[Federal Register Volume 64, Number 159 (Wednesday, August 18, 1999)]
[Rules and Regulations]
[Pages 44856-44858]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-21471]


=======================================================================
-----------------------------------------------------------------------

FEDERAL COMMUNICATIONS COMMISSION

47 CFR PART 73

[MM Docket No. 97-234, GC Docket No. 92-52, and GEN Docket No. 90-264; 
FCC 99-201]


Implementation of Competitive Bidding for Commercial Broadcast 
and Instructional Television Fixed Service Licenses

AGENCY: Federal Communications Commission.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This document concludes that it is appropriate for the Federal 
Communications Commission to attribute the mass media interests of 
investors holding more than a 33% equity and/or debt interest in a 
broadcast auction bidder claiming a New Entrant Bidding Credit, even if 
such an interest is non-voting.

DATES: The effective date is August 18, 1999.

FOR FURTHER INFORMATION CONTACT: Shaun Maher, Video Services Division, 
Mass Media Bureau at (202) 418-1600.

SUPPLEMENTARY INFORMATION: This item contains information collections 
requirements for which we have received OMB approval, OMB Control 
Number 3060-0896. This Memorandum Opinion and Order concludes that it 
is

[[Page 44857]]

appropriate for the Federal Communications Commission to attribute the 
mass media interests of investors holding more than a 33% equity and/or 
debt interest in a broadcast auction bidder claiming a New Entrant 
Bidding Credit, even if such an interest is non-voting. This action is 
a further refinement of the eligibility standards for the New Entrant 
Bidding Credit available to bidders in broadcast auctions created by 
the Commission as a means to promote and facilitate the diversification 
of ownership in the mass media. In an earlier Memorandum Opinion and 
Order, 64 FR 24523 (May 7, 1999), the Commission revised the 
eligibility standards for the New Entrant Bidding Credit to ensure that 
those standards are consistent with the Commission's general 
attribution standards. In this Memorandum Opinion and Order, the 
Commission determined that it was appropriate to attribute the mass 
media interests held by very substantial investors in any broadcast 
auction applicant claiming a New Entrant Bidding Credit. The Commission 
explained that it was taking this action to ensure that only true new 
entrants qualify for the bidding credit, because holders of otherwise 
nonattributable interests may well have a ``realistic potential'' to 
influence bidders claiming new entrant status. The Commission further 
determined, based upon a review of the record in the broadcast 
attribution proceeding and the precedent provided by its long-standing 
cross-interest policy, that setting the attribution threshold at 33% is 
appropriate in the new entrant context.

Supplemental Regulatory Flexibility Analysis (FRFA)

    As required by the Regulatory Flexibility Act (RFA), 5 U.S.C. 603, 
a Final Regulatory Flexibility Analysis (FRFA) was incorporated in 
Appendix B of the First Report and Order, 63 FR 48615 (September 11, 
1998) in this proceeding. In addition, a Supplemental Final Regulatory 
Flexibility Analysis (First Supplemental FRFA) was incorporated in 
Appendix B of the Memorandum Opinion and Order, 64 FR 24523 (May 7, 
1999) in this proceeding that resolved various petitions for 
reconsideration filed against the First Report and Order. The 
Commission's Supplemental Final Regulatory Flexibility Analysis (Second 
Supplemental FRFA) in this Memorandum Opinion and Order reflects 
revised or additional information to that contained in the FRFA and 
First Supplemental FRFA. This Second Supplemental FRFA is thus limited 
to issues addressed in this Memorandum Opinion and Order. This Second 
Supplemental FRFA conforms to the RFA, as amended by the Contract with 
America Advancement Act of 1996, Public Law No. 104-121, 110 Stat. 847 
(1996) (CWAAA); see generally 5 U.S.C. 601 et seq. Title II of the 
CWAAA is the Small Business Regulatory Enforcement Fairness Act of 1996 
(SBREFA).

I. Need For and Objectives of Action

    In the First Report and Order in this proceeding, the Commission 
adopted rules and procedures to implement provisions of the Balanced 
Budget Act of 1997 expanding its competitive bidding authority, under 
Sections 309(j) and 309(l) of the Communications Act of 1934, 47 U.S.C. 
309(j), 309(l), to include, inter alia, the commercial broadcast 
services. In a recent Memorandum Opinion and Order resolving numerous 
petitions for reconsideration filed against the First Report and Order 
the Commission generally upheld its previous determinations made with 
respect to auction rules and procedures for the various broadcast 
services. That Memorandum Opinion and Order did, however, refine the 
eligibility standards for the ``new entrant'' bidding credit, which, as 
adopted in the First Report and Order, provides a tiered credit for 
broadcast auction bidders with no, or very few, other media interests. 
In particular, the Commission concluded in its previous Memorandum 
Opinion and Order that the eligibility standards for the new entrant 
bidding credit should be amended to be consistent with the general 
broadcast attribution standards, by which the Commission defines what 
constitutes an attributable interest in applying the broadcast multiple 
ownership rules. In addition to attributing mass media interests for 
purposes of the new entrant bidding credit to the same extent that such 
media interests are considered attributable for purposes of the 
broadcast multiple ownership rules, the Commission determined in that 
Memorandum Opinion and Order to also consider, in a further order, 
whether to attribute the mass media interests of any individual or 
entity who holds a significant equity and/or debt interest in a 
broadcast auction bidder claiming new entrant status, even if such an 
interest is nonvoting. The above-referenced Memorandum Opinion and 
Order does in fact determine to attribute the mass media interests of 
investors holding more than a 33% equity and/or debt interest in a 
broadcast auction bidder claiming new entrant status, even if such an 
interest is nonvoting.

II. Significant Issues Raised by Public in Response to Final Regulatory 
Flexibility Analysis

    No petitions or comments were received in response to the FRFA or 
the First Supplemental FRFA. Small business-related issues were raised 
indirectly by some parties filing petitions for reconsideration against 
the First Report and Order. These issues were addressed in detail in 
the previous Memorandum Opinion and Order and the First Supplemental 
FRFA.

III. Description and Estimate of the Number of Small Entities Involved

    In the FRFA and First Supplemental FRFA, the Commission utilized 
the definition of ``small business'' promulgated by the Small Business 
Administration (SBA), even though, as discussed in detail in the FRFA, 
we tentatively believed that the SBA's definition of ``small business'' 
overstated the number of radio and television broadcast stations that 
were small businesses and was not particularly suitable for our 
purposes. No petitions or comments were received concerning the 
Commission's use of the SBA's small business definition for purposes of 
the FRFA and First Supplemental FRFA, and we will therefore continue to 
employ such definition for this Second Supplemental FRFA. As we are 
utilizing the same definition of small business for this Second 
Supplemental FRFA, the description and number of small entities 
affected by the rule change adopted in this Memorandum Opinion and 
Order should be the same as the entities described in both the FRFA and 
First Supplemental FRFA, and include, specifically, commercial 
broadcast stations (television, low power television, television 
translator, AM, FM and FM translator stations).

IV. Description of Projected Reporting, Recordkeeping and Other 
Compliance Requirements

    The First Report and Order adopted a number of rules that included 
reporting, recordkeeping and compliance requirements. These 
requirements were described in detail in the FRFA, and, as discussed in 
the First Supplemental FRFA, generally remained unchanged by the rule 
amendments adopted in the previous Memorandum Opinion and Order. The 
rule change adopted in this Memorandum Opinion and Order does not 
include any additional or different reporting or recordkeeping 
requirements, but only affects the

[[Page 44858]]

standards for qualifying for the new entrant bidding credit.

V. Steps Taken to Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered

    The FRFA and First Supplemental FRFA described in considerable 
detail the steps taken in the First Report and Order and in the 
previous Memorandum Opinion and Order to minimize significant economic 
impact on small entities and the alternatives considered. The rule 
amendment adopted in this Memorandum Opinion and Order further refines 
the eligibility standards for the new entrant bidding credit. The 
Commission believes that attributing the mass media interests (if any) 
held by very substantial investors in bidders claiming new entrant 
status will help properly limit the scope of the bidding credit to 
those truly new entities intended to benefit from the credit (and who 
are likely to be small businesses). In addition, adoption of this 
attribution policy should reduce the likelihood of bidder manipulation 
of the eligibility standards for the bidding credit.
    The Commission also believes that setting this attribution 
benchmark at 33% reasonably balances its interest in capturing investor 
relationships that provide a realistic potential to influence the core 
operating functions of broadcast auction applicants, and the needs of 
prospective auction applicants (including small businesses) to obtain 
financing. This 33% equity/debt attribution standard does not preclude 
an individual or entity (including any existing broadcaster) from 
investing any amount in a prospective broadcast auction applicant. Nor 
does this 33% equity/debt standard require an applicant claiming new 
entrant status to contribute a minimum amount of equity, or otherwise 
affect an applicant's right to participate in a broadcast auction. 
Because this standard only establishes that the attributable media 
interests (if any) of an investor who holds more than a 33% equity and/
or debt interest in a broadcast auction bidder will be attributable to 
that bidder for determining its status as a new entrant, the Commission 
concludes that adoption of the 33% equity/debt standard should not 
unduly hinder the ability of broadcast licensees generally, or 
broadcast auction applicants specifically, to obtain capital.

VI. Report to Congress

    The Commission will send a copy of this Memorandum Opinion and 
Order, including this Second Supplemental FRFA, in a report to be sent 
to Congress pursuant to the Small Business Regulatory Enforcement 
Fairness Act of 1996. See 5 U.S.C. 801(a)(1)(A). In addition, the 
Commission will send a copy of the Memorandum Opinion and Order, 
including the Second Supplemental FRFA, to the Chief Counsel for 
Advocacy of the Small Business Administration. A copy of the Memorandum 
Opinion and Order and Second Supplemental FRFA (or summaries thereof) 
will also be published in the Federal Register. See 5 U.S.C. 604(b).
    Authority for issuance of this Memorandum Opinion and Order is 
contained in Sections 4 (i) and (j), 301, 303(f), 303(g), 303(h), 
303(j), 303(r), 307(c), 308(b), 309(j), 309(l) and 403 of the 
Communications Act of 1934, as amended, 47 U.S.C. 154(i), 154(j), 301, 
303(f), 303(g), 303(h), 303(j), 303(r), 307(c), 308(b), 309(j), 309(l) 
and 403.

List of Subjects in 47 CFR Part 73

    Radio broadcasting, Reporting and recordkeeping requirements, 
Television broadcasting.

Federal Communications Commission.
Magalie Roman Salas,
Secretary.

Rule Change

    Part 73 of Title 47 of the Code of Federal Regulations is amended 
as follows:

PART 73--RADIO BROADCAST SERVICES

    1. The authority citation for part 73 continues to read as follows:

    Authority: 47 U.S.C. 154, 303, 334, and 336.

    2. Section 73.5008 is amended by revising paragraph (c) to read as 
follows:


Sec. 73.5008  Definitions applicable for designated entity provisions.

* * * * *
    (c) An attributable interest in a winning bidder or in a medium of 
mass communications shall be determined in accordance with Sec. 73.3555 
and Note 2. In addition, the attributable mass media interests, if any, 
held by an individual or entity with an equity and/or debt interest(s) 
in a winning bidder shall be attributed to that winning bidder for 
purposes of determining its eligibility for the new entrant bidding 
credit, if the equity (including all stockholdings, whether voting or 
nonvoting, common or preferred) and debt interest or interests, in the 
aggregate, exceed thirty-three (33) percent of the total asset value 
(defined as the aggregate of all equity plus all debt) of the winning 
bidder.

[FR Doc. 99-21471 Filed 8-17-99; 8:45 am]
BILLING CODE 6712-01-P