FCC Opens Radio and Television Broadcasting to Foreign Entities

by Stephen Díaz Gavin

For more than 80 years, Section 310(b) of the Communications Act of 1934 has been interpreted as prohibiting direct foreign ownership of more than 20% and indirect ownership of 25% or more of US radio and television broadcast stations.  Effective January 31, 2017, this will change as the Federal Communications Commission (“FCC”) has removed longstanding prohibitions against these limitations on foreign ownership, although it has preserved the right, on a case-by-case basis, to block a foreign acquisition of a broadcast license in excess of 25% (e.g., for reasons of national security).

Foreign entities, for quite some time, have already been permitted to acquire control over non-broadcast licenses (e.g., nationwide cell carrier T-Mobile is majority owned by Deutsche Telekom). But the FCC has steadfastly enforced its longstanding foreign ownership control policies over broadcast station licenses.  Most famously, Rupert Murdoch had to become a U.S. citizen before being able to acquire control over what we know today as Fox Broadcasting.

Changes adopted to the rules of the FCC will enable approval of up to and including 100% aggregate foreign beneficial ownership (voting and/or equity) by foreign investors in the controlling U.S. parent of a broadcast licensee, subject to certain conditions.  The revised rules, which newly define and in certain respects create different rules for “named” and “un-named” investors, they will allow a named foreign investor that acquires less than 100% to increase its controlling interest to 100% at some time in the future.  If a named foreign investor acquires a “noncontrolling” interest, that investor will now be permitted to increase its voting and/or equity interest up to and including a “noncontrolling” interest of 49.99% in the future, if it chooses to do so.

Although the FCC’s expansive “public interest standard” in approving sales and investments in broadcast licenses, coupled with input from other Executive government agencies, could significantly delay or block investments from some countries, the strong support of this initiative by the remaining Republican members of the FCC would tend to indicate the FCC will be disposed to allow most transactions to proceed to closing.  Indeed, the FCC has already signaled its willingness to do so, by approving just such a foreign ownership acquisition in a recent declaratory ruling issued even before the new rules take effect, ending a decades long back-and-forth haggling over Mexican ownership of Univision.

For more information regarding the new FCC rules or assistance in handling the regulatory and transactional aspects of such an investment, contact the author, Stephen Díaz Gavin, or Phil Quatrini or Sandy Sterrett, all partners at Rimon, P.C.

Of course, you can always contact me, Joe Rosenbaum, the Editor!

Legal Bytes – A New Beginning

A long time ago in a galaxy far, far away……  oops, wrong beginning.

Welcome to the new Legal Bytes blog.  As many of you know, my Legal Bytes blog has been dormant after my recent transition to Rimon, P.C..  Getting set up, ensuring smooth transitions for clients, enhancing the look and feel of the blog has taken a longer than I hoped, but hopefully the bugs are out of the system and it’s now up to me to try my best to make the new Legal Bytes blog worth the wait.  For newcomers, buckle your seatbelts – this isn’t your ordinary legal blog!

What happened? Why does it matter? How does or could it affect you?  Inquiring minds always want to know and in the process of trying to answer those questions for you, I will always try to illuminate and perhaps also entertain you.   In the coming months I’ll entice you into regular readership, enlighten you with timely content, addict you with my trivia contests, entice you to keep in touch and most of all, try to help you better understand how developments in the law and regulation may affect you.

I intend to continue Light Bytes, with interesting quotes and sayings that pique my interest and hopefully yours.  Of course, there was never a question about my trivia contests. After all, who else but a lawyer could call it “Useless But Compelling Facts”?  We have once again made arrangements with the International Law Office (ILO) based in London. I am privileged to have been re-appointed as Editor and exclusive content coordinator for their U.S. Media, Marketing, Sports & Entertainment Newsletter.  Although there will be content you will see exclusively in the ILO newsletter, you may also see many of our Legal Bytes articles re-purposed and ‘internationalized’ in collaboration with much appreciated work of the ILO editorial staff.  I am again excited to be working with such a valued organization and truly great people – shout out to Carolyn Boyle, my Editorial contact.

Want to know what’s on my radar for the year ahead – I won’t spoil all the surprises, drone on about drones, nor will I keep my head in the clouds or the crowds.  I am fascinated by the legal implications of the Internet with Things (yes, I replaced ‘Of’ with “With”).  I’m also concerned about cybersecurity and data protection.   I am intrigued by the growing robustness of augmented reality, which means I don’t have to walk around with those funny goggles or a digital scuba mask to experience the virtual world.  Mobile technology is transforming our world – making digital content, e-commerce and communication available to billions of people that had previously never seen a television, had a bank account or used a telephone.  I would be remiss not to mention social media – maturing and increasingly commercialized – further blurring the distinctions between information, entertainment and advertising; between me as an individual and an employee; between me at play and at work; and between my trademarks and my reputation; and between my insatiable desire to tell the world and my seemingly paradoxical concern over my privacy!

It is a brave new world – so much to know and so much to keep up with.

So stay tuned, and as always, thank you for reading.