Revision of Radio Rules and Policies

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 73

[MM Docket No. 91-140; DA 94-1013]

Revision of Radio Rules and Policies

agency: Federal Communications Commission.

action: Final rule; correction of rule and confirmation of effective

date.

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summary: This Order confirms that the stay of certain changes to the

FCC's multiple ownership rule was lifted on September 16, 1992, and

reprints the corrected rule in its entirety. The Mass Media Bureau

takes this action to ensure that the correct version of the rule is

printed in the Code of Federal Regulations. Because the stay was lifted

in an ordering clause to a Commission document but not in the Federal

Register summary associated with that document, the lifting of the stay

was not recognized by the Federal Register. As a result, the rule is

currently printed in the Code of Federal Regulations as if the stay was

still in effect. This Order is intended solely to correct the outdated

version of the multiple ownership rule; no substantive rule changes

have been made.

effective date: September 26, 1994.

for further information contact: Jane Hinckley Halprin, Mass Media

Bureau, Policy and Rules Division, (202) 632-7792.

SUPPLEMENTARY INFORMATION:

Order

Adopted: September 15, 1994

Released: September 19, 1994

In the Matter of: Revision of Radio Rules and Policies.

By the Acting Chief, Mass Media Bureau:

1. In its Report and Order in MM Docket No. 91-140, 7 FCC Rcd 2755

(1992), 57 FR 18089 (April 29, 1992), the Commission amended 47 CFR

73.3555. The effective date of the changes adopted in the Report and

Order was subsequently deferred pending resolution of petitions for

reconsideration. Order Deferring Effective Date in MM Docket No. 91-

140, FCC 92-351 (released July 30, 1992), 57 FR 35763 (Aug. 11, 1992).

The stay of the effective date was lifted by Memorandum Opinion and

Order in MM Docket No. 91-140, 7 FCC Rcd 6387 (1992), 57 FR 42701

(September 16, 1992). Because the stay was lifted in an ordering clause

to the document rather than in the Appendix that contained the modified

rules, the lifting of the stay was not picked up by the Federal

Register. As a result, the rule is currently printed in the Code of

Federal Regulations as if the stay was still in effect.

2. This Order is intended solely to correct the outdated version of

Section 73.3555 currently printed in the Code of Federal Regulations.

No substantive changes have been made to the rules; notice and comment

are therefore unnecessary. See 5 U.S.C. 553(b)(3). The correct version

of Sec. 73.3555 is printed in its entirety below.

3. Accordingly, it is ordered that 47 CFR Sec. 73.3555 is amended

as set forth below.

List of Subjects in 47 CFR Part 73

Radio broadcasting.

Federal Communications Commission.

Renee Licht,

Acting Chief, Mass Media Bureau.

Rule Changes

Part 73 of Title 47 of the U.S. Code of Federal Regulations is

amended to read as follows:

PART 73--RADIO BROADCAST SERVICES

1. The Authority Citation for Part 73 continues to read as follows:

Authority: 47 U.S.C. 154, 303, 334.

2. The stay of the effective date of Sec. 73.3555 was lifted by

publication of a Memorandum Opinion and Order in MM Docket No. 91-140

in the Federal Register at 57 FR 42701 (September 16, 1992), and

Sec. 73.3555 is revised to read as follows:

Sec. 73.3555 Multiple ownership.

(a)(1) Radio contour overlap rule. No license for an AM or FM

broadcasting station shall be granted to any party (including all

parties under common control) if the grant of such license will result

in overlap of the principal community contour of that station and the

principal community contour of any other broadcasting station directly

or indirectly owned, operated, or controlled by the same party, except

that such license may be granted in connection with a transfer or

assignment from an existing party with such interests, or in the

following circumstances:

(i) In radio markets with 14 or fewer commercial radio stations, a

party may own up to 3 commercial radio stations, no more than 2 of

which are in the same service (AM or FM), provided that the owned

stations, if other than a single AM and FM station combination,

represent less than 50 percent of the stations in the market.

(ii) In radio markets with 15 or more commercial radio stations, a

party may own up to 2 AM and 2 FM commercial stations, provided,

however, that evidence that grant of any application will result in a

combined audience share exceeding 25 percent will be considered prima

facie inconsistent with the public interest.

Note to paragraph (a)(1)(ii): When evaluating audience share

evidence submitted under Sec. 73.3555(a)(1)(ii), the Commission will

consider data that eliminates statistical anomalies, provides a

better focused survey area or includes revenue data or other

relevant information. Where applicants certify that they do not have

readily available audience share data, they may substitute other

information that can serve as a proxy for such data. See Memorandum

Opinion and Order in MM Docket No. 91-140, 7 FCC Rcd 6387 (1992), 57

FR 42701 (Sept. 16, 1992).

(iii) Overlap between two stations in different services is

permissible if neither of those two stations overlaps a third station

in the same service.

(2)(i) Where the principal community contours of two radio stations

overlap and a party (including all parties under common control) with

an attributable ownership 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 (a)

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.

(ii) Every time brokerage agreement of the type described in

paragraph (a)(2)(i) of this section 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 paragraphs (a)(1) and (e)(1) of this section.

(iii) Any party operating in conflict with the requirements of

paragraph (a)(2)(ii) of this section on September 16, 1992 shall come

into compliance within one year thereafter.

(3) For purposes of this paragraph:

(i) The ``principal community contour'' for AM stations is the

predicted or measured 5 mV/m groundwave contour computed in accordance

with Sec. 73.183 or Sec. 73.186 and for FM stations is the predicted

3.16 mV/m contour computed in accordance with Sec. 73.313.

(ii) The number of stations in a radio market is the number of

commercial stations whose principal community contours overlap, in

whole or in part, with the principal community contours of the stations

in question (i.e., the station for which an authorization is sought and

any station in the same service that would be commonly owned whose

principal community contour overlaps the principal community contour of

that station). In addition, if the area of overlap between the stations

in question is overlapped by the principal community contour of a

commonly owned station or stations in a different service (AM or FM),

the number of stations in the market includes stations whose principal

community contours overlap the principal community contours of such

commonly owned station or stations in a different service.

(iii) A station's ``audience share'' is the average number of

persons age 12 or older on an average quarter hour basis, Monday-

Sunday, 6 a.m.-midnight, who listen to the station, expressed as a

percentage of the average number of persons listening to AM and FM

stations in that radio metro market or a recognized equivalent, in

which a majority of the overlap between the stations in question takes

place. The ``combined audience share'' is the total audience share of

all AM or FM stations that would be under common ownership or control

following a proposed acquisition. In situations where no metro market

or recognized equivalent exists, the relevant audience share data are

the data for all counties that are within the principal community

contours of the stations in question, in whole or in part.

(iv) ``Time brokerage'' 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.

(b) Television contour overlap (duopoly) rule. No license for a TV

broadcast station shall be granted to any party (including all parties

under common control) if the grant of such license will result in

overlap of the Grade B contour of that station (computed in accordance

with Sec. 73.684) and the Grade B contour of any other TV broadcast

station directly or indirectly owned, operated, or controlled by the

same party.

(c) One-to-a-market ownership rule. No license for an AM, FM or TV

broadcast station shall be granted to any party (including all parties

under common control) if such party directly or indirectly owns,

operates or controls one or more such broadcast stations and the grant

of such license will result in:

(1) The predicted or measured 2 mV/m groundwave contour of an

existing or proposed AM station, computed in accordance with

Sec. 73.183 or Sec. 73.186, encompassing the entire community of

license of an existing or proposed TV broadcast station(s), or the

Grade A contour(s) of the TV broadcast station(s), computed in

accordance with Sec. 73.684, encompassing the entire community of

license of the AM station; or

(2) The predicted 1 mV/m contour of an existing or proposed FM

station, computed in accordance with Sec. 73.313, encompassing the

entire community of license of an existing or proposed TV broadcast

station(s), or the Grade A contour(s) of the TV broadcast station(s),

computed in accordance with Sec. 73.684, encompassing the entire

community of license of the FM station.

(d) Daily newspaper cross-ownership rule. No license for an AM, FM

or TV broadcast station shall be granted to any party (including all

parties under common control) if such party directly or indirectly

owns, operates or controls a daily newspaper and the grant of such

license will result in:

(1) The predicted or measured 2 mV/m contour of an AM station,

computed in accordance with Sec. 73.183 or Sec. 73.186, encompassing

the entire community in which such newspaper is published; or

(2) The predicted 1 mV/m contour for an FM station, computed in

accordance with Sec. 73.313, encompassing the entire community in which

such newspaper is published; or

(3) The Grade A contour of a TV station, computed in accordance

with Sec. 73.684, encompassing the entire community in which such

newspaper is published.

(e)(1) National multiple ownership rule. No license for a

commercial AM, FM or TV broadcast station shall be granted, transferred

or assigned to any party (including all parties under common control)

if the grant, transfer or assignment of such license would result in

such party or any of its stockholders, partners, members, officers or

directors, directly or indirectly, owning, operating or controlling, or

having a cognizable interest in:

(i) More than 18 AM or more than 18 FM stations, or more than 20 AM

or more than 20 FM stations two years after the effective date of this

rule, provided, however, that an entity may have an attributable but

noncontrolling interest in an additional 3 AM and 3 FM stations that

are small business controlled or minority-controlled;

(ii) More than 14 television stations; or

(iii) More than 12 television stations that are not minority-

controlled.

(2) No license for a commercial TV broadcast station shall be

granted, transferred or assigned to any party (including all parties

under common control) if the grant, transfer or assignment of such

license would result in such party or any of its stockholders,

partners, members, officers or directors, directly or indirectly,

owning, operating or controlling, or having a cognizable interest in,

either:

(i) TV stations which have an aggregate national audience reach

exceeding thirty (30) percent, or

(ii) TV stations which have an aggregate national audience reach

exceeding twenty-five (25) percent and which are not minority-

controlled.

(3) For purposes of this paragraph:

(i) National audience reach means the total number of television

households in the Arbitron Area of Dominant Influence (ADI) markets in

which the relevant stations are located divided by the total national

television households as measured by ADI data at the time of a grant,

transfer or assignment of a license. For purposes of making this

calculation, UHF television stations shall be attributed with 50

percent of the television households in their ADI market. Where the

relevant application forms require a showing with respect to audience

reach and the application relates to an area where Arbitron ADI market

data are unavailable, then the applicant shall make a showing as to the

number of television households in its market. Upon such a showing, the

Commission shall make a determination as to the appropriate audience

reach to be attributed to the applicant.

(ii) TV broadcast station or TV station excludes stations which are

primarily satellite operations.

(iii) Minority-controlled means more than 50 percent owned by one

or more members of a minority group.

(iv) Minority means Black, Hispanic, American Indian, Alaska

Native, Asian and Pacific Islander.

(v) Small business means an individual or business entity which, at

the time of application to the Commission, had, including all

affiliated entities under common control, annual revenues of less than

$500,000 and assets of less than $1,000,000.

(f) This section is not applicable to noncommercial educational FM

and noncommercial educational TV stations.

Note 1: The word ``control'' as used herein is not limited to

majority stock ownership, but includes actual working control in

whatever manner exercised.

Note 2: In applying the provisions of this section, ownership

and other interests in broadcast licensees, cable television systems

and daily newspapers 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, cable television system or daily newspaper will be

cognizable;

(b) No minority voting stock interest will be cognizable if

there is a single holder of more than 50% of the outstanding voting

stock of the corporate broadcast licensee, cable television system

or daily newspaper in which the minority interest is held;

(c) 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 10% or more of the outstanding

voting stock of a corporate broadcast licensee, cable television

system or daily newspaper, or if any of the officers or directors of

the broadcast licensee, cable television system or daily newspaper

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.

(d) Attribution of ownership interests in a broadcast licensee,

cable television system or daily newspaper 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 example, 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 since 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.]

(e) 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, cable

television system or daily newspaper are subject to said trust.

(f) Holders of non-voting stock shall not be attributed an

interest in the issuing entity. Holders of debt and instruments such

as warrants, convertible debentures, options or other non-voting

interests with rights of conversion to voting interests shall not be

attributed unless and until conversion is effected.

(g)(1) A limited partnership interest shall be attributed to a

limited partner unless that partner is not materially involved,

directly or indirectly, in the management or operation of the media-

related activities of the partnership and the licensee or system so

certifies.

(2) In order for a licensee or system to make the certification

set forth in paragraph (g)(1) of this section, it must verify that

the partnership agreement or certificate of limited partnership,

with respect to the particular limited partner exempt from

attribution, establishes that the exempt limited partner has no

material involvement, directly or indirectly, in the management or

operation of the media activities of the partnership. The criteria

which would assume adequate insulation for purposes of this

certification are described in the Memorandum Opinion and Order in

MM Docket No. 83-46, FCC 85-252 (released June 24, 1985), as

modified on reconsideration in the Memorandum Opinion and Order in

MM Docket No. 83-46, FCC 86-410 (released November 28, 1986).

Irrespective of the terms of the certificate of limited partnership

or partnership agreement, however, no such certification shall be

made if the individual or entity making the certification has actual

knowledge of any material involvement of the limited partners in the

management or operation of the media-related businesses of the

partnership.

(h) Officers and directors of a broadcast licensee, cable

television system or daily newspaper 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, cable television service or newspaper

publication, 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, cable television system or

daily newspaper, 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,

cable television system or daily newspaper subsidiary, 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, cable television system or

daily newspaper shall not be attributed with ownership of these

entities by virtue of such status.

(i) 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 10 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 (i)(1) of

this section plus the sum of the interests computed under paragraph

(i)(2) of this section is equal to or exceeds 10 percent.

Note 3: In cases where record and beneficial ownership of voting

stock is not identical (e.g., bank nominees holding stock as record

owners for the benefit of mutual funds, brokerage houses holding

stock in street names for the benefit of customers, investment

advisors holding stock in their own names for the benefit of

clients, and insurance companies holding stock), the party having

the right to determine how the stock will be voted will be

considered to own it for purposes of these rules.

Note 4: Paragraphs (a) through (e) 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 increased power

for Class C stations, 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 if no

new or increased overlap would be created between commonly owned,

operated or controlled broadcast stations in the same service and if

no new encompassment of Communities proscribed in paragraphs (c) and

(d) of this section as to commonly owned, operated or controlled

broadcast stations or daily newspaper would result. Said paragraphs

will apply to all applications for new stations, to all other

applications for assignment or transfer, and to all applications for

major changes in existing stations except major changes that will

result in overlap of contours of broadcast stations in the same

service with each other no greater than already existing. (The

resulting areas of overlap of contours of such broadcast stations

with each other in such major change cases may consist partly or

entirely of new terrain. However, if the population in the resulting

areas substantially exceeds that in the previously existing overlap

areas, the Commission will not grant the application if it finds

that to do so would be against the public interest, convenience or

necessity.) Commonly owned, operated or controlled broadcast

stations with overlapping contours or with community-encompassing

contours prohibited by this section may not be assigned or

transferred to a single person, group or entity, except as provided

above in this note and by Sec. 73.3555(a). If a commonly owned,

operated or controlled broadcast station and daily newspaper fall

within the encompassing proscription of this section, the station

may not be assigned to a single person, group or entity if the

newspaper is being simultaneously sold to such single person, group

or entity.

Note 5: Paragraphs (a) through (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), 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 Grade B contour

of which overlaps that of a commonly owned, operated, or controlled

``non-satellite'' parent television broadcast station, or the Grade

A contour of which completely encompasses the community of

publication of a commonly owned, operated, or controlled daily

newspaper, or the community of license of a commonly owned,

operated, or controlled AM or FM broadcast station, or the community

of license of which is completely encompassed by the 2 mV/m contour

of such AM broadcast station or the 1 mV/m contour of such FM

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

and AM or FM stations with the aforementioned community

encompassment, may not be transferred or assigned to a single

person, group, or entity except as provided in Note 4 of this

section. Nor shall any application for assignment or transfer

concerning such ``non-satellite'' stations be granted if the

assignment or transfer would be to the same person, group or entity

to which the commonly owned, operated, or controlled newspaper is

proposed to be transferred, except as provided in Note 4 of this

section.

Note 6: For the purposes of this section a daily newspaper is

one which is published four or more days per week, which is in the

English language and which is circulated generally in the community

of publication. A college newspaper is not considered as being

circulated generally.

Note 7: The Commission will entertain requests to waive the

restrictions of paragraph (c) of this section on a case-by-case

basis. The Commission will look favorably upon waiver applications

that meet either of the following two standards:

(1) Those involving radio and television station combinations in

the top 25 television markets where there will be at least 30

separately owned, operated and controlled broadcast licensees after

the proposed combination, as determined by counting television

licensees in the relevant ADI television market and radio licensees

in the relevant television metropolitan market;

(2) Those involving ``failed'' broadcast stations that have not

been operated for a substantial period of time, e.g., four months,

or that are involved in bankruptcy proceedings. For the purposes of

determining the top 25 ADI television markets, the relevant ADI

television market, and the relevant television metropolitan market

for each prospective combination, we will use the most recent

Arbitron Ratings Television ADI Market Guide. We will determine that

number of radio stations in the relevant television metropolitan

market and the number of television licensees within the relevant

ADI television market based on the most recent Commission ownership

records.

Other waiver requests will be evaluated on a more rigorous case-

by-case basis, as set forth in the Second Report and Order in MM

Docket No. 87-7, FCC 88-407, released February 23, 1989, and

Memorandum Opinion and Order in MM Docket No. 87-7, FCC 89-256,

released August 4, 1989.

Note 8: Paragraph (a)(1) of this section will not apply to an

application for an AM station license in the 535-1605 kHz band where

grant of such application will result in the overlap of 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 if the applicant shows that a significant reduction in

interference to adjacent or co-channel stations would accompany such

common ownership. Such AM overlap cases will be considered on a

case-by-case basis to determine whether common ownership, operation

or control of the stations in question would be in the public

interest. Applicants in such cases must submit a contingent

application of the major or minor facilities change needed to

achieve the interference reduction along with the application which

seeks to create the 5 mV/m overlap situation.

Note 9: 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. Paragraphs (d)(1)(i) and (d)(1)(ii) of this section

will not apply to an application for an AM station license in the

1605-1705 kHz band by an entity that owns, operates, controls or has

a cognizable interest in AM radio stations in the 535-1605 kHz band.

Note 10: Authority for joint ownership granted pursuant to Note

9 will expire at 3 a.m. local time on the fifth anniversary for the

date of issuance of a construction permit for an AM radio station in

the 1605-1705 kHz band.

[FR Doc. 94-23659 Filed 9-23-94; 8:45 am]

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