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Wheeler Proposing Streamlined Broadcast Foreign Ownership Review

FCC chairman Tom Wheeler has circulated a notice of proposed rulemaking (NPRM) 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 FCC is proposing to provide greater flexibility for requests by broadcasters for more than 25% foreign ownership and guidance on how to calculate that ownership interest. 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 proposal would also increase the requirement to identify and seek approval for such petitions from every foreign shareholder to those with at least 5% of stock.

According to an FCC source, what it does not do is 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 on issues like national security.

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.

Then new chairman Tom Wheeler said that it would be a careful review, not a rubber stamp, but that it could help promote media diversity, and even help finance station spectrum sharing or moves from UHF to VHF channels, allowing for the freeing up of spectrum for wireless in the upcoming auction.

While the vote was unanimous, commissioner Michael O'Rielly said it could have gone further by approving guidelines for review or a streamlined process.

Wheeler Thursday gave O'Rielly credit, saying in a blog posting about the item that "thanks to the leadership and thoughtful plan suggested by Commissioner Mike O’Rielly, the second item being circulated today is a proposal that builds on the 2013 Broadcast Clarification Order by modernizing the processes for broadcasters to demonstrate compliance with foreign ownership rules."

"In particular, the NPRM seeks comment on simplifying the foreign ownership approval process for broadcast licensees by extending the rules and procedures that currently apply to common carriers to licensees to broadcast licensees.”

“As a result, the proposed rules will update the filing and review process – all so it is better adapted to the current business environment – while at the same time preserving the Commission’s case-by-case public interest review and national security protections," Wheeler added.

O'Rielly was not yet breaking out the champagne.

"While I still need to review the details, I appreciate the Chairman's willingness to do more on foreign ownership," he said, but added:
"This doesn't decrease the need to also streamline the "Team Telecom" review process."

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

The Pandora declaratory ruling only applied to the "case" of Pandora's ability to buy KXMZ (FM), Box Elder, S.D., a point the FCC made in the initial ruling. "With respect to the alleged universality of our holding," it said, "we emphasize that the actions taken herein are limited to the specific circumstances before us and that any petition for declaratory ruling that another publicly traded company may submit will be analyzed based on its own particular facts and circumstances."

But that caveat notwithstanding, it appeared to signal the FCC's willingness to let other "widely dispersed groups of shareholders" include more than 25% foreign ownership of stations, radio and TV at least revisit the issue. The FCC also made that point in the Pandora order in response to a National Association of Broadcasters request that it do so. "Indeed, we intend to examine in the near future whether it would be appropriate for the Commission to revise its methodology..." the FCC said, and now has acted.

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.