Articles Posted in Ownership Law & Regulation

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The FCC announced in April 2009 its intent to implement a new version of its biennial Ownership Report form, and to require that all commercial broadcast stations file a new Ownership Report with the FCC by November 1 of odd-numbered years. Since that time, the FCC has had to delay the original November 2009 filing deadline a number of times, for reasons ranging from its electronic filing system grinding to a halt and being unable to handle the sheer mass of the new reports, to technical glitches with the form itself, delays in Office of Management and Budget approval, and fierce opposition from broadcasters at the FCC, OMB and now in court based upon the paperwork burden and privacy concerns the new form raises. As we discussed in an earlier Client Alert, the FCC’s revised deadline requires parties to report their November 1, 2009 ownership data on the new form by July 8, 2010.

As that deadline draws near, however, it looks like there are still a few obstacles that the FCC must navigate. As we reported in a recent Client Alert, the FCC yesterday responded to a petition filed with the U.S. Court of Appeals for the DC Circuit by a group of broadcasters. Those broadcasters have asked the court to stop the FCC from implementing the revised Form 323, arguing that the requirement that all “attributable” principals provide their Social Security Number (SSN) to obtain a Federal Registration Number (FRN) for the new ownership report violates the Administrative Procedure Act and the Privacy Act. In its court-ordered response to these allegations, the FCC claims it has complied with the law, and that the broadcasters’ claims are moot in any event because filers are no longer actually required to provide their SSNs and can instead apply for a “Special Use FRN” (SUFRN) (love that acronym!) to complete the new ownership report form.

That response is not, however, entirely accurate. The FCC initially refused to create a Special Use FRN for purposes of reporting ownership interests. It feared that broadcast investors would choose to use that option rather than supplying their SSN, thereby undercutting the FCC’s ability to determine precisely which “Ted Jones” was the owner of a particular radio station. The FCC relented only when it became clear that many broadcasters would be unable to file their Ownership Reports at all since they had no ability to force their investors to reveal SSNs, and the FCC’s electronic filing system would not accept an ownership report if all attributable investors listed did not have an SSN-obtained FRN.

Even when the FCC later relented and created the SUFRN, it limited its use to the filing of biennial ownership reports (as opposed to post-sale ownership reports or other FCC applications). The FCC also made clear that the use of a SUFRN, while technically allowing broadcasters to file their ownership reports through the electronic filing system, did not comply with its rules and that it expected broadcasters to have obtained SSN-obtained FRNs before the next biennial ownership report is due in November 2011.

Since that time, and under continuing pressure from communications lawyers and privacy advocates (who are often one and the same), the FCC appears to be growing more flexible about the use of SUFRNs in completing ownership reports. Action by the court in the short time remaining until the July 8, 2010 filing deadline may determine just how flexible the FCC will need to be in that regard, and whether the filing deadline might have to be extended yet one more time.

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May 2010
The staggered deadlines for filing Biennial Ownership Reports by noncommercial educational radio and television stations remain in effect and are tied to their respective anniversary renewal filing deadlines.

Noncommercial educational radio stations licensed to communities in Michigan and Ohio, and noncommercial educational television stations licensed to communities in Arizona, the District of Columbia, Idaho, Maryland, Nevada, New Mexico, Utah, Virginia, West Virginia, and Wyoming, must file their Biennial Ownership Reports by June 1, 2010.

Last year, the FCC issued a Further Notice of Proposed Rulemaking seeking comments on, among other things, whether the Commission should adopt a single national filing deadline for all noncommercial educational radio and television broadcast stations like the one that the FCC has established for all commercial radio and television stations. That proceeding remains pending without decision. As a result, noncommercial educational radio and television stations continue to be required to file their biennial ownership reports every two years by the anniversary date of the station’s license renewal filing.

A PDF version of this article can be found at Biennial Ownership Reports Are Due by June 1, 2010 for Noncommercial Educational Radio Stations in Michigan and Ohio, and for Noncommercial Educational Television Stations in Arizona, the District of Columbia, Idaho, Maryland, Nevada, New Mexico, Utah, Virginia, West Virginia and Wyoming.

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The staggered deadlines for filing Biennial Ownership Reports by noncommercial educational radio and television stations remain in effect and are tied to their respective anniversary renewal filing deadlines.

Noncommercial educational radio stations licensed to communities in Michigan and Ohio, and noncommercial educational television stations licensed to communities in Arizona, the District of Columbia, Idaho, Maryland, Nevada, New Mexico, Utah, Virginia, West Virginia, and Wyoming, must file their Biennial Ownership Reports by June 1, 2010.
Last year, the FCC issued a Further Notice of Proposed Rulemaking seeking comments on, among other things, whether the Commission should adopt a single national filing deadline for all noncommercial educational radio and television broadcast stations like the one that the FCC has established for all commercial radio and television stations. That proceeding remains pending without decision. As a result, noncommercial educational radio and television stations continue to be required to file their biennial ownership reports every two years by the anniversary date of the station’s license renewal filing.

Should there be any questions concerning this matter, please contact any of the attorneys in the Communications Practice.

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Blair Levin, who headed the FCC’s Omnibus Broadband Initiative (OBI) for the past year and who was the principle architect of the National Broadband Plan, announced yesterday that he’s leaving the FCC on May 7 to join the Aspen Institute, a large and prestigious think tank.

Levin created the OBI from scratch. He moved in to the FCC, but he hired many new staff. He adopted new procedures for gathering public input, including blogging, “staff workshops”, and what amounted to frequent cold calls to people in business and academia to solicit views and information. The OBI was not your father’s FCC proceeding!

Levin also drew a dauntingly broad scope for the effort, and the OBI staff continued to expand that scope almost until the last minute. The proceeding, and the Plan, addressed broadband technology, deployment, services, adoption, financing, and usage. It asked how broadband affects other institutions and industries, from broadcasting, cable, wireless, and voice services to education, politics, energy and the environment, to name just a few.

Levin’s efforts drew enthusiastic support from some quarters and criticism from others. Some disliked his unorthodox procedural approach and others welcomed it. Some who agreed with his positions questioned his procedures, and vice versa. Whatever one thinks of the procedure or the recommendations, the National Broadband Plan is a remarkable document – comprehensive, polished and beautifully written and presented.

The most polarizing issue was a proposal to reallocate broadcast spectrum for wireless broadband use. I’ve questioned some aspects of the broadband plan, especially whether proponents of more broadband spectrum have really made their case. But I’ve been awed by Levin’s ability to “shake things up” in a town where the status quo can last for decades.

Reactions to Levin’s announcement have been as mixed as views of the National Broadband Plan. I’m disappointed to see him go. Levin is one of the smartest, hardest working, most effective, and best-intentioned people to work at the FCC (and that’s a big club). I disagree with some of his views, but I’ve never doubted his sincerity or the honesty of his motives.

Levin didn’t start the debate over broadcast spectrum – that began in the 1980s – and it won’t end on May 7. But he focused the issue and gave it legs. The country is now having a debate about the future of broadcasting that would have seemed unthinkable a year ago.

I’m an optimist — perhaps a delusional optimist. But if downsizing the nation’s broadcasting service is suddenly thinkable today, maybe real deregulation of broadcasting, including much-needed ownership reform, is also thinkable. The FCC’s Future of Media proceeding essentially asks that question.

I’ve harbored hope that ongoing engagement on “the spectrum issue” will eventually lead to grounds-up rethinking of the broadcast ownership rules. Broadcast regulation needs some serious shaking up, and the constituencies around many of those regulations are honed in the art of the status quo. Levin demonstrated an uncanny ability to reset people’s conceptions about what is and isn’t achievable. Broadcasters could use some of that energy focused on ownership rules which artificially limit their participation in a digital broadband future. He’s leaving, but perhaps someone will learn from Levin how to pull off something as ambitious as repealing anachronistic broadcast regulations. I hope so. And I hope the Aspen Institute knows what it’s getting into!

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Death, taxes, and ownership reports: all three are unavoidable, but broadcasters had a brief respite from the last one. That respite has now come to an end.

One of the joys of being a broadcast licensee is filing biennial ownership reports detailing the extended ownership structure of each station. These reports used to be called Annual Ownership Reports and were filed, appropriately enough, annually. In an effort to reduce the amount of paperwork flowing between licensees and the FCC, the requirement changed in 1999 from an annual to a biennial one. That created endless confusion, as any particular station’s filing deadline was generally dictated by where it was located. Radio stations in one state would file by April 1 of odd-numbered years, while radio stations in a different state would be required to file by June 1 of even-numbered years. In fact, even TV and radio stations in the same state were required to file in different years.

Because of exceptions to the general rule on filing deadlines (too boring to discuss here), even the FCC had difficulty determining whether a station had been properly filing its ownership reports on time. As a result, the FCC adopted new filing rules in May 2009 establishing November 1 of odd-numbered years as the national ownership report filing date for all commercial broadcast stations. It also introduced a new form requiring more detailed information than in the past, required formerly exempt entities to file reports, and required that the information be entered electronically and repeatedly into the FCC’s filing system for each attributable owner in the ownership chain.

Previously, licensees with complex ownership structures would create a single exhibit describing the complete ownership structure and other media ownership interests, which was then attached to the ownership report for every entity in the chain of ownership. Because the new electronic ownership report form would not allow such attachments, stations (well, let’s be honest; station’s lawyers) were required to reenter the data for each and every ownership report. The reports for even midsize station groups could take months to complete. Initially, the FCC postponed the filing deadline (twice!) to give licensees time to fill out the voluminous reports, but as the FCC’s electronic filing system started to whimper from the volume of data being entered, the FCC postponed the deadline until the form could be reworked to solve the worst of the problems. For those interested, you can read our advisories and alerts from the time here, here, here, here, here, and here (you begin to appreciate the scope of the problem!).

A few hours ago, the FCC announced that a revamped ownership report form is now available which resolves the repetitive data entry issue by incorporating a spreadsheet that, once filled out, can be copied into multiple ownership reports. With the availability of the new form, the FCC also announced that all commercial broadcast stations, including Class A and LPTV stations, must file their reports on the new form by July 8, 2010. For those interested in the details of the new Form 323 and spreadsheet, you can read our Client Alert on the new form, and ponder whether a similar eight month postponement of death or taxes might also be possible.

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4/8/2010
The FCC’s Media Bureau has announced that a new version of the Biennial Ownership Report Form for commercial broadcast stations, FCC Form 323, will be available on its website as of April 9, 2010. All commercial broadcast station owners must file their biennial ownership reports using the new form by July 8, 2010. However, the data used to complete the form must be accurate as of November 1, 2009.

The FCC originally announced its intent to implement a new version of the Form 323 in an Order released in May 2009 as part of its Promoting Diversification in the Broadcasting Services proceeding. The revision required, among other things, that each holder of a direct or indirect attributable interest in a licensee secure an FCC-issued Federal Registration Number (“FRN”). The revision also mandated that information regarding attributable interest holders and their other broadcast interests be reported repeatedly and in a precisely structured manner. As a result, the number of reports and the time to complete each report increased dramatically for many broadcasters with the ultimate result that the FCC’s electronic filing system ground to a near halt and did not reliably save information entered into it. Based on these technical difficulties, the FCC stayed the filing obligation until it could improve the functioning of the form to account for these difficulties.

The FCC sent its revisions to the form to the Office of Management and Budget (“OMB”) for approval on March 25, and OMB approved the modified form on March 26. The revised form uses a new XML Spreadsheet template that will allow information to be entered into the spreadsheet and then uploaded to the form, thereby reducing the time and effort needed to enter the data. The spreadsheet must be downloaded from the FCC form and comes with detailed instructions regarding the proper use of the XML Spreadsheet. Of particular note are the following:

  • The XML Spreadsheet comes with 25 empty rows for data entry that contain embedded validation codes necessary for the proper functioning of the form. Any licensee needing more than 25 lines must copy and paste the original 25 lines as many times as necessary and not create new lines.
  • The XML Spreadsheet must be saved with an .xml extension, not the .xls or .xlsx extensions that the Excel program will assign by default.
  • Licensees must not change or delete any data in Cell B1.
  • Information must be entered in all capital letters.

The new version of the form also retains the requirement that each attributable interest holder secure an FRN. The instructions state that where, after a good faith effort, a licensee is unable to secure an interest holder’s social security number, which is needed to complete the FRN registration process, a button on the form will allow the licensee to secure a Special Use FRN. The instructions to the form state that the Special Use FRN can only be used for the Biennial Ownership Report filing, and not for any other filing, such as a post-consummation Ownership Report filing.

The Commission’s May 2009 Order also adopted November 1 as a new uniform reporting date for all commercial stations nationwide, regardless of the station’s license renewal filing anniversary (the deadline previously used by the FCC). Because the original November 1, 2009 filing requirement was stayed while the form was revised, the reports filed by the new July 8, 2010 deadline must still reflect the ownership data as it existed November 1, 2009.

The substantial difference in time between the new filing deadline and the time for which ownership information is being reported leads to some interesting questions. For example, where a station has been sold since November 2009, should the report be filed under the name of the new licensee or the prior licensee. If it is to be filed by the new licensee, how will the FCC deal with the fact that the new licensee may not have any personal knowledge of the prior licensee’s November 2009 ownership structure? These questions may be answered by a follow up public notice from the FCC, but if not, we will be pursuing them with the FCC’s staff.

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In the latest chapter of what seems like a never ending saga of the Commission’s effort to adopt new ownership rules, the U.S. Court of Appeals for the Third Circuit recently lifted its stay of the FCC’s revised cross-ownership rules adopted in 2007, which immediately allows the FCC to presume that common ownership of a daily newspaper and a broadcast station in the Top 20 television markets is in the public interest. The Court’s decision, for the first time since 1975, effectively allows the common ownership of a full-power broadcast station and a daily newspaper in the same geographic market.
In 2003, the Chairman Powell-led Commission undertook what was ultimately a highly controversial review of all of its broadcast ownership rules. With respect to newspaper/broadcast cross-ownership rule, the Commission concluded that newspapers and broadcast stations do not compete in the same economic market and that continuation of the cross-ownership ban made no sense except in the smallest markets. Before the re-write of the broadcast rules took effect, it was challenged by various parties in the Third Circuit. The Court, in the well-known Prometheus Radio Project decision, stayed the effectiveness of the re-written rules. Despite the stay, the Court actually agreed with the Commission that a blanket ban on broadcast/newspaper cross-ownership was no longer warranted, so the Court remanded the FCC’s ownership limits back to the agency for further justification.
In response to the Court’s order, the Commission in 2007, this time led by Chairman Martin, once again decided that a complete newspaper/broadcast cross ownership ban did not make sense. It fashioned a rule that presumed that waiver of the ban is waived in the public interest in certain limited circumstances. The FCC said that it would review combinations involving a daily newspaper and either one radio station or one television station in the Top 20 markets on a case-by-case basis, and presume that they were in the public interest, so long as, in the case of television/newspaper combinations, the television station was not a Top-4 ranked station, and at least 8 independent “major media voices” would remain in the market. Combinations in markets outside of the Top 20 would be presumed to not be in the public interest, unless a showing could be made that overcame the presumption.

Again, before that rule could take effect, it was appealed and the Third Circuit continued to stay it. When the leadership of the FCC changed again in 2009, the new Chairman Genachowski-led Commission told the Court that relaxation of the newspaper/broadcast cross-ownership ban adopted by the previous Martin-led Commission does not necessarily reflect the view of a majority of the current Commission. The leadership also asked the Court to continue to hold off ruling on the Martin Commission’s version of the rule until this Commission could complete its Congressionally-mandated review of the broadcast ownership rules in 2010. Despite that request, the Court lifted its stay and ordered that initial briefs in connection with the Martin Commission revisions to its ownership rules be filed by May 17, 2010.

As a result, the FCC’s relaxed newspaper/broadcast cross-ownership rule adopted in 2007 is now in effect. Broadcast/newspaper combinations can now be reviewed and granted on a case-by-case basis in accordance with the standard described above. However, before trying to enter into a new cross-ownership combination, interested parties should keep in mind that the current Commission is on record as being wary of the Martin-era version of the rule, so any hope that the current Commission is in a hurry to review any proposed combos might be misplaced. They should also realize that the Martin-era rule is subject to the Third Circuit’s review, and that it is unclear precisely how, and when (if ever), this rule’s more than thirty-five year saga will end.

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January 2010
The FCC has established a national filing deadline for commercial radio and television stations to file their Biennial Ownership Reports. However, the schedule for the filing of Biennial Ownership Reports by noncommercial stations remains staggered, tied to their anniversary renewal filing deadlines.

Noncommercial radio stations licensed to communities in Arkansas, Louisiana, Mississippi, New Jersey and New York, and noncommercial television stations licensed to communities in Kansas, Nebraska and Oklahoma, must file their Biennial Ownership Reports by February 1, 2010.

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This afternoon, the Commission released an Order announcing that, due to technical difficulties, it was temporarily suspending the use of the new FCC Form 323 and, as a consequence, was postponing the January 11, 2010 deadline for the filing of Biennial Ownership Reports for commercial broadcast licensees. The Commission stated that it would announce the reactivation of the new form and the new filing deadline in a subsequent Public Notice. The Order states that the Commission “will temporarily suspend the ability to start a new biennial Form 323 during this interim suspension period but will allow filers to complete and file forms that they have already started should they wish to do so.” The Order also states that the new filing deadline will be at least 90 days from the date that the new form is made available for new biennial filings.

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