can bring new vitality to the broadcasting industry. We can increase access to capital. And we can help boost minority ownership.”

Fellow commissioner Jessica Rosenworcel stopped short of endorsing the proposal, but said the FCC needed to review it and act quickly, adding that broadcasters face “an increasingly complex, multiplatform future.”

The FCC will be collecting its final comments on the coalition proposal April 30.

E-mail comments to jeggerton@nbmedia.com and follow him on Twitter: @eggerton

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.