[Federal Register Volume 86, Number 123 (Wednesday, June 30, 2021)]
[Rules and Regulations]
[Pages 34627-34631]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-13811]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 73

[MB Docket Nos. 14-50, 09-182, 07-294, 04-256, 17-289; DA 21-656; FR ID 
33718]


Media Bureau Reinstates Commission's Prior Rule Changes Regarding 
Media Ownership Consistent With the U.S. Supreme Court's Decision

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, consistent with the U.S. Supreme Court's 
decision in FCC v. Prometheus Radio Project, the Media Bureau of the 
Federal Communications Commission reinstates the rule changes that were 
previously adopted by the Commission in its media ownership proceedings 
but then vacated and remanded by the U.S. Third Circuit Court of 
Appeals in 2019. As such, the Newspaper/Broadcast Cross-Ownership Rule, 
the Radio/Television Cross-Ownership Rule, and the Television Joint 
Sales Agreement Attribution Rule are eliminated, and the Local 
Television Ownership Rule and Local Radio Ownership Rule are reinstated 
as adopted in the Commission's 2017 Order on Reconsideration. In 
addition, the eligible entity standard and its

[[Page 34628]]

application to regulatory measures as set forth in the Commission's 
2016 Second Report and Order are reinstated. Finally, the regulatory 
measures adopted in the Commission's 2018 Incubator Order are 
reinstated.

DATES: Effective June 30, 2021.

FOR FURTHER INFORMATION CONTACT: Ty Bream, Industry Analysis Division, 
Media Bureau, [email protected], (202) 418-0644.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Order 
in MB Docket Nos. 14-50, 09-182, 07-294, 04-256, and 17-289, DA 21-656, 
that was adopted and released on June 4, 2021. The full text of this 
document is available for public inspection online at https://docs.fcc.gov/public/attachments/DA-21-656A1.pdf. Documents will be 
available electronically in ASCII, Microsoft Word, and/or Adobe 
Acrobat. Alternative formats are available for people with disabilities 
(Braille, large print, electronic files, audio format, etc.) and 
reasonable accommodations (accessible format documents, sign language 
interpreters, CART, etc.) may be requested by sending an email to 
[email protected] or calling the FCC's Consumer and Governmental Affairs 
Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY).

Synopsis

    1. In FCC v. Prometheus Radio Project, 141 S.Ct. 1150 (2021), the 
U.S. Supreme Court reversed the decision of the U.S. Court of Appeals 
for the Third Circuit in Prometheus Radio Project v. FCC, 939 F.3d 567 
(3rd Cir. 2019), regarding the Commission's media ownership rules. The 
Third Circuit had vacated and remanded, in their entirety, the 
Commission's 2018 Incubator Order (83 FR 43773, Aug. 28, 2018) and the 
Commission's 2017 Order on Reconsideration (83 FR 755, Jan. 8, 2018). 
The Third Circuit also had vacated and remanded the definition of 
eligible entities adopted in the Commission's 2016 Second Report and 
Order (81 FR 76262, Nov. 1, 2016).
    2. Consistent with the Supreme Court's decision, the Media Bureau's 
Order reinstates the changes adopted in the Incubator Order and Order 
on Reconsideration and the eligible entity definition as adopted in the 
Second Report and Order. As such, the Newspaper/Broadcast Cross-
Ownership Rule, the Radio/Television Cross-Ownership Rule, and the 
Television Joint Sales Agreement Attribution Rule are eliminated, and 
the Local Television Ownership Rule and Local Radio Ownership Rule are 
reinstated as adopted in the Order on Reconsideration. The presumption 
under the Local Radio Ownership Rule that would apply a two-prong test 
for waiver requests involving existing parent markets with multiple 
embedded markets is reinstated. Note 5 to Sec.  73.3555 is reinstated 
to the version as amended when the Commission adopted the streamlined 
procedures in March 2019 for reauthorizing television satellite 
stations when such stations are assigned or transferred. See 
Streamlined Reauthorization Procedures for Assigned or Transferred 
Television Satellite Stations, Modernization of Media Regulation 
Initiative (84 FR 15125, Apr. 15, 2019). The Order on Reconsideration 
revised Sec.  73.3613(d)(2) of the Commission's rules regarding the 
filing requirement for joint sales agreements. Because that filing 
requirement has since been eliminated, the revision to Sec.  
73.3613(d)(2) adopted in the Order on Reconsideration is not 
reinstated. See Amendment of Section 73.3613 of the Commission's Rules 
Regarding Filing of Contracts, Modernization of Media Regulation 
Initiative (83 FR 65551, Dec. 21, 2018).
    3. In addition, the eligible entity standard and its application to 
regulatory measures as set forth in the Second Report and Order are 
reinstated. Finally, the regulatory measures adopted in the Incubator 
Order are reinstated.
    4. The Bureau finds that notice and comment are unnecessary for 
these rule amendments under 5 U.S.C. 553(b) because this ministerial 
order merely implements the decision of the U.S. Supreme Court. Because 
this Order is being adopted without notice and comment, the Regulatory 
Flexibility Act, 5 U.S.C. 601, et seq., does not apply.
    5. Accordingly, it is ordered that Sec.  73.3555 of the 
Commission's rules, 47 CFR 73.3555, is amended as set forth in the 
Final Rules, effective upon publication in the Federal Register. 
Because of the need during the current broadcast station license 
renewal cycle to alert prospective applicants to the current, 
applicable rules, there is ``good cause'' under 5 U.S.C. 553(d) to make 
the rules effective immediately upon publication in the Federal 
Register.
    6. This action is taken pursuant to the authority contained in 
sections 1, 2(a), 4(i) and (j), 5(c), 257, 303, 307, 308, 309, 310, and 
403 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 
152(a), 154(i), 154(j), 155(c), 257, 303, 307, 308, 309, 310, and 403, 
section 202(h) of the Telecommunications Act of 1996, and Sec. Sec.  
0.61 and 0.283 of the Commission's rules, 47 CFR 0.61, 0.283.
    7. The Bureau has determined, and the Administrator of the Office 
of Information and Regulatory Affairs, Office of Management and Budget, 
concurs that these rules are non-major under the Congressional Review 
Act, 5 U.S.C. 804(2). The Commission will send a copy of this Order to 
Congress and the Government Accountability Office pursuant to 5 U.S.C. 
801(a)(1)(A).

List of Subjects in 47 CFR Part 73

    Radio, Television.

Federal Communications Commission.
Thomas Horan,
Chief of Staff, Media Bureau.

Final Rules

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

PART 73--RADIO BROADCAST SERVICES

0
1. The authority citation for part 73 continues to read as follows:

    Authority:  47 U.S.C. 154, 155, 301, 303, 307, 309, 310, 334, 
336, 339.


0
2. Amend Sec.  73.3555 by:
0
a. Revising paragraph (b);
0
b. Removing and reserving paragraphs (c) and (d);
0
c. In Note 2, revising the introductory text and paragraphs (a) through 
(d) and (g) through (k);
0
d. Revising Note 4 through Note 7 and Note 9; and
0
e. Removing Note 12.
    The revisions read as follows:


Sec.  73.3555  Multiple ownership.

* * * * *
    (b) Local television multiple ownership rule. (1) An entity may 
directly or indirectly own, operate, or control two television stations 
licensed in the same Designated Market Area (DMA) (as determined by 
Nielsen Media Research or any successor entity) if:
    (i) The digital noise limited service contours of the stations 
(computed in accordance with Sec.  73.622(e)) do not overlap; or
    (ii) At the time the application to acquire or construct the 
station(s) is filed, at least one of the stations is not ranked among 
the top four stations in the DMA, based on the most recent all-day (9 
a.m.-midnight) audience share, as measured by Nielsen Media Research or 
by any comparable professional, accepted audience ratings service.
    (2) Paragraph (b)(1)(ii) (Top-Four Prohibition) of this section 
shall not apply in cases where, at the request of the applicant, the 
Commission makes a

[[Page 34629]]

finding that permitting an entity to directly or indirectly own, 
operate, or control two television stations licensed in the same DMA 
would serve the public interest, convenience, and necessity. The 
Commission will consider showings that the Top-Four Prohibition should 
not apply due to specific circumstances in a local market or with 
respect to a specific transaction on a case-by-case basis.
* * * * *

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

    a. Except as otherwise provided herein, partnership and direct 
ownership interests and any voting stock interest amounting to 5% or 
more of the outstanding voting stock of a corporate broadcast licensee 
will be cognizable;
    b. Investment companies, as defined in 15 U.S.C. 80a-3, insurance 
companies and banks holding stock through their trust departments in 
trust accounts will be considered to have a cognizable interest only if 
they hold 20% or more of the outstanding voting stock of a corporate 
broadcast licensee, or if any of the officers or directors of the 
broadcast licensee are representatives of the investment company, 
insurance company or bank concerned. Holdings by a bank or insurance 
company will be aggregated if the bank or insurance company has any 
right to determine how the stock will be voted. Holdings by investment 
companies will be aggregated if under common management.
    c. Attribution of ownership interests in a broadcast licensee that 
are held indirectly by any party through one or more intervening 
corporations will be determined by successive multiplication of the 
ownership percentages for each link in the vertical ownership chain and 
application of the relevant attribution benchmark to the resulting 
product, except that wherever the ownership percentage for any link in 
the chain exceeds 50%, it shall not be included for purposes of this 
multiplication. For purposes of paragraph i. of this note, attribution 
of ownership interests in a broadcast licensee that are held indirectly 
by any party through one or more intervening organizations will be 
determined by successive multiplication of the ownership percentages 
for each link in the vertical ownership chain and application of the 
relevant attribution benchmark to the resulting product, and the 
ownership percentage for any link in the chain that exceeds 50% shall 
be included for purposes of this multiplication. [For example, except 
for purposes of paragraph (i) of this note, if A owns 10% of company X, 
which owns 60% of company Y, which owns 25% of ``Licensee,'' then X's 
interest in ``Licensee'' would be 25% (the same as Y's interest because 
X's interest in Y exceeds 50%), and A's interest in ``Licensee'' would 
be 2.5% (0.1 x 0.25). Under the 5% attribution benchmark, X's interest 
in ``Licensee'' would be cognizable, while A's interest would not be 
cognizable. For purposes of paragraph i. of this note, X's interest in 
``Licensee'' would be 15% (0.6 x 0.25) and A's interest in ``Licensee'' 
would be 1.5% (0.1 x 0.6 x 0.25). Neither interest would be attributed 
under paragraph i. of this note.]
    d. Voting stock interests held in trust shall be attributed to any 
person who holds or shares the power to vote such stock, to any person 
who has the sole power to sell such stock, and to any person who has 
the right to revoke the trust at will or to replace the trustee at 
will. If the trustee has a familial, personal or extra-trust business 
relationship to the grantor or the beneficiary, the grantor or 
beneficiary, as appropriate, will be attributed with the stock 
interests held in trust. An otherwise qualified trust will be 
ineffective to insulate the grantor or beneficiary from attribution 
with the trust's assets unless all voting stock interests held by the 
grantor or beneficiary in the relevant broadcast licensee are subject 
to said trust.
* * * * *
    g. Officers and directors of a broadcast licensee are considered to 
have a cognizable interest in the entity with which they are so 
associated. If any such entity engages in businesses in addition to its 
primary business of broadcasting, it may request the Commission to 
waive attribution for any officer or director whose duties and 
responsibilities are wholly unrelated to its primary business. The 
officers and directors of a parent company of a broadcast licensee, 
with an attributable interest in any such subsidiary entity, shall be 
deemed to have a cognizable interest in the subsidiary unless the 
duties and responsibilities of the officer or director involved are 
wholly unrelated to the broadcast licensee, and a statement properly 
documenting this fact is submitted to the Commission. [This statement 
may be included on the appropriate Ownership Report.] The officers and 
directors of a sister corporation of a broadcast licensee shall not be 
attributed with ownership of that licensee by virtue of such status.
    h. Discrete ownership interests will be aggregated in determining 
whether or not an interest is cognizable under this section. An 
individual or entity will be deemed to have a cognizable investment if:
    1. The sum of the interests held by or through ``passive 
investors'' is equal to or exceeds 20 percent; or
    2. The sum of the interests other than those held by or through 
``passive investors'' is equal to or exceeds 5 percent; or
    3. The sum of the interests computed under paragraph h. 1. of this 
note plus the sum of the interests computed under paragraph h. 2. of 
this note is equal to or exceeds 20 percent.
    i.1. Notwithstanding paragraphs e. and f. of this Note, the holder 
of an equity or debt interest or interests in a broadcast licensee 
subject to the broadcast multiple ownership rules (``interest holder'') 
shall have that interest attributed if:
    A. The equity (including all stockholdings, whether voting or 
nonvoting, common or preferred) and debt interest or interests, in the 
aggregate, exceed 33 percent of the total asset value, defined as the 
aggregate of all equity plus all debt, of that broadcast licensee; and
    B.(i) The interest holder also holds an interest in a broadcast 
licensee in the same market that is subject to the broadcast multiple 
ownership rules and is attributable under paragraphs of this note other 
than this paragraph i.; or
    (ii) The interest holder supplies over fifteen percent of the total 
weekly broadcast programming hours of the station in which the interest 
is held. For purposes of applying this paragraph, the term, ``market,'' 
will be defined as it is defined under the specific multiple ownership 
rule that is being applied, except that for television stations, the 
term ``market'' will be defined by reference to the definition 
contained in the local television multiple ownership rule contained in 
paragraph (b) of this section.
    2. Notwithstanding paragraph i.1. of this Note, the interest holder 
may exceed the 33 percent threshold therein without triggering 
attribution where holding such interest would enable an eligible entity 
to acquire a broadcast station, provided that:
    i. The combined equity and debt of the interest holder in the 
eligible entity is less than 50 percent, or
    ii. The total debt of the interest holder in the eligible entity 
does not exceed 80 percent of the asset value of the station being 
acquired by the eligible entity and the interest holder does not hold 
any equity interest, option, or promise to

[[Page 34630]]

acquire an equity interest in the eligible entity or any related 
entity. For purposes of this paragraph i.2, an ``eligible entity'' 
shall include any entity that qualifies as a small business under the 
Small Business Administration's size standards for its industry 
grouping, as set forth in 13 CFR 121.201, at the time the transaction 
is approved by the FCC, and holds:
    A. 30 percent or more of the stock or partnership interests and 
more than 50 percent of the voting power of the corporation or 
partnership that will own the media outlet; or
    B. 15 percent or more of the stock or partnership interests and 
more than 50 percent of the voting power of the corporation or 
partnership that will own the media outlet, provided that no other 
person or entity owns or controls more than 25 percent of the 
outstanding stock or partnership interests; or
    C. More than 50 percent of the voting power of the corporation that 
will own the media outlet if such corporation is a publicly traded 
company.
    j. ``Time brokerage'' (also known as ``local marketing'') is the 
sale by a licensee of discrete blocks of time to a ``broker'' that 
supplies the programming to fill that time and sells the commercial 
spot announcements in it.
    1. Where two radio stations are both located in the same market, as 
defined for purposes of the local radio ownership rule contained in 
paragraph (a) of this section, and a party (including all parties under 
common control) with a cognizable interest in one such station brokers 
more than 15 percent of the broadcast time per week of the other such 
station, that party shall be treated as if it has an interest in the 
brokered station subject to the limitations set forth in paragraph (a) 
of this section. This limitation shall apply regardless of the source 
of the brokered programming supplied by the party to the brokered 
station.
    2. Where two television stations are both located in the same 
market, as defined in the local television ownership rule contained in 
paragraph (b) of this section, and a party (including all parties under 
common control) with a cognizable interest in one such station brokers 
more than 15 percent of the broadcast time per week of the other such 
station, that party shall be treated as if it has an interest in the 
brokered station subject to the limitations set forth in paragraphs (b) 
and (e) of this section. This limitation shall apply regardless of the 
source of the brokered programming supplied by the party to the 
brokered station.
    3. Every time brokerage agreement of the type described in this 
Note shall be undertaken only pursuant to a signed written agreement 
that shall contain a certification by the licensee or permittee of the 
brokered station verifying that it maintains ultimate control over the 
station's facilities including, specifically, control over station 
finances, personnel and programming, and by the brokering station that 
the agreement complies with the provisions of paragraph (b) of this 
section if the brokering station is a television station or with 
paragraph (a) of this section if the brokering station is a radio 
station.
    k. ``Joint Sales Agreement'' is an agreement with a licensee of a 
``brokered station'' that authorizes a ``broker'' to sell advertising 
time for the ``brokered station.''
    1. Where two radio stations are both located in the same market, as 
defined for purposes of the local radio ownership rule contained in 
paragraph (a) of this section, and a party (including all parties under 
common control) with a cognizable interest in one such station sells 
more than 15 percent of the advertising time per week of the other such 
station, that party shall be treated as if it has an interest in the 
brokered station subject to the limitations set forth in paragraph (a) 
of this section.
    2. Every joint sales agreement of the type described in this Note 
shall be undertaken only pursuant to a signed written agreement that 
shall contain a certification by the licensee or permittee of the 
brokered station verifying that it maintains ultimate control over the 
station's facilities, including, specifically, control over station 
finances, personnel and programming, and by the brokering station that 
the agreement complies with the limitations set forth in paragraph (a) 
of this section if the brokering station is a radio station.
* * * * *

    Note 4 to Sec.  73.3555: Paragraphs (a) and (b) of this section 
will not be applied so as to require divestiture, by any licensee, 
of existing facilities, and will not apply to applications for 
assignment of license or transfer of control filed in accordance 
with Sec.  73.3540(f) or Sec.  73.3541(b), or to applications for 
assignment of license or transfer of control to heirs or legatees by 
will or intestacy, or to FM or AM broadcast minor modification 
applications for intra-market community of license changes, if no 
new or increased concentration of ownership would be created among 
commonly owned, operated or controlled broadcast stations. 
Paragraphs (a) and (b) of this section will apply to all 
applications for new stations, to all other applications for 
assignment or transfer, to all applications for major changes to 
existing stations, and to all other applications for minor changes 
to existing stations that seek a change in an FM or AM radio 
station's community of license or create new or increased 
concentration of ownership among commonly owned, operated or 
controlled broadcast stations. Commonly owned, operated or 
controlled broadcast stations that do not comply with paragraphs (a) 
and (b) of this section may not be assigned or transferred to a 
single person, group or entity, except as provided in this Note, the 
Report and Order in Docket No. 02-277, released July 2, 2003 (FCC 
02-127), or the Second Report and Order in MB Docket No. 14-50, FCC 
16-107 (released August 25, 2016).


    Note 5 to Sec.  73.3555:  Paragraphs (b) and (e) of this section 
will not be applied to cases involving television stations that are 
``satellite'' operations. Such cases will be considered in 
accordance with the analysis set forth in the Report and Order in MM 
Docket No. 87-8, FCC 91-182 (released July 8, 1991), as further 
explained by the Report and Order in MB Docket No. 18-63, FCC 19-17, 
(released March 12, 2019), in order to determine whether common 
ownership, operation, or control of the stations in question would 
be in the public interest. An authorized and operating ``satellite'' 
television station, the digital noise limited service contour of 
which overlaps that of a commonly owned, operated, or controlled 
``non-satellite'' parent television broadcast station may 
subsequently become a ``non-satellite'' station under the 
circumstances described in the aforementioned Report and Order in MM 
Docket No. 87-8. However, such commonly owned, operated, or 
controlled ``non-satellite'' television stations may not be 
transferred or assigned to a single person, group, or entity except 
as provided in Note 4 of this section.


    Note 6 to Sec.  73.3555:  Requests submitted pursuant to 
paragraph (b)(2) of this section will be considered in accordance 
with the analysis set forth in the Order on Reconsideration in MB 
Docket Nos. 14-50, et al. (FCC 17-156).


    Note 7 to Sec.  73.3555: The Commission will entertain 
applications to waive the restrictions in paragraph (b) of this 
section (the local television ownership rule) on a case-by-case 
basis. In each case, we will require a showing that the in-market 
buyer is the only entity ready, willing, and able to operate the 
station, that sale to an out-of-market applicant would result in an 
artificially depressed price, and that the waiver applicant does not 
already directly or indirectly own, operate, or control interest in 
two television stations within the relevant DMA. One way to satisfy 
these criteria would be to provide an affidavit from an independent 
broker affirming that active and serious efforts have been made to 
sell the permit, and that no reasonable offer from an entity outside 
the market has been received.

    We will entertain waiver requests as follows:
    1. If one of the broadcast stations involved is a ``failed'' 
station that has not been in operation due to financial distress for at 
least four consecutive months immediately prior to the

[[Page 34631]]

application, or is a debtor in an involuntary bankruptcy or insolvency 
proceeding at the time of the application.
    2. If one of the television stations involved is a ``failing'' 
station that has an all-day audience share of no more than four per 
cent; the station has had negative cash flow for three consecutive 
years immediately prior to the application; and consolidation of the 
two stations would result in tangible and verifiable public interest 
benefits that outweigh any harm to competition and diversity.
    3. If the combination will result in the construction of an unbuilt 
station. The permittee of the unbuilt station must demonstrate that it 
has made reasonable efforts to construct but has been unable to do so.
* * * * *

    Note 9 to Sec.  73.3555:  Paragraph (a)(1) of this section will 
not apply to an application for an AM station license in the 1605-
1705 kHz band where grant of such application will result in the 
overlap of the 5 mV/m groundwave contours of the proposed station 
and that of another AM station in the 535-1605 kHz band that is 
commonly owned, operated or controlled.

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[FR Doc. 2021-13811 Filed 6-29-21; 8:45 am]
BILLING CODE 6712-01-P