Rule2021-13811
Media Bureau Reinstates Commission's Prior Rule Changes Regarding Media Ownership Consistent With the U.S. Supreme Court's Decision
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
June 30, 2021
Effective
June 30, 2021
Issuing agencies
Federal Communications Commission
Abstract
In this document, consistent with the U.S. Supreme Court's decision in FCC v. Prometheus Radio Project, the Media Bureau of the Federal Communications Commission reinstates the rule changes that were previously adopted by the Commission in its media ownership proceedings but then vacated and remanded by the U.S. Third Circuit Court of Appeals in 2019. As such, the Newspaper/Broadcast Cross-Ownership Rule, the Radio/Television Cross-Ownership Rule, and the Television Joint Sales Agreement Attribution Rule are eliminated, and the Local Television Ownership Rule and Local Radio Ownership Rule are reinstated as adopted in the Commission's 2017 Order on Reconsideration. In addition, the eligible entity standard and its application to regulatory measures as set forth in the Commission's 2016 Second Report and Order are reinstated. Finally, the regulatory measures adopted in the Commission's 2018 Incubator Order are reinstated.
Full Text
<html>
<head>
<title>Federal Register, Volume 86 Issue 123 (Wednesday, June 30, 2021)</title>
</head>
<body><pre>
[Federal Register Volume 86, Number 123 (Wednesday, June 30, 2021)]
[Rules and Regulations]
[Pages 34627-34631]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-13811]
=======================================================================
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 73
[MB Docket Nos. 14-50, 09-182, 07-294, 04-256, 17-289; DA 21-656; FR ID
33718]
Media Bureau Reinstates Commission's Prior Rule Changes Regarding
Media Ownership Consistent With the U.S. Supreme Court's Decision
AGENCY: Federal Communications Commission.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: In this document, consistent with the U.S. Supreme Court's
decision in FCC v. Prometheus Radio Project, the Media Bureau of the
Federal Communications Commission reinstates the rule changes that were
previously adopted by the Commission in its media ownership proceedings
but then vacated and remanded by the U.S. Third Circuit Court of
Appeals in 2019. As such, the Newspaper/Broadcast Cross-Ownership Rule,
the Radio/Television Cross-Ownership Rule, and the Television Joint
Sales Agreement Attribution Rule are eliminated, and the Local
Television Ownership Rule and Local Radio Ownership Rule are reinstated
as adopted in the Commission's 2017 Order on Reconsideration. In
addition, the eligible entity standard and its
[[Page 34628]]
application to regulatory measures as set forth in the Commission's
2016 Second Report and Order are reinstated. Finally, the regulatory
measures adopted in the Commission's 2018 Incubator Order are
reinstated.
DATES: Effective June 30, 2021.
FOR FURTHER INFORMATION CONTACT: Ty Bream, Industry Analysis Division,
Media Bureau, <a href="/cdn-cgi/l/email-protection#d682aff894a4b3b7bb96b0b5b5f8b1b9a0"><span class="__cf_email__" data-cfemail="a0f4d98ee2d2c5c1cde0c6c3c38ec7cfd6">[email protected]</span></a>, (202) 418-0644.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Order
in MB Docket Nos. 14-50, 09-182, 07-294, 04-256, and 17-289, DA 21-656,
that was adopted and released on June 4, 2021. The full text of this
document is available for public inspection online at <a href="https://docs.fcc.gov/public/attachments/DA-21-656A1.pdf">https://docs.fcc.gov/public/attachments/DA-21-656A1.pdf</a>. Documents will be
available electronically in ASCII, Microsoft Word, and/or Adobe
Acrobat. Alternative formats are available for people with disabilities
(Braille, large print, electronic files, audio format, etc.) and
reasonable accommodations (accessible format documents, sign language
interpreters, CART, etc.) may be requested by sending an email to
<a href="/cdn-cgi/l/email-protection#b6d0d5d5838682f6d0d5d598d1d9c0"><span class="__cf_email__" data-cfemail="62040101575256220401014c050d14">[email protected]</span></a> or calling the FCC's Consumer and Governmental Affairs
Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY).
Synopsis
1. In FCC v. Prometheus Radio Project, 141 S.Ct. 1150 (2021), the
U.S. Supreme Court reversed the decision of the U.S. Court of Appeals
for the Third Circuit in Prometheus Radio Project v. FCC, 939 F.3d 567
(3rd Cir. 2019), regarding the Commission's media ownership rules. The
Third Circuit had vacated and remanded, in their entirety, the
Commission's 2018 Incubator Order (83 FR 43773, Aug. 28, 2018) and the
Commission's 2017 Order on Reconsideration (83 FR 755, Jan. 8, 2018).
The Third Circuit also had vacated and remanded the definition of
eligible entities adopted in the Commission's 2016 Second Report and
Order (81 FR 76262, Nov. 1, 2016).
2. Consistent with the Supreme Court's decision, the Media Bureau's
Order reinstates the changes adopted in the Incubator Order and Order
on Reconsideration and the eligible entity definition as adopted in the
Second Report and Order. As such, the Newspaper/Broadcast Cross-
Ownership Rule, the Radio/Television Cross-Ownership Rule, and the
Television Joint Sales Agreement Attribution Rule are eliminated, and
the Local Television Ownership Rule and Local Radio Ownership Rule are
reinstated as adopted in the Order on Reconsideration. The presumption
under the Local Radio Ownership Rule that would apply a two-prong test
for waiver requests involving existing parent markets with multiple
embedded markets is reinstated. Note 5 to Sec. 73.3555 is reinstated
to the version as amended when the Commission adopted the streamlined
procedures in March 2019 for reauthorizing television satellite
stations when such stations are assigned or transferred. See
Streamlined Reauthorization Procedures for Assigned or Transferred
Television Satellite Stations, Modernization of Media Regulation
Initiative (84 FR 15125, Apr. 15, 2019). The Order on Reconsideration
revised Sec. 73.3613(d)(2) of the Commission's rules regarding the
filing requirement for joint sales agreements. Because that filing
requirement has since been eliminated, the revision to Sec.
73.3613(d)(2) adopted in the Order on Reconsideration is not
reinstated. See Amendment of Section 73.3613 of the Commission's Rules
Regarding Filing of Contracts, Modernization of Media Regulation
Initiative (83 FR 65551, Dec. 21, 2018).
3. In addition, the eligible entity standard and its application to
regulatory measures as set forth in the Second Report and Order are
reinstated. Finally, the regulatory measures adopted in the Incubator
Order are reinstated.
4. The Bureau finds that notice and comment are unnecessary for
these rule amendments under 5 U.S.C. 553(b) because this ministerial
order merely implements the decision of the U.S. Supreme Court. Because
this Order is being adopted without notice and comment, the Regulatory
Flexibility Act, 5 U.S.C. 601, et seq., does not apply.
5. Accordingly, it is ordered that Sec. 73.3555 of the
Commission's rules, 47 CFR 73.3555, is amended as set forth in the
Final Rules, effective upon publication in the Federal Register.
Because of the need during the current broadcast station license
renewal cycle to alert prospective applicants to the current,
applicable rules, there is ``good cause'' under 5 U.S.C. 553(d) to make
the rules effective immediately upon publication in the Federal
Register.
6. This action is taken pursuant to the authority contained in
sections 1, 2(a), 4(i) and (j), 5(c), 257, 303, 307, 308, 309, 310, and
403 of the Communications Act of 1934, as amended, 47 U.S.C. 151,
152(a), 154(i), 154(j), 155(c), 257, 303, 307, 308, 309, 310, and 403,
section 202(h) of the Telecommunications Act of 1996, and Sec. Sec.
0.61 and 0.283 of the Commission's rules, 47 CFR 0.61, 0.283.
7. The Bureau has determined, and the Administrator of the Office
of Information and Regulatory Affairs, Office of Management and Budget,
concurs that these rules are non-major under the Congressional Review
Act, 5 U.S.C. 804(2). The Commission will send a copy of this Order to
Congress and the Government Accountability Office pursuant to 5 U.S.C.
801(a)(1)(A).
List of Subjects in 47 CFR Part 73
Radio, Television.
Federal Communications Commission.
Thomas Horan,
Chief of Staff, Media Bureau.
Final Rules
For the reasons discussed in the preamble, the Federal
Communications Commission amends 47 CFR part 73 as follows:
PART 73--RADIO BROADCAST SERVICES
0
1. The authority citation for part 73 continues to read as follows:
Authority: 47 U.S.C. 154, 155, 301, 303, 307, 309, 310, 334,
336, 339.
0
2. Amend Sec. 73.3555 by:
0
a. Revising paragraph (b);
0
b. Removing and reserving paragraphs (c) and (d);
0
c. In Note 2, revising the introductory text and paragraphs (a) through
(d) and (g) through (k);
0
d. Revising Note 4 through Note 7 and Note 9; and
0
e. Removing Note 12.
The revisions read as follows:
Sec. 73.3555 Multiple ownership.
* * * * *
(b) Local television multiple ownership rule. (1) An entity may
directly or indirectly own, operate, or control two television stations
licensed in the same Designated Market Area (DMA) (as determined by
Nielsen Media Research or any successor entity) if:
(i) The digital noise limited service contours of the stations
(computed in accordance with Sec. 73.622(e)) do not overlap; or
(ii) At the time the application to acquire or construct the
station(s) is filed, at least one of the stations is not ranked among
the top four stations in the DMA, based on the most recent all-day (9
a.m.-midnight) audience share, as measured by Nielsen Media Research or
by any comparable professional, accepted audience ratings service.
(2) Paragraph (b)(1)(ii) (Top-Four Prohibition) of this section
shall not apply in cases where, at the request of the applicant, the
Commission makes a
[[Page 34629]]
finding that permitting an entity to directly or indirectly own,
operate, or control two television stations licensed in the same DMA
would serve the public interest, convenience, and necessity. The
Commission will consider showings that the Top-Four Prohibition should
not apply due to specific circumstances in a local market or with
respect to a specific transaction on a case-by-case basis.
* * * * *
Note 2 to Sec. 73.3555: In applying the provisions of this
section, ownership and other interests in broadcast licensees will
be attributed to their holders and deemed cognizable pursuant to the
following criteria:
a. Except as otherwise provided herein, partnership and direct
ownership interests and any voting stock interest amounting to 5% or
more of the outstanding voting stock of a corporate broadcast licensee
will be cognizable;
b. Investment companies, as defined in 15 U.S.C. 80a-3, insurance
companies and banks holding stock through their trust departments in
trust accounts will be considered to have a cognizable interest only if
they hold 20% or more of the outstanding voting stock of a corporate
broadcast licensee, or if any of the officers or directors of the
broadcast licensee are representatives of the investment company,
insurance company or bank concerned. Holdings by a bank or insurance
company will be aggregated if the bank or insurance company has any
right to determine how the stock will be voted. Holdings by investment
companies will be aggregated if under common management.
c. Attribution of ownership interests in a broadcast licensee that
are held indirectly by any party through one or more intervening
corporations will be determined by successive multiplication of the
ownership percentages for each link in the vertical ownership chain and
application of the relevant attribution benchmark to the resulting
product, except that wherever the ownership percentage for any link in
the chain exceeds 50%, it shall not be included for purposes of this
multiplication. For purposes of paragraph i. of this note, attribution
of ownership interests in a broadcast licensee that are held indirectly
by any party through one or more intervening organizations will be
determined by successive multiplication of the ownership percentages
for each link in the vertical ownership chain and application of the
relevant attribution benchmark to the resulting product, and the
ownership percentage for any link in the chain that exceeds 50% shall
be included for purposes of this multiplication. [For example, except
for purposes of paragraph (i) of this note, if A owns 10% of company X,
which owns 60% of company Y, which owns 25% of ``Licensee,'' then X's
interest in ``Licensee'' would be 25% (the same as Y's interest because
X's interest in Y exceeds 50%), and A's interest in ``Licensee'' would
be 2.5% (0.1 x 0.25). Under the 5% attribution benchmark, X's interest
in ``Licensee'' would be cognizable, while A's interest would not be
cognizable. For purposes of paragraph i. of this note, X's interest in
``Licensee'' would be 15% (0.6 x 0.25) and A's interest in ``Licensee''
would be 1.5% (0.1 x 0.6 x 0.25). Neither interest would be attributed
under paragraph i. of this note.]
d. Voting stock interests held in trust shall be attributed to any
person who holds or shares the power to vote such stock, to any person
who has the sole power to sell such stock, and to any person who has
the right to revoke the trust at will or to replace the trustee at
will. If the trustee has a familial, personal or extra-trust business
relationship to the grantor or the beneficiary, the grantor or
beneficiary, as appropriate, will be attributed with the stock
interests held in trust. An otherwise qualified trust will be
ineffective to insulate the grantor or beneficiary from attribution
with the trust's assets unless all voting stock interests held by the
grantor or beneficiary in the relevant broadcast licensee are subject
to said trust.
* * * * *
g. Officers and directors of a broadcast licensee are considered to
have a cognizable interest in the entity with which they are so
associated. If any such entity engages in businesses in addition to its
primary business of broadcasting, it may request the Commission to
waive attribution for any officer or director whose duties and
responsibilities are wholly unrelated to its primary business. The
officers and directors of a parent company of a broadcast licensee,
with an attributable interest in any such subsidiary entity, shall be
deemed to have a cognizable interest in the subsidiary unless the
duties and responsibilities of the officer or director involved are
wholly unrelated to the broadcast licensee, and a statement properly
documenting this fact is submitted to the Commission. [This statement
may be included on the appropriate Ownership Report.] The officers and
directors of a sister corporation of a broadcast licensee shall not be
attributed with ownership of that licensee by virtue of such status.
h. Discrete ownership interests will be aggregated in determining
whether or not an interest is cognizable under this section. An
individual or entity will be deemed to have a cognizable investment if:
1. The sum of the interests held by or through ``passive
investors'' is equal to or exceeds 20 percent; or
2. The sum of the interests other than those held by or through
``passive investors'' is equal to or exceeds 5 percent; or
3. The sum of the interests computed under paragraph h. 1. of this
note plus the sum of the interests computed under paragraph h. 2. of
this note is equal to or exceeds 20 percent.
i.1. Notwithstanding paragraphs e. and f. of this Note, the holder
of an equity or debt interest or interests in a broadcast licensee
subject to the broadcast multiple ownership rules (``interest holder'')
shall have that interest attributed if:
A. The equity (including all stockholdings, whether voting or
nonvoting, common or preferred) and debt interest or interests, in the
aggregate, exceed 33 percent of the total asset value, defined as the
aggregate of all equity plus all debt, of that broadcast licensee; and
B.(i) The interest holder also holds an interest in a broadcast
licensee in the same market that is subject to the broadcast multiple
ownership rules and is attributable under paragraphs of this note other
than this paragraph i.; or
(ii) The interest holder supplies over fifteen percent of the total
weekly broadcast programming hours of the station in which the interest
is held. For purposes of applying this paragraph, the term, ``market,''
will be defined as it is defined under the specific multiple ownership
rule that is being applied, except that for television stations, the
term ``market'' will be defined by reference to the definition
contained in the local television multiple ownership rule contained in
paragraph (b) of this section.
2. Notwithstanding paragraph i.1. of this Note, the interest holder
may exceed the 33 percent threshold therein without triggering
attribution where holding such interest would enable an eligible entity
to acquire a broadcast station, provided that:
i. The combined equity and debt of the interest holder in the
eligible entity is less than 50 percent, or
ii. The total debt of the interest holder in the eligible entity
does not exceed 80 percent of the asset value of the station being
acquired by the eligible entity and the interest holder does not hold
any equity interest, option, or promise to
[[Page 34630]]
acquire an equity interest in the eligible entity or any related
entity. For purposes of this paragraph i.2, an ``eligible entity''
shall include any entity that qualifies as a small business under the
Small Business Administration's size standards for its industry
grouping, as set forth in 13 CFR 121.201, at the time the transaction
is approved by the FCC, and holds:
A. 30 percent or more of the stock or partnership interests and
more than 50 percent of the voting power of the corporation or
partnership that will own the media outlet; or
B. 15 percent or more of the stock or partnership interests and
more than 50 percent of the voting power of the corporation or
partnership that will own the media outlet, provided that no other
person or entity owns or controls more than 25 percent of the
outstanding stock or partnership interests; or
C. More than 50 percent of the voting power of the corporation that
will own the media outlet if such corporation is a publicly traded
company.
j. ``Time brokerage'' (also known as ``local marketing'') is the
sale by a licensee of discrete blocks of time to a ``broker'' that
supplies the programming to fill that time and sells the commercial
spot announcements in it.
1. Where two radio stations are both located in the same market, as
defined for purposes of the local radio ownership rule contained in
paragraph (a) of this section, and a party (including all parties under
common control) with a cognizable interest in one such station brokers
more than 15 percent of the broadcast time per week of the other such
station, that party shall be treated as if it has an interest in the
brokered station subject to the limitations set forth in paragraph (a)
of this section. This limitation shall apply regardless of the source
of the brokered programming supplied by the party to the brokered
station.
2. Where two television stations are both located in the same
market, as defined in the local television ownership rule contained in
paragraph (b) of this section, and a party (including all parties under
common control) with a cognizable interest in one such station brokers
more than 15 percent of the broadcast time per week of the other such
station, that party shall be treated as if it has an interest in the
brokered station subject to the limitations set forth in paragraphs (b)
and (e) of this section. This limitation shall apply regardless of the
source of the brokered programming supplied by the party to the
brokered station.
3. Every time brokerage agreement of the type described in this
Note shall be undertaken only pursuant to a signed written agreement
that shall contain a certification by the licensee or permittee of the
brokered station verifying that it maintains ultimate control over the
station's facilities including, specifically, control over station
finances, personnel and programming, and by the brokering station that
the agreement complies with the provisions of paragraph (b) of this
section if the brokering station is a television station or with
paragraph (a) of this section if the brokering station is a radio
station.
k. ``Joint Sales Agreement'' is an agreement with a licensee of a
``brokered station'' that authorizes a ``broker'' to sell advertising
time for the ``brokered station.''
1. Where two radio stations are both located in the same market, as
defined for purposes of the local radio ownership rule contained in
paragraph (a) of this section, and a party (including all parties under
common control) with a cognizable interest in one such station sells
more than 15 percent of the advertising time per week of the other such
station, that party shall be treated as if it has an interest in the
brokered station subject to the limitations set forth in paragraph (a)
of this section.
2. Every joint sales agreement of the type described in this Note
shall be undertaken only pursuant to a signed written agreement that
shall contain a certification by the licensee or permittee of the
brokered station verifying that it maintains ultimate control over the
station's facilities, including, specifically, control over station
finances, personnel and programming, and by the brokering station that
the agreement complies with the limitations set forth in paragraph (a)
of this section if the brokering station is a radio station.
* * * * *
Note 4 to Sec. 73.3555: Paragraphs (a) and (b) of this section
will not be applied so as to require divestiture, by any licensee,
of existing facilities, and will not apply to applications for
assignment of license or transfer of control filed in accordance
with Sec. 73.3540(f) or Sec. 73.3541(b), or to applications for
assignment of license or transfer of control to heirs or legatees by
will or intestacy, or to FM or AM broadcast minor modification
applications for intra-market community of license changes, if no
new or increased concentration of ownership would be created among
commonly owned, operated or controlled broadcast stations.
Paragraphs (a) and (b) of this section will apply to all
applications for new stations, to all other applications for
assignment or transfer, to all applications for major changes to
existing stations, and to all other applications for minor changes
to existing stations that seek a change in an FM or AM radio
station's community of license or create new or increased
concentration of ownership among commonly owned, operated or
controlled broadcast stations. Commonly owned, operated or
controlled broadcast stations that do not comply with paragraphs (a)
and (b) of this section may not be assigned or transferred to a
single person, group or entity, except as provided in this Note, the
Report and Order in Docket No. 02-277, released July 2, 2003 (FCC
02-127), or the Second Report and Order in MB Docket No. 14-50, FCC
16-107 (released August 25, 2016).
Note 5 to Sec. 73.3555: Paragraphs (b) and (e) of this section
will not be applied to cases involving television stations that are
``satellite'' operations. Such cases will be considered in
accordance with the analysis set forth in the Report and Order in MM
Docket No. 87-8, FCC 91-182 (released July 8, 1991), as further
explained by the Report and Order in MB Docket No. 18-63, FCC 19-17,
(released March 12, 2019), in order to determine whether common
ownership, operation, or control of the stations in question would
be in the public interest. An authorized and operating ``satellite''
television station, the digital noise limited service contour of
which overlaps that of a commonly owned, operated, or controlled
``non-satellite'' parent television broadcast station may
subsequently become a ``non-satellite'' station under the
circumstances described in the aforementioned Report and Order in MM
Docket No. 87-8. However, such commonly owned, operated, or
controlled ``non-satellite'' television stations may not be
transferred or assigned to a single person, group, or entity except
as provided in Note 4 of this section.
Note 6 to Sec. 73.3555: Requests submitted pursuant to
paragraph (b)(2) of this section will be considered in accordance
with the analysis set forth in the Order on Reconsideration in MB
Docket Nos. 14-50, et al. (FCC 17-156).
Note 7 to Sec. 73.3555: The Commission will entertain
applications to waive the restrictions in paragraph (b) of this
section (the local television ownership rule) on a case-by-case
basis. In each case, we will require a showing that the in-market
buyer is the only entity ready, willing, and able to operate the
station, that sale to an out-of-market applicant would result in an
artificially depressed price, and that the waiver applicant does not
already directly or indirectly own, operate, or control interest in
two television stations within the relevant DMA. One way to satisfy
these criteria would be to provide an affidavit from an independent
broker affirming that active and serious efforts have been made to
sell the permit, and that no reasonable offer from an entity outside
the market has been received.
We will entertain waiver requests as follows:
1. If one of the broadcast stations involved is a ``failed''
station that has not been in operation due to financial distress for at
least four consecutive months immediately prior to the
[[Page 34631]]
application, or is a debtor in an involuntary bankruptcy or insolvency
proceeding at the time of the application.
2. If one of the television stations involved is a ``failing''
station that has an all-day audience share of no more than four per
cent; the station has had negative cash flow for three consecutive
years immediately prior to the application; and consolidation of the
two stations would result in tangible and verifiable public interest
benefits that outweigh any harm to competition and diversity.
3. If the combination will result in the construction of an unbuilt
station. The permittee of the unbuilt station must demonstrate that it
has made reasonable efforts to construct but has been unable to do so.
* * * * *
Note 9 to Sec. 73.3555: Paragraph (a)(1) of this section will
not apply to an application for an AM station license in the 1605-
1705 kHz band where grant of such application will result in the
overlap of the 5 mV/m groundwave contours of the proposed station
and that of another AM station in the 535-1605 kHz band that is
commonly owned, operated or controlled.
* * * * *
[FR Doc. 2021-13811 Filed 6-29-21; 8:45 am]
BILLING CODE 6712-01-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on June 30, 2021.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.