[Federal Register Volume 61, Number 246 (Friday, December 20, 1996)]
[Proposed Rules]
[Pages 67275-67291]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-32323]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 21, 73 and 76

[MM Docket No. 94-150, 92-51, 87-154; FCC 96-436]


Multipoint Distribution Services

AGENCY: Federal Communications Commission.

ACTION: Proposed Rule.

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SUMMARY: This Further Notice of Proposed Rule Making (``FNPRM'') seeks 
additional comment in our ongoing proceeding to review our broadcast 
attribution rules, the rules by which we define what constitutes a 
``cognizable interest'' in applying the multiple ownership rules. We 
seek comment as to how the relaxation of our ownership rules resulting 
from the passage of the Telecommunications Act of 1996 (``1996 Act'') 
should affect our review of the attribution rules. We also seek comment 
on new proposals, including a provision to attribute the otherwise 
nonattributable interests of holders of equity and/or debt in a 
licensee or media entity subject to the broadcast cross-ownership rules 
where the interest holder is a program supplier to a licensee or a 
same-market media entity subject to the broadcast cross-ownership rules 
and where the equity and/or debt holding exceeds a specified threshold. 
Additionally, we seek renewed comment on a proposal to attribute Local 
Marketing Agreements (``LMAs''). We also invite comment on whether we 
should revise our approach to joint sales agreements (``JSAs'') in 
specified circumstances. We also seek comment on a study conducted by 
Commission staff, appended to this FNPRM, on attributable interests in 
television broadcast licensees and on the implications of this study 
for our attribution rules, particularly on the voting stock benchmarks. 
Finally, we invite comment as to whether we should amend the cable/
Multipoint Distribution Service (``MDS'') cross-ownership attribution 
rule. The proposed rules are necessary to promote our goals of 
maximizing the precision of the attribution rules, avoiding disruption 
in the flow of capital to broadcasting, affording clarity and certainty 
to regulatees, and facilitating application processing, and the 
proposed rules are intended to effect those results. This NPRM contains 
proposed or modified information collections subject to the Paperwork 
Reduction Act of 1995 (PRA), Public Law 104-13. It has been submitted 
to the Office of Management and Budget (OMB) for review under Section 
3507(d) of the PRA. OMB, the general public, and other Federal agencies 
are invited to comment on the proposed or modified information 
collections contained in this proceeding.

DATES: Written comments by the public on the proposed and/or modified 
information collections are due February 7, 1997, and reply comments 
are due March 7, 1997. Written comments must be submitted by the Office 
of Management and Budget (OMB) on the proposed and/or modified 
information collections on or before February 11, 1997.

ADDRESSES: In addition to filing comments with the Secretary, a copy of 
any comments on the information collections contained herein should be 
submitted to Dorothy Conway, Federal Communications Commission, Room 
234, 1919 M Street, N.W., Washington, DC 20554, or via the Internet to 
[email protected], and to Timothy Fain, OMB Desk Officer, 10236 NEOB, 
725--17th Street, N.W., Washington, DC 20503 or via the Internet to 
fainX[email protected].

FOR FURTHER INFORMATION CONTACT: For additional information concerning 
the information collections contained in this NPRM contact Dorothy 
Conway at 202-418-0217, or via the Internet at [email protected].

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's FNPRM 
in MM Docket No. 94-150, 92-51, 87-

[[Page 67276]]

154; FCC 96-436, adopted November 5, 1996 and released November 7, 
1996. The full text of this FNPRM is available for inspection and 
copying during normal business hours in the FCC Reference Center (Room 
239), 1919 M Street, N.W., Washington, D.C., and also may be purchased 
from the Commission's copy contractor, International Transcription 
Service, Inc., 2100 M Street, N.W., Suite 140, Washington, D.C., 20037, 
(202)857-3800.

Synopsis of Further Notice of Proposed Rule Making

    1. The attribution rules seek to identify those interests in or 
relationships to licensees that confer on their holders a degree of 
influence or control such that the holders have a realistic potential 
to affect the programming decisions of licensees or other core 
operating functions. Our current broadcast attribution rules are set 
out in the Notes to Section 73.3555 of the Commission's rules, and, 
insofar as the broadcast-cable cross-ownership rule is involved, in the 
Notes to 47 CFR 76.501.1 We issued the NPRM in this proceeding, 60 
FR 6483, (February 2, 1995) broadly to review the attribution rules. In 
this FNPRM, we do not specifically discuss a number of issues raised in 
the NPRM, including treatment of Limited Liability Companies (``LLCs'') 
and treatment of limited partnerships. Nonetheless, these issues remain 
outstanding, and we intend to resolve the entire set of issues raised 
in the NPRM and in this FNPRM, together, after the comments received in 
response to this FNPRM are received and reviewed.
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    \1\ We recognize that the attribution standards used in a number 
of other cable rules are implicitly or explicitly based on Section 
76.501. For example, the attribution standards in the cable 
television horizontal ownership, channel occupancy and program 
access rules are derived from these attribution Notes. We are 
considering initiating a separate proceeding to address whether to 
modify the attribution criteria for these rules. In the instant 
proceeding, we are addressing only the attribution criteria that 
would apply to Section 76.501(a), the cable-broadcast cross-
ownership rule. Additionally, we will consider changes to the cable/
MDS cross-ownership attribution rule.
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Paperwork Reduction Act

    2. This NPRM contains either a proposed or modified information 
collection. The Commission, as part of its continuing effort to reduce 
paperwork burdens, invites the general public and the Office of 
Management and Budget (OMB) to comment on the information collections 
contained in this NPRM, as required by the Paperwork Reduction Act of 
1995, Public Law 104-13. Public and agency comments are due at the same 
time as other comments on this NPRM; OMB comments are due 60 days from 
date of publication of this NPRM in the Federal Register. Comments 
should address: (a) Whether the proposed collection of information is 
necessary for the proper performance of the functions of the 
Commission, including whether the information shall have practical 
utility; (b) the accuracy of the Commission's burden estimates; (c) 
ways to enhance the quality, utility, and clarity of the information 
collected; and (d) ways to minimize the burden of the collection of 
information on the respondents, including the use of automated 
collection techniques or other forms of information technology.
    OMB Approval Number: None
    Title: FNPRM--Attribution
    Form No.: FCC 301, FCC 314, FCC 315, FCC 323
    Type of Review: Revision of existing collections
    Respondents: Businesses or other for-profit
    Number of Respondents: 12,216
    Estimated Time Per Response: These proposals could cause an 
increase in burden of an additional 3.5 hours per respondent
    Total Annual Burden: 42,756 hours
    Needs and Uses: This Further NPRM seeks comments as to how the 
relaxation of the Commission's ownership rules resulting from the 
passage of the Telecommunications Act of 1996 should affect our review 
of the attribution rules. The attribution rules define what interests 
are cognizable for purposes of applying the multiple ownership rules to 
specific situations. The multiple ownership rules limit the number of 
broadcast stations that a single person or entity, directly or 
indirectly, is permitted to own, operate, or control. In its Further 
Notice, the Commission invited comment on a proposal to add a new 
``equity or debt plus'' attribution standard to its Rules. Under this 
proposed standard, where the interest holder is a program supplier or 
same-market broadcaster or media entity subject to the broadcast cross-
ownership rules (i.e., cable systems and newspapers), the Commission 
would attribute its otherwise nonattributable equity and/or debt 
interest in a licensee or other media entity subject to the cross-
ownership rules, if the equity and/or debt holding is greater than 33%. 
The Commission also sought comment on: (1) Whether it should attribute 
television Local Marketing Agreements (LMAs) and radio or television 
joint sales agreements (JSAs) among licensees in the same market, 
tentatively concluding that television LMAs should be attributed where 
they involve more than fifteen percent of the brokered station's weekly 
broadcast hours; (2) a staff study of the attributable interests in 
commercial broadcast television licensees, as reported in ownership 
reports, particularly with respect to the voting and nonvoting stock 
attribution benchmarks; and (3) grandfathering/ transition issues 
(except for LMAs, which will be resolved in the television local 
ownership proceeding). With respect to grandfathering, the Commission 
tentatively concluded that (1) any grandfathering should apply only to 
the current holder and should not be transferable; and (2) any 
interests acquired on or after December 15, 1994, the date of adoption 
of the Notice of Proposed Rulemaking in this proceeding, should be 
subject to the final rules adopted in the Report and Order in this 
proceeding. Finally, the Commission invited comment on whether to 
modify the cable/MDS cross-ownership attribution rules to apply 
broadcast attribution criteria, as modified in the attribution 
proceeding, in determining cognizable interests in MDS licensees and 
cable systems for purposes of applying the ownership restrictions of 
Section 21.912 of its Rules.
    3. The FCC 301 (OMB Control #3060-0027), FCC 314 (OMB Control 
#3060-0031), FCC 315 (OMB Control #3060-0032) and the FCC 323 (OMB 
Control #3060-0010) are the data collection devices used to identify 
those interests that are counted for purposes of applying the multiple 
ownership rules. Depending on the outcome of this proceeding, these 
forms may need to be modified to reflect new reportable interest 
standards and could cause an increase in burden. In addition, 
relaxation of the present attributable interests standards could result 
in a reduction in the number of interest-holders required to disclose 
their ownership interests in broadcast licensees and permittees. The 
overall impact, however, cannot be determined until resolution of the 
outstanding rulemaking. The attribution rules seek to identify those 
interests in or relationships to licensees or media entities that 
confer on their holders a degree of influence or control such that the 
holders have a realistic potential to affect programming decisions of 
licensees or other core operating functions. The attribution rules are 
used to implement the Commission's broadcast multiple ownership rules.

Initial Regulatory Flexibility Analysis

    As required by Section 603 of the Regulatory Flexibility Act, 5 
U.S.C. 603

[[Page 67277]]

(``RFA''), the Commission is incorporating an Initial Regulatory 
Flexibility Analysis (``IRFA'') of the expected impact on small 
entities of the policies and proposals in this FNPRM of Proposed Rule 
Making in MM Docket Nos. 94-150, 92-51, & 87-154 (``FNPRM'').2 
Written public comments concerning the effect of the proposals in the 
FNPRM, including the IRFA, on small businesses are requested. Comments 
must be identified as responses to the IRFA and must be filed by the 
deadlines for the submission of comments in this proceeding. The 
Secretary shall send a copy of this FNPRM, including the IRFA, to the 
Chief Counsel for Advocacy of the Small Business Administration in 
accordance with paragraph 603(a) of the Regulatory Flexibility 
Act.3
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    \2\ An IRFA pursuant to Public Law Notice 96-354, section 603, 
94 Stat. 1165 (1980) was incorporated into the Notice of Proposed 
Rule Making in MM Docket Nos. 94-150, 92-51 & 87-154, 10 FCC Rcd 
3606 (1995), 60 FR 3606, February 2, 1996 (``NPRM'').
    \3\ 5 U.S.C. 603(a).
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Reasons Why Agency Action is Being Considered

    After the issuance of the NPRM in this Docket, the 
Telecommunications Act of 1996 (``1996 Act'') was signed into 
law.4 The FNPRM seeks comment as to how the multiple ownership 
rule revisions resulting from passage of the 1996 Act should affect our 
review of the attribution rules. The FNPRM also seeks comment on our 
new proposal to attribute the otherwise nonattributable interests of 
holders of equity and or debt in a licensee or other media entity 
subject to the cross-ownership rules where the interest holder is a 
program supplier to a licensee or a same-market broadcaster and where 
the equity and/or debt holding meets or exceeds specified thresholds. 
This proposal is intended to address the concerns expressed in the NPRM 
that the current attribution rules may not precisely or fully identify 
all the interests in or relationships to broadcast stations that should 
be counted in applying the multiple ownership rules. Additionally, the 
FNPRM seeks comment on proposals concerning attribution of Local 
Marketing Agreements (``LMAs'') and joint sales agreements (``JSAs'') 
in specified circumstances. Also, the FNPRM seeks comment on a study 
conducted by Commission staff, appended to this FNPRM, on attributable 
interests in television broadcast licensees and on the implications of 
this study for our attribution rules, particularly on the voting stock 
benchmarks. Finally, we invite comment as to whether we should amend 
the cable/MDS cross-ownership attribution rule.
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    \4\ Public Law Notice 104-104, 110 Stat. 56 (1996).
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Need for and Objectives of the Proposed Rules

    The attribution rules seek to identify those interests in or 
relationships to licensees or media entities that confer on their 
holders a degree of influence or control such that the holders have a 
realistic potential to affect the programming decisions of licensees or 
other core operating functions. The attribution rules are used to 
implement the Commission's broadcast multiple ownership rules. Our 
goals in commencing this proceeding and in formulating the proposals in 
the FNPRM are to be to maximize the precision of the attribution rules, 
avoid disruption in the flow of capital to broadcasting, afford clarity 
and certainty to regulatees, and ease application processing.

Legal Basis

    Authority for the actions proposed in this FNPRM is contained in 
Sections 4(i), 303, 307 and 310 of the Communications Act of 1934, as 
amended, 47 U.S.C. 154(i), 303, 307, & 310.

Recording, Recordkeeping, and Other Compliance Requirements

    If our attribution rules are made more restrictive so as to 
attribute interests not now currently attributable, our ownership 
reporting form, FCC Form 323, will need to be modified accordingly so 
that such attributable interests will then be reportable on the form. 
We invite comment as to whether any additional professional skills 
would be needed to complete this form.

Federal Rules that Overlap, Duplicate or Conflict With the Proposed 
Rules

    The rules proposed in the FNPRM will modify the current attribution 
rules, and, similarly to the Commission's current attribution rules, 
will be used to implement the multiple ownership rules. Thus, the 
proposed rules are intended to promote the same diversity and 
competition goals also fostered by the multiple ownership rules. 
However, the proposed rules do not overlap, duplicate or conflict with 
the multiple ownership rules.

Description and Estimate of the Number of Small Entities to Which the 
Proposed Rules Will Apply

    Under the RFA, small entities may include small organizations, 
small businesses, and small governmental jurisdictions. 5 U.S.C. 
601(6). The RFA, 5 U.S.C. 601(3), generally defines the term ``small 
business'' as having the same meaning as the term ``small business 
concern'' under the Small Business Act, 15 U.S.C. 632. A small business 
concern is one which: (1) Is independently owned and operated; (2) is 
not dominant in its field of operation; and (3) satisfies any 
additional criteria established by the Small Business Administration 
(``SBA''). Pursuant to 5 U.S.C. 601(3), the statutory definition of a 
small business applies ``unless an agency after consultation with the 
Office of Advocacy of the SBA and after opportunity for public comment, 
establishes one or more definitions of such term which are appropriate 
to the activities of the agency and publishes such definition(s) in the 
Federal Register.'' 5
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    \5\  While we tentatively believe that the SBA's definition of 
``small business'' greatly overstates the number of radio and 
television broadcast stations that are small businesses and is not 
suitable for purposes of determining the impact of the proposals on 
small television and radio stations, for purposes of this FNPRM, we 
utilize the SBA's definition in determining the number of small 
businesses to which the proposed rules would apply, but we reserve 
the right to adopt a more suitable definition of ``small business'' 
as applied to radio and television broadcast stations or other 
entities subject to the proposed rules in this FNPRM and to consider 
further the issue of the number of small entities that are radio and 
television broadcasters or other small media entities in the future. 
See Report and Order in MM Docket No. 93-48 (Children's Television 
Programming), 11 FCC Rcd 10660, 10737-38 (1996), citing 5 U.S.C. 
601(3). We have pending proceedings seeking comment on the 
definition of and data relating to small businesses. In our Notice 
of Inquiry in GN Docket No. 96-113 (In the Matter of Section 257 
Proceeding to Identify and Eliminate Market Entry Barriers for Small 
Businesses), FCC 96-216, released May 21, 1996, 61 FR 33066, June 
26, 1996, we requested commenters to provide profile data about 
small telecommunications businesses in particular services, 
including television, and the market entry barriers they encounter, 
and we also sought comment as to how to define small businesses for 
purposes of implementing Section 257 of the Telecommunications Act 
of 1996, which requires us to identify market entry barriers and to 
prescribe regulations to eliminate those barriers. Additionally, in 
our Order and Notice of Proposed Rule Making in MM Docket No. 96-16 
(In the Matter of Streamlining Broadcast EEO Rule and Policies, 
Vacating the EEO Forfeiture Policy Statement and Amending Section 
1.80 of the Commission's Rules to Include EEO Forfeiture 
Guidelines), 11 FCC Rcd 5154 (1996), 61 FR 9964, March 12, 1996, we 
invited comment as to whether relief should be afforded to stations: 
(1) Based on small staff and what size staff would be considered 
sufficient for relief, e.g., 10 or fewer full-time employees; (2) 
based on operation in a small market; or (3) based on operation in a 
market with a small minority work force.
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    The proposed rules and policies will apply to television 
broadcasting licensees, radio broadcasting licensees and potential 
licensees of either service. The Small Business Administration defines 
a television broadcasting station that has no more than $10.5 million 
in

[[Page 67278]]

annual receipts as a small business.6 Television broadcasting 
stations consist of establishments primarily engaged in broadcasting 
visual programs by television to the public, except cable and other pay 
television services.7 Included in this industry are commercial, 
religious, educational, and other television stations.8 Also 
included are establishments primarily engaged in television 
broadcasting and which produce taped television program 
materials.9 Separate establishments primarily engaged in producing 
taped television program materials are classified under another SIC 
number.10 There were 1,509 television stations operating in the 
nation in 1992.11 That number has remained fairly constant as 
indicated by the approximately 1,550 operating television broadcasting 
stations in the nation as of August, 1996.12 For 1992 13 the 
number of television stations that produced less than $10.0 million in 
revenue was 1,155 establishments.14
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    \6\ 13 CFR 121.201, Standard Industrial Code (SIC) 4833 (1996).
    \7\ Economics and Statistics Administration, Bureau of Census, 
U.S. Department of Commerce, 1992 Census of Transportation, 
Communications and Utilities, Establishment and Firm Size, Series 
UC92-S-1, Appendix A-9 (1995).
    \8\ Id. See Executive Office of the President, Office of 
Management and Budget, Standard Industrial Classification Manual 
(1987), at 283, which describes ``Television Broadcasting Stations 
(SIC Code 4833) as:
    Establishments primarily engaged in broadcasting visual programs 
by television to the public, except cable and other pay television 
services. Included in this industry are commercial, religious, 
educational and other television stations. Also included here are 
establishments primarily engaged in television broadcasting and 
which produce taped television program materials.
    \9\ Economics and Statistics Administration, Bureau of Census, 
U.S. Department of Commerce, 1992 Census of Transportation, 
Communications and Utilities, Establishment and Firm Size, Series 
UC92-S-1, Appendix A-9 (1995).
    \10\ Id. SIC 7812 (Motion Picture and Video Tape Production); 
SIC 7922 Theatrical Producers and Miscellaneous Theatrical Services 
(producers of live radio and television programs).
    \11\ FCC News Release No. 31327, January 13, 1993; Economics and 
Statistics Administration, Bureau of Census, U.S. Department of 
Commerce, supra note 42, Appendix A-9.
    \12\ FCC News Release No. 64958, September 6, 1996.
    \13\ Census for Communications' establishments are performed 
every five years ending with a ``2'' or ``7''. See Economics and 
Statistics Administration, Bureau of Census, U.S. Department of 
Commerce, supra note 42.
    \14\ The amount of $10 million was used to estimate the number 
of small business establishments because the relevant Census 
categories stopped at $9,999,999 and began at $10,000,000. No 
category for $10.5 million existed. Thus, the number is as accurate 
as it is possible to calculate with the available information.
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    Additionally, the Small Business Administration defines a radio 
broadcasting station that has no more than $5 million in annual 
receipts as a small business.15 A radio broadcasting station is an 
establishment primarily engaged in broadcasting aural programs by radio 
to the public.16 Included in this industry are commercial, 
religious, educational, and other radio stations.17 Radio 
broadcasting stations which primarily are engaged in radio broadcasting 
and which produce radio program materials are similarly 
included.18 However, radio stations which are separate 
establishments and are primarily engaged in producing radio program 
material are classified under another SIC number.19 The 1992 
Census indicates that 96 percent (5,861 of 6,127) radio station 
establishments produced less than $5 million in revenue in 1992.20 
Official Commission records indicate that 11,334 individual radio 
stations were operating in 1992.21 As of August, 1996, official 
Commission records indicate that 12,088 radio stations were 
operating.22
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    \15\ 13 CFR 121.201, SIC 4832.
    \16\ Economics and Statistics Administration, Bureau of Census, 
U.S. Department of Commerce, supra note 42, Appendix A-9.
    \17\ Id.
    \18\ Id.
    \19\ Id.
    \20\ The Census Bureau counts radio stations located at the same 
facility as one establishment. Therefore, each co-located AM/FM 
combination counts as one establishment.
    \21\ FCC News Release No. 31327, January 13, 1993.
    \22\ FCC News Release No. 64958, September 6, 1996.
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    Thus, the proposed rules will affect approximately 1,550 television 
stations; approximately 1,194 of those stations are considered small 
businesses.23 Additionally, the proposed rules will affect 12,088 
radio stations, approximately 11,605 of which are small 
businesses.24 These estimates may overstate the number of small 
entities since the revenue figures on which they are based do not 
include or aggregate revenues from non-television or non-radio 
affiliated companies. We recognize that the proposed rules may also 
impact minority and women owned stations, some of which may be small 
entities. In 1995, minorities owned and controlled 37 (3.0%) of 1,221 
commercial television stations and 293 (2.9%) of the commercial radio 
stations in the United States.25 According to the U.S. Bureau of 
the Census, in 1987 women owned and controlled 27 (1.9%) of 1,342 
commercial and non-commercial television stations and 394 (3.8%) of 
10,244 commercial and non-commercial radio stations in the United 
States.26 We recognize that the numbers of minority and women 
broadcast owners may have changed due to an increase in license 
transfers and assignments since the passage of the 1996 Act. We seek 
comment on the current numbers of minority and women owned broadcast 
properties and the numbers of these that qualify as small entities. To 
assist us with our responsibilities under the amended Regulatory 
Flexibility Act, we specifically request comments concerning our 
assessment of the number of small businesses that will be impacted by 
this rule making proceeding, the type or form of impact, and the 
advantages and disadvantages of the impact.
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    \23\  We use the 77 percent figure of TV stations operating at 
less than $10 million for 1992 and apply it to the 1996 total of 
1,550 TV stations to arrive at 1,194 stations categorized as small 
businesses.
    \24\  We use the 96% figure of radio station establishments with 
less than $5 million revenue from the Census data and apply it to 
the 12,088 individual station count to arrive at 11,605 individual 
stations as small businesses.
    \25\ Minority Commercial Broadcast Ownership in the United 
States, U.S. Dep't of Commerce, National Telecommunications and 
Information Administration, The Minority Telecommunications 
Development Program (``MTDP'') (April 1996). MTDP considers minority 
ownership as ownership of more than 50% of a broadcast corporation's 
stock, voting control in a broadcast partnership, or ownership of a 
broadcasting property as an individual proprietor. Id. The minority 
groups included in this report are Black, Hispanic, Asian, and 
Native American.
    \26\  See Comments of American Women in Radio and Television, 
Inc. in MM Docket No. 94-149 and MM Docket No. 91-140, at 4 n.4 
(filed May 17, 1995), citing 1987 Economic Censuses, Women-Owned 
Business, WB87-1, U.S. Dep't of Commerce, Bureau of the Census, 
August 1990 (based on 1987 Census). After the 1987 Census report, 
the Census Bureau did not provide data by particular communications 
services (four-digit Standard Industrial Classification (SIC) Code), 
but rather by the general two-digit SIC Code for communications 
(#48). Consequently, since 1987, the U.S. Census Bureau has not 
updated data on ownership of broadcast facilities by women, nor does 
the FCC collect such data. However, we sought comment on whether the 
Annual Ownership Report Form 323 should be amended to include 
information on the gender and race of broadcast license owners. 
Policies and Rules Regarding Minority and Female Ownership of Mass 
Media Facilities, Notice of Proposed Rule Making, 10 FCC Rcd 2788, 
2797, 60 FR 06068 (January 12, 1995).
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    In addition to owners of operating radio and television stations, 
any entity who seeks or desires to obtain a television or radio 
broadcast license may be affected by the proposals contained in this 
item. The number of entities that may seek to obtain a television or 
radio broadcast license is unknown. We invite comment as to such 
number.
    Additionally, the proposed changes to the cable/MDS cross-ownership 
attribution rule will apply to cable and MDS entities. SBA has 
developed a definition of small entities for cable and other pay 
television services under Standard Industrial Classification 4841

[[Page 67279]]

(SIC 4841), which covers subscription television services, which 
includes all such companies with annual gross revenues of $11 million 
or less.27 This definition includes cable systems operators, 
closed circuit television services, direct broadcast satellite 
services, multipoint distribution systems, satellite master antenna 
systems and subscription television services. According to the Census 
Bureau, there were 1,323 such cable and other pay television services 
generating less than $11 million in revenue that were in operation for 
at least one year at the end of 1992.28 This figure is 
overinclusive since it includes other pay television services, not only 
cable and MDS.
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    \27\ 13 CFR 121.201.
    \28\ 1992 Census, supra, at Firm Size 1-123. See Memorandum 
Opinion and Order and Notice of Proposed Rule Making in MM Docket 
No. 92-266 and CS Docket No. 96-157, 11 FCC Rcd 9517, 9531, 61 FR 
45356 (August 8, 1996).
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    The Communications Act contains a definition of a small cable 
system operator, which is ``a cable operator that, directly or through 
an affiliate, serves in the aggregate fewer than 1 percent of all 
subscribers in the United States and is not affiliated with any entity 
or entities whose gross annual revenues in the aggregate exceed 
$250,000,000.'' 29 The Commission has determined that there are 
61,700,000 subscribers in the United States. Therefore, we found that 
an operator serving fewer than 617,000 subscribers is deemed a small 
operator, if its annual revenues, when combined with the total annual 
revenues of all of its affiliates, do not exceed $250 million in the 
aggregate.30 Based on available data, we find that the number of 
cable operators serving 617,000 subscribers or less totals 
1,450.31 Although it seems certain that some of these cable system 
operators are affiliated with entities whose gross annual revenues 
exceed $250,000,000, we are unable at this time to estimate with 
greater precision the number of cable system operators that would 
qualify as small cable operators under the definition in the 
Communications Act. We are likewise unable to estimate the number of 
these small cable operators that serve 50,000 or fewer subscribers in a 
franchise area.
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    \29\ 47 U.S.C. Sec. 543(m)(2).
    \30\ 47 CFR Sec. 76.1403(b).
    \31\ Paul Kagan Associates, Inc., Cable TV Investor, February 
29, 1996 (based on figures for December 30, 1995).
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    The Commission has developed its own definition of a small cable 
system operator for the purposes of rate regulation. Under the 
Commission's rules, a ``small cable company,'' is one serving fewer 
than 400,000 subscribers nationwide.32 Based on our most recent 
information, we estimate that there were 1,439 cable operators that 
qualified as small cable system operators at the end of 1995.33 
Since then, some of those companies may have grown to serve over 
400,000 subscribers, and others may have been involved in transactions 
that caused them to be combined with other cable operators. 
Consequently, we estimate that there are fewer than 1,439 small entity 
cable system operators that may be affected by the proposal adopted in 
this NPRM. Under the Commission's rules, a small cable system is a 
cable system with 15,000 or fewer subscribers owned by a cable company 
serving 400,000 or fewer subscribers over all of its cable systems. We 
are unable to estimate the number of small cable systems nationwide, 
and we seek comment on the number of small cable systems.
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    \32\ 47 CFR Sec. 76.901(e). The Commission developed this 
definition based on its determinations that a small cable system 
operator is one with annual revenues of $100 million or less. 
Implementation of Sections of the 1992 Cable Act: Rate Regulation, 
Sixth Report and Order and Eleventh Order on Reconsideration, 10 FCC 
Rcd 7393, 60 FR 35854 (June 5, 1995).
    \33\ Paul Kagan Associates, Inc., Cable TV Investor, February 
29, 1996 (based on figures for December 30, 1995).
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    The Commission refined the definition of ``small entity'' for the 
auction of MDS as an entity that together with its affiliates has 
average gross annual revenues that are not more than $40 million for 
the preceding three calendar years.34 This definition of a small 
entity in the context of MDS auctions has been approved by the 
SBA.35
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    \34\ 47 CFR 21.961(b)(1).
    \35\ See Amendment of Parts 21 and 74 of the Commission's Rules 
With Regard to Filing Procedures in the Multipoint Distribution 
Service and in the Instructional Television Fixed Service and 
Implementation of Section 309(j) of the Communications Act--
Competitive Bidding, MM Docket No. 94-31 and PP Docket No. 93-253, 
Report and Order, 10 FCC Rcd 9589, 60 FR 36524 (June 30, 1995).
---------------------------------------------------------------------------

    The Commission completed its MDS auction in March 1996 for 
authorizations in 493 basic trading areas (BTAs). Of 67 winning 
bidders, 61 qualified as small entities. Five bidders indicated that 
they were minority-owned and four winners indicated that they were 
women-owned businesses. MDS is a service heavily encumbered with 
approximately 1,573 previously authorized and proposed MDS facilities 
and information available to us indicates that no MDS facility 
generates revenue in excess of $11 million annually. We tentatively 
conclude that for purposes of this IRFA, there are approximately 1,634 
small MDS providers as defined by the SBA and the Commission's auction 
rules. We seek comment on this tentative conclusion.
    Some of the proposals delineated above may also apply to daily 
newspapers that hold or seek to acquire an interest in a broadcast 
station that would be treated as attributable under the proposals. A 
newspaper is an establishment that is primarily engaged in publishing 
newspapers, or in publishing and printing newspapers.36 The SBA 
defines a newspaper that has 500 or fewer employees as a small 
business.37 Based on data from the U.S. Census Bureau, there are a 
total of approximately 6,715 newspapers, and 6,578 of those meet the 
SBA's size definition.38 However, we recognize that some of these 
newspapers may not be independently owned and operated and, therefore, 
would not be considered a ``small business concern'' under the Small 
Business Act.39 We are unable to estimate at this time how many 
newspapers are affiliated with larger entities. Moreover, the proposal 
would apply only to daily newspapers, and we are unable to estimate how 
many newspapers that meet the SBA's size definition are daily 
newspapers. Consequently, we estimate that there are fewer than 6,578 
newspapers that may be affected by the proposed rules in this FNPRM. We 
invite comment on this estimate.
---------------------------------------------------------------------------

    \36\ 13 CFR 121.201 (SIC 2711).
    \37\ Id.
    \38\ U.S. Small Business Administration 1992 Economic Census 
Industry and Enterprise Report, Table 3, SIC Code 2711 (Bureau of 
the Census data adapted by the Office of Advocacy of the U.S. Small 
Business Administration).
    \39\ 15 U.S.C. 632.
---------------------------------------------------------------------------

Issues Raised by the Public Comments in Response to the Initial 
Regulatory Flexibility Analysis of the 1995 NPRM of Proposed Rule 
Making

    There were no comments submitted specifically in response to the 
IRFA. We have, however, taken into account all issues raised by the 
public in response to the proposals raised in this proceeding. In 
particular, Association of Independent Television Stations, Inc. (now 
known as the Association of Local Television Stations, Inc.), among 
others, generally notes that, given the plethora of other media 
investment opportunities, relaxation of the attribution rules will 
attract capital to broadcasting while tightening of the attribution 
rules may restrict capital flow to broadcasting. We note that access to 
capital is an issue of profound concern to small entities, and, 
accordingly, as discussed in the

[[Page 67280]]

FNPRM, supra, para.1, one of our goals in this proceeding has been to 
avoid disruption in the flow of capital to broadcasting. National 
Association of Black Owned Broadcasters argues that additional 
relaxation of the attribution rules will allow increased concentration 
of control of the media industry, which works against minority 
ownership. Our goal is neither specifically to relax or to tighten the 
attribution rules, but rather to maximize their precision. FNPRM, 
supra, para.1. Additionally, Big Horn Communications, Inc., which notes 
that it is a small market television station in Montana, argues that 
LMAs and time brokerage agreements allow cost efficiencies in small 
markets that increase service to small markets and promote the economic 
viability of small and financially weak stations. Local Station 
Ownership Coalition also urges the Commission not to make television 
station LMAs attributable unless it permits ownership of two television 
stations in a market because LMAs help financially troubled stations 
achieve economic viability. We recognize that LMAs can promote economic 
efficiencies, and our proposal is designed to permit those benefits 
while providing for attribution of those television station LMAs that 
should be counted under our multiple ownership rules.

Any Significant Alternatives Minimizing the Impact on Small Entities 
and Consistent With the Stated Objectives

    This FNPRM solicits comment on a variety of alternatives discussed 
herein. Any significant alternatives presented in the comments will be 
considered. In the NPRM, we invited comment on whether to restrict or 
eliminate current attribution exemptions for nonvoting shares and for 
minority voting shareholders in a corporation with a single majority 
shareholder. In addition, we requested comment on whether we should 
adopt new attribution rules or policies when multiple financial or 
business relationships were held in combination in a licensee. The 
``equity or debt plus'' approach discussed in the FNPRM is a 
specifically tailored approach, narrower than that discussed in the 
NPRM. We seek comment on whether there is a significant economic impact 
on any class of small licensee or permittee as a result of our proposed 
``equity or debt plus'' approach.
    We seek comment on whether there would be a significant economic 
impact on small stations resulting from the proposed attribution rules 
for LMAs or from the possible application of the attribution rules to 
JSAs.
    We seek comment on whether there would be a significant economic 
impact on small entities from the changes we have proposed to the 
cable/MDS cross-ownership attribution rules.

Staff Study of the 1994/95 FCC Annual TV Ownership Reports
Policy and Rules Division
Mass Media Bureau
FCC

Executive Summary

    This study collected and analyzed ownership information from the 
Commission's 1994/1995 annual ownership reports on the majority (1,009 
out of 1,043) of for-profit TV stations. The study draws the following 
conclusions.
     64.6 percent of broadcast TV stations are closely-held, 
where majority control is held by 5 or fewer owners.
     As well, 74.9 percent of TV stations are held by group-
owners.
     Increasing the attribution benchmark for active 
stockholders from 5 percent to 10 percent of voting control would 
decrease the number of currently-attributable owners by approximately 
one-third. As well, the number of licensees with no attributable owners 
(excluding directors and officers) would increase from 81 to 134, or by 
65.4 percent.
     Broadcast investment by mutual funds, life insurance 
companies and other passive investors is relatively small. The proposed 
change from a 10 percent to 20 percent passive investor benchmark would 
affect 5 of 15 currently-attributable passive investors, and impact 5 
stations currently with attributable passive investors. Most reported 
passive investment is now in the range of 5 percent to 10 percent 
voting control.
     Non-passive institutional investment is also small, with 
only 57 such interests reported in total. The proposed increase from a 
5 percent to 10 percent benchmark would decrease by 16, or 33.3 
percent, the number of institutional interests that are currently 
attributable.
     Only 10 instances of reported limited liability 
corporations (LLCs) were found among the stations sampled.

I. Purpose of the Study

    The present study was undertaken in conjunction with the 
attribution notice to analyze the potential impact of proposed rule 
changes on the cognizable and non-cognizable interests in broadcast TV 
stations.

II. Study Population of Interest

    The scope of the data collection and analysis effort was limited to 
for-profit broadcast television stations. Data for non-profit TV 
stations, radio stations and low power stations were not collected for 
several reasons. With non-profit stations only directors and officers 
(D&O) are cognizable, and they remain cognizable under proposed 
changes. The choice to focus on broadcast TV station attribution was 
made to maximize the use of limited resources.

III. Study Design

    Broadcast TV station licensees are required to report cognizable 
ownership interests in the form of an annual ownership report. These 
ownership interests include
    (i) ``active'' stockholders of 5 percent voting interest or greater 
in the licensee,
    (ii) ``passive'' shareholders, including mutual funds, bank trust 
departments and life insurance companies holding 10 percent or greater 
voting interest in the licensee,
    (iii) single-majority stockholders holding greater than 50 percent 
interest (in which cases all other voting interests are not 
attributable),
    (iv) all general partnership interests,
    (v) limited partnership interests that are not ``sufficiently 
insulated'' and
    (vi) all directors and officers (D&O) involved in the licensee.
    Data collection focused on collecting data on all attributable 
interests, with the exception of directors and officers with less than 
1 percent voting interest in the licensee. Because of their direct 
operational involvement with the licensee, this latter group is held 
attributable, regardless of the extent of their ownership stake in the 
station.
    The annual ownership reports also frequently and voluntarily report 
ownership percentages for owners not attributable under current rules, 
in particular voting shareholders with interests in the 1 percent to 5 
percent ownership range. To expand the scope of our analysis, data 
collection was extended to include all ``reported'' voting ownership 
claims of 1 percent or greater.

IV. Overall TV-Station Results

    Ownership information was obtained from the annual ownership 
reports required by the Commission. Information from the most recent 
report on file was used. Essentially, data was collected manually and 
then computer-coded from virtually all of the for-profit broadcast TV 
ownership filings, except with group-owned stations where a single 
ownership report was filed for the entire group.
    Of the total 1542 licensed TV stations, for-profit stations 
numbered 1043 and

[[Page 67281]]

non-profit stations numbered 499. Of the for-profit stations, 781 
stations or 74.8% were held by group owners, defined as 2 or more 
stations owned by the same corporate holding company. The remaining 262 
stations were singly-owned stations. The breakdown between for-profit 
and non-profit stations, and group-owned versus singly-owned stations 
is shown in Table I, presented at the end of this report.
    Table II categorizes TV stations by owner type. Of the for-profit 
TV stations censused, 64.6 percent are closely-held stations, either 
(1) by a sole proprietor, (2) by a single-majority shareholder, (3) 
majority family-owned or (4) majority-owned by a small (less than six) 
number of individual shareholders. Family-owned stations are those 
where five or fewer family members hold more than 50 percent ownership 
interest in a particular station. Closely-held stations are similarly 
defined but without the family-membership requirement. In contrast, 
only 20.1 percent of for-profit stations are categorized as widely-
held, where typically any one shareholder would hold only a small 
percent of ownership in the station. These percentages exclude stations 
which may be closely or widely held in the context of a general 
partnership (GP), limited partnership (LP) or limited liability 
corporation (LLC) ownership structure. As well, 4.2 percent of TV 
stations are organized as GPs, 8.8 percent as LPs and 1.0 percent as 
LLCs. Finally of the remaining stations, 5 are international TV 
stations and 8 are currently in receivership.
    Separate results for group-owned and singly-owned stations are 
given in Table III. As shown in the table, group-owned stations tend to 
have less concentrated ownership, with 20.4 percent of these stations 
widely held, while only 6.8% of singly-owned stations are widely-held.

V. Voting Shareholders as Cognizable Interests

    The Commission currently attributes ownership to stockholders with 
5 percent or more of voting rights in a broadcast station. Under 
consideration in the NPRM is a proposed increase in the attribution 
benchmark for voting stockholders from its current level at 5 percent 
to a 10 percent benchmark. Of interest is the impact of a change in the 
attribution benchmark on the number of attributable owners.
    The distribution of ownership interests that are attributable under 
the 5 percent rule is given next. The number of equity holders in the 1 
percent to 5 percent range is also given, although with the caveat that 
non-attributable interests are voluntarily reported and may undercount 
the true number. The table excludes ``passive'' shareholders, single-
majority shareholders, and partnership interests, which are governed by 
separate attribution rules. These groups will be separately analyzed 
below.

I. Issue Analysis

A. Impact of the 1996 Act

    4. The 1996 Act relaxed our broadcast station multiple ownership 
rules. Section 202 of the 1996 Act directed the Commission to eliminate 
national radio multiple ownership limits, to relax significantly local 
radio ownership rules, to eliminate the limit on the number of 
television stations that a person or entity may directly own 
nationwide, and to raise the national television audience reach cap to 
35 percent. The 1996 Act also directed the Commission to extend its 
one-to-a-market waiver policy, 47 CFR 73.3555(c), to the top 50 
markets, consistent with the public interest, convenience, and 
necessity, and to review its television duopoly rule, 47 CFR 
73.3555(b).
    5. In two Orders released on March 8, 1996 (61 FR 10689, March 15, 
1996 and 61 FR 10691, March 15, 1996), the Commission amended its 
ownership rules to reflect: (1) The elimination of the numerical 
national television ownership caps and the increase in the national 
television ownership audience reach cap to 35 percent; and (2) the 
elimination of national radio ownership limits and the relaxation of 
the local radio ownership limits.40 In a companion Second Further 
Notice of Proposed Rule Making in MM Docket Nos. 91-221 & 87-8, adopted 
today, the Commission invites further comment on a number of issues 
concerning the local television ownership rules, including extension of 
the one-to-a-market waiver policy and possible grandfathering of 
existing television LMAs, should we ultimately determine that these 
arrangements are attributable.41
---------------------------------------------------------------------------

    \40\ Implementation of Sections 202(a) and 202(b)(1) of the 
Telecommunications Act of 1996 (Broadcast Radio Ownership), FCC 96-
90, 61 FR 10689 (March 15, 1996); Implementation of Sections 
202(c)(1) and 202(e) of the Telecommunications Act of 1996 (National 
Broadcast Television Ownership and Dual Network Operations), FCC 96-
91, 61 FR 10691 (March 15, 1996).
    \41\ FCC 96-438, released November 7, 1996 (``TV Ownership 
Second FNPRM'').
---------------------------------------------------------------------------

    6. We invite comment in this proceeding as to whether the changes 
resulting from passage of the 1996 Act should affect our discussion of 
the attribution and cross-interest issues raised by the NPRM, and, if 
so, how. The relaxation of our multiple ownership rules does not itself 
require either a relaxation or tightening of the attribution rules. It 
does, however, reinforce our belief that the attribution rules must 
function effectively and accurately to identify all interests that are 
relevant to the underlying purposes of the multiple ownership rules and 
that should therefore be counted in applying those rules. As 
importantly, we seek to identify clearly those interests that do not 
and should not implicate concerns raised by the multiple ownership 
rules and that should not, therefore, be counted. We invite comment on 
these issues, and we specifically invite commenters to update the 
record on the impact of the 1996 Act on the issues raised in the NPRM, 
including those not discussed again in this FNPRM, such as LLCs and the 
cross-interest policy.

B. New Attribution Issues and Proposals

    7. In this FNPRM, we explore additional issues and proposals to 
increase the precision of our attribution rules. First, we invite 
comment on whether we should add a new ``equity or debt plus'' 
attribution rule to the current rules. If adopted, such a new rule 
would limit, but not eliminate, the single majority shareholder and 
nonvoting stock attribution exemptions and would address our concerns, 
expressed in the NPRM, about whether certain multiple business 
interests should be attributable when held in combination. Under such a 
rule, where the interest holder is a program supplier or same-market 
broadcaster or media entity subject to the broadcast cross-ownership 
rules, 47 CFR 73.3555(c), 73.3555(d), & 76.501(a), we would attribute 
its otherwise nonattributable equity and/or debt interest in a licensee 
or other media entity subject to the cross-ownership rules if the 
equity and/or debt holding is greater than a specified 
benchmark.42 Second, we incorporate into this proceeding our 
proposal to attribute television time brokerage agreements (or LMAs) 
based on the same principles that currently apply to radio LMAs.43 
Thus, we

[[Page 67282]]

tentatively conclude that we should treat time brokerage of another 
television station in the same market for more than fifteen percent of 
the brokered station's weekly broadcast hours as being attributable, 
and therefore as counting toward the brokering licensee's national and 
local ownership limits. Third, we invite comment as to whether we 
should attribute joint sales agreements among broadcasters in the same 
markets, at least under certain circumstances, and as to what factors 
should make such contractual relationships attributable. With respect 
to television stations, the definition of what is the same ``market'' 
for purposes of applying the ``equity or debt plus'' attribution 
standard, if adopted, as well as for applying the proposals to 
attribute LMAs and JSAs, will be resolved in the television local 
ownership proceeding. For radio stations and other entities covered by 
our broadcast attribution rules, we would define the same ``market'' by 
reference to the definition of the market used in the underlying 
multiple ownership rule that is implicated.
---------------------------------------------------------------------------

    \42\ We will refer herein to such media entities or outlets 
proposed to be subject to the ``equity or debt plus'' approach as 
``same-market broadcasters'' simply as a shorthand. Thus, when we 
refer to a ``same-market broadcaster'' in this FNPRM in the context 
of discussing the ``equity or debt plus'' approach, we include daily 
newspapers and cable operators.
    \43\ We earlier raised this proposal in the television ownership 
proceeding, Further Notice of Proposed Rule Making in MM Docket Nos. 
91-221 & 87-8, 10 FCC Rcd 3524, Paras. 138-40 , 60 FR 6483, 
(February 2,1995) (``TV Ownership FNPRM''), but now intend to 
resolve the issue of treatment of LMAs in this attribution 
proceeding. We will resolve the issue of possible grandfathering of 
LMAs in the television ownership proceeding.
---------------------------------------------------------------------------

1. ``Equity or Debt Plus''
    8. Background. In the NPRM, para. 51, we expressed concern that our 
earlier conclusion that a minority shareholder could not exert 
significant influence on a licensee where there is a single majority 
shareholder may not be a valid conclusion in all circumstances. 
Therein, para. 53, we also noted our concern that nonvoting 
shareholders could, in certain circumstances, carry appreciable 
influence that is not now attributed. Accordingly, we invited comment 
on whether to restrict or eliminate current attribution exemptions for 
nonvoting shares and for minority voting shareholders in a corporation 
with a single majority shareholder. In addition, we requested comment 
on whether we should adopt new attribution rules or policies when 
multiple financial or business relationships were held in combination 
in a licensee. We noted that such multiple relationships could in 
combination with equity or debt interests create sufficient influence 
to warrant attribution. While we expressed these concerns, we did not 
delineate specific proposals to address them.
    9. We received several comments concerning these issues. Most 
commenters urged us to retain the single majority shareholder and 
nonvoting stock exemptions from attribution. However, network 
affiliates have expressed concerns that the exemptions have allowed 
networks to extend their nationwide reach by structuring 
nonattributable deals in which the networks effectively exert 
significant influence if not control over licensees.44 In 
addition, while most parties were generally opposed to a case-by-case 
attribution approach, several parties agreed that there is a need to 
adopt new policies with respect to multiple business interests, or at 
least to clarify our existing policies in this regard.45 One 
commenter was generally opposed to relaxing the attribution rules, 
commenting that ``[a]ny relaxation of the attribution rules will allow 
an increase in the concentration of control of the industry,'' and 
adding that an increased concentration of control ``works against 
diversity of viewpoints and works against minority ownership.'' 46
---------------------------------------------------------------------------

    \44\ See Consolidated Comments of AFLAC Broadcast Group 
(``AFLAC'') at 15-19; Consolidated Reply Comments of AFLAC at 3-4; 
Reply Comments of Network Affiliated Stations Alliance at 2-3, 6-7.
    \45\ See, e.g., Consolidated Comments of AFLAC at 15, 21-23.
    \46\ Comments of National Association of Black Owned 
Broadcasters at 10, 13.
---------------------------------------------------------------------------

    10. In light of the broad divergence of opinion in the comments, we 
believe it would be desirable to explore a balanced, specifically-
tailored approach that would focus the rules more precisely on those 
relationships that potentially permit significant influence such that 
they should be attributed. Accordingly, based in part on our review of 
the comments, which underscore the concerns expressed in the NPRM, and 
in response to recent cases, we invite comment on a new ``equity or 
debt plus'' attribution rule. Many of the concerns sought to be 
addressed by the proposed ``equity or debt plus'' attribution approach 
have traditionally been dealt with under the cross-interest policy. A 
chief benefit of the new proposed approach, as discussed further below, 
is that it would permit greater certainty and predictability in 
deciding future cases than the cross-interest policy, which has 
traditionally been applied on an ad hoc, case-by-case basis.
    11. Overview of Approach. The new rule would operate in addition to 
other attribution standards and would attempt to increase the precision 
of the attribution rules, address the foregoing concerns about multiple 
nonattributable relationships, and respond to concerns about abuses of 
the single majority shareholder and nonvoting stock attribution 
exemptions. This approach would not eliminate the nonvoting and single 
majority shareholder exemptions from attribution, but would limit their 
availability in certain circumstances. Under this approach, we would 
attribute the otherwise nonattributable debt or equity interests in a 
licensee where: (1) The interest holder also holds certain other 
significant interests in or relationships to a licensee or other media 
outlet subject to the cross-ownership rules that could result in the 
ability to exercise significant influence; and (2) the equity and/or 
debt holding exceeds specified thresholds. We seek to apply bright line 
attribution tests wherever possible. Accordingly, we invite comment on 
what the appropriate threshold(s) for these purposes should be and 
specifically whether we should set the threshold at 33 percent where 
the interest holder is: (1) A program supplier to the licensee, as will 
be discussed below, or (2) a same-market broadcaster or other media 
outlet subject to the broadcast cross-ownership rules, including 
newspapers and cable operators. We emphasize that, under the ``equity 
or debt plus'' approach delineated herein, a finding that an interest 
is attributable would result in that interest being counted for all 
applicable multiple ownership rules, local and national.
    12. The ``equity or debt plus'' approach is narrower than that 
discussed in the NPRM with respect to resolving our concerns that 
multiple nonattributable business interests could be combined to exert 
influence over licensees. It also does not go so far as to repeal the 
current nonvoting stock and single majority shareholder attribution 
exemptions; except in cases involving a same-market broadcaster or a 
program supplier or any other relationship category that we delineate, 
the single majority shareholder and nonvoting stock exemptions would 
continue to apply as they do now. This approach reflects our current 
judgment as to the appropriate balance between our goal of maximizing 
the precision of the attribution rules by attributing all interests 
that are of concern, and only those interests, and our equally 
significant goals of not unduly disrupting capital flow and of 
affording ease of administrative processing and reasonable certainty to 
regulatees in planning their transactions. To the extent that it misses 
some situations that might be of concern, we, of course, would reserve 
the right to address extraordinary cases on an ad hoc basis and in a 
manner consistent with the public interest. We invite comment as to 
whether the ``equity or debt plus'' option should be adopted, and, if 
so,

[[Page 67283]]

whether the 33 percent benchmark is appropriate and whether other 
relationships to or interests in a licensee should also trigger 
attribution under an ``equity or debt plus'' approach.
    13. Triggering Relationships. The ``equity or debt plus'' approach 
would focus directly on those relationships that may trigger situations 
in which there is significant incentive and ability for the otherwise 
nonattributable interest holder to exert influence such that the 
interest may implicate diversity and competition concerns and should be 
attributed. As noted above, we seek comment as to whether the 
application of the equity and/or debt benchmarks discussed below should 
be triggered where the interest holder is either: (1) A broadcaster or 
other media entity in any service implicated by any of the current 
cross-ownership rules, which operates in the same market; or (2) a 
program supplier.
    14. The approach of focusing on specified triggering relationships 
would extend the Commission's current recognition that the category or 
nature of the interest holder is important to whether an interest 
should be attributed. For example, under the current broadcast 
attribution rules, passive investors are subject to a higher voting 
stock attribution benchmark, 47 CFR 73.3555 Note 2(c), since these 
parties are subject to fiduciary and other restraints on their exercise 
of influence over licensees and are, by their nature, principally 
concerned with investment returns rather than direct influence over the 
licensee.
    15. Same-market broadcasters and certain other same-market media 
entities may raise particular concerns because of our goal of 
protecting local diversity and competition. Firms with existing local 
media interests could use financing or contractual arrangements, such 
as LMAs, to obtain a degree of horizontal integration within a 
particular local market that should be subject to local multiple 
ownership limitations. Indeed, the Commission's cross-interest policy 
reflects its concern for competition and diversity where an entity has 
an attributable interest in one media outlet and a ``meaningful 
relationship'' with another media outlet serving substantially the same 
area, i.e., in the same market.47 In such cases, if the ``equity 
or debt plus'' approach is adopted, an attributable investment in one 
broadcast or other media outlet subject to the broadcast cross-
ownership rules (i.e., cable systems and newspapers), combined with a 
substantial non-attributable investment in a second station or media 
outlet subject to the cross-ownership rules in the same market, would 
trigger attribution of both stations or media interests to the interest 
holder, where common ownership of the two entities involved would be 
barred by the broadcast cross-ownership rules. We seek comment on this 
option. Certainly, television broadcasters should be included as 
``same-market broadcasters,'' as should radio stations. We also believe 
that other media entities captured by the cross-ownership rules (i.e., 
daily newspapers and cable operators) should be subject to the ``equity 
or debt plus'' approach, just as they are subject to our broadcast 
cross-ownership rules, but we seek comment on the implications of 
including daily newspapers and cable operators within the scope of this 
proposal. In particular, how should we define what is the ``same 
market'' for purposes of applying the ``equity or debt plus'' proposal 
to these latter entities?
---------------------------------------------------------------------------

    \47\ For a recent application of the policy and statement of 
this justification, see Roy M. Speer, FCC 96-258, Paras. 124-25, 
released June 14, 1996.
---------------------------------------------------------------------------

    16. We also invite comment on whether we should include program 
suppliers under the ``equity or debt plus'' attribution test to address 
our concern and that of some commenters that program suppliers such as 
networks could use nonattributable interests to exert influence over 
critical station decisions, including programming and affiliation 
choices. In recent transactions involving program suppliers, it has 
appeared that nonattributable investors can be granted rights over 
licensee decisions that might afford them significant influence over 
the licensee. We note that radio and television time brokerage 
agreements or LMAs are program supply contracts and would be 
encompassed under the ``equity or debt plus'' attribution approach, if 
we specify program suppliers as a triggering category. Thus, under the 
``equity or debt plus'' approach, such agreements might result in 
attribution in specific cases if the brokering station holds a 
financial interest in or acts as a creditor of the brokered station. 
Television time brokerage agreements might also be attributable under 
the per se LMA attribution approach discussed below.
    17. One recent transaction, for example, required us to decide 
whether to attribute complex and substantial financial interests that a 
national television network held in the proposed assignee of a 
television station and associated translator station.48 The 
proposed assignee was a multiple station owner whose stations were 
affiliated with the network investor. We found that the collective 
interests and relationships in that case ``do not squarely fall within 
any of the cases  * * * in which the Commission has previously found 
multiple relationships between a network and its affiliate 
nonattributable.'' 49 We therefore granted the application 
conditioned upon the outcome of this rulemaking proceeding.50 
Other recent cases have raised similar concerns and are also 
conditioned on the outcome of this proceeding.51
---------------------------------------------------------------------------

    \48\ BBC License Subsidiary L.P (WLUK-TV), 10 FCC Rcd 7926 
(1995).
    \49\ Id. at para. 43.
    \50\ Id. at para. 44.
    \51\  These include Roy M. Speer, FCC 96-258, released June 14, 
1996; BBC License Subsidiary L.P. (KHON-TV et. al), 10 FCC Rcd 10968 
(1995); BBC License Subsidiary L.P (WLUK-TV), 10 FCC Rcd 7926 
(1995); Quincy D. Jones, 11 FCC Rcd 2481 (1995); Letter to Heritage 
Media, Inc. et al. from Roy J. Stewart, Chief, Mass Media Bureau, 
dated January 18, 1996 (FCC File Nos. BTCCT-950911KF-KG and BALCT-
950628KJ-KL); Letter of Roy J. Stewart, Chief, Mass Media Bureau, 
dated May 8, 1995, Re File Nos. BALH-940323GE and BAL-940330EA 
(Cincinnati, Ohio); Letter of Larry D. Eads, Chief, Audio Services 
Division, Mass Media Bureau, Ref. 1800B2, 8910-BD, dated June 8, 
1995, Re File Nos. BAL-940525EA, BALH-940525EB (Wellington and Fort 
Collins, Colorado). Additionally, on March 27, 1996, the staff, 
acting pursuant to delegated authority, conditioned the grant of 
applications seeking authorization for the transfer of control of 
Noble Broadcast Licenses, Inc., licensee of radio stations serving 
communities in Ohio, Missouri, Illinois, and Colorado, to Jacor 
Communications, Inc., on the outcome of this proceeding. We do not 
seek nor will we consider in this proceeding comments on the merits 
of the decisions in these particular cases. If necessary, we will 
issue separate orders to apply any new rules resulting from the 
instant proceeding to the cases that have been conditioned on its 
outcome. We mention these cases here only to illustrate the kinds of 
relationships and interests that have aroused concerns about the 
need to revise our attribution rules and invite comment, as 
discussed below, on these relationships and interests in general.
---------------------------------------------------------------------------

    18. We tentatively conclude that there is the potential for certain 
substantial investors or creditors to have the ability to exert 
significant influence over key licensee decisions through their 
contract rights, even though they are not granted a direct voting 
interest or may only have a minority voting interest in a corporation 
with a single majority shareholder, which may undermine the diversity 
of voices we seek to promote. They may, through their contractual 
rights and their ongoing right to communicate freely with the licensee, 
exert as much or more influence or control over some corporate 
decisions as voting equity holders whose interests are attributable. We 
seek specific comment on this issue.
    19. If we were to apply this new attribution approach to program 
suppliers, we would need to decide how to define the category of 
``program supplier.'' We seek comment on how

[[Page 67284]]

the definition should be set. One potential definition would include 
all entities from which a broadcast licensee obtains programming, 
including program producers, syndicators and networks. As noted above, 
these entities in particular may have inherent interests in influencing 
programming decisions. Alternatively, should we limit the definition to 
networks or only to program suppliers that supply significant or 
substantial quantities of programming to the licensee? If we limit the 
definition to networks, how should we define a network for these 
purposes? Alternatively, if we were to adopt a criterion based on the 
amount of programming supplied, what amount of programming would be 
sufficient for us to classify an entity as a program supplier for 
purposes of applying the ``equity or debt plus'' approach? In addition, 
where the program supplier is an entity in which other persons or 
entities hold interests, how great an interest in a program supplier 
can a person or entity hold without being deemed to be a program 
supplier for purposes of applying the debt or equity plus rule? Should 
we treat as program suppliers only those persons or entities that hold 
a controlling interest (de facto or de jure) in a program supplier? 
Alternatively, should we apply our broadcast attribution rules in 
answering this question? Under such an approach, for example, applying 
the current attribution rules, the holder of five percent of the voting 
stock in a program supplier would be considered to be a program 
supplier for purposes of applying the ``equity or debt plus'' approach. 
As another alternative, should we establish a separate benchmark to be 
applied in making this determination? If the last, what should that 
benchmark be?
    20. Finally, if we include programming suppliers among the 
cognizable relationships that would trigger the equity or debt 
thresholds discussed above, we nonetheless wish to avoid disrupting the 
flow of capital to television stations to fund, among other things, the 
conversion to digital television, which we anticipate will be costly. 
We invite comment as to whether the ``equity or debt plus'' approach 
would significantly hinder networks or other telecommunications 
entities from helping stations to fund the conversion to digital 
television, and, if so, if this is a significant problem.
    21. Investment Thresholds. Under the foregoing approach, where the 
creditor or equity interest holder is a same-market broadcaster or a 
program supplier to the station in question, in addition to applying 
the existing attribution criteria, we would attribute any financial 
interest or investment in the station or other media outlet that 
exceeds specified equity or debt thresholds. We would aggregate the 
equity interests of such an investor (including both non-voting stock 
in whatever form it is held and voting stock) in a licensee or other 
media outlet for purposes of applying the equity threshold and would 
apply the same approach with respect to aggregating all debt holdings 
in applying the debt threshold. We seek comment as to whether preferred 
stock should be treated as equity or as debt for purposes of applying 
the threshold. Additionally, when the investor's total investment in 
the licensee or other media outlet, aggregating all debt and equity 
interests, exceeds a specified threshold percentage of all investment 
in the licensee (the sum of all equity plus debt), attribution would 
also be triggered. In aggregating the different classes of investment, 
equity and debt, we propose to use total capitalization as a base. We 
invite comment on these views. Is the approach proposed workable? Would 
aggregating different classes of investment pose difficulties, and, if 
so, how can these difficulties be avoided?
    22. We invite comment on what specific percentage threshold(s) we 
should set for purposes of applying the foregoing approach, and we 
specifically request commenters to provide factual and empirical data 
to support the threshold or benchmark they advocate. We are inclined to 
set the equity and debt thresholds at the same level because the 
rationale for including such investments, i.e., those affording the 
ability to influence important station decisions, is the same for all 
such forms of investment. A 33 percent benchmark might be reasonable 
for these purposes. We invite comment on whether a higher or lower 
benchmark would be more effective in achieving our diversity and 
competition goals, while not unduly disrupting capital flow. We believe 
that the threshold should be at least as high as the passive investor 
benchmark, whether that benchmark be 10 percent, as under the current 
rules, or 20 percent, as proposed in the NPRM in this proceeding. 
Additionally, we do not want to set the limit so low as to unduly 
disrupt capital flow to broadcasting. Finally, we note that, in the 
context of its cross interest policy, the Commission has permitted a 
nonattributable equity interest as large as 33 percent. See Cleveland 
Television Corp., 91 FCC 2d 1129, 1132-35 (Rev. Bd. 1982), review 
denied, FCC 83-235 (May 18, 1983), aff'd, Cleveland Television Corp. v. 
FCC, 732 F.2d 962 (D.C. Cir. 1984) (``Cleveland Television''). Accord, 
Roy M. Speer, FCC 96-258, Paras.  124-26, released June 14, 1996. In 
Cleveland Television, 91 FCC 2d at 1132-35, the Commission held that a 
one-third non-voting preferred stock interest by a broadcaster in 
another station in the same market conferred ``insufficient incidents 
of contingent control'' to violate the multiple ownership rules or the 
cross-interest policy, and that the holders, by virtue of ownership of 
the non-voting preferred stock interest would not retain the means to 
directly or indirectly control the station. We invite comment on the 
validity of this conclusion in the context of the ``equity or debt 
plus'' approach. Additionally, we seek comment on the impact of a 33 
percent threshold on small business entities, particularly on whether 
there would be a disproportionate effect on small or minority entities.
    23. With respect to the specific benchmark proposed, the comments 
reveal that the networks have substantial nonattributable investments 
in affiliated stations and that group owners have nonattributable 
investments in other stations.52 We invite commenters to give us 
current data as to the typical nonattributable interests held by 
networks and group owners in other stations and how those relationships 
might be affected by the proposed changes. We ask commenters to 
designate whether the station is a small business as defined by the 
Small Business Administration (``SBA''),53 and/or is minority or 
woman-owned. Such information would be useful in weighing the probable 
impact of setting the threshold at the 33 percent level or another 
level. Finally, we note that nonvoting shares, debt, and voting 
minority shares in a corporation with a single majority shareholder are 
not reported under current ownership

[[Page 67285]]

report forms, and, if we adopt the ``equity or debt plus'' proposal, we 
would need to modify our ownership forms accordingly. We invite comment 
as to how we should modify our ownership report form, FCC Form 323, for 
this purpose.
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    \52\ For example, according to the Network Affiliated Stations 
Alliance Comments, Exhibit 1, filed in May 1995: ABC had a 14.7 
percent nonattributable interest in 10 stations in addition to the 
stations in which it owned a 100 percent interest; CBS had a 49 
percent nonattributable interest in one station in addition to 
transactions pending to acquire other nonattributable interests in 
connection with a station swap with NBC; Fox had a 20 percent 
nonattributable interest in the stations attributed to New World, a 
25 percent nonattributable interest in the stations attributed to 
SF/Savoy, and a proposed 20 percent nonattributable interest in the 
Blackstar stations; and NBC had a 49 percent nonattributable 
interest in one station. Of course, this information is over one 
year old. Indeed, in the interim, both CBS and ABC have been sold to 
other entities that are group owners.
    \53\ The SBA defines a small television station as one that has 
no more than $10.5 million in annual receipts. 13 CFR Sec. 121.201.
---------------------------------------------------------------------------

    24. We also invite comment as to whether the targeted approach 
outlined above would be preferable to a case-by-case approach that 
determines whether an interest should be attributed based directly on 
the kinds of powers granted to an interest holder in contract language. 
For example, in some recent transactions, currently nonattributable 
investments have been accompanied by contractual provisions that 
essentially give the investor veto power over decisions normally made 
by the board of directors under the authority of the voting 
shareholders.54 Such combined provisions could give the investor 
undue power to influence operational decisions. One approach to 
handling these cases might be to base attribution on the type of 
contract language that yields control over decisions of concern to us. 
Although such an ad hoc approach is more tailored than a generic rule, 
it also might lead to complicated interpretation and processing 
difficulties and might add uncertainty to resolution of attribution 
cases. Thus, a bright line approach, such as the ``equity or debt 
plus'' approach, which clearly defines those business relationships 
that cause the greatest concern, could provide certainty and minimize 
regulatory costs. We invite comment as to whether a bright line test, 
where attribution would be linked to the size of an investor's 
interest, can serve as a proxy for these concerns, based on the 
assumption that the degree of contractual rights an investor may hold 
is typically related to the level of his investment. Also, would the 
``equity or debt plus'' approach capture those cases where currently 
nonattributable investments are accompanied by contractual provisions 
that have aroused the foregoing concerns?
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    \54\ For example, in BBC License Subsidiary L.P (WLUK-TV), 10 
FCC Rcd 7926 (1995), in addition to holding 45 percent of the cash 
equity in the licensee and other contractual rights, the investor 
had approval rights over certain major decisions of the licensee, 
such as expansion of operations into new business areas, mergers, 
consolidations and acquisition of other businesses, the sale of 
assets, the sale of securities and issuance of stock, the amendment 
of the corporate by-laws and dividend payment decisions.
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2. Attribution of Time Brokerage Agreements or LMAs
    25. An LMA or time brokerage agreement is a type of contract that 
generally involves the sale by a licensee of discrete blocks of time to 
a broker that then supplies the programming to fill that time and sells 
the commercial spot announcements to support the programming.55 In 
the radio context, time brokerage of another radio station in the same 
market for more than fifteen percent of the brokered station's weekly 
broadcast hours results in attribution of the brokered station to the 
brokering licensee for purposes of applying our multiple ownership 
rules. See 47 CFR Sec. 73.3555(a)(4)(i).
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    \55\ TV Ownership FNPRM, para. 133. In this FNPRM, we refer to 
LMAs or time brokerage agreements. For purposes of applying the 
radio LMA rules, the Commission's rules define time brokerage as 
``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.'' 47 CFR 
Sec. 73.3555(a)(4)(iii). While we have generally used the terms 
interchangeably, we will refer herein to LMAs as those time 
brokerage agreements involving a broker that is a licensee of one or 
more stations in the same market as the brokered station.
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    26. In our TV Ownership FNPRM, we tentatively proposed to attribute 
television LMAs based on the same principles that apply to radio time 
brokerage agreements. Thus, time brokerage of another television 
station in the same market for more than fifteen percent of the 
brokered television station's weekly broadcast hours would be held to 
be attributable, and therefore would count toward the brokering 
television licensee's national and local ownership limits.56 We 
specifically propose here that LMAs, if attributable, would also count 
in applying our other ownership rules, including, for example, the 
broadcast-newspaper cross-ownership rule (47 CFR 73.3555(d)), the 
broadcast-cable cross-ownership rule (47 CFR 76.501(a)) and the one-to-
a-market rule (or radio-television cross-ownership rule) (47 CFR 
73.3555(c)). We request comment on these tentative proposals. We also 
note that if we adopt this proposal for television LMAs, the radio LMA 
rules (47 CFR 73.3555(a)(3)) would have to be modified accordingly, 
since radio LMAs are currently considered only for purposes of applying 
the radio contour overlap rule (47 CFR 73.3555(a)(1)), and invite 
comment on how the radio LMA attribution rules should be modified in 
this regard. We also incorporate the tentative proposal that 
attributable television LMAs be filed with the Commission in addition 
to being kept at the stations involved in an LMA.57 We note that 
we asked in the TV Ownership FNPRM, para. 139, whether the program 
duplication or simulcasting limits that apply to commonly owned or time 
brokered radio stations should apply to TV LMAs. We will also resolve 
that issue in this proceeding.
---------------------------------------------------------------------------

    \56\ TV Ownership FNPRM, para. 138. When the TV Ownership FNPRM 
was released, we applied national multiple ownership limits to radio 
stations, and the brokered station was attributed to the brokering 
station for purposes of applying both those national limits and the 
local limits. See Revision of Radio Rules and Policies, 7 FCC Rcd 
2755, 57 FR 18089 (April 29, 1992), on reconsideration, 7 FCC Rcd 
6387, 6400-01 (``First Radio Ownership Reconsideration Order'') 57 
FR 42701 (September 16, 1992), on further reconsideration, 9 FCC Rcd 
7183, 7191, 59 FR 62609 (December 6, 1994). Subsequently, the 
national ownership limits were eliminated for radio. See 
Implementation of Sections 202(a) and 202(b)(1) of the 
Telecommunications Act of 1996 (Broadcast Radio Ownership), FCC 96-
90, 61 FR 10689 (March 15, 1996). Accordingly, the interest is 
counted only in applying local radio ownership limits. National 
multiple ownership limits apply to television stations, however, 
and, under our proposal, the brokered television station would be 
counted toward the brokering television station's national and local 
ownership limits, including the one-to-market rule. We note, 
however, that the narrow issue of whether the audience reach of a 
brokering and a brokered station serving the same market would both 
be counted toward the audience reach cap, with the effect of double 
counting the stations, will be decided in our proceeding concerning 
the television national multiple ownership rules. Notice of Proposed 
Rule Making in MM Docket Nos. 96-222, 91-221 & 87-8, FCC 96-437, 
released November 7, 1996.
    \57\ See TV Ownership FNPRM, para. 138. See 47 CFR 
Sec. 73.3613(d).
---------------------------------------------------------------------------

    27. The proposed per se LMA attribution standard would apply 
whether or not the LMA holder has other multiple business relationships 
with the brokered station or otherwise has a financial investment in 
the brokered station. While time brokerage agreements not involving a 
television station in the same market would not fall under this per se 
LMA attribution standard, as discussed above, such time brokerage 
agreements could be attributable under the ``equity or debt plus'' 
approach, if adopted, where the brokering station has an equity and/or 
debt interest in the brokered station that exceeds the specified 
investment threshold.58 We invite updated comments on all aspects 
of the foregoing tentative conclusions and proposals.
---------------------------------------------------------------------------

    \58\ Thus, under the proposals enumerated in this FNPRM, LMAs 
are potentially attributable under a per se LMA attribution rule 
and/or under the ``equity or debt plus'' approach discussed above.
---------------------------------------------------------------------------

    28. In making this proposal to attribute television LMAs in the TV 
Ownership FNPRM, we also recognized the need to deal with pre-existing 
television LMAs and asked whether we should grandfather television LMAs 
entered into prior to December 15, 1994, the date of adoption of the TV 
Ownership FNPRM, and whether we should subject such existing LMAs to 
renewability and transferability guidelines similar to those governing 
radio LMAs.59 However, if we do decide to attribute LMAs as we 
propose here,

[[Page 67286]]

we intend to resolve the grandfathering, renewability and 
transferability issues in the separate TV local ownership docket, TV 
Ownership Second FNPRM, so that we can evaluate the extent to which 
grandfathering may be needed based on the nature of the local ownership 
rules we adopt.
---------------------------------------------------------------------------

    \59\ TV Ownership FNPRM, Paras.  138-40.
---------------------------------------------------------------------------

    29. With respect to our tentative proposal in the TV Ownership 
FNPRM, now incorporated within this attribution proceeding, to 
attribute certain television LMAs to the brokering station for purposes 
of applying the multiple ownership rules, commenters voiced a range of 
positions. Some opposed attributing television LMAs for ownership 
purposes, particularly if the Commission does not relax its duopoly 
rule.60 Others supported using the radio rules as a blueprint for 
regulating television LMAs.61 Still other parties argued for more 
restrictive rules.62 However, commenters generally failed to 
provide the Commission with the kind of factual information we seek. 
Consequently we once again request quantitative information on the 
number and characteristics of existing television LMAs.
---------------------------------------------------------------------------

    \60\  See, e.g., Comments of Association of Independent 
Television Stations, Inc., now known as Association of Local 
Television Stations, Inc. (``ALTV''), filed in MM Docket Nos. 91-221 
& 87-8 at 29, n.52; Comments of Kentuckiana Broadcasting, Inc. filed 
in MM Docket Nos. 91-221 & 87-8 at 5-6.
    \61\  See, e.g., Comments of ABC, filed in MM Docket Nos. 91-221 
& 87-8, at 26-27.
    \62\  See Comments of Post-Newsweek Stations, Inc., filed in MM 
Docket Nos. 91-221 & 87-8, at 8-9.
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    30. We are especially interested in information on the typical 
geographic proximity of the brokering and brokered stations, the 
typical term of television LMAs, the typical renewal provisions, the 
typical arrangements between the brokered station and the broker on the 
sale of advertising time during brokered time periods, the percent of 
brokered station time sold to the program supplier in an LMA, and the 
typical arrangements between the brokered station and the broker to 
allow the brokered station to reject broker-supplied programming that 
the brokered station deems not in the public interest to broadcast. We 
ask commenters to provide us with information as to whether such 
agreements typically require the broker to make fixed payments to the 
brokered station or whether other payment terms are applicable. Do LMAs 
typically require that the broker sell all the brokered time? Do they 
call for the broker to provide the brokered station with studio 
services at the broker's facility? Is there a typical LMA? Are there 
typical provisions or do these agreements vary widely? Can we draw 
general conclusions about LMAs? Are there classes or categories of LMAs 
that should be subject to different attribution treatment? Finally, we 
want to emphasize, as we did in our radio ownership proceeding, ``that 
the licensee is ultimately responsible for all programming aired on its 
station, regardless of its source.'' 63 In this regard, we invite 
comment on what, if any, specific safeguards we should adopt with 
respect to television LMAs to ensure a brokered station's ability to 
exercise its programming responsibility.64
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    \63\  First Radio Ownership Reconsideration Order, 7 FCC Rcd 
6387, para. 63 (1992).
    \64\  For instance, radio time brokerage agreements of the type 
described in Section 73.3555(a)(3)(i) of our Rules must be reduced 
to writing and contain a certification by the licensee or permittee 
of the brokered station verifying that it maintains ultimate control 
over the station's facilities, including control over station 
finances, personnel, and programming. See 47 CFR 73.3555(a)(3)(ii).
---------------------------------------------------------------------------

3. Joint Sales Agreements (JSAs)
    31. In the Attribution NPRM, Paras. 94-95, we requested comment on 
whether, through multiple cooperative arrangements or contractual 
agreements, broadcasters could so merge their operations as to 
implicate our diversity and competition concerns. We noted, however, 
that we did not intend to re-open our earlier decisions permiting joint 
sales practices in radio and television. These decisions, of course, 
allowed joint sales practices subject to compliance with the antitrust 
laws.
    32. Subsequent to issuing the Attribution NPRM, the staff has been 
presented with cases involving joint sales agreements (i.e., agreements 
for the joint sales of broadcast commercial time) that have raised anew 
diversity and competition concerns with respect to such 
agreements.65 This leads us to ask whether non-ownership based 
mechanisms such as JSAs that might convey influence or control over 
advertising shares should be considered, and possibly attributed. For 
example, where one station owner controls a large percentage of the 
advertising time in a particular market, it could potentially exercise 
market power. Accordingly, we invite additional comments on the 
potential effects of JSAs among same-market broadcasters on diversity 
and competition. We also seek comment as to whether we should attribute 
JSAs among licensees in the same market, including both radio and 
television licensees, irrespective of whether they are accompanied by 
the holding of debt or equity.
---------------------------------------------------------------------------

    \65\  See, e.g., Letter of Roy J. Stewart, Chief, Mass Media 
Bureau, dated May 8, 1995, Re File Nos. BALH-940323GE and BAL-
940330EA (Cincinnati, Ohio); Letter of Larry D. Eads, Chief, Audio 
Services Division, Mass Media Bureau, Ref. 1800B2, 8910-BD, dated 
June 8, 1995, Re File Nos. BAL-940525EA, BALH-940525EB (Wellington 
and Fort Collins, Colorado).
---------------------------------------------------------------------------

    33. We recognize that a JSA not involving stations in the same 
market may permit influence over station operations. Nonetheless, we 
distinguish between JSAs in the same market and JSAs among stations not 
located in the same market. Our concern for media concentration has 
been focused on local markets. For example, in the radio context, only 
LMAs among stations in the same market are subject to attribution, and 
we apply only local multiple ownership limits. And, in the television 
context, we have similarly been more concerned with local markets 
because the video program delivery market is a local market.66 
Following this traditional concern for local markets, we focus on JSAs 
in local markets. We invite comment on this approach.
---------------------------------------------------------------------------

    \66\  See TV Ownership FNPRM, Paras. 31, 36-45, 87-88.
---------------------------------------------------------------------------

    34. We seek general information concerning the typical contractual 
terms of JSAs. What is the typical length of such agreements, and are 
they automatically renewable? How are the station owner and broker 
compensated? Are there package deals among several stations? Does the 
broker get involved in the operation of the station, including 
programming and finances, either directly or indirectly? As a practical 
matter, do typical JSAs differ from LMAs or do time brokerage 
agreements usually accompany JSAs? What other arrangements typically 
occur between parties in terms of station operations, joint sales force 
utilization, or joint use of production facilities? In addition, what 
kind of efficiencies arise with JSAs, how are these shared among 
parties to the JSA, and how do these benefits differ from those of 
LMAs? Finally, what impact do JSAs have on competition, and under what 
circumstances, if any, should the interest of the broker/JSA holder be 
held attributable? If we were to consider JSAs, should such interests 
be attributable in all circumstances involving stations in the same 
market, or only where the broker also has some influence over the 
programming or other operations of the brokered station? Alternatively, 
should we apply another criterion in deciding whether to attribute 
JSAs, such as attributing JSAs among same-market stations where the 
brokering station exceeds a specific market share benchmark? We seek

[[Page 67287]]

comment on these issues and any other relevant questions concerning 
whether or not JSAs should be attributable, at least under certain 
circumstances.

C. Voting Stock Benchmarks

    35. In the NPRM, as discussed above, we requested comment as to 
whether we should increase the voting stock benchmarks from five to ten 
percent for active investors and from ten to twenty percent for passive 
investors. In response, the majority of commenters that responded to 
these issues favor increasing the benchmarks. However, commenters did 
not submit, in response to the NPRM, the kind of specific, empirical 
evidence that we believe may be necessary before we can reasonably 
conclude that the benchmarks should be raised, and we invite additional 
comments to provide such additional evidence and economic studies. 
Accordingly, we ask for specific and empirical information in a number 
of areas to justify raising the benchmarks.
    36. In this regard, Commission staff has conducted a study of the 
attributable interests in commercial broadcast television licensees, as 
reported in the ownership reports licensees are required to file. The 
results of the staff study are set forth below. One conclusion from 
that study is that increasing the attribution benchmark for active 
investors from five percent to ten percent would decrease the number of 
currently-attributable owners by approximately one-third. The number of 
stations for which no stockholder would be attributable would increase 
from 81 to 134 stations (out of 389 commercial for-profit television 
stations that are incorporated and are not single majority shareholder 
stations), under current stock distribution patterns.
    37. We invite comment on all aspects of this study, including its 
implications for our attribution rules. Does the study suggest that 
existing attribution criteria appropriately balance the goals of 
identifying those interests that should be counted in applying the 
multiple ownership rules, while not unduly disrupting capital flow? 
Would stockholding or investment patterns change in response to a 
change in the attribution rules? If so, how would they change, and why 
would they change? Would there be a significant impact on capital flow, 
given the relaxation of the multiple ownership rules resulting from 
passage of the 1996 Act? Is there a need to encourage additional 
capital investment?

D. Transition Issues

    38. In the NPRM, para. 15, we stated our concern that any action 
taken in this proceeding not disrupt existing financial arrangements, 
and, accordingly, invited comment as to whether we should grandfather 
existing situations or allow a transition period for licensees to come 
into compliance with the multiple ownership rules if we adopt more 
restrictive attribution rules. All commenters that have addressed this 
issue in response to the NPRM urge the Commission to grandfather 
existing interests indefinitely if it adopts more restrictive 
attribution rules because of the disruptive effect and the unfairness 
to the parties of mandatory divestiture. According to CBS, Comments at 
13-14, the alternative of a transition period would not provide real 
relief from restrictive attribution rule changes, such as restricting 
the availability of the single majority shareholder exemption.
    39. We now seek additional comment on the option of a transition 
period, particularly since the national television multiple ownership 
rules have recently been relaxed, as have the local radio multiple 
ownership rules, and the national radio ownership limits have been 
eliminated. Accordingly, we invite commenters again to address the 
transition/grandfathering issue in light of these different 
circumstances, including the appropriate length for any transition 
period that may be adopted. We reiterate that the issue of 
grandfathering of television LMAs, should we decide to attribute them, 
will be resolved in the television local ownership proceeding; in this 
FNPRM, we refer only to transition and grandfathering issues related to 
the other (non-LMA) attribution issues raised in this attribution 
proceeding.
    40. If we grandfather existing interests, what grandfathering 
principle should we apply? Such grandfathering would mean that the 
relationship would be held attributable, but the holder would not be 
required to divest holdings in the event that the attribution resulted 
in the holder exceeding our ownership limits. If the joint holdings 
were later sold, that ownership grandfathering would not transfer to 
the assignee or transferee. We also invite comment as to the extent of 
grandfathering that would be required if we restrict attribution rules.
    41. Finally, regardless of what policy we ultimately adopt with 
respect to either a transition or grandfathering of existing interests, 
we tentatively conclude that any interests acquired on or after 
December 15, 1994, the date of adoption of the NPRM in this proceeding, 
should be subject to the final rules adopted in the Report and Order in 
this proceeding. We seek comment on this approach, and whether a 
subsequent grandfathering date would be more appropriate. In the event 
that we adopt a transition period, what is the appropriate length for 
such a transition period? We tentatively propose that any such 
transition period adopted to permit divestiture of such interests 
should be relatively short and no longer than six months.67
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    \67\ See, e.g,, Implementation of Sections 202(c)(1) and 202(e) 
of the Telecommunications Act of 1996 (National Broadcast Television 
Ownership and Dual Network Operations), FCC 96-91, 61 FR 10691 
(March 15, 1996).
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E. Cable/MDS Cross-Ownership Attribution

    42. We also take this opportunity to consider changes to the cable/
Multipoint Distribution Service (``MDS'') cross-ownership attribution 
rule.68 Section 613(a) of the Act states that ``[i]t shall be 
unlawful for a cable operator to hold a license for multichannel 
multipoint distribution service * * * in any portion of the franchise 
area served by that cable operator's cable system.'' 47 U.S.C. 
Sec. 533(a) (emphasis added). The Commission may waive the requirements 
of this provision ``to the extent the Commission determines is 
necessary to ensure that all significant portions of a franchise area 
are able to obtain video programming.'' 47 U.S.C. 
Sec. 533(a)(2).69 Section 613(a) was added by Section 11(a) of the 
1992 Cable Act. In implementing Section 613(a), the Commission modified 
its existing cable/MDS cross-ownership rule in Section 21.912 of the 
rules.70 Section 21.912(a) prevents a cable operator from 
obtaining an MDS authorization if any portion of the MDS protected 
service area overlaps with the cable system's franchise area actually 
being served by cable. Section 21.912(b) also prohibits a cable 
operator from leasing MDS capacity if its franchise area being served 
overlaps with the MDS protected service area. For purposes of this 
rule, ``an attributable ownership interest shall be defined by 
reference to the definitions

[[Page 67288]]

contained in the Notes to Sec. 76.501, provided however, that:

    \68\ For purposes of this item, MDS also includes single channel 
Multipoint Distribution Service (``MDS'') and Multichannel 
Multipoint Distribution Service (``MMDS'').
    \69\ Compare 47 U.S.C. 537(d) (before the 1996 Act, providing 
broad authority for ``public interest'' waivers of the cable anti-
trafficking restriction). The cable/MMDS cross-ownership prohibition 
does not apply if the cable operator is subject to ``effective 
competition'' in its franchise area. Id. section 533(a)(3) (added by 
1996 Act).
    \70\ Implementation of Section 11 and 13 of the Cable Television 
Consumer Protection and Competition Act of 1992, 8 FCC Rcd 6828, 
6843, 58 FR 42013 (August 6, 1993) (``Implementation Order''), 
reconsidered on other grounds, 10 FCC Rcd 4654, 60 FR 37830 (July 
24, 1995).
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    (i) The single majority shareholder provisions of Note 2(b) to 
Sec. 76.501 and the * * * limited partner insulation provisions of 
Note 2(g) to Sec. 76.501 shall not apply; and
    (ii) The provisions of Note 2(a) to Sec. 76.501 regarding five 
(5) percent interests shall include all voting or nonvoting stock or 
limited partnership equity interests of five (5) percent or more.'' 
71

    \71\ 47 CFR 21.912 (note 1(A)).
---------------------------------------------------------------------------

    43. This strict attribution standard severely restricts investment 
opportunities that are compatible with our goal of strengthening 
wireless cable and providing meaningful competition to cable operators. 
Additionally, we see no reason to have different attribution criteria 
for broadcasting and MDS. We have previously observed that ``the 
Commission could employ the broadcast attribution criteria contained in 
Section 73.3555 (Notes) of its Rules, or such other attribution rules 
as the Commission deemed appropriate for this purpose.'' 72 Thus, 
the instant proceeding provides us with an opportunity to revisit our 
current attribution standard consistent with our responsibility to 
achieve the objective of diversity while ``balancing genuine and 
significant efficiencies.'' 73 Therefore, we invite comment on 
whether we should apply broadcast attribution criteria, as modified by 
this proceeding, in determining cognizable interests in MDS licensees 
and cable systems for purposes of applying the ownership restrictions 
of Section 21.912 of our Rules. In addition, we seek comment as to 
whether we should add an ``equity or debt plus'' attribution rule where 
the competing entity's holding exceeds 33 percent or some other 
benchmark. We believe that these proposed modifications of our 
attribution rule will increase the potential for investment consistent 
with our responsibility ``[t]o further diversity and prevent cable from 
warehousing its potential competition.'' 74
---------------------------------------------------------------------------

    \72\ Implementation Order at 6843.
    \73\ S. Rep. No. 92, 102d Cong., 1st Sess. 46-47 (1991)
    \74\ Id.
---------------------------------------------------------------------------

IV. Conclusion

    44. By this FNPRM, we request comments to update the record in this 
proceeding, which is intended to determine whether the attribution 
rules continue to be effective in identifying those interests that 
should be counted for purposes of applying the multiple ownership 
rules. It is important to ensure that these rules operate accurately so 
that we apply the multiple ownership limits, which have recently been 
relaxed as a result of passage of the 1996 Act, in an appropriate 
manner, and that the attribution rules are not used as a means to evade 
or circumvent these limits. We believe that the concerns and issues 
raised in the comments and in this FNPRM are of utmost importance, and 
we look forward to well-reasoned and empirically-based comments with 
respect to these issues.

V. Administrative Matters

    45. Filing of Comments. Pursuant to applicable procedures set forth 
in Sections 1.415 and 1.419 of the Commission's Rules, 47 CFR 1.415 and 
1.419, interested parties may file comments on or before February 7, 
1997 and reply comments on or before March 7, 1997. To file formally in 
this proceeding, you must file an original plus four copies of all 
comments, reply comments, and supporting comments. Parties are also 
asked to submit, if possible, draft rules that reflect their positions. 
If you want each Commissioner to receive a copy of your comments, you 
must file an original plus nine copies. You should send comments and 
reply comments to Office of the Secretary, Federal Communications 
Commission, Washington, D.C. 20554. Parties should also file one copy 
of any documents filed in this docket with the Commission's copy 
contractor, International Transcription Services, Inc., 2100 M Street, 
N.W., Suite 140, Washington D.C. 20037. Comments and reply comments 
will be available for public inspection during regular business hours 
in the FCC Reference Center (Room 219), 1919 M Street, N.W., 
Washington, D.C. 20554.
    46. Initial Paperwork Reduction Act of 1995 Analysis. This FNPRM 
contains either a proposed or modified information collection (i.e., 
revision of Annual Ownership Report, FCC Form 323). As part of its 
continuing effort to reduce paperwork burdens, we invite the general 
public and the Office of Management and Budget (OMB) to take this 
opportunity to comment on the information collections contained in this 
FNPRM, as required by the Paperwork Reduction Act of 1995, Public Law 
Notice 104-13. Public and agency comments are due at the same time as 
other comments on this FNPRM; OMB comments are due 60 days from the 
date of publication of this FNPRM in the Federal Register. Comments 
should address: (a) Whether the proposed collection of information is 
necessary for the proper performance of the functions of the 
Commission, including whether the information shall have practical 
utility; (b) the accuracy of the Commission's burden estimates; (c) 
ways to enhance the quality, utility, and clarity of the information 
collected; and (d) ways to minimize the burden of the collection of 
information on the respondents, including the use of automated 
collection techniques or other forms of information technology.
    47. Written comments by the public on the proposed and/or modified 
information collections are due February 7, 1997. Written comments must 
be submitted by the Office of Management and Budget (OMB) on the 
proposed and/or modified information collections on or before 60 days 
after the date of publication in the Federal Register. In addition to 
filing comments with the Secretary, a copy of any comments on the 
information collections contained herein should be submitted to Dorothy 
Conway, Federal Communications Commission, Room 234, 1919 M Street, 
N.W., Washington DC 20554, or via the Internet to [email protected] and 
to Timothy Fain, OMB Desk Officer, 10236 NEOB, 725--17th Street, N.W., 
Washington, DC 20503 or via the Internet to
[email protected].
    48. Ex Parte Rules. This is a non-restricted notice and comment 
rulemaking proceeding. Ex parte presentations are permitted, except 
during the Sunshine Agenda period, provided they are disclosed as 
provided in the Commission's Rules. See generally 47 CFR Sections 
1.1202, 1.1203, and 1.206(a).
    49. This FNPRM is issued pursuant to authority contained in 
Sections 4(i) and 303 of the Communications Act of 1934, as amended, 47 
U.S.C. 154(i), 303.
    50. Additional Information. For additional information on this 
proceeding, contact Mania K. Baghdadi (202) 418-2130 or Berry Wilson 
(202) 418-2024, Policy and Rules Division, Mass Media Bureau.
    51. Initial Regulatory Flexibility Analysis. With respect to this 
FNPRM, an Initial Regulatory Flexibility Analysis (``IRFA'') as set 
forth below. As required by Section 603 of the Regulatory Flexibility 
Act, the Commission has prepared an IRFA of the expected impact on 
small entities of the proposals contained in this FNPRM. Written public 
comments are requested on the IRFA. In order to fulfill the mandate of 
the Contract with America Advancement Act of 1996 regarding the Final 
Regulatory Flexibility Analysis, we ask a number of questions in our 
IRFA regarding the prevalence of small businesses in the radio and 
television broadcasting industries. Comments on the IRFA must be filed 
in accordance with the same filing deadlines as

[[Page 67289]]

comments on the FNPRM, but they must have a distinct heading 
designating them as responses to the IRFA.
    The Secretary shall send a copy of this FNPRM, including the IRFA, 
to the Chief Counsel for Advocacy of the Small Business Administration 
in accordance with Section 603(a) of the Regulatory Flexibility Act, 
Public Law Notice 96-354, 94 Stat. 1164, 5 U.S.C. 601 et seq. (1981), 
as amended.

List of Subject

47 CFR Part 21

    Televison broadcasting.

47 CFR Part 73

    Television broadcasting, and radio broadcasting.

List of Subject in 47 CFR Part 76

    Cable televison.

Federal Communications Commission.
Shirley S. Suggs,
Chief, Publications Branch.

         Table A.--Distribution of Non-Passive Ownership Claims         
------------------------------------------------------------------------
              Ownership range (percent)                Number    Percent
------------------------------------------------------------------------
1-<5................................................       274  
5-<10...............................................       438      37.5
10-<15..............................................       183      15.7
15-<20..............................................       129      11.1
20-50....................................       417      35.7
50-100..............................................       * 0       0.0
                                                     -------------------
      Total attributable............................      1167       100
------------------------------------------------------------------------
Not currently attributable. Also, D&Os holding less than 1 percent      
  equity are not reported.                                              
*Single-majority shareholders are analyzed below.                       

    The table indicates that among attributable shareholders falling 
under the current 5% rule, 37.5 percent have ownership interests 
between 5 percent and 10 percent, 15.7 percent with interests between 
10 percent and 15 percent, 11.1 percent with interests between 10 
percent and fifteen percent and 35.7 percent with interests between 20 
percent and 50 percent. Interestingly, the largest concentrations of 
ownership are in the 5 percent to 10 percent and 20 percent to 50 
percent categories. Under the proposed change in the attribution 
benchmark from 5 percent to 10 percent, approximately 37.5 percent of 
currently attributable owners would become non-attributable.
    Of additional interest is the impact of proposed rule changes on 
the number of attributable owners per broadcast station. The following 
table gives the distribution of the number of attributable owners per 
broadcast TV station under the current 5 percent benchmark and under 
the proposed 10 percent benchmark.

   Table B.--Distribution of Number of Attributable Owners Per Station  
   Under 5 Percent and 10 Percent Benchmarks for Non-passive Investors  
------------------------------------------------------------------------
                                                                Proposed
                                                    Current 5      10   
     Per station number of attributable owners       percent    percent 
                                                    benchmark  benchmark
------------------------------------------------------------------------
0 *...............................................         81        134
1.................................................         41         27
2.................................................         67         92
3.................................................         56         66
4.................................................         38         43
5.................................................         43         19
6.................................................         24          3
7.................................................         16          5
8.................................................         18          0
9.................................................          0          0
10................................................          1          0
11................................................          1          0
12................................................          3          0
                                                   ---------------------
      Total stations..............................        389       389 
------------------------------------------------------------------------
* D&Os holding less than 1 percent equity are excluded.                 

    The table indicates that the number of stations with no 
attributable owners (except directors and officers) would increase from 
81 to 134, or by 65.4 percent.

VI. Voting Stock: Passive Investors

    A less-restrictive 10 percent attribution benchmark is currently 
set for certain institutional investors thought to be restricted by law 
or fiduciary responsibility from active involvement in station 
operations. These so-called ``passive'' investors include bank trust 
departments, mutual funds and insurance companies. Because of their 
passive status, the Commission prohibits these investors from serving 
as directors or officers of the broadcast station, or from attempting 
to otherwise influence station operations.
    The distribution of ownership claims for passive investors, 
excluding partnerships and single-majority stockholder stations, is 
given next.

           Table C.--Distribution of Passive Ownership Claims           
------------------------------------------------------------------------
                   Ownership range                     Number    Percent
------------------------------------------------------------------------
1%-<5%..............................................         0  
5%-<10%.............................................        28  
10%-<15%............................................         1       6.7
15%-<20%............................................         4      26.7
20%-50%..................................        10      66.7
50%-100%............................................        0*       0.0
                                                     -------------------
    Total attributable..............................        15       100
------------------------------------------------------------------------
 Not currently attributable.                                    
* Single-majority shareholders are analyzed below.                      

    As given in the table, the reported number of passive investors is 
relatively small, with only 43 such institutional investors reported in 
total for these stations. Of these 43, only 15 hold attributable equity 
interests. With the proposed relaxation of the attribution benchmark to 
20 percent, 5 of the currently attributable interests would become non-
attributable. As well, the largest number of passive investors fall in 
the 5 percent to 10 percent range.
    Despite the small number of passive institutional investors, some 
of these do in fact have large equity stakes in broadcast stations. For 
example, one passive investor owns 50% of the parent company of a 
licensee.
    The following table gives the distribution of the number of 
attributable owners under the current 10 percent and under the proposed 
20 percent benchmark for passive investors.

   Table D.--Distribution of Number of Attributable Owners Per Station  
    Under 10 Percent and 20 Percent Benchmarks for Passive Investors    
------------------------------------------------------------------------
                                                     Current    Proposed
                                                        10         20   
     Per station number of attributable owners       percent    percent 
                                                    benchmark  benchmark
------------------------------------------------------------------------
0.................................................        376        381
1.................................................         11          6
2.................................................          2          2
------------------------------------------------------------------------

VII. Voting Stock: Other Institutional Investors

    Institutional investors not considered to be passive investors 
include commercial banks (excluding trust departments), investment 
banks, brokerage firms and pension funds. These investors are not 
judged to be restricted by law or fiduciary responsibility from 
involvement in broadcast operations, and are subject to the 5 percent 
attribution benchmark of other non-passive voting shareholders. No 
change is currently proposed for these passive investors in the NPRM. 
The distribution of ownership interests

[[Page 67290]]

for non-passive institutional investors is given next.

      Table E.--Distribution of Ownership Interests of Non-Passive      
                         Institutional Investors                        
------------------------------------------------------------------------
                   Ownership range                     Number    Percent
------------------------------------------------------------------------
1%-<5%..............................................         9  ........
5%-<10%.............................................        16      33.3
10%-<15%............................................         8      16.7
15%-<20%............................................         7      14.6
20%-50%..................................        13      27.1
50%-100%............................................         4       8.3
                                                     -------------------
    Total TV stations...............................        57     100.0
------------------------------------------------------------------------

    As with passive investors, the number of reported non-passive 
institutional investors in broadcast stations is relatively small. With 
the proposed relaxation to 10 percent benchmark, 16 or 33.3 percent of 
these would become non-attributable.
    Despite their small number, some non-passive institutional owners 
have large interests in broadcast stations. For example, one bank owns 
100 percent of the parent company of three TV broadcast licenses. As 
well, a venture capital subsidiary owns 72.05% of the parent company of 
two TV licensees.

VIII. Single-Majority Shareholder

    Single-majority shareholder investments are those where a single 
stockholder controls more than 50 percent of the voting interest in the 
licensee. All other shareholders in this case are non-attributable, 
regardless of their percent ownership, since the single-majority 
shareholder is thought to hold operational control.
    As given in Table II, a total of 308, or 30.5% of for-profit TV 
stations, are single majority shareholder owned. The following table 
lists the distribution of voting shares for these licensees falling 
under the single-majority shareholder rule. Sole proprietorships and 
sole owners are listed as 100 percent.

             Table F.--Distribution of Ownership Interests in Single-Majority Shareholder Licensees             
----------------------------------------------------------------------------------------------------------------
                                                                Non-passive investors       Passive investors   
                       Ownership range                       ---------------------------------------------------
                                                                 Number      Percent       Number      Percent  
----------------------------------------------------------------------------------------------------------------
1%-<5%......................................................           74          9.9            0          0.0
5%-<10%.....................................................          121         16.2            0          0.0
10%-<15%....................................................          101         13.5            2         16.7
15%-<20%....................................................           52          7.0            1          8.3
20%-50%..........................................           93         12.5            7         58.3
50%-<100%...................................................          305         40.9            2         16.7
100%........................................................          162         40.9            0          0.0
                                                             ---------------------------------------------------
      Total.................................................          746                        12             
----------------------------------------------------------------------------------------------------------------

    The distribution of non-attributable interests (excluding D&Os with 
less than 1 percent stake) in single-majority shareholder licensees is 
reasonably uniform. In particular, the results do not indicate a large 
block of ``49%'' shareholders, who might have chosen to use the single-
majority shareholder rule to circumvent attribution, while holding a 
large stake in the licensee.
    Some instances of single-majority shareholders involve 
institutional owners with large stakes. For example, three licensees 
are 90.0% owned by trust agreement. As cited above, 5 licensees are 
closely held by non-passive institutional investors.

IX. Non-Voting Stock

    The attribution rules for equity interests in a broadcast station 
apply only to those stockholders holding voting control. Common or 
preferred stockholders without voting rights are exempted from 
attribution under the premise that their lack of voting control 
precludes their ability to affect management or operation of a 
broadcast station. Non-voting stock is a common mechanism for companies 
to raise equity capital without sacrificing voting control. 
Differential voting rights includes companies with dual or multiple 
classes of stock where one class of stock carries greater voting rights 
than other classes of stock. For purposes of attribution, the 
attributable equity interests is determined by the percent of total 
voting rights held by any individual. In total, the study found 79 
instances of non-voting interests in TV broadcast stations.

X. Partnership Interests

    Under the attribution rules governing partnership interests, 
general partners are always attributable, regardless of the extent of 
their ownership stake. Limited partners are likewise attributable as 
owners, regardless of their ownership percentage, unless the licensee 
files a certification statement that the limited partner is 
``insulated'', i.e., non-active in the management or operation of the 
licensee. This special treatment of general and limited partners 
derives in part from the special role that general partners play as 
both owners and managers. In contrast, limited partners are restricted 
from involvement in operational control, and can be forced to give up 
limited liability rights if they participate in operation or management 
decisions. Therefore, in contrast to corporations, the separation of 
ownership and control is weaker for general partners, who perform both 
functions and stronger for limited partners, who may lose limited 
liability rights if separation is not maintained.
    As presented in Table II, 42 in number, or 4.2% of for-profit TV 
stations are organized as general partnerships, and 89 in number or 
8.8% are limited partners. In addition, another 42 of for-profit TV 
stations have a limited partnership involved as an equity holder.
    The following table presents the distribution of interests in 
stations organized as general or limited partnerships. Excluded are all 
non-partnership for-profit stations, including those broadcast stations 
where one of the equity owners may be a limited partnership.

[[Page 67291]]



                Table G.--Distribution of Ownership Interests in General and Limited Partnerships               
----------------------------------------------------------------------------------------------------------------
                                                                General                   Limited               
                       Ownership range                          partners     Percent      partners     Percent  
----------------------------------------------------------------------------------------------------------------
1%-<5%......................................................           51         21.3           29         19.7
5%-<10%.....................................................           13          5.4           46         31.3
10%-<15%....................................................            9          3.8           44         30.0
15%-<20%....................................................           11          4.6            0          0.0
20%-50%..........................................           72         30.0           28         19.0
50%-100%....................................................           84         35.0            0          0.0
                                                             ---------------------------------------------------
      Total.................................................          240                       147             
----------------------------------------------------------------------------------------------------------------

    The results indicate that the majority of general partners have 
either small (less than 5 percent) or very large (greater than 20 
percent) ownership stakes in the licensee.
    The ownership files investigated also indicate that virtually all 
limited partners claim insulation of their partnership claim.

XI. Limited Liability Companies and Other New Business Forms

    A limited liability company (LLC) is a new hybrid form of ownership 
that combines advantages of both a limited partnership and 
corporations. Like limited partnerships, profits in an LLC are passed 
directly through to investors and therefore taxed only as personal 
income, which avoids the double taxation of corporations. However, 
unlike limited partnerships, LLC members may exercise management 
control without threat of loss of limited liability.
    The available ownership records show a total of 10 stations 
organized as LLCs and 1 station partially owned by an LLC.

A. Total Profit and Non-Profit Stations

  Table I.--Distribution of For-Profit TV Stations Across Type 1994/95  
                          Ownership-Report Data                         
------------------------------------------------------------------------
                                                       Numbers   Percent
------------------------------------------------------------------------
For-profit TV stations:                                                 
Group-owned stations................................       781      74.8
Single-owned stations...............................       262      25.2
                                                     -------------------
    Total for-profit stations.......................     *1043     100.0
Number of TV group-owners...........................       180          
Not-for-profit TV stations:                                             
    Total stations..................................      *499          
                                                     ----------         
    Total number of stations........................     1542           
------------------------------------------------------------------------
* This break-out between for-profit and not-for-profit stations reflects
  the designation self-reported by licensees on their annual ownership  
  report filed with the Commission. The number of not-for-profit        
  stations exceeds the number of non-commercial stations (363 as of 11/ 
  20/95, Broadcasting & Cable) by some 130 stations, representing       
  commercial-band stations that are not-for-profit.                     

B. Aggregate For-Profit Station Results

  Table II.--For-Profit TV Stations by Station Type 1994/95 Ownership-  
                               Report Data                              
------------------------------------------------------------------------
                                                       Number           
                  Type of ownership                      of      Percent
                                                      stations          
------------------------------------------------------------------------
Single-owner stations...............................       158      15.7
Single-majority-shareholder stations................       308      30.5
Family-owned stations...............................        72       7.1
Closely-held stations...............................       114      11.3
Widely-held stations................................       203      20.1
General partnerships (GP)...........................        42       4.2
Limited partnerships (LP)...........................        89       8.8
Limited liability corporations (LLC)................        10       1.0
International Stations..............................         5       0.5
In Receivership.....................................         8       0.8
                                                     -------------------
                                                          1009       100
------------------------------------------------------------------------


   Table III.--Group-Owned and Singly-Owned TV Station Results 1994/95  
                          Ownership-Report Data                         
------------------------------------------------------------------------
                                                       Group-    Singly-
                                                        owned     owned 
                  Type of ownership                   stations  stations
                                                       percent   percent
------------------------------------------------------------------------
Single-owner stations...............................      15.3      22.9
Single-majority-shareholder stations................      32.2      30.5
Family-owned stations...............................       7.9       4.4
Closely-held stations...............................      10.2      18.9
Widely-held stations................................      20.4       6.8
General partnerships (GP)...........................       4.0       3.2
Limited partnerships (LP)...........................       8.5       9.6
Limited liability corporations (LLC)................       1.1       0.4
International Stations..............................       0.0       2.0
In Receivership.....................................       0.6       1.6
------------------------------------------------------------------------

[FR Doc. 96-32323 Filed 12-19-96; 8:45 am]
BILLING CODE 6712-01-U