FCC Unanimously Approves Foreign Ownership NPRM
The FCC unanimously approved an NPRM on proposals to make it easier for broadcasters to have foreign owners and change the way the commission assesses foreign ownership, as was expected (see 1510190064). The foreign ownership rules for broadcasting act as funding constraints that other industries don’t face, said Commissioner Jessica Rosenworcel at Thursday’s commissioner meeting. The proposals in the NPRM would allow the FCC to allow broadcasters better access to foreign capital without “sacrificing” security, Rosenworcel said. “It’s time to fix these constraints,” she said. “If a common carrier can request commission approval for up to 100 percent foreign ownership, why shouldn’t a broadcaster be able to do the same?” Commissioner Ajit Pai asked.
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The NPRM seeks comment on codifying that broadcasters can be 100 percent foreign owned if the FCC finds it meets the public interest, letting broadcasters become up to 5 or 10 percent foreign owned without needing Media Bureau approval, and allowing foreign investors that already have been approved by the commission to increase their ownership stake up to 100 percent without filing a new petition, said a bureau news release.
The item also proposes bringing to broadcasting some processes already used for foreign ownership situations involving common carriers. The FCC doesn’t currently have a standardized process for broadcasters asking to go over the 25 percent foreign ownership line, and the NPRM proposes creating one similar to the foreign ownership processes used for common carriers, the release said. The concepts in the NPRM will provide better transparency and reliability for broadcasters going through the foreign ownership process, said Commissioner Mignon Clyburn. “Extending the streamlined foreign ownership rules already used for common carrier licensees to broadcast licensees, as we propose, would certainly multiply potential funding options available to broadcasters,” said Commissioner Mike O’Rielly. Chairman Tom Wheeler and Pai credited O'Reilly with bringing attention to the foreign ownership issue.
The NPRM also seeks comment on changing the way the FCC assesses foreign ownership, to prevent a repeat of what Pai referred to an "absurd" incident during Pandora’s buy of KXMZ(FM) Box Elder, South Dakota. During that purchase, the FCC’s own rules forced it to treat some of Pandora's investors -- who were using "street names" to protect their anonymity under SEC policies -- as foreign. “Foreign interests almost certainly did not own more than 25 percent of Pandora,” Pai said. “But the commission couldn’t acknowledge that fact. Why? Because of our outdated methodology for measuring foreign ownership.”
The NPRM is an “incremental” step that doesn’t go far enough, O’Rielly said. “Nothing here would address the opaque and often very lengthy Team Telecom review process for foreign ownership, which in too many instances has devolved into a black hole of uncertainty.” The administration is reviewing the Team Telecom process, Wheeler said at a news conference after the meeting. Wheeler said he is hopeful the issue will soon be addressed, and O’Rielly said he's looking forward to that process.
The foreign ownership process has worked well for common carriers and should work just as well for broadcasters, said Covington Burling attorney Mace Rosenstein in an interview. He represented a coalition of broadcasters and programmers that in 2012 asked the commission to relax barriers to foreign ownership for broadcasters. Proposals to relax those rules have yet to face any opposition from industry or at the commission, Rosenstein said.
"Establishing a standardized process for broadcasters, just as the FCC does for other segments of the telecommunications industry, may more easily attract foreign investors,” said House Communications Subcommittee ranking member Anna Eshoo, D-Calif. “Consideration of this issue makes common sense, and is consistent with the Communications Act's core principles of promoting diversity, localism and competition." Relaxing foreign 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 an NAB spokesman.