[Federal Register Volume 73, Number 35 (Thursday, February 21, 2008)]
[Rules and Regulations]
[Pages 9481-9492]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-3133]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 73

[MB Docket Nos. 06-121; 02-277; 01-235; 01-317; 00-244; 04-228; 99-360; 
FCC 07-216]


2006 Quadrennial Regulatory Review--Review of the Commission's 
Broadcast Ownership Rules and Other Rules Adopted Pursuant to Section 
202 of the Telecommunications Act of 1996

AGENCY: Federal Communications Commission.

[[Page 9482]]


ACTION: Final rule.

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SUMMARY: This document adopts rule changes that presumptively permit 
newspaper/broadcast cross ownership only in the largest markets and 
only where there exists competition and numerous voices. The revised 
rule balances the need to support the availability and sustainability 
of local news while not significantly increasing local concentration or 
harming diversity. The Commission generally retains the other broadcast 
ownership rules currently in effect.

DATES: Effective March 24, 2008 except for 73.3555(d) which contains 
information collection requirements that have not been approved by OMB. 
The FCC will publish a document announcing the effective date of that 
section.

FOR FURTHER INFORMATION CONTACT: Royce Sherlock, (202) 418-2330; Mania 
Baghdadi, (202) 418-2330.

SUPPLEMENTARY INFORMATION: This is a summary of the Federal 
Communications Commission's Report and Order and Order on 
Reconsideration in MB Docket Nos. 06-121; 02-277; 01-235; 01-317; 00-
244; 04-228; 99-360, FCC 07-216, adopted December 18, 2007, and 
released February 4, 2008. The full text of this document is available 
for public inspection and copying during regular business hours in the 
FCC Reference Center, Federal Communications Commission, 445 12th 
Street, SW., CY-A257, Washington, DC 20554. These documents will also 
be available via ECFS (http://www.fcc.gov/cgb/ecfs). The complete text 
may be purchased from the Commission's copy contractor, 445 12th 
Street, SW., Room CY-B402, Washington, DC 20554. To request this 
document in accessible formats (computer diskettes, large print, audio 
recording and Braille), send an e-mail to [email protected] or call the 
FCC's Consumer and Governmental Affairs Bureau at (202) 418-0530 
(voice)(202) 418-0432 (TTY).

Summary of the Report and Order

    1. This Order was adopted to address the issues raised by the 
opinion of the United States Court of Appeals for the Third Circuit in 
Prometheus Radio Project v. FCC, and pursuant to Section 202(h) of the 
Telecommunications Act of 1996 (``1996 Act''), which requires the 
Commission to review its ownership rules (except the national 
television ownership limit) every four years and ``determine whether 
any of such rules are necessary in the public interest as the result of 
competition.''
    2. The Report and Order eliminates the 32-year old prohibition on 
newspaper-broadcast cross-ownership. The Report and Order revises the 
Commission's rules to presumptively permit cross ownership only in the 
largest markets and only where there exists competition and numerous 
voices. Under the new approach, the Commission presumes a proposed 
newspaper-broadcast transaction is not inconsistent with the public 
interest if it meets the following test: (1) The market at issue is one 
of the 20 largest Nielsen Designated Market Areas (``DMAs''); (2) the 
transaction involves the combination of only one major daily newspaper 
and only one television or radio station; (3) if the transaction 
involves a television station, at least eight independently owned and 
operating major media voices (defined to include major newspapers and 
full-power TV stations) would remain in the DMA following the 
transaction; and (4) if the transaction involves a television station, 
that station is not among the top four ranked stations in the DMA.
    3. All other proposed newspaper-broadcast transactions generally 
would continue to be presumed not to be in the public interest. The 
Report and Order identifies two limited circumstances in which this 
negative presumption would be reversed:
     First, the negative presumption will be reversed if the 
newspaper-broadcast combination involves a ``failing'' or ``failed'' 
newspaper or station. The Report and Order adapts the Commission's 
longstanding approach concerning failed or failing station waivers of 
the local television ownership limit to newspaper-broadcast 
combinations, using the same criteria to define whether an outlet is 
``failing'' or has ``failed'' in the newspaper-broadcast context. To be 
deemed ``failed,'' the newspaper or broadcast station would have to 
have ceased publication or gone dark at least four months before the 
filing of an application, or be in bankruptcy proceedings. To be 
treated as ``failing,'' the applicant must show that (a) the broadcast 
station has had an all-day audience share of 4 percent or lower, (b) 
the newspaper or broadcast station has had a negative cash flow for the 
previous three years, and (c) the combination will produce public 
interest benefits. In addition, the applicant must show that the in-
market buyer is the only reasonably available candidate willing and 
able to acquire and operate the newspaper or station.
     Second, the negative presumption against a newspaper-
broadcast combination will be reversed when a proposed transaction 
results in a new source of local news in a market--to be specific, when 
a combination would initiate at least seven hours of new local news 
programming per week on a broadcast station that previously has not 
aired local newscasts.
    4. Under the new rule, parties seeking to overcome a negative 
presumption will face high hurdles. In particular, applicants 
attempting to overcome a negative presumption about a major newspaper-
television combination will need to demonstrate by clear and convincing 
evidence that post-merger, the merged entity will increase the 
diversity of independent news outlets (e.g., separate editorial and 
news coverage decisions) and increase competition among independent 
news sources in the relevant market. The Commission will use the 
following factors to inform its evaluation: (1) Whether the combined 
entity will significantly increase the amount of local news in the 
market; (2) whether the newspaper and the broadcast outlets each will 
continue to employ its own staff and each will exercise its own 
independent news judgment; (3) the level of concentration in the DMA; 
and (4) the financial condition of the newspaper or broadcast station, 
and if the newspaper or broadcast station is in financial distress, the 
proposed owner's commitment to invest significantly in newsroom 
operations.
    5. This approach will permit the Commission to balance the needs of 
the public for media and viewpoint diversity with its concerns about 
the financial health and viability of traditional media outlets and to 
do so in the context of each particular transaction.
    6. In reaching these decisions, the item reaffirms the Commission's 
previous decision to eliminate the blanket ban on newspaper-broadcast 
cross-ownership and replace it with a presumption that waivers of the 
ban are in the public interest in certain limited circumstances. The 
Report and Order observes that the Prometheus court agreed that the ban 
is not necessary to promote competition, diversity, or localism. It 
concludes that the record contains ample evidence that marketplace 
conditions have indeed changed since 1975, when the ban was 
established, and thus justifies a recalibration at this time. In 
particular, it cites evidence that the largest markets contain a robust 
number of diverse media sources and the diversity of viewpoints would 
not be jeopardized by certain newspaper-broadcast combinations, and 
that newspaper-broadcast combinations can create synergies that result 
in more news

[[Page 9483]]

coverage for consumers. Because the modified rule generally presumes 
that waivers are in the public interest only for combinations of a 
single broadcast outlet and a daily newspaper in the largest markets, 
the item reasons that the modified rule will ensure that such synergies 
can be captured without impairing diversity.
    7. The item explains that newspaper-broadcast cross-ownership in 
the 20 largest DMAs in the country generally raises fewer diversity 
concerns because such media markets are more vibrant and have more 
media outlets. The Commission found notable differences between the top 
20 markets and all other DMAs, both in terms of voices and in terms of 
television households.
    8. The item defines major media voices as full-power commercial and 
noncommercial television stations and major newspapers. It acknowledges 
that other types of outlets contribute to diversity, but concludes that 
other voices are not major sources of local news or information and, 
therefore, should not be included as major media voices in determining 
whether eight independently owned voices will remain if a combination 
is allowed. It explains that the Commission selected the number eight 
for the major media voice count because it is comfortable that at least 
eight major media voices in the top-20 markets--along with the other 
unquantified media outlets that are present in those markets--will 
assure that these markets continue to enjoy an adequate diversity of 
local news and information sources. The item further explains that the 
top-four prohibition is included because the Commission considers daily 
newspapers and the top-four stations to be the most influential 
providers of local news in markets. Thus, such combinations are likely 
to cause a greater harm to diversity in a market.
    9. With regard to non-top 20 markets, the item establishes a 
general presumption that it is inconsistent with the public interest 
for an entity to own, operate or control a combination in such markets 
in order to protect competition and media diversity, as these markets 
cannot match the robustness in media and outlet diversity found in the 
top 20 markets. Nevertheless, the item recognizes the need to consider 
factors particular to each market and proposed transaction. Thus, 
applicants in markets below DMA 20 may overcome the presumption that a 
merger would not be in the public interest by showing countervailing 
benefits of the proposed transaction. While the Commission expects such 
cases to be rare, it acknowledges that a particular market may have 
unique attributes or that the proposed transaction may present unique 
advantages. The item explains that the two situations in which the 
negative presumption may be reversed--when a newspaper or station has 
failed or is failing and when a proposed combination results in a new 
source of a significant amount of local news in a market--are grounded 
in the Commission's longstanding application of a failed/failing 
station model in evaluating local TV waiver criteria for over 25 years, 
as well as its recognition of the unique and particular importance of 
local news and public affairs programming.
    10. The Order does not require divestiture of the combinations 
grandfathered in the Commission's 1975 decision implementing a ban on 
common ownership of a daily newspaper and a full-power broadcast 
station; rather these combinations remain grandfathered. Similarly, all 
permanent waivers from the prior rule that previously have been granted 
will continue in effect under the new rule.
    11. The Order grants five permanent waivers of the rule for the 
following: Gannett's combination in Phoenix; Media General's 
combinations in Myrtle Beach-Florence, South Carolina; Columbus, 
Georgia; Panama City, Florida, and the Tri-Cities, Tennessee/Virginia 
DMA.
    12. Where a pending waiver request involves an existing combination 
consisting of more than one newspaper and/or more than one broadcast 
station or an entity has been granted a waiver to hold such a 
combination pending the completion of this rulemaking, we will afford 
the licensee 90 days after the effective date of this order to either 
amend its waiver/renewal request or file a request for permanent 
waiver. Such requests will be examined on a case-by-case basis. Pending 
waiver requests and renewal applications will be held in abeyance until 
the Commission receives an appropriate amendment. Current temporary 
waivers that have been granted pending the completion of the rulemaking 
proceeding will be temporarily extended pending our action on requests 
for permanent waivers. In order to ensure adequate public notice of 
pending waiver requests, the Order indicates that the Commission will 
flag applications for proposed newspaper/broadcast combinations in its 
public notices as seeking waiver of the newspaper/broadcast cross-
ownership rule pursuant to Section 73.3555(d) of the Commission's 
rules.
    13. With respect to the remaining broadcast ownership rules under 
review, including the local television ownership rule, the radio-tv 
cross-ownership rule, the local radio ownership rule, and the dual 
network rule, the Commission determined that any further relaxation of 
ownership rules in the radio or television broadcast markets should not 
be allowed and retains the media ownership rules that are currently in 
effect. Thus, it retains the changes to the local radio ownership rule 
adopted in the 2002 Biennial Review Order, including use of Arbitron 
markets to define the relevant radio market and including noncommercial 
stations in determining the size of the radio market. The Order also 
reaffirms the decision in the 2002 Biennial Review Order to attribute 
certain same-market radio Joint Sales Agreements. These rules reaffirm 
the Commission's core competition and diversity goals, while 
harmonizing these goals with marketplace realities. Finally, the Order 
concludes that the Commission is foreclosed from addressing the issue 
of the UHF discount in this proceeding by the 2004 Consolidated 
Appropriations Act. Accordingly, these rules remain necessary in the 
public interest as the result of competition.
    14. The Report and Order also reinstates the failed station 
solicitation rule, which required an applicant for a waiver of the 
local TV ownership rule to provide notice of the sale of a failed, 
failing or unbuilt station to potential out-of-market buyers before it 
could sell that station to an in-market buyer. The Order states that it 
is necessary to ensure that out-of-market buyers, including qualified 
minority broadcasters, have notice of, and an opportunity to bid for, a 
station before it is combined with an in-market station. A waiver of 
the rule should only be permitted when no out-of-market buyer is 
willing to purchase the station at a reasonable price.

Report and Order

Final Paperwork Reduction Act of 1995 Analysis

    15. This Report and Order contains both new and modified 
information collection requirements subject to the Paperwork Reduction 
Act of 1995 (PRA), Public Law 104-13. It will be 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 new or modified information collection 
requirements contained in this proceeding. In addition, we note that 
pursuant to the Small Business Paperwork Relief Act of 2002, Public

[[Page 9484]]

Law 107-198, see 44 U.S.C. 3506(c)(4), we have considered how the 
Commission might ``further reduce the information collection burden for 
small business concerns with fewer than 25 employees.'' We find that 
the modified requirements must apply fully to small entities (as well 
as to others) to protect consumers and further other goals, as 
described in the Order.
    16. In this present document, we have assessed the effects of the 
Commission's broadcast ownership rules, as amended, and find that the 
effect on businesses with fewer than 25 employees will be minimal.

Final Regulatory Flexibility Analysis

    17. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was 
incorporated in the Notice of Proposed Rulemaking (NPRM) in MB Docket 
No. 02-277. The Commission sought written public comment on the 
proposals in the NPRM including comment on the IRFA (FCC 02-249, 67 FR 
65751, October 28, 2002). The Commission also prepared a Supplemental 
Initial Regulatory Flexibility Analysis (Supplemental IRFA) of the 
possible significant economic impact on small entities of the proposals 
in the Further Notice of Proposed Rulemaking (FNPRM) (FCC 06-93, 71 FR 
45511, August 9, 2006; 71 FR 54253, September 14, 2006). The Commission 
sought written public comment on the FNPRM, including comment on the 
Supplemental IRFA. This present Final Regulatory Flexibility Analysis 
(FRFA) conforms to the RFA.

A. Need for, and Objectives of, the Report and Order and Order on 
Reconsideration (Order)

    18. The Order concludes the Commission's 2006 Quadrennial Review of 
the broadcast ownership rules. This review encompasses the newspaper/
broadcast cross-ownership rule, the radio-television cross-ownership 
rule, the local television multiple ownership rule, the local radio 
ownership rule, and the dual network rule. The rules are reviewed under 
Section 202(h) of the Telecommunications Act of 1996 (``1996 Act''), 
which requires the Commission to review its ownership rules (except the 
national television ownership limit) every four years and ``determine 
whether any of such rules are necessary in the public interest as the 
result of competition.'' Under Section 202(h), the Commission ``shall 
repeal or modify any regulation it determines to be no longer in the 
public interest.'' The Commission modifies the newspaper/broadcast 
cross-ownership rule and retains the other broadcast ownership rules 
currently in effect.
    19. The Commission's approach in this Order is a cautious approach 
that balances the concerns of many commenters that it not permit 
excessive consolidation, with concerns of other commenters that it 
afford some relief to assure continued diversity and investment in 
local news programming by a modest loosening of the 32 year-old 
prohibition on newspaper/broadcast cross-ownership. The Commission 
believes that the decisions it adopts in the Order serve our public 
interest goals, appropriately take account of the current media 
marketplace, and comply with our statutory responsibilities.

B. Legal Basis

    20. This Order is adopted pursuant to Sections 1, 2(a), 4(i), 303, 
307, 309, and 310 of the Communications Act of 1934, as amended, 47 
U.S.C. 151, 152(a), 154(i), 303, 307, 309, and 310, and Section 202(h) 
of the Telecommunications Act of 1996.

C. Summary of Significant Issues Raised by Public Comments in Response 
to the IRFA and the Supplemental IRFA

    21. The Commission received no comments in direct response to the 
IRFA and the Supplemental IRFA. However, the Commission received 
comments that discuss issues of interest to small entities. These 
comments are discussed in the section of this FRFA discussing the steps 
taken to minimize significant impact on small entities, and the 
significant alternatives considered.

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

    22. The RFA directs agencies to provide a description of, and, 
where feasible, an estimate of the number of small entities that may be 
affected by the proposed rules, if adopted. The RFA defines the term 
``small entity'' as having the same meaning as the terms ``small 
business,'' ``small organization,'' and ``small governmental entity'' 
under Section 3 of the Small Business Act. In addition, the term 
``small business'' has the same meaning as the term ``small business 
concern'' under the Small Business Act. 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 SBA.
    23. Television Broadcasting. In this context, the application of 
the statutory definition to television stations is of concern. The 
Small Business Administration defines a television broadcasting station 
that has no more than $13 million in annual receipts as a small 
business. Business concerns included in this industry are those 
``primarily engaged in broadcasting images together with sound.'' 
According to Commission staff review of the BIA Financial Network, Inc. 
Media Access Pro Television Database as of December 7, 2007, about 825 
(66 percent) of the 1,250 commercial television stations in the United 
States have revenues of $13 million or less. However, in assessing 
whether a business entity qualifies as small under the above 
definition, business control affiliations must be included. Our 
estimate, therefore, likely overstates the number of small entities 
that might be affected by any changes to the ownership rules, because 
the revenue figures on which this estimate is based do not include or 
aggregate revenues from affiliated companies.
    24. An element of the definition of ``small business'' is that the 
entity not be dominant in its field of operation. The Commission is 
unable at this time and in this context to define or quantify the 
criteria that would establish whether a specific television station is 
dominant in its market of operation. Accordingly, the foregoing 
estimate of small businesses to which the rules may apply does not 
exclude any television stations from the definition of a small business 
on this basis and is therefore over-inclusive to that extent. An 
additional element of the definition of ``small business'' is that the 
entity must be independently owned and operated. It is difficult at 
times to assess these criteria in the context of media entities, and 
our estimates of small businesses to which they apply may be over-
inclusive to this extent.
    25. Radio Broadcasting. The Small Business Administration defines a 
radio broadcasting entity that has $6.5 million or less in annual 
receipts as a small business. Business concerns included in this 
industry are those ``primarily engaged in broadcasting aural programs 
by radio to the public.'' According to Commission staff review of the 
BIA Financial Network, Inc. Media Access Radio Analyzer Database as of 
December 7, 2007, about 10,500 (95 percent) of 11,050 commercial radio 
stations in the United States have revenues of $6.5 million or less. We 
note, however, that in assessing whether a business entity qualifies as 
small under the above definition, business control affiliations must be 
included. Our estimate, therefore, likely overstates the number of 
small entities that might be affected by any changes to the ownership 
rules, because the revenue figures on which this estimate is based do 
not include or

[[Page 9485]]

aggregate revenues from affiliated companies.
    26. In this context, the application of the statutory definition to 
radio stations is of concern. An element of the definition of ``small 
business'' is that the entity not be dominant in its field of 
operation. We are unable at this time and in this context to define or 
quantify the criteria that would establish whether a specific radio 
station is dominant in its field of operation. Accordingly, the 
foregoing estimate of small businesses to which the rules may apply 
does not exclude any radio station from the definition of a small 
business on this basis and is therefore over-inclusive to that extent. 
An additional element of the definition of ``small business'' is that 
the entity must be independently owned and operated. We note that it is 
difficult at times to assess these criteria in the context of media 
entities, and our estimates of small businesses to which they apply may 
be over-inclusive to this extent.
    27. Daily Newspapers. The SBA has developed a small business size 
standard for the census category of Newspaper Publishers; that size 
standard is 500 or fewer employees. Census Bureau data for 2002 show 
that there were 5,159 firms in this category that operated for the 
entire year. Of this total, 5,065 firms had employment of 499 or fewer 
employees, and an additional 42 firms had employment of 500 to 999 
employees. Therefore, we estimate that the majority of Newspaper 
Publishers are small entities that might be affected by our action.

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

    28. Broadcasters whose newspaper/broadcast combination is approved 
under the presumption that a proposed newspaper broadcast combination 
is consistent with the public interest when it initiates the 
programming of local newscasts of at least seven hours per week on a 
broadcast outlet that otherwise was not offering local newscasts prior 
to the combined operations must report to the Commission annually 
regarding how they have followed through on their commitment to 
initiate at least seven hours a week of local news. The Order modestly 
revises the newspaper/broadcast cross-ownership rule and otherwise 
retains the broadcast ownership rules currently in effect. With the 
exception of the foregoing reporting requirement, the Order imposes no 
increased reporting, recordkeeping or other compliance requirements.

F. Steps Taken to Minimize Significant Impact on Small Entities and 
Significant Alternatives Considered

    29. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its proposed approach, 
which may include the following four alternatives (among others):
    (1) The establishment of differing compliance or reporting 
requirements or timetables that take into account the resources 
available to small entities; (2) the clarification, consolidation, or 
simplification of compliance or reporting requirements under the rule 
for small entities; (3) the use of performance, rather than design, 
standards; and (4) an exemption from coverage of the rule, or any part 
thereof, for small entities.
    30. The Order modestly revises the newspaper/broadcast cross-
ownership rule. Under the new rule, the Commission presumes a proposed 
newspaper/broadcast transaction is not inconsistent with the public 
interest if it meets the following test: (1) The market at issue is one 
of the 20 largest Nielsen Designated Market Areas (``DMAs''); (2) the 
transaction involves the combination of only one major daily newspaper 
and only one television or radio station; (3) if the transaction 
involves a television station, at least eight independently owned and 
operating major media voices (defined to include major newspapers and 
full-power TV stations) would remain in the DMA following the 
transaction; and (4) if the transaction involves a television station, 
that station is not among the top four ranked stations in the DMA. All 
other proposed newspaper/broadcast transactions would continue to be 
presumed not in the public interest.
    31. Under the new rule, the negative presumption will be reversed 
in two circumstances. First, the newspaper or broadcast station would 
have to be considered ``failed'' or ``failing.'' To be deemed 
``failed,'' the newspaper or broadcast station would have to have 
ceased publication or gone dark at least four months before the filing 
of an application, or be in bankruptcy proceedings. To be treated as 
``failing,'' the applicant must show that (a) the broadcast station has 
had an all-day audience share of 4 percent or lower, (b) the newspaper 
or broadcast station has had a negative cash flow for the previous 
three years, (c) the combination will produce public interest benefits, 
and (d) the in-market buyer is the only reasonably available candidate 
willing and able to acquire and operate the newspaper or station. 
Second, the negative presumption will be reversed when the combination 
is with a broadcast station that was not offering local newscasts prior 
to the combination, and the station will initiate at least seven hours 
per week of local news programming after the combination. Under the new 
rule, the Commission would consider a negative presumption as 
establishing a high hurdle as it reviews the transactions on a case-by-
case basis. In particular, applicants attempting to overcome a negative 
presumption about a newspaper television combination will need to 
demonstrate by clear and convincing evidence that post-merger the 
merged entity will increase the diversity of independent news outlets 
(e.g., separate editorial and news coverage decisions) and increase 
competition among independent news sources in the relevant market. The 
Commission will use the following factors to inform its evaluation: (1) 
The extent to which cross-ownership will serve to increase the amount 
of local news disseminated through the affected media outlets in the 
combination; (2) whether each affected media outlet in the combination 
will exercise its own independent news judgment; (3) the level of 
concentration in the Nielsen DMA; and (4) the financial condition of 
the newspaper or broadcast station, and if the newspaper or broadcast 
station is in financial distress, the owner's commitment to invest 
significantly in newsroom operations. This approach will permit the 
Commission to balance the needs of the public for media and viewpoint 
diversity with its concerns about the financial health of traditional 
media outlets in the context of each particular transaction.
    32. The Commission considered other alternatives, but the Order 
retains the other media ownership rules currently in effect. The 
Commission believes that the decisions it adopts in the Order serve our 
public interest goals, appropriately take account of the current media 
marketplace, and comply with our statutory responsibilities. It retains 
the radio/television cross-ownership rule currently in effect to 
provide protection for diversity goals in local markets and thereby 
serve the public interest.
    33. The Order finds that restrictions on common ownership of 
television stations in local markets continue to be necessary in the 
public interest to protect competition for viewers and in local 
television advertising markets. The Commission concludes that, in order 
to preserve adequate levels of competition within local television 
markets, the local TV ownership rule as it is

[[Page 9486]]

currently in effect should be retained. Accordingly, an entity may own 
two television stations in the same DMA if: (1) The Grade B contours of 
the stations do not overlap; or (2) at least one of the stations in the 
combination is not ranked among the top four stations in terms of 
audience share, and at least eight independently owned and operating 
commercial or non-commercial full-power broadcast television stations 
would remain in the DMA after the combination. To determine the number 
of voices remaining after the merger, the Commission counts those 
broadcast television stations whose Grade B signal contours overlap 
with the Grade B signal contour of at least one of the stations that 
would be commonly owned. With respect to the waiver standard for the 
local TV ownership rule, we will reinstate our requirement that a 
waiver applicant demonstrate that there is no buyer outside the market 
willing to purchase the station at a reasonable price. Reinstating this 
requirement will promote the market entry of small businesses, 
including minority- and women-owned businesses, because it will 
increase the likelihood that they will learn of purchasing 
opportunities.
    34. The Commission does not revise its decision that DMAs are the 
more precise geographic markets. Nonetheless, in the instant Order, 
unlike in the 2002 Biennial Review Order, we are not relaxing the local 
television ownership rule, and, accordingly, to avoid disruption to 
settled expectations, we retain the Grade B overlap provision. 
Furthermore, we believe that maintaining the Grade B provision will 
promote television service in rural areas by continuing to enable 
station owners to build or purchase an additional station in a remote 
corner of the DMA, beyond the reach of their Grade B signal, without 
regard to the top four/eight voices restriction.
    35. The Order concludes that the current local radio ownership rule 
remains ``necessary in the public interest'' to protect competition in 
local radio markets. As directed by the Prometheus court, the 
Commission also provides a reasoned justification for our decision to 
retain the existing numerical limits on local radio ownership and the 
AM subcaps. In addition, we deny or dismiss a number of pending 
petitions for reconsideration of the Commission's action concerning the 
local radio ownership rule in the 2002 Biennial Review Order. 
Accordingly, an entity may own, operate, or control (1) up to eight 
commercial radio stations, not more than five of which are in the same 
service (i.e., AM or FM), in a radio market with 45 or more full-power, 
commercial and noncommercial radio stations; (2) up to seven commercial 
radio stations, not more than four of which are in the same service, in 
a radio market with between 30 and 44 (inclusive) full-power, 
commercial and noncommercial radio stations; (3) up to six commercial 
radio stations, not more than four of which are in the same service, in 
a radio market with between 15 and 29 (inclusive) full-power, 
commercial and noncommercial radio stations; and (4) up to five 
commercial radio stations, not more than three of which are in the same 
service, in a radio market with 14 or fewer full-power, commercial and 
noncommercial radio stations, except that an entity may not own, 
operate, or control more than 50 percent of the stations in such a 
market. Retaining the AM subcap serves the public interest because the 
relative affordability of radio compared to other mass media makes it a 
likely avenue for new entry into the media business, particularly by 
small businesses.
    36. For the same reasons recited by the Commission in 2002, we 
continue to believe that the dual network rule is necessary in the 
public interest to promote competition and localism. Accordingly, the 
Order retains the dual network rule in its current form. No petitions 
were filed asking the Commission to reconsider its decision to retain 
the rule, and no challenges were filed in Prometheus. The Commission 
sought comment in the FNPRM on whether the dual network rule remains 
necessary in the public interest to promote the Commission's policy 
goals. Almost all of the few parties commenting on the rule in this 
proceeding support retaining the rule in its current form. Other 
parties argue that relaxing or eliminating the rule would increase 
concentration to the detriment of competition, diversity, and localism. 
No specific changes to the dual network rule were proposed, and only 
two parties--Fox and CBS--oppose retaining the rule in any form. 
Neither of these parties has provided evidence convincing us that a 
departure from our 2002 decision to retain the rule in its current form 
is warranted.
    37. The Order finds that the Commission is foreclosed from 
addressing the issue of the UHF discount in this proceeding by the 2004 
Consolidated Appropriations Act. Although the Appropriations Act did 
not specifically mention the UHF discount, the Prometheus court 
observed that the statutory 39 percent national cap would be altered if 
the UHF discount were modified. The court observed that the 
Appropriations Act amended Section 202(h) to exclude ``any rules 
relating to'' the 39 percent national cap, and determined that the UHF 
discount was a rule ``relating to'' the national TV cap. The Third 
Circuit concluded that Congress ``apparently intended to insulate the 
UHF discount from periodic review,'' but left open the possibility that 
the Commission may consider the discount in a rulemaking ``outside the 
context of Section 202(h).'' Accordingly, the Order concludes that the 
UHF discount is insulated from review under Section 202(h).
    38. The Order notes that in the pending proceeding entitled Public 
Interest Obligations of TV Broadcast Licensees commenters ask the 
Commission to impose additional ``public interest'' obligations on 
television broadcasters. The Order explains that some of the issues 
raised in that proceeding have already been resolved by the Commission. 
With respect to other ideas raised in this proceeding such as whether 
the agency should establish more specific minimum public interest 
requirements for licensees and how broadcasters could improve political 
candidates' access to television, the Commission declines to take any 
further action at this time. Nevertheless, to the extent that 
circumstances change, the Commission agrees to revisit this decision 
and initiate proceedings as appropriate.

Congressional Review Act

    39. The Commission will send a copy of this Report and Order in a 
report to be sent to Congress and the Government Accountability Office 
pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).

Ordering Clauses

    40. Accordingly, It is ordered, that pursuant to the authority 
contained in sections 1, 2(a), 4(i,), 303, 307, 309 and 310 of the 
Communications Act of 1934, as amended, 47 U.S.C. 151, 152(a), 154(i), 
303, 307, 309 and 310, and Section 202(h) of the Telecommunications Act 
of 1996, this Report and Order and Order on Reconsideration and the 
rule modifications attached hereto as Appendix A are adopted, effective 
thirty (30) days after publication of the text or summary thereof in 
the Federal Register, except for those rules and requirements involving 
Paperwork Reduction Act burdens, which shall become effective 
immediately upon announcement in the Federal Register of OMB approval. 
It is our intention in

[[Page 9487]]

adopting these rule changes that, if any of the rules that we retain, 
modify or adopt today, or the application thereof to any person or 
circumstance, are held to be unlawful, the remaining portions of the 
rules not deemed unlawful, and the application of such rules to other 
persons or circumstances, shall remain in effect to the fullest extent 
permitted by law. Thus, for example, if one of the ownership rules is 
held to be unlawful, the other ownership rules shall remain in effect 
to the fullest extent permitted by law, each being severable from the 
others.
    41. It is further ordered, that the Petition for Reconsideration 
filed by Office of Communication of the United Church of Christ, Inc., 
Black Citizens for a Fair Media, Philadelphia Lesbian and Gay Task 
Force, and Women's Institute for Freedom of the Press; and the Petition 
for Reconsideration filed by Minority Media and Telecommunications 
Council, Counsel for Diversity and Competition Supporters filed in MB 
Docket No. 02-277 are granted to the extent set forth in this Order, 
and otherwise are denied. The Petitions for Reconsideration filed in MB 
Docket No. 02-277 by National Association of Black Owned Broadcasters, 
Inc. and The Rainbow/PUSH Coalition, Inc.; WTCM Radio, Inc.; WJZD, 
Inc.; Cumulus Media, Inc.; Galaxy Communications, L.P.; Mt. Wilson FM 
Broadcasters; Entercom Communications Corp.; Great Scott Broadcasting; 
Treasure and Space Coast Radio; Saga Communications, Inc.; Future of 
Music Coalition; National Organization for Women; Mid-West Family 
Broadcasting; Monterey Licenses, LLC; LIN Television Corporation and 
Raycom Media Inc.; Duff, Ackerman & Goodrich, LLC; Center for the 
Creative Community and Association of Independent Video and Filmmakers; 
Robert W. McChesney and Josh Silver of Free Press; Nexstar Broadcasting 
Group, LLC; Saga Communications, Inc.; Consumers Federation of America 
and Consumers Union; Capitol Broadcasting Company, Inc.; Bennco, Inc.; 
The Amherst Alliance and the Virginia Center for the Public Press are 
dismissed or denied as discussed in this Order.
    42. It is further ordered, that as enumerated in paragraph 76 of 
the Report and Order and Order on Reconsideration, the grandfathering 
or waivers granted in the 1975 newspaper/broadcast cross-ownership 
decision, Amendment of Sections 73.34, 73.240, and 73.636 of the 
Commission's Rules Relating to Multiple Ownership of Standard, FM, and 
Television Broadcast Stations, Docket No. 18110, 50 FCC 2d 1046 (1975) 
are continued, and all permanent waivers for the prior newspaper-
broadcast cross ownership rule that have previously been granted are 
continued.
    43. It is further ordered, that as enumerated in paragraph 77 of 
the Report and Order and Order on Reconsideration, waivers are granted 
to Gannett Co. Inc.'s combination in Phoenix (The Arizona Republic and 
KPNX-TV), Media General Inc.'s combination in Myrtle Beach-Florence, 
South Carolina (WBTW(TV) and the Morning News), Media General, Inc.'s 
combination in Columbus, Georgia (WRBL(TV) and the Opelika-Auburn 
News), Media General, Inc.'s combination in Panama City, Florida 
(WMBB(TV) and the Jackson County Floridan), and Media General's 
combination in the Tri-Cities, Tennessee/Virginia DMA (WJHL-TV and the 
Bristol (Virginia Tennessee) Herald Courier).
    44. It is further ordered, that as enumerated in paragraph 78 of 
the Report and Order and Order on Reconsideration, licensees with a 
pending waiver request that involves an existing station combination 
consisting of more than one newspaper and/or more than one broadcast 
station will have 90 days after the effective date of the Report and 
Order and Order on Reconsideration to either amend their renewal or 
waiver requests or file a request for a permanent waiver.
    45. It is further ordered, that as enumerated in paragraph 78 of 
the Report and Order and Order on Reconsideration, entities that have 
been granted a temporary waiver of the newspaper/broadcast cross-
ownership rule pending the completion of this rulemaking will have 90 
days after the effective date of the Report and Order to either amend 
their renewal or waiver requests or file a request for a permanent 
waiver.
    46. It is further ordered, that the proceedings in MB Docket No. 
06-121, MB Docket No. 02-277, MM Docket No. 01-235, MM Docket No. 01-
317, MM Docket No. 00-244, and MM Docket No. 99-360 are terminated.
    47. It is further ordered, that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, shall send a 
copy of this Report and Order and Order on Reconsideration, including 
the Final Regulatory Flexibility Analysis, to the Chief Counsel for 
Advocacy of the Small Business Administration.

List of Subjects in 47 CFR Part 73

    Radio, Television.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.

Final Rules

0
For the reasons discussed in the preamble, the Federal Communications 
Commission amends 47 CFR part 73 as follows:

PART 73--RADIO BROADCAST SERVICES

0
1. The authority citation for part 73 reads as follows:

    Authority: 47 U.S.C. 154, 303, 334, 336, and 339.

0
2. Section 73.3555 is revised to read as follows:


Sec.  73.3555  Multiple ownership.

    (a)(1) Local radio ownership rule. A person or single entity (or 
entities under common control) may have a cognizable interest in 
licenses for AM or FM radio broadcast stations in accordance with the 
following limits:
    (i) In a radio market with 45 or more full-power, commercial and 
noncommercial radio stations, not more than 8 commercial radio stations 
in total and not more than 5 commercial stations in the same service 
(AM or FM);
    (ii) In a radio market with between 30 and 44 (inclusive) full-
power, commercial and noncommercial radio stations, not more than 7 
commercial radio stations in total and not more than 4 commercial 
stations in the same service (AM or FM);
    (iii) In a radio market with between 15 and 29 (inclusive) full-
power, commercial and noncommercial radio stations, not more than 6 
commercial radio stations in total and not more than 4 commercial 
stations in the same service (AM or FM); and
    (iv) In a radio market with 14 or fewer full-power, commercial and 
noncommercial radio stations, not more than 5 commercial radio stations 
in total and not more than 3 commercial stations in the same service 
(AM or FM); provided, however, that no person or single entity (or 
entities under common control) may have a cognizable interest in more 
than 50% of the full-power, commercial and noncommercial radio stations 
in such market unless the combination of stations comprises not more 
than one AM and one FM station.
    (2) Overlap between two stations in different services is 
permissible if neither of those two stations overlaps a third station 
in the same service.
    (b) Local television multiple ownership rule. An entity may 
directly or indirectly own, operate, or control two television stations 
licensed in the

[[Page 9488]]

same Designated Market Area (DMA) (as determined by Nielsen Media 
Research or any successor entity) only under one or more of the 
following conditions:
    (1) The Grade B contours of the stations (as determined by Sec.  
73.684) do not overlap; or
    (i) At the time the application to acquire or construct the 
station(s) is filed, at least one of the stations is not ranked among 
the top four stations in the DMA, based on the most recent all-day (9 
a.m.-midnight) audience share, as measured by Nielsen Media Research or 
by any comparable professional, accepted audience ratings service; and
    (ii) At least 8 independently owned and operating, full-power 
commercial and noncommercial TV stations would remain post-merger in 
the DMA in which the communities of license of the TV stations in 
question are located. Count only those stations the Grade B signal 
contours of which overlap with the Grade B signal contour of at least 
one of the stations in the proposed combination. In areas where there 
is no Nielsen DMA, count the TV stations present in an area that would 
be the functional equivalent of a TV market. Count only those TV 
stations the Grade B signal contours of which overlap with the Grade B 
signal contour of at least one of the stations in the proposed 
combination.
    (2) [Reserved]
    (c) Radio-television cross-ownership rule.
    (1) This rule is triggered when: (i) The predicted or measured 1 
mV/m contour of an existing or proposed FM station (computed in 
accordance with Sec.  73.313) encompasses the entire community of 
license of an existing or proposed commonly owned TV broadcast 
station(s), or the Grade A contour(s) of the TV broadcast station(s) 
(computed in accordance with Sec.  73.684) encompasses the entire 
community of license of the FM station; or
    (ii) The predicted or measured 2 mV/m groundwave contour of an 
existing or proposed AM station (computed in accordance with Sec.  
73.183 or Sec.  73.386), encompasses the entire community of license of 
an existing or proposed commonly owned TV broadcast station(s), or the 
Grade A contour(s) of the TV broadcast station(s) (computed in 
accordance with Sec.  73.684) encompass(es) the entire community of 
license of the AM station.
    (2) An entity may directly or indirectly own, operate, or control 
up to two commercial TV stations (if permitted by paragraph (b) of this 
section, the local television multiple ownership rule) and 1 commercial 
radio station situated as described in paragraph (c)(1) of this 
section. An entity may not exceed these numbers, except as follows:
    (i) If at least 20 independently owned media voices would remain in 
the market post-merger, an entity can directly or indirectly own, 
operate, or control up to:
    (A) Two commercial TV and six commercial radio stations (to the 
extent permitted by paragraph (a) of this section, the local radio 
multiple ownership rule); or
    (B) One commercial TV and seven commercial radio stations (to the 
extent that an entity would be permitted to own two commercial TV and 
six commercial radio stations under paragraph (c)(2)(i)(A) of this 
section, and to the extent permitted by paragraph (a) of this section, 
the local radio multiple ownership rule).
    (ii) If at least 10 independently owned media voices would remain 
in the market post-merger, an entity can directly or indirectly own, 
operate, or control up to two commercial TV and four commercial radio 
stations (to the extent permitted by paragraph (a) of this section, the 
local radio multiple ownership rule).
    (3) To determine how many media voices would remain in the market, 
count the following:
    (i) TV stations: independently owned and operating full-power 
broadcast TV stations within the DMA of the TV station's (or stations') 
community (or communities) of license that have Grade B signal contours 
that overlap with the Grade B signal contour(s) of the TV station(s) at 
issue;
    (ii) Radio stations: (A)(1) Independently owned operating primary 
broadcast radio stations that are in the radio metro market (as defined 
by Arbitron or another nationally recognized audience rating service) 
of:
    (i) The TV station's (or stations') community (or communities) of 
license; or
    (ii) The radio station's (or stations') community (or communities) 
of license; and
    (2) Independently owned out-of-market broadcast radio stations with 
a minimum share as reported by Arbitron or another nationally 
recognized audience rating service.
    (B) When a proposed combination involves stations in different 
radio markets, the voice requirement must be met in each market; the 
radio stations of different radio metro markets may not be counted 
together.
    (C) In areas where there is no radio metro market, count the radio 
stations present in an area that would be the functional equivalent of 
a radio market.
    (iii) Newspapers: Newspapers that are published at least four days 
a week within the TV station's DMA in the dominant language of the 
market and that have a circulation exceeding 5% of the households in 
the DMA; and
    (iv) One cable system: if cable television is generally available 
to households in the DMA. Cable television counts as only one voice in 
the DMA, regardless of how many individual cable systems operate in the 
DMA.
    (d) Daily newspaper cross-ownership rule. (1) No license for an AM, 
FM or TV broadcast station shall be granted to any party (including all 
parties under common control) if such party directly or indirectly 
owns, operates or controls a daily newspaper and the grant of such 
license will result in:
    (i) The predicted or measured 2 mV/m contour of an AM station, 
computed in accordance with Sec.  73.183 or Sec.  73.186, encompassing 
the entire community in which such newspaper is published; or
    (ii) The predicted 1 mV/m contour for an FM station, computed in 
accordance with Sec.  73.313, encompassing the entire community in 
which such newspaper is published; or
    (iii) The Grade A contour of a TV station, computed in accordance 
with Sec.  73.684, encompassing the entire community in which such 
newspaper is published.
    (2) Paragraph (d)(1) of this section shall not apply in cases where 
the Commission makes a finding pursuant to Section 310(d) of the 
Communications Act that the public interest, convenience, and necessity 
would be served by permitting an entity that owns, operates or controls 
a daily newspaper to own, operate or control an AM, FM, or TV broadcast 
station whose relevant contour encompasses the entire community in 
which such newspaper is published as set forth in paragraph (d)(1) of 
this section.
    (3) In making a finding under paragraph (d)(2) of this section, 
there shall be a presumption that it is not inconsistent with the 
public interest, convenience, and necessity for an entity to own, 
operate or control a daily newspaper in a top 20 Nielsen DMA and one 
commercial AM, FM or TV broadcast station whose relevant contour 
encompasses the entire community in which such newspaper is published 
as set forth in paragraph (d)(1) of this section, provided that, with 
respect to a combination including a commercial TV station,
    (i) The station is not ranked among the top four TV stations in the 
DMA, based on the most recent all-day (9 a.m.-midnight) audience share, 
as measured

[[Page 9489]]

by Nielsen Media Research or by any comparable professional, accepted 
audience ratings service; and
    (ii) At least 8 independently owned and operating major media 
voices would remain in the DMA in which the community of license of the 
TV station in question is located (for purposes of this provision major 
media voices include full-power TV broadcast stations and major 
newspapers).
    (4) In making a finding under paragraph (d)(2) of this section, 
there shall be a presumption that it is inconsistent with the public 
interest, convenience, and necessity for an entity to own, operate or 
control a daily newspaper and an AM, FM or TV broadcast station whose 
relevant contour encompasses the entire community in which such 
newspaper is published as set forth in paragraph (d)(1) of this section 
in a DMA other than the top 20 Nielsen DMAs or in any circumstance not 
covered under paragraph (d)(3) of this section.
    (5) In making a finding under paragraph (d)(2) of this section, the 
Commission shall consider:
    (i) Whether the combined entity will significantly increase the 
amount of local news in the market;
    (ii) Whether the newspaper and the broadcast outlets each will 
continue to employ its own staff and each will exercise its own 
independent news judgment;
    (iii) The level of concentration in the Nielsen Designated Market 
Area (DMA); and
    (iv) The financial condition of the newspaper or broadcast station, 
and if the newspaper or broadcast station is in financial distress, the 
proposed owner's commitment to invest significantly in newsroom 
operations.
    (6) In order to overcome the negative presumption set forth in 
paragraph (d)(4) of this section with respect to the combination of a 
major newspaper and a television station, the applicant must show by 
clear and convincing evidence that the co-owned major newspaper and 
station will increase the diversity of independent news outlets and 
increase competition among independent news sources in the market, and 
the factors set forth above in paragraph (d)(5) of this section will 
inform this decision.
    (7) The negative presumption set forth in paragraph (d)(4) of this 
section shall be reversed under the following two circumstances:
    (i) The newspaper or broadcast station is failed or failing; or
    (ii) The combination is with a broadcast station that was not 
offering local newscasts prior to the combination, and the station will 
initiate at least seven hours per week of local news programming after 
the combination.
    (e) National television multiple ownership rule. (1) No license for 
a commercial television broadcast station shall be granted, transferred 
or assigned to any party (including all parties under common control) 
if the grant, transfer or assignment of such license would result in 
such party or any of its stockholders, partners, members, officers or 
directors having a cognizable interest in television stations which 
have an aggregate national audience reach exceeding thirty-nine (39) 
percent.
    (2) For purposes of this paragraph (e):
    (i) National audience reach means the total number of television 
households in the Nielsen Designated Market Areas (DMAs) in which the 
relevant stations are located divided by the total national television 
households as measured by DMA data at the time of a grant, transfer, or 
assignment of a license. For purposes of making this calculation, UHF 
television stations shall be attributed with 50 percent of the 
television households in their DMA market.
    (ii) No market shall be counted more than once in making this 
calculation.
    (3) Divestiture. A person or entity that exceeds the thirty-nine 
(39) percent national audience reach limitation for television stations 
in paragraph (e)(1) of this section through grant, transfer, or 
assignment of an additional license for a commercial television 
broadcast station shall have not more than 2 years after exceeding such 
limitation to come into compliance with such limitation. This 
divestiture requirement shall not apply to persons or entities that 
exceed the 39 percent national audience reach limitation through 
population growth.
    (f) The ownership limits of this section are not applicable to 
noncommercial educational FM and noncommercial educational TV stations. 
However, the attribution standards set forth in the Notes to this 
section will be used to determine attribution for noncommercial 
educational FM and TV applicants, such as in evaluating mutually 
exclusive applications pursuant to subpart K of part 73.

    Note 1 to Sec.  73.3555: The words ``cognizable interest'' as 
used herein include any interest, direct or indirect, that allows a 
person or entity to own, operate or control, or that otherwise 
provides an attributable interest in, a broadcast station.


    Note 2 to Sec.  73.3555: In applying the provisions of this 
section, ownership and other interests in broadcast licensees, cable 
television systems and daily newspapers will be attributed to their 
holders and deemed cognizable pursuant to the following criteria:

    a. Except as otherwise provided herein, partnership and direct 
ownership interests and any voting stock interest amounting to 5% or 
more of the outstanding voting stock of a corporate broadcast licensee, 
cable television system or daily newspaper will be cognizable;
    b. Investment companies, as defined in 15 U.S.C. 80a-3, insurance 
companies and banks holding stock through their trust departments in 
trust accounts will be considered to have a cognizable interest only if 
they hold 20% or more of the outstanding voting stock of a corporate 
broadcast licensee, cable television system or daily newspaper, or if 
any of the officers or directors of the broadcast licensee, cable 
television system or daily newspaper are representatives of the 
investment company, insurance company or bank concerned. Holdings by a 
bank or insurance company will be aggregated if the bank or insurance 
company has any right to determine how the stock will be voted. 
Holdings by investment companies will be aggregated if under common 
management.
    c. Attribution of ownership interests in a broadcast licensee, 
cable television system or daily newspaper that are held indirectly by 
any party through one or more intervening corporations will be 
determined by successive multiplication of the ownership percentages 
for each link in the vertical ownership chain and application of the 
relevant attribution benchmark to the resulting product, except that 
wherever the ownership percentage for any link in the chain exceeds 
50%, it shall not be included for purposes of this multiplication. For 
purposes of paragraph i. of this note, attribution of ownership 
interests in a broadcast licensee, cable television system or daily 
newspaper that are held indirectly by any party through one or more 
intervening organizations will be determined by successive 
multiplication of the ownership percentages for each link in the 
vertical ownership chain and application of the relevant attribution 
benchmark to the resulting product, and the ownership percentage for 
any link in the chain that exceeds 50% shall be included for purposes 
of this multiplication. [For example, except for purposes of paragraph 
(i) of this note, if A owns 10% of company X, which owns 60% of company 
Y, which owns 25% of ``Licensee,'' then X's interest in ``Licensee'' 
would be 25% (the same as Y's interest because X's interest in Y 
exceeds 50%), and A's interest in ``Licensee'' would be 2.5% (0.1 x 
0.25). Under the 5% attribution benchmark, X's interest in ``Licensee'' 
would be cognizable, while A's interest would not

[[Page 9490]]

be cognizable. For purposes of paragraph i. of this note, X's interest 
in ``Licensee'' would be 15% (0.6 x 0.25) and A's interest in 
``Licensee'' would be 1.5% (0.1 x 0.6 x 0.25). Neither interest would 
be attributed under paragraph i. of this note.]
    d. Voting stock interests held in trust shall be attributed to any 
person who holds or shares the power to vote such stock, to any person 
who has the sole power to sell such stock, and to any person who has 
the right to revoke the trust at will or to replace the trustee at 
will. If the trustee has a familial, personal or extra-trust business 
relationship to the grantor or the beneficiary, the grantor or 
beneficiary, as appropriate, will be attributed with the stock 
interests held in trust. An otherwise qualified trust will be 
ineffective to insulate the grantor or beneficiary from attribution 
with the trust's assets unless all voting stock interests held by the 
grantor or beneficiary in the relevant broadcast licensee, cable 
television system or daily newspaper are subject to said trust.
    e. Subject to paragraph i. of this note, holders of non-voting 
stock shall not be attributed an interest in the issuing entity. 
Subject to paragraph i. of this note, holders of debt and instruments 
such as warrants, convertible debentures, options or other non-voting 
interests with rights of conversion to voting interests shall not be 
attributed unless and until conversion is effected.
    f. 1. A limited partnership interest shall be attributed to a 
limited partner unless that partner is not materially involved, 
directly or indirectly, in the management or operation of the media-
related activities of the partnership and the licensee or system so 
certifies. An interest in a Limited Liability Company (``LLC'') or 
Registered Limited Liability Partnership (``RLLP'') shall be attributed 
to the interest holder unless that interest holder is not materially 
involved, directly or indirectly, in the management or operation of the 
media-related activities of the partnership and the licensee or system 
so certifies.
    2. For a licensee or system that is a limited partnership to make 
the certification set forth in paragraph f. 1. of this note, it must 
verify that the partnership agreement or certificate of limited 
partnership, with respect to the particular limited partner exempt from 
attribution, establishes that the exempt limited partner has no 
material involvement, directly or indirectly, in the management or 
operation of the media activities of the partnership. For a licensee or 
system that is an LLC or RLLP to make the certification set forth in 
paragraph f. 1. of this note, it must verify that the organizational 
document, with respect to the particular interest holder exempt from 
attribution, establishes that the exempt interest holder has no 
material involvement, directly or indirectly, in the management or 
operation of the media activities of the LLC or RLLP. The criteria 
which would assume adequate insulation for purposes of this 
certification are described in the Memorandum Opinion and Order in MM 
Docket No. 83-46, FCC 85-252 (released June 24, 1985), as modified on 
reconsideration in the Memorandum Opinion and Order in MM Docket No. 
83-46, FCC 86-410 (released November 28, 1986). Irrespective of the 
terms of the certificate of limited partnership or partnership 
agreement, or other organizational document in the case of an LLC or 
RLLP, however, no such certification shall be made if the individual or 
entity making the certification has actual knowledge of any material 
involvement of the limited partners, or other interest holders in the 
case of an LLC or RLLP, in the management or operation of the media-
related businesses of the partnership or LLC or RLLP.
    3. In the case of an LLC or RLLP, the licensee or system seeking 
insulation shall certify, in addition, that the relevant state statute 
authorizing LLCs permits an LLC member to insulate itself as required 
by our criteria.
    g. Officers and directors of a broadcast licensee, cable television 
system or daily newspaper are considered to have a cognizable interest 
in the entity with which they are so associated. If any such entity 
engages in businesses in addition to its primary business of 
broadcasting, cable television service or newspaper publication, it may 
request the Commission to waive attribution for any officer or director 
whose duties and responsibilities are wholly unrelated to its primary 
business. The officers and directors of a parent company of a broadcast 
licensee, cable television system or daily newspaper, with an 
attributable interest in any such subsidiary entity, shall be deemed to 
have a cognizable interest in the subsidiary unless the duties and 
responsibilities of the officer or director involved are wholly 
unrelated to the broadcast licensee, cable television system or daily 
newspaper subsidiary, and a statement properly documenting this fact is 
submitted to the Commission. [This statement may be included on the 
appropriate Ownership Report.] The officers and directors of a sister 
corporation of a broadcast licensee, cable television system or daily 
newspaper shall not be attributed with ownership of these entities by 
virtue of such status.
    h. Discrete ownership interests will be aggregated in determining 
whether or not an interest is cognizable under this section. An 
individual or entity will be deemed to have a cognizable investment if:
    1. The sum of the interests held by or through ``passive 
investors'' is equal to or exceeds 20 percent; or
    2. The sum of the interests other than those held by or through 
``passive investors'' is equal to or exceeds 5 percent; or
    3. The sum of the interests computed under paragraph h. 1. of this 
note plus the sum of the interests computed under paragraph h. 2. of 
this note is equal to or exceeds 20 percent.
    i. Notwithstanding paragraphs e. and f. of this note, the holder of 
an equity or debt interest or interests in a broadcast licensee, cable 
television system, daily newspaper, or other media outlet subject to 
the broadcast multiple ownership or cross-ownership rules (``interest 
holder'') shall have that interest attributed if:
    1. The equity (including all stockholdings, whether voting or 
nonvoting, common or preferred) and debt interest or interests, in the 
aggregate, exceed 33 percent of the total asset value, defined as the 
aggregate of all equity plus all debt, of that media outlet; and
    2. i. The interest holder also holds an interest in a broadcast 
licensee, cable television system, newspaper, or other media outlet 
operating in the same market that is subject to the broadcast multiple 
ownership or cross-ownership rules and is attributable under paragraphs 
of this note other than this paragraph (i); or
    ii. The interest holder supplies over fifteen percent of the total 
weekly broadcast programming hours of the station in which the interest 
is held. For purposes of applying this paragraph, the term, ``market,'' 
will be defined as it is defined under the specific multiple or cross-
ownership rule that is being applied, except that for television 
stations, the term ``market,'' will be defined by reference to the 
definition contained in the local television multiple ownership rule 
contained in paragraph (b) of this section.
    j. ``Time brokerage'' (also known as ``local marketing'') is the 
sale by a licensee of discrete blocks of time to a ``broker'' that 
supplies the programming to fill that time and sells the commercial 
spot announcements in it.
    1. Where two radio stations are both located in the same market, as 
defined

[[Page 9491]]

for purposes of the local radio ownership rule contained in paragraph 
(a) of this section, and a party (including all parties under common 
control) with a cognizable interest in one such station brokers more 
than 15 percent of the broadcast time per week of the other such 
station, that party shall be treated as if it has an interest in the 
brokered station subject to the limitations set forth in paragraphs 
(a), (c), and (d) of this section. This limitation shall apply 
regardless of the source of the brokered programming supplied by the 
party to the brokered station.
    2. Where two television stations are both located in the same 
market, as defined in the local television ownership rule contained in 
paragraph (b) of this section, and a party (including all parties under 
common control) with a cognizable interest in one such station brokers 
more than 15 percent of the broadcast time per week of the other such 
station, that party shall be treated as if it has an interest in the 
brokered station subject to the limitations set forth in paragraphs 
(b), (c), (d) and (e) of this section. This limitation shall apply 
regardless of the source of the brokered programming supplied by the 
party to the brokered station.
    3. Every time brokerage agreement of the type described in this 
Note shall be undertaken only pursuant to a signed written agreement 
that shall contain a certification by the licensee or permittee of the 
brokered station verifying that it maintains ultimate control over the 
station's facilities including, specifically, control over station 
finances, personnel and programming, and by the brokering station that 
the agreement complies with the provisions of paragraphs (b), (c), and 
(d) of this section if the brokering station is a television station or 
with paragraphs (a), (c), and (d) of this section if the brokering 
station is a radio station.
    k. ``Joint Sales Agreement'' is an agreement with a licensee of a 
``brokered station'' that authorizes a ``broker'' to sell advertising 
time for the ``brokered station.''
    1. Where two radio stations are both located in the same market, as 
defined for purposes of the local radio ownership rule contained in 
paragraph (a) of this section, and a party (including all parties under 
common control) with a cognizable interest in one such station sells 
more than 15 percent of the advertising time per week of the other such 
station, that party shall be treated as if it has an interest in the 
brokered station subject to the limitations set forth in paragraphs 
(a), (c), and (d) of this section.
    2. Every joint sales agreement of the type described in this Note 
shall be undertaken only pursuant to a signed written agreement that 
shall contain a certification by the licensee or permittee of the 
brokered station verifying that it maintains ultimate control over the 
station's facilities, including, specifically, control over station 
finances, personnel and programming, and by the brokering station that 
the agreement complies with the limitations set forth in paragraphs 
(a), (c), and (d) of this section.

    Note 3 to Sec.  73.3555: In cases where record and beneficial 
ownership of voting stock is not identical (e.g., bank nominees 
holding stock as record owners for the benefit of mutual funds, 
brokerage houses holding stock in street names for the benefit of 
customers, investment advisors holding stock in their own names for 
the benefit of clients, and insurance companies holding stock), the 
party having the right to determine how the stock will be voted will 
be considered to own it for purposes of these rules.


    Note 4 to Sec.  73.3555: Paragraphs (a) through (d) of this 
section will not be applied so as to require divestiture, by any 
licensee, of existing facilities, and will not apply to applications 
for assignment of license or transfer of control filed in accordance 
with Sec.  73.3540(f) or Sec.  73.3541(b), or to applications for 
assignment of license or transfer of control to heirs or legatees by 
will or intestacy, if no new or increased concentration of ownership 
would be created among commonly owned, operated or controlled media 
properties. Paragraphs (a) through (d) of this section will apply to 
all applications for new stations, to all other applications for 
assignment or transfer, to all applications for major changes to 
existing stations, and to applications for minor changes to existing 
stations that implement an approved change in an FM radio station's 
community of license or create new or increased concentration of 
ownership among commonly owned, operated or controlled media 
properties. Commonly owned, operated or controlled media properties 
that do not comply with paragraphs (a) through (d) of this section 
may not be assigned or transferred to a single person, group or 
entity, except as provided in this Note or in the Report and Order 
in Docket No. 02-277, released July 2, 2003 (FCC 02-127).


    Note 5 to Sec.  73.3555: Paragraphs (b) through (e) of this 
section will not be applied to cases involving television stations 
that are ``satellite'' operations. Such cases will be considered in 
accordance with the analysis set forth in the Report and Order in MM 
Docket No. 87-8, FCC 91-182 (released July 8, 1991), in order to 
determine whether common ownership, operation, or control of the 
stations in question would be in the public interest. An authorized 
and operating ``satellite'' television station, the Grade B contour 
of which overlaps that of a commonly owned, operated, or controlled 
``non-satellite'' parent television broadcast station, or the Grade 
A contour of which completely encompasses the community of 
publication of a commonly owned, operated, or controlled daily 
newspaper, or the community of license of a commonly owned, 
operated, or controlled AM or FM broadcast station, or the community 
of license of which is completely encompassed by the 2 mV/m contour 
of such AM broadcast station or the 1 mV/m contour of such FM 
broadcast station, may subsequently become a ``non-satellite'' 
station under the circumstances described in the aforementioned 
Report and Order in MM Docket No. 87-8. However, such commonly 
owned, operated, or controlled ``non-satellite'' television stations 
and AM or FM stations with the aforementioned community 
encompassment, may not be transferred or assigned to a single 
person, group, or entity except as provided in Note 4 of this 
section. Nor shall any application for assignment or transfer 
concerning such ``non-satellite'' stations be granted if the 
assignment or transfer would be to the same person, group or entity 
to which the commonly owned, operated, or controlled newspaper is 
proposed to be transferred, except as provided in Note 4 of this 
section.


    Note 6 to Sec.  73.3555: For purposes of this section a daily 
newspaper is one which is published four or more days per week, 
which is in the dominant language in the market, and which is 
circulated generally in the community of publication. A college 
newspaper is not considered as being circulated generally.


    Note 7 to Sec.  73.3555: The Commission will entertain 
applications to waive the restrictions in paragraph (b) and (c) of 
this section (the local television ownership rule and the radio/
television cross-ownership rule) on a case-by-case basis. In each 
case, we will require a showing that the in-market buyer is the only 
entity ready, willing, and able to operate the station, that sale to 
an out-of-market applicant would result in an artificially depressed 
price, and that the waiver applicant does not already directly or 
indirectly own, operate, or control interest in two television 
stations within the relevant DMA. One way to satisfy these criteria 
would be to provide an affidavit from an independent broker 
affirming that active and serious efforts have been made to sell the 
permit, and that no reasonable offer from an entity outside the 
market has been received.
    We will entertain waiver requests as follows:
    1. If one of the broadcast stations involved is a ``failed'' 
station that has not been in operation due to financial distress for 
at least four consecutive months immediately prior to the 
application, or is a debtor in an involuntary bankruptcy or 
insolvency proceeding at the time of the application.
    2. For paragraph (b) of this section only, if one of the 
television stations involved is a ``failing'' station that has an 
all-day audience share of no more than four per cent; the station 
has had negative cash flow for three consecutive years immediately 
prior to the application; and consolidation of the two stations 
would result in tangible and

[[Page 9492]]

verifiable public interest benefits that outweigh any harm to 
competition and diversity.
    3. For paragraph (b) of this section only, if the combination 
will result in the construction of an unbuilt station. The permittee 
of the unbuilt station must demonstrate that it has made reasonable 
efforts to construct but has been unable to do so.


    Note 8 to Sec.  73.3555: Paragraph (a)(1) of this section will 
not apply to an application for an AM station license in the 535-
1605 kHz band where grant of such application will result in the 
overlap of 5 mV/m groundwave contours of the proposed station and 
that of another AM station in the 535-1605 kHz band that is commonly 
owned, operated or controlled if the applicant shows that a 
significant reduction in interference to adjacent or co-channel 
stations would accompany such common ownership. Such AM overlap 
cases will be considered on a case-by-case basis to determine 
whether common ownership, operation or control of the stations in 
question would be in the public interest. Applicants in such cases 
must submit a contingent application of the major or minor 
facilities change needed to achieve the interference reduction along 
with the application which seeks to create the 5 mV/m overlap 
situation.


    Note 9 to Sec.  73.3555: Paragraph (a)(1) of this section will 
not apply to an application for an AM station license in the 1605-
1705 kHz band where grant of such application will result in the 
overlap of the 5 mV/m groundwave contours of the proposed station 
and that of another AM station in the 535-1605 kHz band that is 
commonly owned, operated or controlled. Paragraphs (d)(1)(i) and 
(d)(1)(ii) of this section will not apply to an application for an 
AM station license in the 1605-1705 kHz band by an entity that owns, 
operates, controls or has a cognizable interest in AM radio stations 
in the 535-1605 kHz band.


    Note 10 to Sec.  73.3555: Authority for joint ownership granted 
pursuant to Note 9 will expire at 3 a.m. local time on the fifth 
anniversary for the date of issuance of a construction permit for an 
AM radio station in the 1605-1705 kHz band.

[FR Doc. E8-3133 Filed 2-20-08; 8:45 am]
BILLING CODE 6712-01-P