New FCC Foreign Broadcast Ownership Stance Likely to Involve Small Deals at First, Say Attorneys
The first tests of the FCC’s new openness to increased foreign ownership of broadcasters will likely be small transactions rather than outright purchases of whole stations, said Covington Burling broadcast attorney Mace Rosenstein, speaking at an FCBA event on foreign ownership Monday night. Rosenstein represented a coalition of broadcasters that asked the commission to clarify its stance on foreign ownership applications, leading to its declaratory ruling earlier this month (CD Nov 15 p3). Rosenstein said media attention had focused on the ruling’s ramifications for large transactions, but smaller deals involving a company’s ownership rising only slightly over the 25 percent threshold would be “the best cases to make law” and begin to establish the parameters of the FCC’s new stance on foreign ownership.
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Rosenstein said that’s important because the commission’s declaratory ruling doesn’t specify what factors the FCC will consider in approving or disapproving applications. The lack of specificity in the declaratory ruling is something he and his clients requested, he said, and the way the rule is handled in the future will be influenced by the first cases to come in under the new policy. The first few applications for foreign ownership groups over the 25 percent threshold will likely be decided by the full commission rather than at the bureau level, Rosenstein said, though he said he’s not aware of any pending applications.
The first applications under the declaratory ruling might involve relatively small investments from family members of existing broadcasters, said Minority Media and Telecommunications Council President David Honig, who supported the FCC policy shift, in an interview. Honig had previously said loosening foreign ownership policy would likely affect foreign-language stations the most, and he suggested that’s where such family transactions could show up.
House Communications Subcommittee Vice Chairman Bob Latta, R-Ohio, expressed concerns with the declaratory ruling and how it would be regulated to prevent foreign interests from “buying up all the airwaves,” in a recent appearance on C-SPAN’s The Communicators (http://cs.pn/1c7h9OF). Rosenstein said Monday that he and his clients did extensive lobbying on Capitol Hill before asking the commission to issue the ruling, to ensure lawmakers didn’t object. He and his clients didn’t want to “put the commission in an untenable position” by running afoul of Congress, he said. Rosenstein said most congressional concerns about foreign ownership were national security-related.
As the new stance on foreign ownership is implemented, Rosenstein said it’s possible that procedures and institutional knowledge from the FCC International Bureau’s administration of the commission’s rules on foreign ownership of wireless carriers could be adopted by the Media Bureau. “Seems a shame to leave all this institutional knowledge and precedent on the other side of the house,” said Rosenstein. However, broadcasters operate in a very different medium, said Policy Director Matt Wood of Free Press, which had some concerns with the declaratory ruling but said shortly before it was adopted that the group didn’t oppose it, in an interview. “Broadcasters are not common carriers -- broadcasters are supposed to be responsible for producing local content.” He said broadcasters’ content-related responsibilities would be an “insurmountable” obstacle to using the same procedures and considerations to regulate foreign ownership of broadcasters that are used on common carriers.
Rosenstein also said the difference in the two bureaus’ approaches might work to the advantage of those seeking foreign ownership over the 25 percent threshold. The Media Bureau and broadcasters are used to considering the “public interest ramifications of decisions,” said Rosenstein. Though that’s irrelevant in the common carrier sphere, it would give broadcast applicants an opportunity to showcase the “enhancements” foreign investment can provide to local broadcasting, he said.