Univision Holdings, Inc. Grant of Petition for Declaratory Ruling to exceed 25 percent foreign ownership benchmark in Section 310(b)(4) of Communications Act of 1934, as amended.
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Text
Federal Communications Commission DA 17-4
Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of
Univision Holdings, Inc.
and
Grupo Televisa S.A.B.
Petition for Declaratory Ruling
)
)
)
)
)
)
)
)
)
MB Docket No. 16-217
DECLARATORY RULING
Adopted: January 3, 2017 Released: January 3, 2017
By the Chief, Media Bureau:
I. INTRODUCTION
1. Univision Holdings, Inc. (Univision) and Grupo Televisa, S.A.B. (Grupo Televisa)
(jointly Petitioners) filed a Petition for Declaratory Ruling (Initial Petition),
1
requesting that the
Commission find, pursuant to Section 310(b)(4) of the Communications Act of 1934, as amended (the
Act),
2
that the public interest would be served by permitting foreign ownership of Univision in excess of
the 25 percent benchmark contained in that subsection.
3
Petitioners request that the Commission permit
foreign investors to own up to 49 percent of Univision�s equity and 49 percent of its voting interests,
including up to 40 percent of its equity and voting interest to be held by Televisa and its affiliates.
4
The
petition is unopposed.
5
Upon consideration of the record, we grant the Petition as set forth below.
II. BACKGROUND
2. Existing Corporate Structure. Univision, a privately held Delaware corporation, is a
multi-platform media company that serves the U.S. Hispanic market.
6
It is the parent company of
licensees that own and operate broadcast radio and television stations throughout the United States.
7
Univision also operates multiple national broadcast and cable television networks, including Univision
1
The Petitioners also jointly filed a Supplemental Petition (Supplemental Petition) and Reply Comments in Support
of Petition for Declaratory Ruling (Reply Comments). Univision separately filed a Request for Confidentiality and
Public Supplemental Response (Univision Response)
oadcast and cable television networks, including Univision
1
The Petitioners also jointly filed a Supplemental Petition (Supplemental Petition) and Reply Comments in Support
of Petition for Declaratory Ruling (Reply Comments). Univision separately filed a Request for Confidentiality and
Public Supplemental Response (Univision Response). Televisa separately filed a Response to FCC Questions
(Televisa Reponse) and a Request for Specific Approval (Televisa Request).
2
47 U.S.C. � 310(b)(4).
3
Initial Petition at 1.
4
Id.
5
The National Hispanic Foundation for the Arts, The National Hispanic Media Coalition, and the National
Association of Latino Independent Producers all filed comments in support of the Petition.
6
Initial Petition at 3.
7
Id. A complete list of Univision�s broadcast holdings is found at Supplemental Petition, Attachment 2.
Federal Communications Commission DA 17-4
2
Network, UniM�s, and Galavision.
8
In addition to its Spanish-language programming, Univision has
online services in English targeting the African American community and younger audiences interested in
Latin culture.
9
3. Televisa, a Mexican corporation that is publicly traded on the New York stock exchange,
is a producer of Spanish language programming and a long time program provider to Univision and its
affiliated stations.
10
The Petitioners state that Televisa provides 35 percent of Univision�s broadcast
programming and that its programming reaches 92 percent of Hispanic households in the United States.
11
4. 1n 1997, Univision was acquired by a consortium of five private equity investors and
their affiliates (the Investors)
and a long time program provider to Univision and its
affiliated stations.
10
The Petitioners state that Televisa provides 35 percent of Univision�s broadcast
programming and that its programming reaches 92 percent of Hispanic households in the United States.
11
4. 1n 1997, Univision was acquired by a consortium of five private equity investors and
their affiliates (the Investors).
12
The Investors are: Madison Dearborn Partners, LLC, which holds 20.5
percent of the voting interests and 18.9 percent of the equity of Univision; Providence Equity Partners,
LLC, which holds 19.5 percent of the voting interests and 19 percent of the equity; Saban Capital Group,
Inc., which holds 10.3 percent of the voting interests and 7.1 percent of the equity; Thomas H. Lee
Partners, L.P., which holds 0 percent of the voting interests and 19 percent of the equity; and TPG Global,
LLC, which holds 27.3 percent of the voting interests and 20.6 percent of the equity. All of the investors
are U.S. organized entities and controlled by U.S. citizens.
13
None of the Investors has an individual
investor within the private equity entity with a greater than 5 percent voting interest.
14
In 2014, an
additional U.S. organized and controlled investor, Glade Brook Capital Partners, LLC, (Glade Brook)
acquired 3.2 percent of Univision�s voting interesst and 2.2 percent of its equity.
15
Univision states that
Glade Brook is deemed attributable even though its interest is less than 5 percent because it has the right
to designate one member of Univision�s board of directors.
16
5. In 2010, Televisa acquired an equity stake in Univision and debentures convertible into
additional equity, subject to applicable laws and regulations and certain contractual limitations.
17
Currently, Televisa, through a series of wholly owned subsidiaries, holds 14.4 percent of the voting
interests and 10 percent of the equity of Univision
of Univision�s board of directors.
16
5. In 2010, Televisa acquired an equity stake in Univision and debentures convertible into
additional equity, subject to applicable laws and regulations and certain contractual limitations.
17
Currently, Televisa, through a series of wholly owned subsidiaries, holds 14.4 percent of the voting
interests and 10 percent of the equity of Univision.
18
Televisa owns 100 percent of the voting interests
and 100 percent of the equity of Grupo Telesistema, S.A. de C.V., which in turn owns 100 percent of the
voting interests and 100 percent of the equity of Grupo Bissagio, S.A. de C.V., which owns 0 percent of
the voting interests and 76 percent of the equity of Multimedia Telecom, S.A. de C.V. (Multimedia
Telecom). At the same time Televisa directly owns 100 percent of the voting interests and 24 percent of
the equity of Multimedia Telecom. Multimedia Telecom owns 14 percent of the voting interests and 10
percent of the equity in Univision.
19
Televisa has sought specific approval for each of these entities to
8
Initial Petition at 3.
9
Id.
10
Initial Petition at 4. The Petitioners state that approximately half of Televisa�s shares are U.S. owned.
Supplemental Petition at 4. Televisa�s U.S. ownership is held through American Depository shares, which foreign
companies that have a primary listing on a non-U.S. stock exchange and a secondary listing on a U.S. exchange can
use for U.S. trading. Id. at n.2
11
Id.
12
Id. at 2.
13
Univision Response at para. 1.
14
Id.
15
Supplemental Petition at 2.
16
Id.
17
Initial Petition at 3.
18
Supplemental Petition at 2.
19
Televisa Request at 2.
Federal Communications Commission DA 17-4
3
hold equity and voting interests greater than five percent
exchange and a secondary listing on a U.S. exchange can
use for U.S. trading. Id. at n.2
11
Id.
12
Id. at 2.
13
Univision Response at para. 1.
14
Id.
15
Supplemental Petition at 2.
16
Id.
17
Initial Petition at 3.
18
Supplemental Petition at 2.
19
Televisa Request at 2.
Federal Communications Commission DA 17-4
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hold equity and voting interests greater than five percent.
20
In addition, Emilio Fernando Azcarraga Jean
is an owner of Televisa who holds 43 percent of the voting interests and 14.7 percent of the equity of
Televisa and also holds an attributable interest in and sits on the board of Univision.
21
Televisa has also
sought specific approval for Mr. Azcarraga Jean to hold voting and equity interests greater than five
percent.
22
6. Each of the Investors has the right to appoint three directors, except that Saban Capital
may appoint two;
23
Televisa may appoint four; and, as noted above, Glade Brook may appoint one.
24
No
single investor has a controlling interest in Univision.
25
7. In 2015, in anticipation of a planned initial public offering (IPO), Univision reduced its
outstanding debt by entering into an agreement with Televisa pursuant to which the 2010 debentures were
converted into warrants, which are exercisable for the number of shares of common stock that Televisa
would have otherwise received on conversion of the debentures.
26
By their terms, the warrants, which are
exercisable for approximately a 29.2 equity interest in Univision, may not be utilized unless the resulting
increase would comply with Section 310(b)(4) of the Act.
27
8. The Petitioners state that Univision�s aggregate foreign equity investment is
approximately 15.6 percent, of which 4.9 percent is held by the Investors and 10 percent is held by
Televisa and less than 1 percent is held by Gladebrook and certain non-attributable investors of
Univision
, may not be utilized unless the resulting
increase would comply with Section 310(b)(4) of the Act.
27
8. The Petitioners state that Univision�s aggregate foreign equity investment is
approximately 15.6 percent, of which 4.9 percent is held by the Investors and 10 percent is held by
Televisa and less than 1 percent is held by Gladebrook and certain non-attributable investors of
Univision.
28
The aggregate foreign voting interest in Univision is 19.9 percent, of which 4.5 percent is
held by the Investors, 14.4 percent is held by Televisa, and approximately 1 percent is held by
Gladebrook and certain non-attributable investors of Univision.
29
As a privately held corporation,
Univision determined its foreign ownership levels by direct inquiry of its shareholders.
30
9. The Petitioners� Request for a Declaratory Ruling. The Petitioners request a declaratory
ruling in anticipation of Univision�s expected IPO, which may result in increased foreign investment, and
to facilitate exercise of the Televisa warrants and any additional associated investment from Televisa.
31
The Petitioners state that the precise number of shares of Univision common stock that will be made
available for sale or ultimately purchased during the IPO, or the allocation of those shares between
domestic and foreign, cannot be known at this time.
32
Petitioners further state that the percentage of
20
Id.
21
Supplemental Petition at 6. See also Grupo Televisa, FCC Form 323, Ownership Report for Commercial
Broadcast Stations, File No. BOA-20151201FUM. Through his direct voting interest in Televisa Mr. Azcarraga
Jean�s voting interest in Univision is 6.2% percent. (.43 (his voting interest in Televisa) x .144 (Televisa�s voting
interest in Unvision) = .0619 or 6.2%) In addition his status as �control person� of Televisa would attribute all of
Televisa�s voting interest in Univision to him
l
Broadcast Stations, File No. BOA-20151201FUM. Through his direct voting interest in Televisa Mr. Azcarraga
Jean�s voting interest in Univision is 6.2% percent. (.43 (his voting interest in Televisa) x .144 (Televisa�s voting
interest in Unvision) = .0619 or 6.2%) In addition his status as �control person� of Televisa would attribute all of
Televisa�s voting interest in Univision to him. Televisa has indicated that no other entity or individual holds more
than 5 percent of the voting interests or equity in it.
22
Televisa Request at 2.
23
Supplemental Petition at 5
24
Id.
25
Id.
26
Id.
27
Id. at 4.
28
Supplemental Petition at 8.
29
Id.
30
Univision Response at para. 2. As a foreign corporation, all of Televisa�s interests are deemed foreign.
31
Initial Petition at 6.
32
Supplemental Petition at 8.
Federal Communications Commission DA 17-4
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ownership of each Investor and Televisa is subject to adjustment depending on the results of the IPO.
33
The Petitioners claim that the increased foreign investment will serve the public interest, because it will
allow Univision to strengthen its partnership with Televisa and to continue to provide award-winning
programming to Hispanic audiences and other minority communities across multiple platforms on a level
that competes with and often outperforms the top-four networks, thereby enhancing competition.
34
Furthermore, the Petitioners argue that grant of their Petition will enhance their community-based
empowerment programs, which include, among other things, school programs, incubator programs, and
writing and development fellowships.
35
Finally, they state that grant of the Petition aligns with U.S. trade
policy and will encourage reciprocity with U.S. trading partners.
36
10. The Initial Petition and Supplemental Petition were put out for public comment on July 7,
2016.
37
No parties have opposed the Petitions or asked for conditions to be placed on a grant.
38
III. DISCUSSION
11
and development fellowships.
35
Finally, they state that grant of the Petition aligns with U.S. trade
policy and will encourage reciprocity with U.S. trading partners.
36
10. The Initial Petition and Supplemental Petition were put out for public comment on July 7,
2016.
37
No parties have opposed the Petitions or asked for conditions to be placed on a grant.
38
III. DISCUSSION
11. As described below, we find that the public interest would not be served by refusing to
grant Univision�s petition for a declaratory ruling to permit foreign ownership of Univision Holdings,
Inc., as described herein, above the statutory cap of 25 percent in Section 310(b) and up to 49 percent. In
this section, first we summarize the relevant law and Commission precedent related to foreign ownership
of broadcast licensees. Then we consider facts presented by Univision regarding its foreign ownership
status and its public interest arguments.
12. Relevant Law and Commission Precedent: Section 310(b) of the Act restricts investment
by non-U.S. citizens in broadcast, common carrier, aeronautical en route, and aeronautical fixed radio
licensees.
39
Section 310(b)(4) of the Act states:
No broadcast or common carrier or aeronautical en route or aeronautical fixed radio station
license shall be granted to or held by . . . any corporation directly or indirectly controlled by any
other corporation of which more than one-fourth of the capital stock is owned of record or voted
by aliens, their representatives, or by a foreign government or representative thereof, or by any
corporation organized under the laws of a foreign country, if the Commission finds that the public
interest will be served by the refusal or revocation of such license.
40
13. In the 2013 Broadcast Clarification Order,
41
the Commission clarified the policies and
33
Id. at 9.
34
Id. at 2, 11-15.
35
Id. at 2, 15-17.
36
Supplemental Petition at 2, 21-23
nder the laws of a foreign country, if the Commission finds that the public
interest will be served by the refusal or revocation of such license.
40
13. In the 2013 Broadcast Clarification Order,
41
the Commission clarified the policies and
33
Id. at 9.
34
Id. at 2, 11-15.
35
Id. at 2, 15-17.
36
Supplemental Petition at 2, 21-23.
37
Media Bureau Announces Filing of Petition for Declaratory Ruling by Univision & Televisa & Permit-but-
Disclose Ex Parte Status for the Proceeding, 31 F.C.C. Rcd. 7343 (2016).
38
On August 2, 2016, the Commission received a request to defer action on the Petition pending review by
Executive Branch agencies. See Letter from Bermel Paz to Marlene Dortch, Secretary, Federal Communications
Commission, dated August 2, 2016, MB Docket 16-217. A further letter withdrawing the deferral request and
stating that the reviewing agencies have no objection to the Petition was received by the Commission on November
25, 2016. See Letter from Bermel Paz to Marlene Dortch, Secretary, Federal Communications Commission, dated
November 23, 2016, MB Docket 16-217.
39
47 U.S.C. � 310(b).
40
47 U.S.C. � 310(b)(4).
41
Commission Policies and Procedures Under Section 310(b)(4) of the Communications Act, Foreign Investment in
Broadcast Licensees, MB Docket No. 13-50, Declaratory Ruling, 28 FCC Rcd 16244 (2013) (2013 Broadcast
Clarification Order).
Federal Communications Commission DA 17-4
5
procedures for evaluating potential foreign investment in broadcast licensees under Section 310(b)(4) of
the Act to remove apparent uncertainty.
42
The Commission declined to adopt a standardized review
process in that proceeding, and instead clarified that it would continue to conduct a fact-specific,
individualized case-by-case review of each application or petition for declaratory ruling involving
broadcast stations
l foreign investment in broadcast licensees under Section 310(b)(4) of
the Act to remove apparent uncertainty.
42
The Commission declined to adopt a standardized review
process in that proceeding, and instead clarified that it would continue to conduct a fact-specific,
individualized case-by-case review of each application or petition for declaratory ruling involving
broadcast stations.
43
The Commission reiterated its position that, in the context of Section 310(b)(4)
review for broadcast licensees, the 25 percent benchmark �is only a trigger for the exercise of our
discretion, which we then exercise based upon a more searching analysis of the circumstances of each
case.�
44
The Commission also recognized that �changes have occurred in the media landscape and
marketplace since the foreign ownership restriction was enacted and that limited access to capital is a
concern in the broadcast industry, especially for small business entities and new entrants, including
minorities and women.�
45
14. The Commission has ruled on only one petition for declaratory ruling regarding foreign
ownership in the broadcast context since the 2013 Broadcast Clarification Order. In the 2015 Pandora
Declaratory Ruling, the Commission granted a petition for declaratory ruling filed by Pandora Radio LLC
(Pandora) to exceed the 25 percent foreign ownership benchmark set out in Section 310(b)(4), in
connection with an application for consent to assignment of license of KXMZ(FM), Box Elder, South
Dakota.
46
In its petition, Pandora sought permission for its parent company, Pandora Media, a publicly
traded company organized and headquartered in the United States, to have varying levels of foreign
ownership (voting and equity) because it could not prove that foreign entities did not own or vote more
than 25 percent of its shares
assignment of license of KXMZ(FM), Box Elder, South
Dakota.
46
In its petition, Pandora sought permission for its parent company, Pandora Media, a publicly
traded company organized and headquartered in the United States, to have varying levels of foreign
ownership (voting and equity) because it could not prove that foreign entities did not own or vote more
than 25 percent of its shares.
47
Based on the facts specific to that case and in view of existing broadcast
foreign ownership policies, the Commission approved the request to exceed the 25 percent benchmark
under Section 310(b)(4) provided that Pandora obtain prior Commission approval for (1) aggregate
foreign equity and/or foreign voting interests in Pandora Media exceeding 49.99 percent; (2) any change
in the Pandora Media Board of Directors that would result in a majority of foreign members; or (3) any
individual foreign investor or �group� acquiring a greater than 5 percent voting or equity interest (or
greater than 10 percent for certain institutional investors) in Pandora Media.
48
The Commission required
Pandora Media to modify its organizational documents to ensure that its Board of Directors has all
necessary powers to maintain compliance with Section 310(b)(4), including the right to request and obtain
information regarding citizenship of Pandora Media�s interest holders, and the necessary powers to cure
noncompliance, specifically: (1) the right to restrict the transfer of shares to aliens; (2) the right to require
disclosure when an alien acquires an equity and/or voting interest; and (3) the right to compel the
redemption of shares held by aliens.
49
42
Id.
43
The Commission stated that it would not entertain petitions to exceed the foreign ownership limits of Section
310(b)(3) for foreign investment in broadcast licensees. 2013 Broadcast Clarification Order, 28 FCC Rcd at 5752,
para. 15, n.49
ing interest; and (3) the right to compel the
redemption of shares held by aliens.
49
42
Id.
43
The Commission stated that it would not entertain petitions to exceed the foreign ownership limits of Section
310(b)(3) for foreign investment in broadcast licensees. 2013 Broadcast Clarification Order, 28 FCC Rcd at 5752,
para. 15, n.49. Unlike Section 310(b)(4), Section 310(b)(3) does not afford the Commission discretion to approve
foreign investment in broadcast licensees in excess of the limitations contained therein.
44
2013 Broadcast Clarification Order, 28 FCC Rcd at 16249-50, para. 11.
45
Id. at 16249, para. 10.
46
Pandora Radio LLC Petition for Declaratory Ruling Under Section 310(b)(4) of the Communications Act of 1934,
as Amended, MB Docket No. 14-109, Declaratory Ruling, 30 FCC Rcd 5094, 5095-96, para. 4 (2015) (2015
Pandora Declaratory Ruling), recon denied, 30 FCC Rcd 10570 (2015).
47
Id.
48
Id. at 5101, para. 19.
49
Id. at 5101, para. 20.
Federal Communications Commission DA 17-4
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15. The Commission recently adopted its 2016 Foreign Ownership Order,
50
which modified
the broadcast licensee foreign ownership review process by extending the streamlined rules and
procedures developed for review of foreign ownership of common carrier and certain aeronautical
licensees under Section 310(b)(4) to the broadcast context, with certain limited exceptions.
51
In the 2016
Foreign Ownership Order, the Commission also reformed the methodology used by both common carrier
and broadcast licensees to assess compliance with the foreign ownership limits in Sections 310(b)(3)
52
and 310(b)(4) of the Act, as appropriate, in recognition of the difficulty that U.S. publicly traded
companies face in attempting to ascertain their level of foreign ownership.
53
This reformed methodology
provides a framework for a publicly traded licensee or controlling U.S
carrier
and broadcast licensees to assess compliance with the foreign ownership limits in Sections 310(b)(3)
52
and 310(b)(4) of the Act, as appropriate, in recognition of the difficulty that U.S. publicly traded
companies face in attempting to ascertain their level of foreign ownership.
53
This reformed methodology
provides a framework for a publicly traded licensee or controlling U.S. parent to ascertain its foreign
ownership using information that �is known or reasonably should be known� to the company in the
ordinary course of business and eliminates the need for shareholder surveys.
54
16. The rules adopted in the 2016 Foreign Ownership Order have not yet taken effect, and
thus our foreign ownership review process is still governed by the 2013 Broadcast Clarification Order.
55
As noted, in the 2013 Broadcast Clarification Order the Commission adopted a case-by-case approach to
reviewing petitions for declaratory ruling to exceed the 310(b)(4) benchmark.
56
In that order, the
Commission stated that �[b]y their nature, these case-by-case reviews will lead to distinct, factually
driven results.�
57
Thereafter, in the Pandora Declaratory Ruling, the Commission granted such a petition
based on the facts and circumstances of that case and, imposed a series of conditions appropriate to those
circumstances.
58
The 2013 Broadcast Clarification Order allows us discretion in considering petitions
such as the instant one to impose terms and conditions on a licensee if warranted based on the facts and
circumstances of each particular case.
59
Because the Commission clearly acknowledged that fact-specific
inquiries will lead to different results in different cases, we need not conclude that the conditions imposed
in the Pandora Declaratory Ruling are appropriate under the facts and circumstances of this case or that
we are limited to those conditions here if we conclude that new or different conditions would be more
appropriate to the present case
ion clearly acknowledged that fact-specific
inquiries will lead to different results in different cases, we need not conclude that the conditions imposed
in the Pandora Declaratory Ruling are appropriate under the facts and circumstances of this case or that
we are limited to those conditions here if we conclude that new or different conditions would be more
appropriate to the present case.
50
Review of Foreign Ownership Policies for Broadcast, Common Carrier and Aeronautical Radio Licensees under
Section 310(b)(4) of the Communications Act of 1934, as Amended, Report and Order, GN Docket 15-236
(2016)(2016 Foreign Ownership Order). See note 39 supra.
51
Id.
52
47 U.S.C. � 310(b)(3)(Prohibiting grant of a broadcast, common carrier, aeronautical en route and aeronautical
fixed radio license to �[A]ny corporation of which more than one-fifth of the capital stock is owned of record or
voted by aliens or their representatives or by a foreign government or representative thereof or by any corporation
organized under the laws of a foreign country��). See note 43 supra.
53
2016 Foreign Ownership Order, at paras. 35-72.
54
Id. at paras. 44-53.
55
By its terms, the 2016 Foreign Ownership Order takes effect 60 days after publication in the Federal Register,
except those provisions that contain new or modified information collection requirements that require approval by
the Office of Management and Budget (OMB) under the Paperwork Reduction Act. Id. at para. 113. Those sections
will become effective after the Commission publishes a notice in the Federal Register announcing such approval and
the relevant effective date. Id. The 2016 Foreign Ownership Order was published in the Federal Register on
December 1, 2016. Review of Foreign Ownership for Broadcast, Common Carrier and Aeronautical Radio
Licensees, 81 Fed. Reg. 86568 (Dec. 1, 2016)
. 113. Those sections
will become effective after the Commission publishes a notice in the Federal Register announcing such approval and
the relevant effective date. Id. The 2016 Foreign Ownership Order was published in the Federal Register on
December 1, 2016. Review of Foreign Ownership for Broadcast, Common Carrier and Aeronautical Radio
Licensees, 81 Fed. Reg. 86568 (Dec. 1, 2016). The order will be effective on January 30, 2017, except for those
sections requiring OMB approval.
56
2013 Broadcast Clarification Order, 28 FCC Rcd at 16252.
57
Id.
58
Pandora Declaratory Ruling, 30 FCC Rcd at 5101-5103.
59
Id.
Federal Communications Commission DA 17-4
7
17. In the context of considering whether to grant this petition, and, if so, whether conditions
are necessary and what conditions should apply, we are cognizant of the Commission�s recent decision in
the 2016 Foreign Ownership Order, which is scheduled to become effective soon after the adoption of
this declaratory ruling. Although the rules adopted in that order are not yet in effect, we note that our
action here is not inconsistent with the policies or rules the Commission adopted.
60
18. Facts Regarding Univision�s Foreign Ownership Status. Univision has identified each
U.S. broadcast station license that it currently holds.
61
Univision has described how it conducted its
foreign ownership review using information that it knew or reasonably should have known as a privately
held corporation at the time the Petition was filed. Based on its review, Univision has shown that there
are no unaccounted for attributable shareholders with a greater than 5 percent interest, equity or voting, in
the company, and no unaccounted for alien shareholders with a greater than 5 percent interest, equity or
voting, in the company. The Petitioners have submitted the necessary ownership diagrams and
demonstrated that Univision is currently in compliance with the 25 percent benchmark under Section
310(b)(4)
attributable shareholders with a greater than 5 percent interest, equity or voting, in
the company, and no unaccounted for alien shareholders with a greater than 5 percent interest, equity or
voting, in the company. The Petitioners have submitted the necessary ownership diagrams and
demonstrated that Univision is currently in compliance with the 25 percent benchmark under Section
310(b)(4). We find that Univision has provided sufficient information regarding its current foreign
ownership status and its proposed future foreign ownership status to inform our decision on the pending
petition.
19. Public Interest Analysis. In both the 2013 Broadcast Clarification Ruling and the 2016
Foreign Ownership Order, the Commission emphasized the need to encourage new sources of investment
in the broadcast industry, including foreign investment.
62
The Commission has also emphasized the need
to protect important interests related to national security, law enforcement, foreign policy, trade policy,
and other public policy goals while maintaining compliance with Section 310(b).
63
The relevant
Executive Branch agencies with expertise on issues related to national security, law enforcement, foreign
policy, and trade policy have not filed any objection to issuance of the declaratory ruling or requested that
we impose conditions on the grant. Univision has submitted information that grant of its Petition has the
potential to encourage investment in the company from new sources and to encourage reciprocity in parts
of Latin America.
64
The Petitioners have also shown how grant of the application will further Univision�s
service to the Hispanic community and other minority communities and advance its empowerment
initiatives.
65
As noted above, no parties have opposed the petition for declaratory ruling or asked for
conditions to be placed on it. Therefore, we find that grant of the petition for declaratory ruling will serve
the public interest
shown how grant of the application will further Univision�s
service to the Hispanic community and other minority communities and advance its empowerment
initiatives.
65
As noted above, no parties have opposed the petition for declaratory ruling or asked for
conditions to be placed on it. Therefore, we find that grant of the petition for declaratory ruling will serve
the public interest.
60
Univision�s petition was on public notice, under review by the Executive Branch, and amended repeatedly during
the pendency of the proceeding that resulted in the 2016 Foreign Ownership Order. Review of Foreign Ownership
Policies for Broadcast, Common Carrier and Aeronautical Radio Licensees Under Section 310(b)(4) of the
Communications Act of 1934, as Amended, GN Docket 15-236, Notice of Proposed Rulemaking, 30 FCC Rcd 11830
(2015) (2015 Foreign Ownership NPRM). The 2016 Foreign Ownership Order NPRM was released on October 22,
2015 and Univision filed its Initial Petition on November 30, 2015, and supplemented it after the release of the 2016
Foreign Ownership Order. Univision petition is therefore differently situated then Pandora�s. Pandora did not have
the benefit of the Commission�s guidance in the 2015 Foreign Ownership NPRM or the 2016 Foreign Ownership
Order.
61
Supplement, Attachment 2.
62
2013 Broadcast Clarification Ruling at 16249; 2016 Foreign Ownership Order at para. 2.
63
2013 Broadcast Clarification Order, 28 FCC Fcd at 16251; 2016 Foreign Ownership Order at para. 2.
64
Supplemental Petition at 2, 21-23. U.S. Department of State, 2014 Investment Climate Statement at 4-5 (2014).
See also, Ley Federal de Telecommunicaciones y Radiofusi�n, Articulo Segundo (issued July 14, 2014),
http://www.dof.gob.mx.nota_detalle.php?codigo5352323&fecha++14/07/2014 (available in English at
http://www.sct.gob.mx/fileadmin/Comunicaciones/LFTR_english.pdf, Article Two, at pdf p. 86).
65
Supplemental Petition at 2, 15-17
tment of State, 2014 Investment Climate Statement at 4-5 (2014).
See also, Ley Federal de Telecommunicaciones y Radiofusi�n, Articulo Segundo (issued July 14, 2014),
http://www.dof.gob.mx.nota_detalle.php?codigo5352323&fecha++14/07/2014 (available in English at
http://www.sct.gob.mx/fileadmin/Comunicaciones/LFTR_english.pdf, Article Two, at pdf p. 86).
65
Supplemental Petition at 2, 15-17.
Federal Communications Commission DA 17-4
8
IV. DECLARATORY RULING
20. Under these circumstances, pursuant to Section 310(b) of the Act, we find that the public
interest would not be served by prohibiting foreign ownership of Univision Holdings, Inc. in excess of the
25 percent benchmark in Section 310(b) of the Act, because this increased level of foreign investment in
Univision will facilitate investment from new sources of capital in Univision that would not otherwise be
available and encourage reciprocity by foreign governments. Specifically, this ruling permits aggregate
foreign equity and voting interest in Univision Holdings, Inc. to exceed 25 percent and to increase up to
and including 49 percent.
21. Specific Approval. Furthermore, this declaratory ruling grants specific approval to each
of the following individuals and entities to hold up to 40 percent of the voting interests and 49 percent of
the equity of Univision Holdings, Inc.:
? Grupo Televisa, S.A.B.,
? Grupo Telesistema, S.A. de C.V.,
? Grupo Bissagio, S.A. de C.V.,
? Multimedia Telecom, S.A. de C.V.,
? Emilio Fernando Azcarraga Jean
In granting these specific approvals, we have coordinated with the relevant Executive Branch agencies
and given them the opportunity to review the Petitioners� filings and the requests for specific approval in
light of interests related to national security, law enforcement, foreign policy, trade policy, and other
public policy goals. The Executive Branch agencies have filed a letter with the Commission stating that
they have no objections
nated with the relevant Executive Branch agencies
and given them the opportunity to review the Petitioners� filings and the requests for specific approval in
light of interests related to national security, law enforcement, foreign policy, trade policy, and other
public policy goals. The Executive Branch agencies have filed a letter with the Commission stating that
they have no objections. We also find no grounds to object to the specific approvals, and we conclude
that grant of them will facilitate the foreign investment sought by the petitioner.
22. Aggregate and Individual Ownership Limits. Univision must obtain (1) prior Commission
approval for foreign equity and/or foreign voting interests exceeding 49 percent in the aggregate or for
any such interest held by any individual or entity listed above that exceeds 49 percent, which are the
limits requested in the Petition; and (2) prior specific Commission approval for any individual foreign
investor or �group� other than those listed above acquiring a greater than five percent voting or equity
interest (or ten percent for certain institutional investors) in Univision.
66
While these conditions do not
bar Univision from seeking additional future foreign investment opportunities, they accommodate the
relief requested in the Petition while providing continued protection to important interests related to
national security, law enforcement, foreign policy, trade policy, and other public policy goals.
23. Changes to Organizational Documents. Univision shall modify its organizational
documents to the extent necessary to ensure that the Board of Directors has all necessary powers to
implement the provisions of this Declaratory Ruling. Reflecting broadcast industry best practices these
powers must include the right of Univision to request and obtain information regarding the citizenship of
beneficial owners and those with voting rights in order to ensure compliance with Section 310(b)
the extent necessary to ensure that the Board of Directors has all necessary powers to
implement the provisions of this Declaratory Ruling. Reflecting broadcast industry best practices these
powers must include the right of Univision to request and obtain information regarding the citizenship of
beneficial owners and those with voting rights in order to ensure compliance with Section 310(b). These
powers must also include the right to take any and all actions that the Board of Directors deems necessary
to so comply or to cure any noncompliance. Univision�s certificate of incorporation, bylaws, or other
organization documents must include the following: (1) the right to restrict the transfer of shares to
foreign investors; (2) the right to require disclosure when a foreign investor acquires 5 percent or more
the equity or voting interests in the company; and (3) the right to compel the redemption the redemption
66
See Pandora Declaratory Ruling, 30 FCC Rcd at 5101. A �group� is two or more individuals or entities that have
agreed to act together for the purpose of acquiring, holding, voting, or disposing of their equity and/or voting
interests in the licensee and/or controlling U.S. parent of the licensee or in any intermediate company(ies) through
which any of the individuals or entities holds its interests in the licensee and/or controlling U.S. parent of the
licensee. 17 C.F.R. � 240.13d-5(b).
Federal Communications Commission DA 17-4
9
of shares held by foreign investors. These powers will enable Univision to better maintain compliance
with the requirements of Section 310(b) and of this Declaratory Ruling.
24. Compliance Monitoring. Univision shall monitor its compliance on an ongoing basis
the licensee and/or controlling U.S. parent of the
licensee. 17 C.F.R. � 240.13d-5(b).
Federal Communications Commission DA 17-4
9
of shares held by foreign investors. These powers will enable Univision to better maintain compliance
with the requirements of Section 310(b) and of this Declaratory Ruling.
24. Compliance Monitoring. Univision shall monitor its compliance on an ongoing basis.
67
If, at any time, Univision knows, or has reason to know, that it is no longer in compliance with this
declaratory ruling, Section 310(b)(4) of the Act, or the Commission�s rules and policies on foreign
ownership, it shall file a statement with the Commission explaining the circumstances within 30 days of
the date that it knew or had reason to know that it was no longer in compliance and how it intends to
correct the overage, either by filing a new petition for declaratory ruling or by reducing the foreign
interest.
68
Ongoing monitoring will allow the licensee to stay ahead of changes in its foreign ownership
levels to ensure that it obtains Commission approval before it goes out of compliance with this
declaratory ruling. The required remedial action will provide the licensee with the opportunity and the
incentive to correct an inadvertent error prior to enforcement action by the Commission.
25. As a privately held corporation, Univision has known the identity of its shareholders and
has been able to monitor its level of foreign investment by direct inquiry of them. Following an IPO, as a
publicly traded corporation, consistent with broadcast industry compliance practices, Univision must
diligently seek to identify the citizenship of beneficial owners of its stock and of those entities or
individuals with voting rights in numbers to make this certification on a reasonably reliable basis.
69
We
expect Univision to use sources other than shareholder mailing addresses and corporate headquarters
addresses
sistent with broadcast industry compliance practices, Univision must
diligently seek to identify the citizenship of beneficial owners of its stock and of those entities or
individuals with voting rights in numbers to make this certification on a reasonably reliable basis.
69
We
expect Univision to use sources other than shareholder mailing addresses and corporate headquarters
addresses. Recognizing the unique structure and circumstances of each company, we grant Univision
some flexibility in the specific means of achieving compliance supporting its certifications; however,
Univision should consider the following measures:
? Entering into the Depository Trust Corporation (DTC) SEG-100 or equivalent program
that allows for the deposit of foreign-owned shares into a segregated account for
monitoring of shares. When an issuer such as Univision requests to be included in the
SEG-100 program, DTC notifies its participants that they must apply SEG-100
procedures to future trades of Univision stock. Each DTC participant is obligated to
make inquiries of their own account holders and place the shares of every holder that is a
non-U.S. citizen in the DTC participant�s SEG-100 account. This process will allow
Univision, through its transfer agent, to monitor foreign ownership levels and, if the
threshold is exceeded, to notify DTC of the number of shares that must be transferred out
of SEG-100 accounts. Univision will receive periodic reports from its transfer agent
reflecting the total number of its shares shares placed in SEG-100 accounts.
? Monitoring shares held by current and former officers and directors.
? Monitoring relevant SEC filings, such as Form 13F, Schedule 13D, Schedule 13G, and
Form ADV, with respect to shares held in Univision and any plan or proposal to
influence the management or operation of the company
rts from its transfer agent
reflecting the total number of its shares shares placed in SEG-100 accounts.
? Monitoring shares held by current and former officers and directors.
? Monitoring relevant SEC filings, such as Form 13F, Schedule 13D, Schedule 13G, and
Form ADV, with respect to shares held in Univision and any plan or proposal to
influence the management or operation of the company.
? As to each institutional investor or other person/entity filing such SEC reports, reviewing
the reports, consulting other publicly available sources, and contacting the filer as
necessary (and permissible under SEC regulations and the company�s governance
documents) to determine (1) the citizenship of the holder(s) of sole or shared voting
rights in the shares reported by the filer, and (2) the citizenship of the beneficial owners
of (i.e. the persons or entities holding the economic interests in) such shares. Including as
67
Nothing in this declaratory ruling excuses the petitioner or its subsidiary licensees from the requirements
associated with Section 310(b) certification at the time of filing a Commission application that requires such
certification.
68
See Pandora Declaratory Ruling, 30 FCC Rcd at 5102.
69
See id.
Federal Communications Commission DA 17-4
10
part of its recertification showing, alien ownership (equity) and voting data for shares
reported by each institutional investor or person/entity filing a Form 13F, Schedule 13D
or Schedule 13G.
? Requesting that Broadbridge Financial Services (or equivalent company) provide
Univision with a non-objecting beneficial owner (NOBO) list, i.e., a list of beneficial
owners that own shares through a broker or bank intermediary and that do not object to
their identifying information being reported to the issuer. Request that all NOBOs
provide citizenship information. This may be done in connection with the issuance of
Univision�s annual meeting proxy notices
vide
Univision with a non-objecting beneficial owner (NOBO) list, i.e., a list of beneficial
owners that own shares through a broker or bank intermediary and that do not object to
their identifying information being reported to the issuer. Request that all NOBOs
provide citizenship information. This may be done in connection with the issuance of
Univision�s annual meeting proxy notices.
? Committing to make reasonable efforts to secure the cooperation of the relevant financial
intermediaries in obtaining citizenship information.
26. Organizational Changes. This ruling shall apply to all of Univision�s subsidiaries and
affiliates, whether existing or formed or acquired subsequently, that are wholly owned and controlled by,
or under 100 percent common ownership and control with Univision. In addition, any foreign investor
that has received specific approval may insert a new, foreign-organized company that is under 100
percent common ownership and control with the foreign investor in the investor�s vertical ownership
chain above the controlling U.S. parent.
70
The flexibility granted here reflects the reality that it is not
uncommon for publicly traded companies to make changes within their corporate structure that in no way
affect the operation, management, or control of those companies. This flexibility does not detract in any
way from the requirement under the Act and our Rules to apply for and receive prior Commission consent
to a voluntary assignment of license or transfer of control before such a transaction may be
consummated
71
or to seek a new declaratory ruling before its foreign ownership exceeds the terms or
conditions of this declaratory ruling.
72
V. PROCEDURAL MATTERS
27. This declaratory ruling is issued pursuant to section 310(b)(4) of the Communications
Act of 1934, 47 U.S.C. � 310(b)(4), and sections 0.61 and 0.283 of the Commission�s rules, 47 C.F.R. ��
0.61 and 0.283.
28
ay be
consummated
71
or to seek a new declaratory ruling before its foreign ownership exceeds the terms or
conditions of this declaratory ruling.
72
V. PROCEDURAL MATTERS
27. This declaratory ruling is issued pursuant to section 310(b)(4) of the Communications
Act of 1934, 47 U.S.C. � 310(b)(4), and sections 0.61 and 0.283 of the Commission�s rules, 47 C.F.R. ��
0.61 and 0.283.
28. Issuance of this declaratory ruling is without prejudice to the Commission�s action on any
other matter.
70
Although this condition was not in the Pandora Declaratory Ruling, we find that it is consistent with that
decision�s condition allowing the creation of new, wholly owned subsidiaries of the licensee�s parent company to be
inserted in the ownership chain.
71
See Pandora Declaratory Ruling, 30 FCC Rcd at 5102.
72
Some of the conditions we adopt here are similar to the terms of the rules adopted in the 2016 Foreign Ownership
Order. See, e.g. 47 C.F.R. �1.5001(i); 47 C.F.R. � 1.5004 (b), (d) and (f). However, we adopt these conditions here
not to apply those rules, which are not yet effective, but because we conclude that these conditions are appropriate
under the facts and circumstances of this case.
Federal Communications Commission DA 17-4
11
29. Pursuant to section 1.103 of the Commission�s rules, 47 C.F.R. � 1.103, the consent
granted herein is effective upon release of this declaratory ruling.
FEDERAL COMMUNICATIONS COMMISSION
William T. Lake
Chief
Media Bureau
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.