Editorial: Capital Idea

The FCC could do something right now to help out broadcasters,
and potentially boost minority and women ownership—or it
could at least act much sooner than it has historically moved
on other, seemingly obvious ways to help an industry it professes
to want to keep strong and vibrant.

The extent to which the commission under the
current or a future chair has been, or is, willing
to go to bat for broadcasters is a matter for another
editorial, but regardless, both the mediaownership
rule review and action on minority
initiatives tied to that are stalled for the moment,
while action on loosening the foreign-ownership
rules appears within the FCC’s ready grasp.

We would say the odds are good that the commission
will actually vote to loosen the de facto
25% cap on foreign investment in TV and radio

The National Association of Broadcasters, Jessie
Jackson’s Rainbow/PUSH Coalition and the National
Association of Media Brokers are all on
the same page on this one. In fact, a laundry
list of minority advocates, many usually on the
other side of any move that would deregulate
media ownership, have weighed in at the FCC
in support of the change (see Washington Watch).

That’s because, for most potential buyers, and
for potential minority buyers in particular, access
to capital is the biggest obstacle to getting into
the business.

If the FCC is serious about leaving a broadcasting
business worth buying into at the other end
of the spectrum incentive auctions it’s holding
to encourage some to sell out, it will make this
fairly simple change, one that really only squares
with the intent of the foreign-ownership rules,
which allow for waivers of the cap if they are in
the public interest.

As a practical matter, the 25% has been a ceiling.
Only one waiver has ever been granted, and
that was ex post facto to Rupert Murdoch, after
News Corp. had owned the Metromedia stations
for a decade.

Meanwhile, the FCC has no such foreignownership
limit on investments in the vaunted
wired and wireless broadband sphere—both of
which get a lot more attention from the FCC as
critical U.S. infrastructure—or telcos or online
video providers. That disparity never made much
sense and now is only one more way of handicapping
broadcasters’ competitive future.

The FCC two weeks ago took steps to make it
easier for foreign investment in wireless, so not to
follow suit by giving broadcasters at least a little
more access to that capital would be a flashing
neon sign that the FCC was not serious about its
support for broadcasting.

The commission needs to get moving on ownership
reform with more urgency—that, too, is
another editorial.

Raising the cap doesn’t mean that North Korea
would be free to buy up TV
stations, or that China could
siphon off incentive auction
proceeds. There would still be a
case-by-case analysis of whether
the purchase was in the public
interest, and we assume those
would not be.

But what it does mean is that
broadcasters would get more
access to capital if they want to
buy, and access to more potential
bidders if they want to sell.

The same groups that asked
for the foreign-ownership
change last week also asked
President Obama to nominate
a new chair who will make
boosting minority ownership a
priority. That would apply to an
interim chair as well, one who
could be in the post for months. Reply comments
are due April 30 on the proposal to loosen the de
facto cap, so at least theoretically, the FCC could
act within the next couple of months.

If that interim chair turns out to be Mignon
Clyburn (the senior Democrat on the commission,
after exiting chairman Julius Genachowski),
it would be a !tting move for the first African-
American woman to hold that post.

But whoever is running the FCC, we agree
that giving broadcasters the same opportunity to
attract international capital as virtually all of its
direct competitors have should be high on the
to-do list.