[Federal Register Volume 83, Number 5 (Monday, January 8, 2018)]
[Proposed Rules]
[Pages 774-780]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-28328]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 73

[MB Docket No. 17-289; FCC 17-156]


Rules and Policies To Promote New Entry and Ownership Diversity 
in the Broadcasting Services

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: This document solicits comment on how to design and implement 
an incubator program to support the entry of new and diverse voices in 
the broadcast industry. It seeks comment on the structure, review, and 
oversight of such a program in order to help create new sources of 
financial, technical, operational, and managerial support for eligible 
broadcasters, thereby creating ownership opportunities for new entrants 
and small businesses and promoting competition and new voices in the 
broadcast industry.

DATES: Comments are due on or before March 9, 2018 and reply comments 
are

[[Page 775]]

due on or before April 9, 2018. Written comments on the Paperwork 
Reduction Act proposed information collection requirements must be 
submitted by the public, Office of Management and Budget (OMB), and 
other interested parties on or before March 9, 2018.

ADDRESSES: You may submit comments, identified by MB Docket No. 17-289, 
by any of the following methods:
     Federal Communications Commission's website: http://apps.fcc.gov/ecfs//. Follow the instructions for submitting comments.
     People with Disabilities: Contact the FCC to request 
reasonable accommodations (accessible format documents, sign language 
interpreters, CART, etc.) by email: [email protected] or phone: 202-418-
0530 or TTY: 888-835-5322.
    For detailed instructions for submitting comments and additional 
information on the rulemaking process, see the SUPPLEMENTARY 
INFORMATION section of this document. In addition to filing comments 
with the Secretary, a copy of any comments on the Paperwork Reduction 
Act information collection requirements contained herein should be 
submitted to the Federal Communications Commission via email to 
[email protected].

FOR FURTHER INFORMATION CONTACT: Benjamin Arden, Industry Analysis 
Division, Media Bureau, FCC, (202) 418-2330. For additional information 
concerning the PRA proposed information collection requirements 
contained in the Notice of Proposed Rulemaking, contact Cathy Williams 
at (202) 418-2918, or via the internet at [email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice 
of Proposed Rulemaking (NPRM), in MB Docket No. 17-289; FCC 17-156, was 
adopted on November 16, 2017, and released on November 20, 2017. The 
complete text of this document is available electronically via the 
search function on the FCC's Electronic Document Management System 
(EDOCS) web page at https://apps.fcc.gov/edocs_public/. The complete 
document is available for inspection and copying during normal business 
hours in the FCC Reference Information Center, 445 12th Street SW, Room 
CY-A257, Washington, DC 20554. To request materials in accessible 
formats for people with disabilities (Braille, large print, electronic 
files, audio format), send an email to [email protected] or call the FCC's 
Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), 
(202) 418-0432 (TTY).

Initial Paperwork Reduction Act of 1995 Analysis

    The NPRM proposes a new or revised information collection 
requirement. The Commission, as part of its continuing effort to reduce 
paperwork burdens, invites the general public and the OMB to comment on 
the information collection requirements contained in this document, as 
required by the Paperwork Reduction Act of 1995, Public Law 104-13. 
Public and agency comments are due March 9, 2018. Comments should 
address: (a) Whether the proposed collection of information is 
necessary for the proper performance of the functions of the 
Commission, including whether the information shall have practical 
utility; (b) the accuracy of the Commission's burden estimates; (c) 
ways to enhance the quality, utility, and clarity of the information 
collected; (d) ways to minimize the burden of the collection of 
information on the respondents, including the use of automated 
collection techniques or other forms of information technology; and (e) 
way to further reduce the information collection burden on small 
business concerns with fewer than 25 employees. In addition, pursuant 
to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, 
see 44 U.S.C. 3506(c)(4), the Commission seeks specific comment on how 
it might further reduce the information collection burden for small 
business concerns with fewer than 25 employees.

Synopsis

I. Introduction

    1. With the NPRM, the Commission seeks comment on how to design and 
implement an incubator program to support the entry of new and diverse 
voices in the broadcast industry. Specifically, the Commission seeks 
comment on the structure, review, and oversight of a comprehensive 
incubator program that will help create new sources of financial, 
technical, operational, and managerial support for eligible 
broadcasters. The Commission believes that such a program can create 
ownership opportunities for new entrants and small businesses, thus 
promoting competition and new voices in the broadcast industry.

II. Background

    2. The Commission has long considered whether to adopt an incubator 
program to help provide new sources of capital and support to entities 
that may otherwise lack operational experience or access to financing. 
Generally, an incubator program would provide an ownership rule waiver 
or similar benefits to a company that establishes a program to help 
facilitate station ownership for a certain class of prospective or 
existing station owners. For example, in exchange for a defined 
benefit, such as waiver of a broadcast ownership rule, an established 
company could assist a new owner by providing financial, management, 
technical, training, and/or business planning assistance. Over the 
years, a number of parties have proposed or supported recommendations 
for some type of an incubator program, but the Commission has never 
developed a comprehensive incubator program. The Commission has adopted 
a limited program that provides a duopoly preference to parties that 
agree to incubate or finance an eligible entity, but this limited 
policy preference does not serve as an effective basis upon which to 
design a comprehensive incubator program.
    3. The history of this issue dates back at least to the early 
1990s, but the Commission's goal is to build on its most recent 
efforts. Notably, in 2010 the Commission's Advisory Committee on 
Diversity for Communications in the Digital Age recommended that the 
Commission commence a rulemaking to pursue an incubator program in 
order to help promote ownership diversity. The committee provided 
various recommendations on how to structure such a program. 
Subsequently, the Commission sought comment during its 2010/2014 
quadrennial reviews of its media ownership rules on whether to adopt an 
incubator program and, if so, how to structure such a program. The 
Commission highlighted administrative concerns and structural issues 
that needed to be addressed before such a program could be adopted. The 
record built in response to the Commission's requests for comment 
contained continued support for the concept of an incubator program and 
some suggestions on how to structure certain aspects of such a program. 
Some commenters, however, expressed concern that an incubator program 
would create a loophole in the Commission's ownership limits that could 
potentially harm small and independent station owners. The Commission 
found that the record failed to address those specific concerns and 
declined to adopt an incubator program. A couple of commenters urged 
the Commission to continue its consideration of an incubator program 
and suggested that additional public comment could help resolve the 
remaining administrative and structural issues. In an Order on 
Reconsideration adopted in conjunction with this NPRM,

[[Page 776]]

the Commission decided to adopt an incubator program and committed to 
initiating this proceeding to resolve issues regarding the design and 
implementation of that program.
    4. In addition, on July 5, 2017, the Commission commissioned the 
Advisory Committee on Diversity and Digital Empowerment, which held its 
first meeting on September 25, 2017. The Commission anticipates that 
the committee's work will help inform its efforts to create an 
incubator program.

III. Discussion

    5. As stated above, the Commission decided to adopt an incubator 
program to help address the lack of access to capital and technical 
expertise faced by potential new entrants and small businesses. But 
while there is general support for an incubator program to help address 
these issues, there is little consensus regarding the structure or 
details of such a program. The Commission anticipates that this NPRM, 
devoted exclusively to an incubator program, can help generate 
solutions to these technical and administrative issues. Accordingly, as 
detailed below, the Commission seeks comment on eligibility criteria 
for the incubated entity; appropriate incubating activities; benefits 
to the incubating entity; how such a program would be reviewed, 
monitored, and enforced; and the attendant costs and benefits. The 
Commission anticipates that the record will reveal innovative 
strategies for partnerships between established broadcasters and new 
entrants.

A. Defining Entities Eligible for Participation

    6. The Commission seeks comment on how to determine eligibility for 
participation in the incubator program. Options include:
     New Entrants. The Commission could create a standard 
similar to the new entrant bidding credit eligibility definition 
applicable in the broadcast auction context. Under the auction rules, 
an auction participant is eligible for bidding credits if it has 
attributable interests in few or no other media of mass communication. 
A 35 percent bidding credit is awarded to a qualifying new entrant that 
has no attributable interest in any other media of mass communication, 
while a 25 percent bidding credit is awarded to a qualifying new 
entrant that holds an attributable interest in no more than three mass 
media facilities.
     Revenue-Based Eligible Entity. The Commission could use 
its previously adopted revenue-based eligible entity standard to 
identify those qualified to take advantage of certain preferential 
regulatory policies. An eligible entity under this definition is any 
commercial or non-commercial entity that qualifies as a small business 
consistent with Small Business Administration (SBA) revenue grouping 
according to industry. Additionally, the Commission requires a small 
business eligible entity to hold: (1) 30 percent or more of the stock/
partnership shares and more than 50 percent voting power of the 
corporation or partnership that will hold the broadcast license; (2) 15 
percent or more of the stock/partnership shares and more than 50 
percent voting power of the corporation or partnership that will hold 
the broadcast license, providing that no other person or entity owns or 
controls more than 25 percent of the outstanding stock or partnership 
interest; or (3) more than 50 percent of the voting power of the 
corporation if the corporation that holds the licenses is a publicly 
traded corporation.
     Socially and Economically Disadvantaged Businesses (SDB). 
The SDB standard is based on the definition employed by the SBA. 
Pursuant to the SBA's program, persons of certain racial or ethnic 
backgrounds are presumed to be disadvantaged; all other individuals may 
qualify for the program if they can show by a preponderance of the 
evidence that they are disadvantaged. To qualify for this program, a 
small business must be at least 51 percent owned and controlled by a 
socially and economically disadvantaged individual or individuals. The 
SDB standard is explicitly race-conscious and, therefore, subject to 
heightened constitutional review, a standard that the Commission 
previously found was insufficiently met by the record at the time.
     Overcoming Disadvantages Preference (ODP). The ODP 
standard would employ various criteria to demonstrate that an 
individual or entity has overcome significant disadvantage. The 
Commission previously declined to adopt an ODP standard, citing 
concerns with the approach.
    7. The Commission seeks comment on these various standards, 
including any modifications that would be appropriate in the incubator 
context. In particular, are there any changes to these standards that 
would help address previous concerns expressed by the Commission? Which 
of these standards most closely aligns with the Commission's goal to 
help facilitate ownership opportunities for entities that lack access 
to capital and operational experience and thereby promote competition 
and viewpoint diversity in local markets? In addition, the Commission 
seeks comment on any other standards that would effectively promote its 
objectives. Any commenters proposing or supporting a race- and/or 
gender-specific standard should also provide analysis regarding how 
such a standard could withstand a constitutional challenge. The 
Commission also seeks comment on the relative advantages of the various 
standards. Certain standards are more difficult to define and 
administer and may raise constitutional concerns. What are the 
offsetting benefits of these approaches relative to standards that are 
easier to apply and/or do not raise constitutional concerns?

B. Defining Qualifying Incubation Activities

    8. The Commission also seeks comment on the activities that would 
qualify as incubation. Such activities would need to provide the 
incubated entity with support that it otherwise lacks and that is 
essential to its operation and ability to serve its community. As 
traditionally conceived, a comprehensive program could include 
management or technical assistance, loan guarantees, direct financial 
assistance through loans or equity investment, and training and 
business planning assistance. Should the Commission consider other 
activities, such as donating stations to certain organizations or 
arrangements whereby the new entrant gains operational experience 
without first acquiring a station, such as programming a station and 
selling advertising time under a local marketing agreement?
    9. What combination of activities (financial and operational) 
should be required to qualify as an incubation relationship? Should 
there be any conditions on the financial aspects of the relationship? 
For example, should there be any limitations on the incubating entity 
holding an option to acquire the incubated station? Should the 
Commission adopt time limitations on technical assistance? For example, 
should the Commission impose a minimum amount of time to ensure that 
the incubated station acquires sufficient technical expertise to 
operate the station independently of the established broadcaster? 
Should the Commission impose a maximum amount of time to ensure that 
the incubated station actually does become independent? What role 
should sharing agreements (e.g., local marketing agreements, joint 
sales agreements, and shared service agreements) play, if any, in the 
incubation relationship? The Commission seeks comment on these issues.
    10. How can the Commission ensure that use of the incubation 
program is

[[Page 777]]

necessary to promote new entry? For example, should the proposed 
incubated station certify that it lacks the access to capital and 
technical expertise necessary to acquire and operate the station? 
Should participation in an incubator program be limited to new station 
acquisitions? Alternatively, should participation extend to existing 
station owners that are struggling and may need financing or other 
support to continue operation? Are there any justifications for 
limiting participation differently based on the eligibility standard 
selected?
    11. While the Commission's rules already prohibit unauthorized 
transfers of control, including de facto transfers of control, should 
it adopt any additional safeguards as part of an incubation program to 
ensure that the incubated station licensee retains control of its 
station?

C. Benefit to Incubating Station

    12. In order to encourage an established broadcaster to engage in 
incubating activities, the incubation program must provide a meaningful 
benefit to the incubating entity. In general, the potential benefit 
suggested has been a waiver of the Commission's local broadcast 
ownership rules. How should the Commission structure the waiver 
program? For example, should the waiver be limited to the market in 
which the incubating activity is occurring? Alternatively, should 
waiver be permissible in any similarly sized market? How would the 
Commission determine which markets are similar in size? Should the 
Commission review these waivers in the future to determine whether they 
continue to be justified? On what grounds would the Commission evaluate 
the waivers? Should the waiver be tied to the success of the incubation 
relationship? Should the waiver continue even if the incubator program 
ends and, if so, for how long? What should be considered a successful 
relationship? Should the waiver be transferrable if the incubating 
entity sells a cluster of stations that does not comply with the 
ownership limits at the time?
    13. Instead of a waiver to acquire a different station in the 
market (or a similarly sized market), should the Commission allow the 
incubating entity to obtain an otherwise impermissible non-controlling, 
attributable interest in the incubated station? This would allow the 
incubating entity to obtain financial benefits that accrue from 
successful operation of the incubated station and would limit the 
impact on competition, both by ensuring that the incubated entity 
retains control of the station and by tying the ownership waiver to the 
period of time the incubated entity owns the station. Would such an 
approach dilute the contributions of the incubated station as an 
independent market participant?
    14. Should the Commission limit any incubator program to radio, as 
the proposal was initially conceived, or should the program apply to 
both radio and television? Should the Commission adopt a phased 
approach, whereby it institutes the program on a trial basis in radio 
and then evaluate its success and operation before expanding to 
television, and if so, how long should such a trial period last? What 
steps should the Commission take to evaluate the trial period and 
whether to expand the program?

D. Review of Incubation Proposals

    15. The Commission seeks comment on the review process for 
incubation proposals. It expects that most incubation proposals will 
accompany an assignment or transfer of control application. These 
applications would be subject to petitions to deny and informal 
comments under the Commission's rules. Does this provide the public 
with sufficient opportunity to comment on the proposal? What public 
concerns should the Commission consider in its evaluation? Are there 
other situations beyond an assignment or transfer of control 
application in which an incubator proposal could be applied, and if so, 
how should the review process work in such circumstances?
    16. If the program is extended to incubation opportunities for 
existing station owners that are facing financial and/or technical 
difficulties, how should the parties submit the proposal to the 
Commission for review and approval? For example, should the Commission 
require electronic filing of such requests in the Commission's 
Electronic Comment Filing System? Should these filings then be subject 
to the same public comment requirements as those filed as part of an 
assignment or transfer of control application?
    17. The Commission notes that so long as the arrangement is 
permissible under existing Commission rules, parties do not need prior 
approval to enter into agreements regarding finances or station 
operations. However, for the arrangement to count as incubation, such 
that the incubating entity is entitled to the benefits of the program 
(e.g., an ownership waiver), the Commission would need to find that the 
relationship satisfies the incubation criteria. In such circumstances, 
should Commission approval be required prior to the initiation of the 
incubation relationship or should the parties be permitted to request 
recognition of a previous or ongoing incubation relationship, perhaps 
as part of an application from the incubating entity requesting an 
ownership waiver for the acquisition of another station? Should there 
be a time limit on such subsequent requests for approval?

E. Compliance Assessment

    18. As evidenced by the foregoing, an incubation relationship may 
involve complex agreements between the parties regarding financing, 
programming, and operations. How should the Commission monitor 
compliance with the terms of incubation? Should the Commission require 
periodic reports to be filed by one or both parties or placed in their 
online public files? If so, how frequently should the reports be filed? 
Should these reports be available to the public? What information 
should the reports contain? Should the Commission instead conduct its 
own periodic review of the incubation activities and compliance with 
the relevant agreements? What other compliance measures should the 
Commission consider?
    19. If compliance lapses, for any reason, what are the 
consequences? Should the incubating party be required to divest itself 
of the benefits it received for engaging in incubation activities? For 
example, if the incubating party was granted a waiver of a local 
broadcast ownership rule, should it be forced to come into compliance 
with the relevant ownership limit if it does not fulfill the terms of 
the incubation program? Should the Commission allow the incubating 
party to seek to be relieved of its obligations and retain the benefits 
(e.g., ownership waiver) if the incubated station fails to comply with 
the terms of the agreement? Are there other appropriate enforcement 
responses, such as fines? Should the Commission establish a time limit 
on the benefits granted under the incubation program based on the 
premise that the purpose of the program is to enable incubated entities 
to operate independently after some period of assistance?

F. Costs and Benefits

    20. The Commission seeks comment on the costs and benefits 
associated with the proposals in this NPRM. In particular, the 
Commission encourages broadcasters and other industry participants to 
submit any relevant data regarding the potential costs associated with 
the various application, recordkeeping, and compliance requirements 
proposed herein. Are there

[[Page 778]]

ways to structure the program to reduce costs, particularly for small 
businesses? How does the Commission define and quantify the expected 
benefits of an incubator program?

IV. Procedural Matters

A. Ex Parte Rules

    21. The proceeding for the NPRM shall be treated as a ``permit-but-
disclose'' proceeding in accordance with the Commission's ex parte 
rules. Persons making ex parte presentations must file a copy of any 
written presentation or a memorandum summarizing any oral presentation 
within two business days after the presentation (unless a different 
deadline applicable to the Sunshine period applies). Persons making 
oral ex parte presentations are reminded that memoranda summarizing the 
presentation must (1) list all persons attending or otherwise 
participating in the meeting at which the ex parte presentation was 
made, and (2) summarize all data presented and arguments made during 
the presentation. If the presentation consisted in whole or in part of 
the presentation of data or arguments already reflected in the 
presenter's written comments, memoranda or other filings in the 
proceeding, the presenter may provide citations to such data or 
arguments in his or her prior comments, memoranda, or other filings 
(specifying the relevant page and/or paragraph numbers where such data 
or arguments can be found) in lieu of summarizing them in the 
memorandum. Documents shown or given to Commission staff during ex 
parte meetings are deemed to be written ex parte presentations and must 
be filed consistent with Section 1.1206(b). In proceedings governed by 
Section 1.49(f) or for which the Commission has made available a method 
of electronic filing, written ex parte presentations and memoranda 
summarizing oral ex parte presentations, and all attachments thereto, 
must be filed through the electronic comment filing system available 
for that proceeding, and must be filed in their native format (e.g., 
.doc, .xml, .ppt, searchable .pdf). Participants in this proceeding 
should familiarize themselves with the Commission's ex parte rules.

B. Filing Requirements

    22. Pursuant to sections 1.415 and 1.419 of the Commission's rules, 
47 CFR 1.415, 1.419, interested parties may file comments and reply 
comments on or before the dates indicated on the first page of this 
document. Comments may be filed using the Commission's Electronic 
Comment Filing System (ECFS). See Electronic Filing of Documents in 
Rulemaking Proceedings, 63 FR 24121 (1998).
    [ssquf] Commenting parties may file comments in response to this 
NPRM in MB Docket No. 17-289; interested parties are not required to 
file duplicate copies in the additional dockets associated with the 
Order on Reconsideration adopted at the same time as the NPRM.
    [ssquf] Electronic Filers: Comments may be filed electronically 
using the internet by accessing the ECFS: http://apps.fcc.gov/ecfs/.
    [ssquf] Paper Filers: Parties who choose to file by paper must file 
an original and one copy of each filing.
    Filings can be sent by hand or messenger delivery, by commercial 
overnight courier, or by first-class or overnight U.S. Postal Service 
mail. All filings must be addressed to the Commission's Secretary, 
Office of the Secretary, Federal Communications Commission.
    [ssquf] All hand-delivered or messenger-delivered paper filings for 
the Commission's Secretary must be delivered to FCC Headquarters at 445 
12th St. SW, Room TW-A325, Washington, DC 20554. The filing hours are 
8:00 a.m. to 7:00 p.m. All hand deliveries must be held together with 
rubber bands or fasteners. Any envelopes and boxes must be disposed of 
before entering the building.
    [ssquf] Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9050 Junction Drive, 
Annapolis Junction, MD 20701.
    [ssquf] U.S. Postal Service first-class, Express, and Priority mail 
must be addressed to 445 12th Street SW, Washington, DC 20554.
    People with Disabilities: To request materials in accessible 
formats for people with disabilities (braille, large print, electronic 
files, audio format), send an email to [email protected] or call the 
Consumer and Governmental Affairs Bureau at 202-418-0530 (voice), 202-
418-0432 (tty).

V. Initial Regulatory Flexibility Act Analysis

    23. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), the Commission has prepared this present Initial 
Regulatory Flexibility Act Analysis (IRFA) of the possible significant 
economic impact on small entities by the policies and rules proposed in 
this NPRM. Written public comments are requested on this IRFA. Comments 
must be identified as responses to the IRFA and must be filed by the 
deadlines for comments provided on the first page of the NPRM. The 
Commission will send a copy of the NPRM, including this IRFA, to the 
Chief Counsel for Advocacy of the Small Business Administration (SBA). 
In addition, the NPRM and IRFA (or summaries thereof) will be published 
in the Federal Register.

A. Need for, and Objectives of, the Proposed Rules

    24. In the NPRM, the Commission seeks comment on the structure and 
implementation of an incubator program. Broadly speaking, an incubator 
program would provide an ownership rule waiver or similar benefits to a 
company that establishes a program to help facilitate station ownership 
for a certain class of new owners. Under such a program, an established 
company could assist a new owner by providing financial, management, 
technical, training, and/or business planning assistance. The primary 
purpose of such a program would be to help provide new sources of 
capital and support to entities that may otherwise lack operational 
experience or access to financing and thereby promote diversity. Over 
the years, a number of parties have proposed or supported 
recommendations for some type of an incubator program; however, 
substantive and administrative issues need to be resolved before an 
incubator program can be adopted. This NPRM seeks comment on these 
issues.

B. Legal Basis

    25. The proposed action is authorized pursuant to sections 1, 2(a), 
4(i), 257, 303, 307, 309, 310, and 403 of the Communications Act of 
1934, as amended, 47 U.S.C. 151, 152(a), 154(i), 257, 303, 307, 309, 
310, and 403.

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

    26. 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 generally defines 
the term ``small entity'' as having the same meaning as the terms 
``small business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' 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

[[Page 779]]

established by the SBA. A description of such small entities is 
provided below, as well as an estimate of the number of such small 
entities, where feasible.
    27. Television Broadcasting. This Economic Census category 
``comprises establishments primarily engaged in broadcasting images 
together with sound.'' These establishments operate television 
broadcasting studios and facilities for the programming and 
transmission of programs to the public. These establishments also 
produce or transmit visual programming to affiliated broadcast 
television stations, which in turn broadcast the programs to the public 
on a predetermined schedule. Programming may originate in their own 
studio, from an affiliated network, or from external sources. The SBA 
has created the following small business size standard for such 
businesses: Those having $38.5 million or less in annual receipts. The 
2012 Economic Census data reports that 751 such firms in this category 
operated in that year. Of that number, 656 had annual receipts of 
$25,000,000 or less, 25 had annual receipts between $25,000,000 and 
$49,999,999 and 70 had annual receipts of $50,000,000 or more. Based on 
this data the Commission therefore estimates that the majority of 
commercial television broadcasters are small entities under the 
applicable SBA size standard.
    28. The Commission has estimated the number of licensed commercial 
television stations to be 1,382. Of this total, 1,262 stations (or 
about 91 percent) had revenues of $38.5 million or less, according to 
Commission staff review of the BIA Kelsey Inc. Media Access Pro 
Television Database (BIA) on May 9, 2017, and therefore these licensees 
qualify as small entities under the SBA definition. In addition, the 
Commission has estimated the number of licensed noncommercial 
educational television stations to be 393. Notwithstanding, the 
Commission does not compile and otherwise does not have access to 
information on the revenue of NCE stations that would permit it to 
determine how many such stations would qualify as small entities.
    29. It is important to note, however, that, in assessing whether a 
business concern qualifies as small under the above definition, 
business (control) affiliations must be included. The Commission's 
estimate, therefore, likely overstates the number of small entities 
that might be affected by its action, because the revenue figure on 
which it is based does not include or aggregate revenues from 
affiliated companies. In addition, another 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 to define or quantify 
the criteria that would establish whether a specific television 
broadcast station is dominant in its field of operation. Accordingly, 
the estimate of small businesses to which rules may apply do not 
exclude any television broadcast station from the definition of a small 
business on this basis and are therefore possibly over-inclusive. Also, 
as noted above, 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 the Commission's estimates of small businesses to 
which they apply may be over-inclusive to this extent.
    30. Radio Stations. This Economic Census category ``comprises 
establishments primarily engaged in broadcasting aural programs by 
radio to the public. Programming may originate in their own studio, 
from an affiliated network, or from external sources.'' The SBA has 
established a small business size standard for this category as firms 
having $38.5 million or less in annual receipts. Economic Census data 
for 2012 shows that 2,849 radio station firms operated during that 
year. Of that number, 2,806 operated with annual receipts of less than 
$25 million per year, 17 with annual receipts between $25 million and 
$49,999,999 million and 26 with annual receipts of $50 million or more. 
Therefore, based on the SBA's size standard the majority of such 
entities are small entities.
    31. According to Commission staff review of the BIA/Kelsey, LLC's 
Media Access Pro Radio Database on May 9, 2017, about 11,392 (or about 
99.9 percent) of 11,401 of commercial radio stations had revenues of 
$38.5 million or less and thus qualify as small entities under the SBA 
definition. The Commission has estimated the number of licensed 
commercial radio stations to be 11,401. It is important to note that 
the Commission has also estimated the number of licensed noncommercial 
radio stations to be 4,111. Nevertheless, the Commission does not 
compile and otherwise does not have access to information on the 
revenue of NCE stations that would permit it to determine how many such 
stations would qualify as small entities.
    32. It is important to note, that in assessing whether a business 
concern qualifies as small under the above definition, business 
(control) affiliations must be included. The Commission's estimate, 
therefore, likely overstates the number of small entities that might be 
affected by its action, because the revenue figure on which it is based 
does not include or aggregate revenues from affiliated companies. In 
addition, an element of the definition of ``small business'' is that 
the entity not be dominant in its field of operation. It is difficult 
at times to assess these criteria in the context of media entities, and 
the estimate of small businesses to which these rules may apply does 
not exclude any radio station from the definition of a small business 
on these basis. The Commission's estimate of small businesses may 
therefore be over-inclusive. Also, as noted above, an additional 
element of the definition of ``small business'' is that the entity must 
be independently owned and operated. The Commission notes that it is 
difficult at times to assess these criteria in the context of media 
entities and the estimates of small businesses to which they apply may 
be over-inclusive to this extent.

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

    33. Certain options, if adopted, may result in new reporting, 
recordkeeping, and compliance obligations for those broadcasters that 
participate in an incubator program. For example, parties could be 
required to submit the incubation proposal to the Commission for 
approval, file periodic compliance reports with the Commission or place 
the reports in their online public files, or submit requests for relief 
if the terms of the incubator proposal are not adhered to. In order to 
evaluate any new or modified reporting, recordkeeping or other 
compliance requirements that may result from the actions proposed in 
this NPRM, the Commission has sought input from the parties on various 
matters. The NPRM seeks comment on how to structure an incubation 
program, including a requirement that the parties file the incubation 
proposal with the Commission for the purpose of seeking the 
Commission's approval of the arrangement. The Commission seeks comment 
on the method for filing the agreement in circumstances in which the 
parties seek Commission approval of the incubation relationship, such 
as whether it should be filed as part of an application for assignment 
or transfer of control of a broadcast license or, in the absence of 
such an application, via the Commission's Electronic Comment Filing 
System. The NPRM also seeks comment on how to structure reporting, 
recordkeeping, and compliance requirements, which could also result in 
increased requirements for parties to an incubation arrangement. For 
example, the NPRM seeks comment on whether to

[[Page 780]]

require periodic certifications that the parties remain in compliance 
with the incubation proposal approved by the Commission.

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

    34. 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, standard; and (4) an 
exemption from coverage of the rule, or any part thereof, for small 
entities.
    35. To evaluate options and alternatives should there be a 
significant economic impact on small entities as a result of actions 
that have been proposed in this NPRM, the Commission has sought comment 
from the parties. The NPRM seeks comment on the costs and benefits 
associated with various proposals and alternatives such as how to 
structure the administration and oversight of an incubator program and 
specifically seeks comment on ways to reduce the burdens on small 
entities. Overall, however, the Commission believes that small entities 
will benefit from their participation in an incubator arrangement by 
getting access to capital and/or operational assistance that they may 
otherwise lack, which may minimize any economic impact that may be 
incurred by small entities.

F. Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rules

    36. None.

VI. Ordering Clauses

    37. Accordingly, it is ordered that, pursuant to the authority 
contained in sections 1, 2(a), 4(i), 257, 303, 307, 309, 310, and 403 
of the Communications Act of 1934, as amended, 47 U.S.C. 151, 152(a), 
154(i), 257, 303, 307, 309, 310, and 403, and section 202(h) of the 
Telecommunications Act of 1996, the Notice of Proposed Rulemaking is 
adopted.
    38. It is further ordered that, pursuant to applicable procedures 
set forth in sections 1.415 and 1.419 of the Commission's rules, 47 CFR 
1.415, 1.419, interested parties may file comments on the NPRM in MB 
Docket No. 17-289 on or before March 9, 2018 and reply comments on or 
before April 9, 2018.
    39. It is further ordered that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, shall send a 
copy of the NPRM, including the Initial Regulatory Flexibility 
Analysis, to the Chief Counsel for Advocacy of the Small Business 
Administration.


Federal Communications Commission.
Katura Jackson,
Federal Register Liaison Officer. Office of the Secretary.
[FR Doc. 2017-28328 Filed 1-5-18; 8:45 am]
 BILLING CODE 6712-01-P