[Federal Register Volume 78, Number 239 (Thursday, December 12, 2013)]
[Notices]
[Pages 75563-75568]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-29698]


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FEDERAL COMMUNICATIONS COMMISSION

[MB Docket No. 13-50; FCC No. 13-150]


Commission Policies and Procedures Under the Communications Act, 
Foreign Investment in Broadcast Licensees

AGENCY: Federal Communications Commission.

ACTION: Notice.

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SUMMARY: This Declaratory Ruling is intended to remove apparent 
uncertainty regarding Commission policies and procedures in reviewing 
broadcast applications for transfer of control, or requests for 
declaratory ruling, that seek greater than 25 percent indirect foreign 
ownership in the controlling U.S. parents of broadcast licensees 
pursuant to the Communications Act of 1934. The ruling clarifies that 
the Commission intends to evaluate any applications or proposed 
transactions that would exceed the statutory 25 percent benchmark on a 
case-by-case basis. The Declaratory Ruling responds to a request from a 
broad coalition of interested parties, including broadcasters, public 
interest groups and the financial sector, that the Commission clarify 
that it intends to exercise its statutory discretion to conduct a 
substantive, facts and circumstances evaluation of proposals seeking 
above-the-benchmark foreign investment.

FOR FURTHER INFORMATION CONTACT: Jamila Bess Johnson, Media Bureau 
(202) 418-2608, or email at [email protected].

SUPPLEMENTARY INFORMATION: This Declaratory Ruling in MB Docket No. 13-
50, FCC 13-150, was adopted and released on November 14, 2013. The 
complete text of the document is available for inspection and copying 
during normal business hours in the FCC Reference Center, 445 12th 
Street SW., Washington, DC 20554, and may also be purchased from the 
Commission's copy contractor, BCPI, Inc., Portals II, 445 12th Street 
SW., Washington, DC 20554. Customers may contact BCPI, Inc. at their 
Web site http://www.bcpi.com or call 1-800-378-3160. This document is 
also available on the Commission's Web site at http://fcc.gov.

Synopsis of the Declaratory Ruling

I. Introduction

    1. This Declaratory Ruling issued pursuant to Sec.  1.2 of the 
Commission's rules \1\ is intended to remove apparent uncertainty about 
the Commission's policies and procedures for evaluating potential 
foreign investment in broadcast licensees under section 310(b)(4) of 
the Communications Act of 1934, as amended (the Act).\2\ That section 
restricts foreign ownership or voting interests exceeding 25 percent of 
the capital stock in U.S.-organized entities that control broadcast 
(and certain other types of) Commission licensees, when the Commission 
finds that the imposition of such a limitation is in the public 
interest. As noted below, broadcasters, public interest groups, and 
others have expressed the view that it would be in the public interest 
to increase access to capital and investment financing for the 
broadcast sector. These parties assert that, as they read Commission 
precedent, the application of section 310(b)(4) to broadcast licensees 
has restricted the flow of foreign capital to domestic broadcast 
licensees or to entities interested in entering the broadcast

[[Page 75564]]

industry. They assert that foreign sources of capital would be 
available to broadcasters if section 310(b)(4) were not applied to 
block access to those sources. Some parties further believe that the 
benefits of increased capital from foreign investors would assist, 
among other beneficiaries, minorities, women, and small broadcast 
entities, for which access to capital is a particular impediment to 
market entry. In light of these stated concerns, we believe it useful 
to articulate and clarify the Commission's policies and procedures in 
reviewing applications or proposed transactions that propose foreign 
broadcast ownership that would exceed the 25 percent benchmark 
contained in section 310(b)(4) and to assure the broadcast industry and 
potential foreign investors that the Commission intends to consider 
such matters on a case-by-case basis.
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    \1\ 47 CFR 1.2. See also 5 U.S.C. 554(e).
    \2\ 47 U.S.C. 310(b)(4).
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II. Background

    2. The Act's foreign ownership restrictions were originally 
conceived to address homeland security interests during wartime. They 
were designed to protect the integrity of ship-to-shore and 
governmental communications and thwart the airing of foreign propaganda 
on broadcast stations.\3\ Nevertheless, those statutory provisions have 
always provided the Commission with the discretion to approve foreign 
ownership in broadcast licensees in excess of the 25 percent benchmark. 
Section 310 currently states in pertinent part:
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    \3\ See, e.g., Radio Communications: Hearing on S. 3620 and S. 
5334 Before the House Commerce Committee, 62nd Cong 35-37 (Mar. 1, 
1912) (adopting predecessor language to section 310). See also Fox 
Television Stations, Inc., 10 FCC Rcd 8452 (1995) (Fox I); Wilner & 
Scheiner, Request for Declaratory Ruling Concerning the Citizenship 
Requirements of Section 310(b)(3) and (4) of the Communications Act 
of 1934, 103 FCC 2d 511, 516-17 (stating that . . . Section 310(b) 
reflects the broader purpose of `safeguard[ing] the United States 
from foreign influence' in the field of broadcasting. The specific 
citizenship requirements governing positional, ownership and voting 
interests reflect a deliberate judgment on the part of Congress as 
to the limitations necessary to prevent undue alien influence in 
broadcasting.) (1985) (Wilner & Scheiner); Request for Declaratory 
Ruling Concerning section 310(a)(5) of the Communications Act, 67 
FCC 2d 604 (1974) (the prior section 310(a)(5) is now section 
310(b)(4)). See also Letter from Mace Rosenstein and Gerard J. 
Waldron, Counsel for the Coalition for Broadcast Investment (CBI), 
to Marlene H. Dortch, Secretary, Federal Communications Commission 
at 2 (Aug. 31, 2012) (CBI Request); Nexstar Broadcasting, Inc. 
Comments at 2 (Nexstar).

    (b) No broadcast or common carrier or aeronautical en route or 
aeronautical fixed radio station license shall be granted to or held 
by--* * * (4) any corporation directly or indirectly controlled by 
any other corporation of which more than one-fourth of the capital 
stock is owned of record or voted by aliens, their representatives, 
or by a foreign government or representative thereof, or by any 
corporation organized under the laws of a foreign country, if the 
Commission finds that the public interest will be served by the 
refusal or revocation of such license.\4\
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    \4\ 47 U.S.C. 310(b)(4). The officer and director thresholds 
originally contained in section 310(b)(4) were eliminated by Section 
403(k) of the Telecommunications Act of 1996, Public Law 104-104, 
110 Stat 56 (1996); see also Implementation of section 403(k) of the 
Telecommunications Act of 1996 (Citizenship Requirements), 61 CFR 
55579-01, Oct. 28, 1996 (FCC 96-396) (amending Commission rules, 47 
CFR parts 20, 21, 22 and 101 (Communications common carriers, 
Radio); and 47 CFR parts 24, 26, 80, 87, 90 and 100 (Radio).

    3. The Commission has traditionally viewed the 25 percent benchmark 
for foreign ownership and voting interests in U.S.-organized entities 
that control broadcast licensees as the presumptive limit consistent 
with the public interest.\5\ It has done so based on a determination 
that foreign ownership of broadcast stations presents different 
questions from those raised by foreign ownership in other types of 
radio spectrum licensees.\6\ The Commission's approach to the benchmark 
for foreign investments in broadcast licensees has reflected heightened 
concern for foreign influence over or control of [broadcast] licensees 
which exercise editorial discretion over the content of their 
transmissions.\7\ Over time, the Commission's approach to foreign 
investment in the common carrier context has resulted in the 
development of a body of precedent, rules, and procedures for 
transactions involving such carriers. The Commission has not been 
presented with a similar number of applications in the broadcast sector 
and therefore has not had the opportunity to develop its policies and 
procedures in this context.
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    \5\ Traditionally, the Commission has considered the type of 
radio license at issue in assessing whether foreign ownership in 
excess of the benchmark would serve the public interest. See, e.g., 
Review of Foreign Ownership Policies for Common Carrier and 
Aeronautical Radio Licensees under section 310(b)(4) of the 
Communications Act of 1934, As Amended, IB Docket No. 11-133, Notice 
of Proposed Rulemaking, FCC 11-121, 26 FCC Rcd 11703, 11704 n.3 
(2011) (Foreign Ownership NPRM) (noting that the Commission 
historically has recognized different policy concerns for foreign 
ownership in the U.S.-organized parents of broadcast licensees under 
section 310(b)(4)); Review of Foreign Ownership Policies for Common 
Carrier and Aeronautical Radio Licensees under Section 310(b)(4) of 
the Communications Act of 1934, As Amended, IB Docket No. 11-133, 
First Report and Order, FCC 12-93, 27 FCC Rcd 9832, 9834 n.11 (2012) 
(same) (Foreign Ownership First Report and Order); Review of Foreign 
Ownership Policies for Common Carrier and Aeronautical Radio 
Licensees under Section 310(b)(4) of the Communications Act of 1934, 
As Amended, IB Docket No. 11-133, Second Report and Order, FCC 13-
50, 28 FCC Rcd 5741, 5742 n.4 (2013) (Foreign Ownership Second 
Report and Order), citing to Foreign Ownership NPRM at 11704 n.3. 
For example, the Commission has noted common carrier radio licenses 
are passive in nature and confer no control over the content of 
transmissions. Broadcast transmissions have been found to present 
additional national security concerns because they implicate 
content. See, e.g., Foreign Ownership NPRM, 26 FCC Rcd at 11704 n.3, 
citing Cable & Wireless, Inc., Declaratory Ruling and Memorandum 
Opinion, Order, Authorization, and Certificate, 10 FCC Rcd 13177, 
13179, para. 18 (1995); Market Entry and Regulation of Foreign-
Affiliated Entities, Notice of Proposed Rule Making, 10 FCC Rcd 
4844, 4852 n.19 and accompanying text (1995) (Market Entry NPRM).
    \6\ Market Entry and Regulation of Foreign-Affiliated Entities, 
Report and Order, 11 FCC Rcd 3873, 3947 (1995) (Market Entry Order) 
(Commission determination not to adopt an effective competitive 
opportunities (ECO) approach for broadcast foreign ownership similar 
to that applied in common carrier section 310 evaluations). See also 
supra note 5.
    \7\ Market Entry NPRM, 10 FCC Rcd at 4884 paragraph 99.
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    4. A number of diverse interested parties have asked the Commission 
to review its policies and procedures regarding the assessment of 
applications or proposed transactions that would exceed the 25 percent 
threshold in section 310(b)(4) in the broadcast context. On August 31, 
2012, the Coalition for Broadcast Investment (CBI) filed a ``Request 
for Clarification of the Commission's Policies and Procedures Under 47 
U.S.C. 310(b)(4). Therein, CBI sought clarification that the Commission 
will exercise its statutory discretion to conduct a substantive, facts 
and circumstances evaluation of proposals for foreign investment in 
excess of 25 percent in the parent company of a broadcast licensee.\8\ 
On February 26, 2013, the Media Bureau issued a public notice inviting 
comment on the CBI Request. The Commission received nine comments and 
five reply comments, the majority of which support CBI's position.\9\
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    \8\ CBI Request at 1; see also CBI May 28, 2013, Ex Parte at 1. 
CBI members comprise national broadcast networks, radio and 
television station licensees, and community and consumer 
organizations.
    \9\ Media Bureau Announces Filing of Request for Clarification 
of the Commission's Policies and Procedures Under 47 U.S.C. 
310(b)(4) by the Coalition for Broadcast Investment, MB Docket No. 
13-50, Public Notice, 28 FCC Rcd 1469 (MB 2013). Comments were filed 
by Adelante Media Group, Nexstar Broadcasting, Inc., Asian American 
Justice Center, Minority Media and Telecommunications Council, 
National Association of Broadcasters, National Association of Media 
Brokers, Dale A. Ganske, Bradley L. Gould and David A. Schum. Reply 
comments were filed by CBI, National Association of Broadcasters, 
Alaska Broadcast Communications, Inc. et al., Wiley Rein LLP, and 
National Association of Black Elected Legislative Women. See also 
Letter from Sen. Harry Reid (D-Nevada) to Julius Genachowski, FCC 
Chairman (June 8, 2012); Letter from Sen. Charles Schumer (D-New 
York) to Julius Genachowski, FCC Chairman (July 2, 2012). Senators 
Reid and Schumer support a case-by-case review process for foreign 
broadcast investments and coordination of national security reviews 
with Executive Branch agencies.
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    5. CBI asserts that the Commission, for over 80 years, has failed 
to exercise

[[Page 75565]]

its authority and discretion to permit foreign ownership interests in 
entities that control the licensees of broadcast radio or television 
stations in excess of the 25 percent benchmark. It is commenters' view 
that the Commission ``maintains an irrebutable presumption'' against 
relief from the 25 percent restriction, which inhibits financial 
institutions and other investors from considering broadcast 
transactions where the 25 percent benchmark would be surpassed and 
frustrates the public interest. CBI contends that by confirming its 
intention to exercise the discretion afforded the agency by the plain 
language of the statute the Commission can ease the path for new 
broadcast entrants, while enabling existing broadcasters to offer 
expanded, innovative services. National Association of Media Brokers 
(NAMB) indicates that banks from Canada and Europe have expressed their 
interest in making equity investments in U.S. broadcast stations but 
that the alien ownership limitations in section 310(b)(4) of the Act, 
as applied to the broadcast industry, have limited their participation. 
Broadcasters support CBI's request for clarification as a way to 
attract new sources of capital to their industry.
    6. Commenters also highlight the fact that the Commission adjusted 
its policies and procedures involving common carrier licensees over 15 
years ago to authorize foreign investment in excess of the statutory 
benchmark in order to encourage a more open and competitive U.S. 
telecommunications market. Commenters attribute globalization, growth 
and innovation in the telecommunications sector to that Commission 
decision. NAB adds that the Commission has issued approximately 150 
section 310(b)(4) rulings authorizing foreign investment in U.S. 
telecommunications carriers exceeding the 25 percent statutory 
benchmark. By comparison, in the view of industry commenters, the 
Commission's inflexibility in its review of broadcast foreign 
investment over the 25 percent benchmark has deprived the broadcast 
sector of available capital.
    7. Several commenters remark that the media landscape has evolved 
significantly since section 310 was enacted and that those changes 
eliminate the need to restrict foreign ownership in broadcast licensees 
to 25 percent. CBI member Adelante Media Group states that imposition 
of the limit on broadcasters is unfair because broadcasters must 
compete against distribution platforms that are not subject to the same 
statutory policy--Netflix, Apple, Google, Twitter, multichannel video 
program distributors, and pay TV networks.\10\ Others concur,\11\ 
stating that wireless carriers and cable operators have seen 
significant capital investments from foreign interests while 
broadcasters have been denied those same opportunities. Wiley Rein LLP 
similarly contends that a revised foreign investment policy for 
broadcasting would correct the current marketplace distortion that 
exists between broadcasters and their competitors in other services. 
NAB states that today's security concerns stem principally from the 
possibility that foreign interests will engage in cyber-warfare over 
wired and wireless communications networks, not from the possibility of 
editorial control over broadcast transmissions.
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    \10\ Adelante Comments at 2. Adelante Media Group specializes in 
Spanish language radio and television broadcasting in emerging 
Hispanic markets, owning and operating 18 radio stations in nine 
markets. Jay Meyers, Chief Executive Officer of Adelante, is also 
President and CEO of Broadcast Management and Technology, a firm 
that consults with financial institutions and broadcast owners. 
Adelante Comments at 1-2; see also Nexstar Comments at 2-3; AJT 
Joint Reply Comments at 3-4 n.11 (citing Statement of Ajit Pai, 
Commissioner, Federal Communications Commission, Hearing Before the 
Committee on Commerce, Science, and Transportation of the United 
States Senate, Oversight of the Federal Communications Commission, 
2013 WL 987095 *11 (Mar. 12, 2013); Wiley Rein Reply Comments at 4.
    \11\ See, e.g., NAB Reply Comments at 2 n.4, citing Foreign 
Ownership Second Report and Order, Statement of Commissioner Jessica 
Rosenwercel (available at http://transition.fcc.gov/Daily_Releases/Daily_Business/2013/db0418/FCC-13-50A4.pdf) and Statement of 
Commissioner Ajit Pai (available at http://transition.fcc.gov/Daily_Releases/Daily_Business/2013/db0418/FCC-13-50A5.pdf).
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    8. CBI maintains that a regulatory infrastructure exists that is 
sufficient for the Commission to evaluate broadcasters' foreign 
investment proposals. They recommend that the Commission utilize the 
procedures already in place with respect to proposed common carrier 
foreign ownership to coordinate with the relevant Executive Branch 
agencies on any issues related to national security, law enforcement, 
foreign policy, or trade policy with respect to particular applications 
or proposed transactions that would exceed 25 percent foreign 
investment in the controlling U.S. parents of telecommunications 
entities. CBI notes that, pursuant to current procedures, the 
Commission regularly refers requests for section 310(b)(4) declaratory 
rulings involving such proposed investments in common carriers to the 
relevant Executive Branch agencies with expertise in national security 
matters. CBI suggests that a similar process would ensure that 
broadcast transactions that propose foreign investment over the 25 
percent benchmark would receive national security review.
    9. NAB and other commenters observe that Congress and the 
Commission have long recognized lack of access to capital as a leading 
barrier to increased ownership opportunities for small businesses, 
including women and minorities, in broadcasting and other 
communications sectors.\12\ Commenters in other Commission proceedings 
have raised similar concerns. For example, in the current quadrennial 
review of broadcast ownership rules, Diversity and Competition 
Supporters \13\ request that the Commission relax its foreign ownership 
policies pursuant to section 310(b)(4) to provide new funding options 
for minority broadcast entrepreneurs . . . and give all U.S. 
broadcasters the opportunity to increase their investments in foreign 
broadcast outlets.\14\ Diversity and Competition Supporters (DCS) 
includes 50 trade, civil rights, legislative and scholarly 
organizations. Furthermore, in its comments in this proceeding, 
Minority Media and Telecommunications Council (MMTC), on behalf of 31 
national minority and civil rights organizations, states that 
encouraging foreign investment in broadcasting would create 
``reciprocal opportunities'' for American broadcasters to expand their 
footprints into radio and television markets in regions and countries 
such as Central and South America, China,

[[Page 75566]]

Korea, and Australia.\15\ These groups maintain that relaxing the 
strict interpretation and application of section 310(b)(4) is one of 
the most significant steps the Commission can take to reverse the 
decline in minority broadcast ownership.\16\ Commenters, including 
Adelante and NAMB, assert that access to additional capital will 
support the creation of more programming aimed at racial and ethnic 
minorities and bilingual speakers, and foster new entrants into 
broadcast ownership.\17\


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    \12\ Asian American Justice Center Comments at 1; CBI Request at 
4; see also NAB Comments at 5 n.13 (the Commission has previously 
recognized that the primary impediment to the participation of women 
and minorities in spectrum-based services is lack of access to 
capital, caused by factors which include higher costs in raising 
capital and lending discrimination).
    \13\ Diversity and Competition Supporters (DCS) includes 50 
trade, civil rights, legislative and scholarly organizations. See 
Initial Comments of the Diversity and Competition Supporters in 
Response to the Notice of Proposed Rulemaking, 2010 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, Promoting Diversification of 
Ownership in the Broadcasting Services, MB Docket Nos. 09-182, 07-
294 (DCS Initial Comments).
    \14\ See DCS Initial Comments at 24. Several commenters in that 
proceeding broadly endorsed DCS' proposal that the Commission relax 
foreign ownership policies. See Reply Comments of Tribune Company, 
Debtor-in-Possession, MB Docket Nos. 09-182, 07-294 at 41-42; 
Bonneville/Scranton Reply to the Report on Ownership of Commercial 
Broadcast Stations, MB Docket Nos. 09-182, 07-294 at 13 (323 
Report); see also NAB 323 Report Reply at 3. See also Azteca: Raise 
Foreign Ownership Limits, by Harry A. Jessell, TV Newscheck (July 
13, 2010) (Azteca International Corp. urges the Commission to relax 
foreign ownership rules to allow foreign companies to own up to 51 
percent of U.S. broadcasting companies).
    \15\ Comments of MMTC on behalf of Thirty-one Civil Rights 
Organizations at 1; see also CBI Reply Comments at 1, 5; Asian 
American Justice Center Comments at 1; Letter from Margaret L. 
Tobey, Vice President for Regulatory Affairs, NBC Universal, to 
Marlene H. Dortch, FCC Secretary (Nov. 7, 2013) (the Declaratory 
Ruling . . . could help U.S. broadcast companies gain greater access 
to foreign media markets).
    \16\ Comments of MMTC on behalf of Thirty-one Civil Rights 
Organizations at 1; see also National Organization of Black Elected 
Legislative Women Reply Comments at 2. But see Letter from Lauren M. 
Wilson, Policy Counsel, Free Press, to Marlene H. Dortch, FCC 
Secretary (Nov. 7, 2013) (raising concerns about the availability of 
foreign investment for new entrants and smaller broadcasters).
    \17\ Adelante Comments at 2; NAMB Comments at 4; NAB Reply 
Comments at 3.
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III. Discussion

    10. We believe the broadcast industry, the financial sector, and 
ownership diversity advocates will each benefit from a fresh statement 
of our policy and procedures governing Commission review under section 
310(b)(4) of the Act of proposals for foreign investment exceeding the 
25 percent benchmark in U.S.-organized entities that control broadcast 
licensees. We acknowledge commenters' common position that changes have 
occurred in the media landscape and marketplace since the foreign 
ownership restriction was enacted and that limited access to capital is 
a concern in the broadcast industry, especially for small business 
entities and new entrants, including minorities and women. We read the 
plain language of the statute as providing us the opportunity to review 
on a case-by-case basis applications for approval of foreign investment 
in the controlling U.S. parent of a broadcast licensee above the 25 
percent benchmark. Such applications may be granted unless the 
Commission finds that a denial will serve the public interest. In light 
of the concerns many commenters raised, we believe that a clear 
articulation of the Commission's approach to section 310(b)(4) in the 
broadcast context has the potential to spur new and increased 
opportunities for capitalization for broadcasters, and particularly for 
minority, female, small business entities, and new entrants.\18\ 
Greater capitalization may in turn yield greater innovation, 
particularly in programming directed at niche or minority audiences.
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    \18\ We also hope that clarifying our policy regarding foreign 
investment will encourage other countries to liberalize restrictions 
on investment in their media markets and pave the way for greater 
U.S. investment opportunities in those markets.
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    11. Section 310(b)(4) of the Act authorizes us to evaluate whether 
or not, in a particular situation, it is in the public interest to 
permit an entity to obtain or to hold a station license notwithstanding 
the fact that the alien interest in the U.S. parent of the station 
licensee would exceed the statutory benchmark--and to make such 
determinations on a case-by-case basis.\19\ Congress' directive is that 
25 percent alien ownership is the point at which the Commission must 
act and exercise its discretion in making a public interest 
determination on proposed ownership arrangements that would exceed this 
level.\20\ Congress entrusts to the Commission the discretion to reject 
alien voting or ownership above the benchmark if the Commission finds 
that the public interest would be served by the refusal of the 
transaction which would confer a greater than 25 percent alien interest 
in the controlling U.S. parent of a domestic broadcast license or by 
the revocation of the licenses involved. The Commission's decision in 
such cases is based on the specific facts and unique circumstances 
presented by each application before it. The bulk of the Commission's 
precedent under section 310(b)(4) has involved foreign investment in 
the controlling U.S. parents of telecommunications carriers, not 
broadcast station licensees.\21\ To the extent that the Commission's 
past practice may have been interpreted as precluding case-by-case 
review of applications involving foreign investment in the controlling 
U.S. parents of broadcast licensees, as some commenters have suggested, 
we take this occasion to clarify that the contrary is true. We have 
given, and will continue to give, the fact-specific, individual case-
by-case review the statute calls for to applications involving 
broadcast stations. As we have previously concluded with respect to the 
application of section 310(b)(4) in broadcast cases, the 25 percent 
benchmark is only a trigger for the exercise of our discretion, which 
we then exercise based upon a more searching analysis of the 
circumstances in each case.\22\
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    \19\ See, e.g., Wilner & Scheiner, 103 FCC 2d at 524 
(clarifying, inter alia, that limited partnership interests are 
within the scope of section 310(b)).
    \20\ The statutory benchmark reflects Congress' judgment of the 
point at which foreign ownership and voting may conflict with the 
national interest. Fox Television Stations Inc., 11 FCC Rcd 5714, 
5722 (1995); see also Univision Holdings, Inc. (Transferor) and 
Perenchio Television, Inc. (Transferee) for Transfer of Control of 
Univision Station Group, Inc., Licensee of Television Station Group 
Inc., 7 FCC Rcd 6672 (1992) (examining alien de facto control and 
real-party-in-interest issues for section 310(b)(4) compliance).
    \21\ See, e.g., supra note 5; see also Foreign Ownership Second 
Report and Order, 28 FCC Rcd 5741.
    \22\ Fox I, 10 FCC Rcd at 8472. See also GRC Cablevision Inc., 
47 FCC 2d 467, 468 paragraph 6 (1974) (alien ownership in broadcast 
television presents different questions which we will deal with as 
they arise in concrete situations.).
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    12. The Commission has not interpreted the benchmark as a 
permissive threshold that would allow foreign investors to hold more 
than 25 percent interests in the controlling U.S. parents of licensees 
absent Commission action.\23\ Rather, under the Commission's precedent 
the 25 percent benchmark set forth in section 310(b)(4) of the Act has 
been applied to restrict foreign ownership of the controlling U.S. 
parents of broadcast licensees absent an affirmative Commission finding 
in a particular case that such ownership is in the public interest. The 
parties to this proceeding have not asked us to reconsider this 
precedent. Thus, we reiterate that, under this precedent, applicants 
may not exceed the section 310(b)(4) benchmark absent the express prior 
consent of the Commission. To exercise the statute's discretion in a 
meaningful way, the Commission must receive from the applicant detailed 
information sufficient for the agency to make the public interest 
finding required by the statute.\24\
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    \23\ Fox I, 10 FCC Rcd at 8745-46 (stating that . . . [T]he 
Commission must be given the opportunity to make a public interest 
determination specifically focused upon the implications of 
exercising its discretion before an ownership structure above the 
foreign ownership benchmark is vested with corporate prerogatives 
over a Commission licensee.); Galesburg Broadcasting Company, Notice 
of Apparent Liability for Forfeiture, 6 FCC Rcd 2210, 2210 (1991) 
(Galesburg) (finding that the transfer of a majority of the voting 
stock in the U.S.-organized parent of the licensee to a trustee 
wholly owned by a Canadian bank without prior Commission approval 
deprived the Commission of the opportunity to pass on the propriety 
of alien ownership which section 310(b)(4) of the Act contemplates). 
See also Foreign Ownership First Report and Order, 27 FCC Rcd at 
9843 n.58; Foreign Ownership Second Report and Order, 28 FCC Rcd at 
5759, n.98 (both citing to Fox I and Galesburg for the same 
proposition).
    \24\ Fox I, 10 FCC Rcd at 8476-77; Galesburg Broadcasting 
Company, 6 FCC Rcd at 2210; compare In re Hispanic Broadcasting 
Corp., 18 FCC Rcd 18834 (2003) (finding that the equity and voting 
interests held by foreign entities in Univision comply with the 
alien ownership restrictions set forth in section 310 of the 
Communications Act). See also Foreign Ownership Second Report and 
Order, 28 FCC Rcd at 5759 (confirming the Commission's long-standing 
policy that the statute requires us to review and approve foreign 
ownership of licensees subject to section 310(b)(4) before that 
foreign ownership exceeds the 25 percent statutory limit).

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[[Page 75567]]

    13. Applicants seeking approval of broadcast assignments or 
transfers must continue to inform the Commission of their proposed 
transaction's compliance with section 310 of the Act.\25\ For example, 
Section III, Question 9 of Form 314 requires proposed assignees to 
certify their compliance with the provisions of section 310 relating to 
interests of aliens and foreign governments. Applicants must continue 
either to certify that their transactions will comply with section 310 
benchmarks or, in the event they will not, to indicate that they will 
not comply and provide an explanatory exhibit.\26\ A petition for 
declaratory ruling to allow foreign ownership to exceed the 25 percent 
benchmark must be filed along with any application in which the 
applicant cannot certify compliance with section 310(b)(4).\27\ Again, 
in all cases, before the benchmark may be exceeded, we must approve the 
transaction.
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    \25\ See FCC Form 314--Application for Consent to Assignment of 
Broadcast Station Construction Permit or License, Section III, 
Question 9, Alien Ownership and Control (Oct. 2012) (available at 
http://transition.fcc.gov/Forms/Form314/314.pdf); FCC Form 315--
Application for Consent to Transfer Control of Entity Holding 
Broadcast Station Construction Permit or License, Section IV, 
Question 11, Alien Ownership and Control (Oct. 2012) (available at 
http://transition.fcc.gov/Form/Form315/315.pdf; FCC Form 316--
Application for Consent to Assign Broadcast Station Construction 
Permit or License or Transfer of Control of Entity Holding Broadcast 
Station Construction Permit or License, Section III, Question 10, 
Alien Ownership and Control (June 2010) (available at http://transition.fcc.gov/Forms/Form316/316.pdf).
    \26\ We use the long-form broadcast assignment application, FCC 
Form 314, as an example. The same standard would apply whenever 
compliance with the alien ownership provisions or certification to 
such compliance arises. See, e.g., supra note 25.
    \27\ 47 CFR 1.2(a) (the Commission may on motion or on its own 
motion issue a declaratory ruling terminating a controversy or 
removing uncertainty).
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    14. We also clarify that, prospectively, if a proposed foreign 
investment in a broadcast licensee's controlling U.S. parent would 
exceed the benchmark but does not require the filing of a Form 314 or 
other FCC application, a petition for declaratory ruling must be filed 
with the Commission in advance. We expect to process Form 314 and other 
applications, as well as petitions for declaratory rulings in this 
category, in a similar manner for purposes of section 310(b)(4) review. 
Following preliminary staff review to ensure completeness of the filing 
materials, both types of submissions will be subject to public notice 
seeking comment from interested parties. The Commission will coordinate 
as necessary and appropriate with Executive Branch agencies regarding 
such applications and petitions. Consistent with the Commission's long-
standing policy in reviewing foreign ownership of common carrier 
applicants and licensees, the Commission will continue to afford 
appropriate deference to the expertise of the Executive Branch agencies 
on issues related to national security, law enforcement, foreign 
policy, and trade policy.\28\ As part of its review, the Commission may 
send the applicants or petitioners letters of inquiry or document 
requests, request additional materials, or take any other needed 
measures in order to conduct a comprehensive public interest review. 
Once the Commission has concluded its inquiry, it will release a 
written opinion or other notice authorizing, denying, or conditioning 
the requested foreign ownership.\29\
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    \28\ See generally Foreign Ownership Second Report and Order, 28 
FCC Rcd at 5751 paragraph 13, 5762 paragraph 34; see also Rules and 
Policies on Foreign Participation in the U.S. Telecommunications 
Market: Market Entry and Regulation of Foreign Affiliated Entities, 
IB Docket Nos. 97-14 and 95-22, Report and Order and Order on 
Reconsideration, 12 FCC Rcd 23891, 23920 para. 63 (1997) (Foreign 
Participation Order) (We thus will continue to accord deference to 
the expertise of Executive Branch agencies in identifying and 
interpreting issues of concern related to national security, law 
enforcement, and foreign policy that are relevant to an application 
pending before us.); see also Market Entry Order, 11 FCC Rcd at 3955 
para. 219. We anticipate that we may further develop our broadcast 
foreign ownership policies and procedures as we conduct our case-by-
case reviews of particular applications and petitions and as we 
coordinate such filings with the appropriate Executive Branch 
agencies.
    \29\ See, e.g., Applications of Cellco Partnership d/b/a Verizon 
Wireless and SpectrumCo LLC and Cox TMI, LLC For Consent To Assign 
AWS-1 Licenses, Applications of Verizon Wireless and Leap for 
Consent To Exchange Lower 700 MHz, AWS-1, and PCS Licenses, 
Applications of T-Mobile License LLC and Cellco Partnership d/b/a 
Verizon Wireless for Consent to Assign Licenses, WT Docket No. 12-4, 
Memorandum Opinion and Order and Declaratory Ruling, FCC 12-95, 27 
FCC Rcd 10699, 10769 paragraphs 191-92 (2013), pet. for recon. 
pending (conditioning grant of applications to assign licenses and 
grant of declaratory ruling to Verizon Wireless on its compliance 
with the terms and conditions contained in the March 27, 2008, 
Letter to Stewart Baker, Assistant Secretary of Policy, U.S. 
Department of Homeland Security; and conditioning grant of 
applications to assign licenses to T-Mobile License on its 
compliance with the terms contained in the National Security 
Agreement entered into on January 12, 2001, as amended as of January 
4, 2008, between Deutsche Telekom and the U.S. Department of 
Justice, the Federal Bureau of Investigation, and the U.S. 
Department of Homeland Security).
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    15. We expect to evaluate proposals on the basis of our body of 
decisions relating to broadcast ownership and foreign ownership and the 
framework set forth in this item, evaluating the facts as they are 
presented in each specific application or petition for declaratory 
ruling.\30\ By their nature, these case-by-case reviews will lead to 
distinct, factually driven results. Each application or petition will 
be assessed on its own merits, and we will determine, given the 
particular circumstances presented in a particular case, whether the 
public interest would be served by permitting the requested foreign 
ownership. We anticipate that applicants may propose ownership by a 
range of foreign interests and countries, involving varying corporate 
and organizational structures, with differing public interest showings. 
Although many commenters have suggested that there is significant 
availability of foreign capital for broadcasters, we cannot predict 
whether applications proposing new foreign investment will in fact 
increase. If they do increase, over time, the Commission's case-by-case 
review may suggest policy issues or streamlined procedural mechanisms 
that could be addressed in future Commission proceedings. We may in the 
future elect to create a standardized review process similar to that 
adopted in the common carrier context.\31\ At this time, however, we 
are cognizant of the distinctions between common carrier facilities and 
broadcast stations and of the differences in the Commission's 
experiences with proposals to exceed the section 310(b)(4) benchmark 
for

[[Page 75568]]

foreign investments in these two categories of Commission licensees. 
Therefore, we believe it is appropriate that our review of proposed 
broadcast investments remain on a case-by-case basis and be allowed to 
mature before we consider comprehensive rules and procedures similar to 
those applicable to foreign investment in common carrier licensees.\32\
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    \30\ We will not entertain petitions to exceed the foreign 
ownership limits of section 310(b)(3) for foreign investment in 
broadcast licensees. Foreign interests in a U.S.-organized parent 
that controls a licensee are subject to section 310(b)(4), not 
section 310(b)(3). Unlike section 310(b)(4), section 310(b)(3) does 
not afford the Commission any discretion to approve foreign 
investment in broadcast licensees in excess of the limitations 
contained therein. While the Commission has statutory authority to 
forbear from applying any regulation or provision of the Act to a 
telecommunications carrier or service if the Commission determines 
that forbearance is in the public interest, that authority is 
limited to application of those requirements to telecommunications 
carriers or services. See 47 U.S.C. 160. It does not extend to 
broadcast station licensees covered by section 310(b)(3). Foreign 
Ownership Second Report and Order, 28 FCC Rcd at 5749 paragraph 9 
n.31. See also Foreign Ownership First Report and Order, 27 FCC Rcd 
9832 (adopting forbearance from applying the section 310(b)(3) limit 
to the class of common carrier licensees in which foreign ownership 
in the licensee is held through U.S.-organized entities that do not 
control the licensee, to the extent the Commission determines such 
foreign ownership is consistent with the public interest under the 
policies and procedures the Commission has adopted for the public 
interest review of foreign ownership subject to section 310(b)(4) of 
the Act).
    \31\ See Foreign Ownership Second Report and Order, 28 FCC Rcd 
5741 (codifying policies and procedures for authorizing foreign 
ownership of common carrier, aeronautical en route, and aeronautical 
fixed radio station licensees under section 310(b)). See also 
Foreign Participation Order, 12 FCC Rcd at 24033 paragraph 323.
    \32\ Some commenters raise additional suggestions for Commission 
review of foreign investment in broadcast licensees. Although many 
of these recommendations proffer thoughtful contributions to the 
proceeding record, it is premature to adopt them at this time. Our 
consideration of the numerous overarching issues involved in this 
area is ongoing. As we continue to address applications on a case-
by-case basis, we will ascertain whether it is appropriate to 
conduct a rulemaking proceeding.
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    16. Some commenters have asserted that the underlying national 
security rationale for section 310(b)(4) in the broadcast area, 
protection from foreign propaganda on radio and television stations, no 
longer exists. Although many new potential threats and national 
security issues have arisen as technology has advanced,\33\ we do not 
believe that the historical statutory concern for foreign influence 
over broadcast stations has disappeared. Broadcast stations are 
licensed to serve the needs and interests of local U.S. communities. 
They uniquely offer a range of critical information services to the 
American public, including, for instance, the provision of local, 
state, national, and international news, national Emergency Alerts, 
local severe weather alerts, Amber Alerts for missing children, and 
homeland security information. Ensuring that the ownership of broadcast 
licensees serves the public interest is embodied in a statutory 
directive with which we must faithfully comply and we will evaluate 
applications proposing foreign broadcast ownership accordingly. In 
particular, we will address each specific situation in terms of its 
potential public interest benefits and any relevant public interest 
concerns, including national security concerns, consistent with the 
statute and this Declaratory Ruling.
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    \33\ See, e.g., Confidential Reports List U.S. Weapon System 
Designs Compromised by Chinese Cyberspies, by Ellen Nakashima, The 
Washington Post (May 27, 2013).
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IV. Ordering Clause

    17. Accordingly, it is ordered that, pursuant to the authority 
contained in sections 4(i) and 310(b) of the Communications Act of 
1934, as amended, 47 U.S.C. 154(i), 310(b), 5 U.S.C. 554(e) and Sec.  
1.2 of the Commission's rules, 47 CFR 1.2, this Declaratory Ruling in 
MB Docket No. 13-50 is adopted.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 2013-29698 Filed 12-11-13; 8:45 am]
BILLING CODE 6712-01-P