FCC Grants First 100% Foreign Control of U.S. Broadcasters

Media Bureau points out petition was unopposed and is in public interest

The FCC's Media Bureau has granted a petition by a pair of Australian citizens to control 100% of broadcast stations (four radio stations in Alaska and Texas).

The FCC has granted aggregate foreign investments in broadcast licensees of up to 49.99% under foreign ownership rules loosened in 2013 (the Pandora decision), and just last month allowed foreign investors to own up to a 49% equity stake in TV and radio station owner Univision, including up to a 40% stake by Mexico's Televisa.

But this is the first time it has allowed 100% foreign ownership of the parent of broadcast licensees, at least outside of one-off waivers--the FCC allowed NewsCorp., also Australian, to buy its (Fox) TV stations in the 1990s.

The FCC's Media Bureau, which issued the declaratory ruling Feb. 23 allowing the ownership change, said the petition had been unopposed and that it had consulted with the "relevant agencies" on law enforcement, national security, foreign policy and trade issues—and none of those agencies raised any objections or said any conditions should be put on the deal.

Any deal that will result in more than 25% foreign ownership triggers such heightened scrutiny, but since 2013 such a 100% control scenario has been possible, which the FCCs' Media Bureau pointed out in noting that the petition was reviewed under that 2013 clarification rather than the 2015 decision to streamline foreign ownership reviews, which explicitly said the FCC would consider petitions for 100% control. That is because the 2016 streamlining has yet to take effect.

But under that heightened scrutiny, the bureau has concluded that not only are there no grounds to object, there are grounds to favor the deal. "[W]e find that grant of the Petition would: (1) increase the likelihood of continued service to small communities by authorizing investment by individuals who are ready, willing, and able to operate the stations based on their extensive experience operating them to date; (2) facilitate foreign investment in the U.S. broadcast radio market; and (3) potentially encourage reciprocal investment opportunities for U.S. companies in foreign markets. For these reasons, we find that grant of the Petition will serve the public interest."

The stations at issue are KGTW (FM) Ketchikan and KINY (AM) Juneau, both Alaska, and KCMC (AM) Texarkana and KTOY (FM) Texarkana, both Texas.

The stations are owned by Frontier, an Alaska-based company controlled by Richard and Sharon Burns, who are Australian citizens. They each own 10% of the ownership interests in the stations and want to buy the other 80% so they would hold 100% of the ownership interest.

"[A]fter the proposed transaction, the Burnses, would hold 100 percent of the ownership interests in Frontier, the parent of all four Licensees, and, through Frontier, would indirectly own 100 percent of the interests in the Licensees," the Bureau said.

Both of the Burnses have lived and worked in the U.S. for more than a decade, the FCC pointed out. They have managed the Alaska stations since 2006 and the Texarkana stations since 2013.