[Federal Register Volume 74, Number 209 (Friday, October 30, 2009)]
[Rules and Regulations]
[Pages 56131-56135]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-26071]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 73

[MB Docket Nos. 07-294; 06-121; 02-277; 04-228; MM Docket Nos. 01-235; 
01-317; 00-244; FCC 09-92]


Promoting Diversification of Ownership in the Broadcasting 
Services

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: This document reconsiders the requirement that licensees 
report certain nonattributable interests on FCC Form 323, Ownership 
Report for Commercial Broadcast Stations. Therefore, entities will not 
have to report these interests biennially on Form 323. The Commission 
reaffirms all other changes it made to the FCC Form 323 in the 323 
Order.

DATES: The rule in this document contains information collection 
requirements that have been approved by the Office of Management and 
Budget (OMB). The rule will become effective upon publication of a 
document in the Federal Register announcing the OMB approval.

FOR FURTHER INFORMATION CONTACT: Mania Baghdadi, (202) 418-2330, Amy 
Brett, (202) 418-2300.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's 
Memorandum Opinion and Order in MB Docket Nos. 07-294; 06-121; 02-277; 
04-228; MM Docket Nos. 01-235; 01-317; 00-244, FCC 09-92, adopted

[[Page 56132]]

October 15, 2009 and released October 16, 2009. 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.

Summary of the Memorandum Opinion and Order

    1. In the MO&O, the Commission grants the National Association of 
Broadcaster's (NAB) Petition for Reconsideration to the extent that it 
requests reconsideration of the requirement that licensees report 
certain nonattributable interests. Otherwise, the Commission denies 
NAB's Petition, specifically its request to reconsider the requirement 
that sole proprietors file Form 323 ownership reports biennially. The 
Commission dismisses David Wilson's Petition for Reconsideration of the 
same requirement as repetitious.
    2. The MO&O is an order on reconsideration of the 323 Order, in 
which the Commission adopted changes to the commercial broadcast 
ownership reporting requirements and delegated authority to the Media 
Bureau to revise FCC Form 323 accordingly. The Commission adopted these 
changes to increase the accuracy and comprehensiveness of the minority 
and female ownership data collected and to address other flaws in the 
data collection process as identified by the United States Government 
Accountability Office and by study authors who have attempted to use 
the current data to analyze broadcast ownership issues. Among other 
things, the Commission required sole proprietors and partnerships 
composed of natural persons to file Form 323 biennially, and it 
expanded the reporting requirement to include interests that are not 
attributable because of: (a) The single majority shareholder exemption; 
and (b) the exemption for interests held in eligible entities that 
would be attributable but for the higher Equity/Debt Plus (``EDP'') 
thresholds adopted in the Diversity Order for certain investments in 
eligible entities.
    3. The Commission ratifies the Media Bureau's extension of the date 
for commercial licensees to file their initial biennial ownership 
reports on the new Form 323 to a date that is no earlier than 30 days 
after public notice of approval by OMB of the revised Form, with data 
current as of November 1, 2009. In the 323 Order, the Commission 
adopted a November 1, 2009 initial biennial filing date, requiring data 
to be current as of October 1, 2009. The deferral gives licensees and 
other entities sufficient time to review the new form and gather the 
necessary information. The extension of these deadlines will apply only 
to the initial filing. Beginning with the 2011 filing, the form must be 
filed no later than November 1 with data current as of October 1 of the 
filing year.
    4. In the 323 Order, the Commission decided to require broadcasters 
to report every two years, on Form 323, information on entities with 
financial interests that would be attributable (1) but for the single 
majority shareholder attribution exemption or (2) the higher Equity/
Debt Plus threshold adopted in the Diversity Order for purposes of 
attributing certain interests in eligible entities. NAB states that the 
Commission did not provide notice on this issue and that the record 
therefore lacks information as to potential harms or benefits of this 
new filing requirement. NAB expresses doubt that information from 
nonattributable entities will provide the Commission with any useful 
information on the current status of minority and female ownership of 
broadcast stations. NAB states that, by excluding these interests from 
its attribution rules, the Commission has already determined that such 
interests fail to confer sufficient influence over a licensee's 
operations. Therefore, NAB questions how the ownership information will 
further the Commission's stated goals. NAB is concerned that the 
reporting requirement will deter investment in the broadcast industry. 
If the Commission affirms its decision, NAB asks that reporting be 
limited to race, gender, and ownership percentage of the 
nonattributable investors, rather than full reporting of their names, 
addresses, familial relationships, and other media holdings.
    5. Upon reconsideration, the Commission will delete the requirement 
that these two types of nonattributable interests be reported and 
modifies 73.3615 of the Commission's rules, accordingly. In the 323 
Order, the Commission sought to revise Form 323 to ``obtain an 
accurate, reliable, and comprehensive assessment of minority and female 
broadcast ownership in the United States.'' The Commission concluded 
that gathering race, ethnicity, and gender data on the holders of these 
two types of interests would be useful in achieving this goal. While 
the Commission believes that this reporting requirement is a logical 
outgrowth of the Third Further Notice, it acknowledges that its 
intention to impose the requirement was not explicitly stated and notes 
that no comments specifically addressed the reporting of 
nonattributable interests. Therefore, the Commission separately issues 
a Further Notice to invite additional comment on this issue in order to 
obtain a complete record.
    6. NAB also asks the Commission to reconsider the requirement that 
sole proprietors file ownership reports biennially. NAB also objects to 
sole proprietors having to update or refile after the initial filing on 
the new form. NAB is concerned that the biennial filing requirement 
will place a significant financial burden on sole proprietors, who may 
lack legal counsel or the personnel to track filing deadlines and other 
compliance matters. Instead, NAB proposes that the Commission 
incorporate in the database the most recently filed Form 323 for each 
licensee sole proprietor. NAB contends that the ownership report on 
file will provide current information on race, ethnicity, and gender, 
as these characteristics would not change over time. UCC disagrees with 
NAB that requiring sole proprietors to file Form 323 biennially creates 
significant burdens. UCC does not oppose NAB's suggestion that sole 
proprietors be allowed to link back to previously filed ownership 
reports, so long as the data ``quality, accuracy, accessibility and 
ease of use'' is not compromised.
    7. The Commission reaffirms its decision to require sole 
proprietors to file Form 323 biennially. The revised Form 323 is 
intended to improve the quality, accuracy, and reliability of the 
information gathered over that collected in the old form, and it 
addresses the GAO Report and researcher's criticism that the existing 
data is difficult to aggregate and summarize. Pursuant to delegated 
authority, the Media Bureau revised and improved the instructions and 
questions in all sections of the form in order to: (1) Clarify the 
information sought in the form; (2) ensure that the data are collected 
in formats that can be easily incorporated in database programs used to 
prepare economic and policy studies and are not provided in unusable 
narrative exhibits; and (3) simplify completion of the form by giving 
respondents menu-style or checkbox-style options to enter data.
    To further improve the ability of researchers and other users of 
the data to cross-reference information and construct complete 
ownership structures, the Media Bureau also is requiring each filing 
entity, including sole proprietors, to obtain a unique FCC

[[Page 56133]]

Registration Number (FRN) and to report the FRNs of entities one step 
above and one step below it in the ownership chain and to identify the 
FRNs of its attributable officers, directors, and shareholders. The 
uniform filing date and a uniform date ``as of'' which the data being 
reported must be accurate will allow comparisons of snapshots of all 
firms at uniform points in time and will facilitate long-term 
comparative studies of ownership.
    8. Under NAB's approach, none of the ownership data on sole 
proprietors that would be included in the database immediately 
following the initial filing date would be submitted in the research-
friendly format of the revised form, nor would it pass through the 
built-in quality control mechanisms in the revised form, and its 
submission would not be informed by the significantly improved 
instructions that are incorporated in the revised form. Absent the 
biennial filing requirement, it could be literally years before some 
sole proprietors would submit an ownership report using the non-
biennial form, and even then race, ethnicity, and gender data would not 
be reported because, as a result of revisions made to the form pursuant 
to the 323 Order, non-biennial filers will not be required to provide 
this information. The Commission rejects NAB's approach that sole 
proprietors not update or refile after the initial filing on the new 
form. The biennial filing requirement will ensure that sole 
proprietors, like other filers, review and verify that the data on file 
are current. The verification process will greatly benefit efforts to 
improve the accuracy and reliability of the data collection. Without a 
periodical certification that the information is accurate, the 
Commission must assume that a lack of a filing constitutes a licensee's 
assurance that its information is current. However, the absence of a 
filing also could mean that the licensee failed to file a report, even 
though its ownership information had changed. The information could be 
out of date, and the Commission and public would have no assurance to 
the contrary.
    9. The Commission also disagrees that the biennial filing 
requirement places an undue burden on sole proprietors. These licensees 
each have only one principal, therefore, determination of the relevant 
information should be a simple process. After the initial filing, these 
licensees, with current reports on file, simply must recertify, once 
every two years that they have reviewed their current reports and that 
they are accurate. Using the Commission's electronic filing system, a 
filer will launch a pre-filled form that already contains the 
information from its previously submitted Form 323. If all of the 
information is up to date, sole proprietors would then simply sign and 
electronically submit the pre-filled form. No additional data must be 
entered.

Final Paperwork Reduction Analysis

    10. The MO&O contains revised information collection requirements 
subject to the Paperwork Reduction Act of 1995, Public Law 104-13. The 
revised information collection requirements will have the effect of 
reducing the paperwork burden. On August 11, 2009, the Commission 
submitted to the Office of Management and Budget (OMB) for review under 
Section 3507(d) of the PRA, the modified information collections 
pursuant to the 323 Order and published a notice in the Federal 
Register seeking comments on the August 11 submission. Due to public 
comments that were received with respect to FCC Form 323, the 
Commission further revised the information collection requirements that 
were contained in the 323 Order and amended the supporting statement 
and adjusted the burden hours and costs based on the revised 
information collection requirements contained in the MO&O.

Final Regulatory Flexibility Analysis

    11. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), prepared a Supplemental Final Regulatory Flexibility 
Analysis (Supplemental FRFA). The Supplemental FRFA addresses only the 
matters considered on reconsideration in this MO&O.

A. Need for, and Objectives of, the MO&O

    12. The MO&O reaffirms its earlier conclusions in the 323 Order, 
except for one decision. In the 323 Order, the Commission decided to 
require broadcasters to report on Form 323 certain nonattributable 
interests and to require entities holding nonattributable interests to 
file Form 323. Specifically, the Commission required broadcasters to 
report every two years on Form 323 information on entities with 
financial interests that would be attributable (1) but for the single 
majority shareholder attribution exemption or (2) the higher Equity/
Debt Plus threshold adopted in the Diversity Order for purposes of 
attributing certain interests in eligible entities. In addition, every 
two years, entities holding these interests would have to file Form 
323. The 323 Order revised 47 CFR 73.3615 to implement this change. On 
reconsideration, the Commission determined that because no comments 
were filed on this issue, the record may not be complete. Therefore, 
the Commission will not require broadcasters to report these interests 
and will not require entities holding these interests to file Form 323. 
Instead, the Commission is issuing a further notice of proposed 
rulemaking to seek comment on this issue.

B. Legal Basis

    13. This MO&O is adopted pursuant to 47 U.S.C. 151, 152(a), 154(i)-
(j), 257, and 303(r).

C. Summary of Significant Issues Raised by Public Comments in Response 
to the FRFA

    14. The Commission received no comments in direct response to the 
FRFA. No commenters addressed the impact of this reporting requirement 
on small entities in their comments generally.

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

    15. 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.
    16. 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 $14 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 August 14, 2009, about 923 
(72 percent) of the 1,289 commercial television stations in the United 
States have revenues of $14 million or less. The FCC notes that in 
assessing whether a business entity qualifies as small under the above

[[Page 56134]]

definition, business control affiliations must be included. The 
estimate, therefore, likely overstates the number of small entities 
that might be affected by any changes to the filing requirements for 
FCC Form 323, because the revenue figures on which this estimate is 
based do not include or aggregate revenues from affiliated companies.
    17. 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.
    18. Radio Broadcasting. The Small Business Administration defines a 
radio broadcasting entity that has $7 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 
August 14, 2009, about 10,660 (96 percent) of 11,100 commercial radio 
stations in the United States have revenues of $7 million or less. The 
FCC notes that in assessing whether a business entity qualifies as 
small under the above definition, business control affiliations must be 
included. The 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.
    19. 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. The FCC is 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. 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.
    20. Class A TV and LPTV stations. The rules and policies adopted 
herein apply to licensees of Class A TV stations and low power 
television (``LPTV'') stations, as well as to potential licensees in 
these television services. The same SBA definition that applies to 
television broadcast licensees would apply to these stations. The SBA 
defines a television broadcast station as a small business if such 
station has no more than $14.0 million in annual receipts. As of June 
30, 2009, there are approximately 553 licensed Class A stations and 
2,386 licensed LPTV stations. Given the nature of these services, the 
FCC presumes that all of these licensees qualify as small entities 
under the SBA definition. However, under the SBA's definition, revenue 
of affiliates that are not LPTV stations should be aggregated with the 
LPTV station revenues in determining whether a concern is small. The 
estimate may thus overstate the number of small entities since the 
revenue figure on which it is based does not include or aggregate 
revenues from non-LPTV affiliated companies.

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

    21. The MO&O eliminates one of the reporting, recordkeeping and 
compliance requirements adopted in the 323 Order. Licensees will not be 
required to report holders of two classes of nonattributable ownership 
interests: (1) Equity interests in a licensee that would be 
attributable but for the single majority shareholder exemption and (2) 
interests that would be attributable but for the higher Equity/Debt 
Plus thresholds adopted in the Diversity Order for purposes of 
determining attribution of certain interests in eligible entities. 
Thus, the FCC has reduced the reporting and recordkeeping requirements 
associated with this form.

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

    22. 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 and 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.
    23. On reconsideration, the Commission reversed its decision in the 
323 Order to require reporting of certain nonattributable interests. 
The FCC believes that it is preferable to seek additional comment on 
this issue in a further notice of proposed rulemaking to develop a full 
record on this issue, and not require broadcasters to file this 
information based on the current record in this proceeding. The MO&O 
reduces the burdens on small entities because these entities will not 
have to report on certain nonattributable interests and holders of 
those interests will not have to file Form 323 every two years.

G. Report to Congress

    24. The Commission will send a copy of the MO&O, including the 
Supplemental FRFA, in a report to Congress and the Government 
Accountability Office, pursuant to the Congressional Review Act. In 
addition, the Commission will send a copy of the MO&O, including the 
Supplemental FRFA, 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 Rule

0
For the reasons stated 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 continues to read as follows:

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


0
2. Section 73.3615 is amended by revising paragraph (a) introductory 
text to read as follows:

[[Page 56135]]

Sec.  73.3615  Ownership reports.

    (a) The Ownership Report for Commercial Broadcast Stations (FCC 
Form 323) must be electronically filed every two years by each licensee 
of a commercial AM, FM, or TV broadcast station (a ``Licensee''); and 
each entity that holds an interest in the licensee that is attributable 
for purposes of determining compliance with the Commission's multiple 
ownership rules (see Notes 1-3 to 47 CFR 73.3555) (a ``Respondent''). 
The initial filing deadline shall be set by Public Notice issued by the 
Media Bureau. Thereafter, the Form shall be filed biennially by 
November 1, 2011, and every two years thereafter. A Licensee or 
Respondent with a current and unamended Report on file at the 
Commission, which was filed on or by the initial filing date or 
thereafter, using the Form revised pursuant to the Commission's Orders 
in MB Docket Nos. 07-294, et al., 24 FCC Rcd 5896 (2009) (FCC 09-92, 
rel. Oct. 16, 2009), and which is still accurate, may electronically 
validate and resubmit its previously filed Form 323. Ownership Reports 
shall provide the following information as of October 1 of the year in 
which the Report is filed, except that the Form filed by the initial 
filing date shall provide the following information as of November 1, 
2009:
* * * * *
[FR Doc. E9-26071 Filed 10-29-09; 8:45 am]
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