In a move that could bring more bucks into the station brokerage market, acting FCC Chairwoman Mignon Clyburn has circulated an item for the November public meeting that would potentially allow greater foreign ownership of U.S. broadcast properties.
After the FCC released a tentative agenda with a foreign ownership item listed, Clyburn released a statement clarifying just what that item was.
"Today, I circulated a declaratory ruling that clears the way for increased access to capital and potential new investors for the broadcast sector," she said in a statement. "Approval of this item will clarify the Commission's intention to review, on a case-by-case basis, proposed transactions that would exceed the 25 percent benchmark that restricts foreign ownership in companies holding broadcast licenses. I look forward to working with my colleagues toward a final Commission vote next month."
Currently, commission rules have a soft cap of 25% foreign ownership in a TV or radio station. That, however, has morphed into a de facto hard cap that cuts off a potential new source of capital infusion at a time when broadcasters could really use it.
"I am very pleased that Chairwoman Clyburn has circulated an item to modernize the agency's approach to foreign investment in the broadcasting business," said FCC Commissioner Ajit Pai. "Over a year ago, I called for the elimination of the de facto ban on any foreign investment in a U.S. broadcast holding company that exceeds a 25 percent benchmark. I am now optimistic that we will take that step at our next Commission meeting."
The case-by-case approach does not come as a surprise.
Back in April, the FCC voted unanimously to make it easier for wireless companies to access foreign capital, signaling it might be ready to do the same for broadcasters, as the Coalition for Broadcast Investment petitioned it to do.
Minority ownership advocates are on the same page, since the biggest impediment to boosting their business, they argue, is access to capital.
It may have been only a soft cap, but the commission has only issued one waiver of the 25% cap. That was to Rupert Murdoch, whose News Corp. purchased Metromedia stations in the mid-1980s but failed to inform the FCC it represented a 99% foreign-ownership purchase. Ten years later, the FCC retroactively granted the waiver.
As broadcasters have long pointed out, a similar restriction has not been placed on foreign investments in telcos, cable or satellite companies, or Internet video competitors.
"NAB applauds Acting FCC Chairwoman Clyburn for proposing that the Commission should consider foreign investment in U.S. broadcast properties the same way it considers such investments in other telecommunications properties," said National Association of Broadcasters President Gordon Smith. "This is fundamentally fair and will serve the public interest. Permitting new potential sources of capital for American radio and TV stations will strengthen our ability to continue providing compelling news, entertainment and sports programming and to remain competitive in a multichannel digital world."
Not surprisingly, the National Association of Media Brokers has made sure the FCC knows it is all for the change. In fact, while others were pitching the FCC on loosening the newspaper/broadcast cross-ownership rules, NAMB has been arguing that the lack of access to capital has been the big obstacle. "While most of the other portions of the telecommunications industry in the United States have seen significant foreign investment-including investments in the wireless carriers and, in the past, in the cable television industry- broadcasting remains an island where the opportunities for foreign investment have, thus far, been limited," the NAMB told the FCC last April.
The Coalition for Broadcast Investment, which had requested the declaratory ruling, for case-by-case consideration of foreign investment in broadcast properties that exceeded the 25% de facto limit, was understandably pleased.
"We are gratified that the Commission is taking this significant step, and we appreciate Chairwoman Clyburn's leadership on this important issue," said Mace Rosenstein, a partner with Covington & Burling and an adviser to the Coalition. "The proposed ruling would enable broadcasters to access capital on the same terms as their cable, wireline, wireless and online counterparts and could be especially important to minority and women broadcast entrepreneurs. We are pleased the Commission will consider the request from a broad array of diverse stakeholders to clarify its existing statutory authority to permit broadcast foreign investment that is consistent with the public interest and our national security," he said.
The Coalition includes Hearst Television Inc., CBS, Disney, Univision and Clear Channel Communications, as well as civil rights organizations.