[Federal Register Volume 64, Number 159 (Wednesday, August 18, 1999)]
[Rules and Regulations]
[Pages 44856-44858]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-21471]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR PART 73
[MM Docket No. 97-234, GC Docket No. 92-52, and GEN Docket No. 90-264;
FCC 99-201]
Implementation of Competitive Bidding for Commercial Broadcast
and Instructional Television Fixed Service Licenses
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: This document concludes that it is appropriate for the Federal
Communications Commission to attribute the mass media interests of
investors holding more than a 33% equity and/or debt interest in a
broadcast auction bidder claiming a New Entrant Bidding Credit, even if
such an interest is non-voting.
DATES: The effective date is August 18, 1999.
FOR FURTHER INFORMATION CONTACT: Shaun Maher, Video Services Division,
Mass Media Bureau at (202) 418-1600.
SUPPLEMENTARY INFORMATION: This item contains information collections
requirements for which we have received OMB approval, OMB Control
Number 3060-0896. This Memorandum Opinion and Order concludes that it
is
[[Page 44857]]
appropriate for the Federal Communications Commission to attribute the
mass media interests of investors holding more than a 33% equity and/or
debt interest in a broadcast auction bidder claiming a New Entrant
Bidding Credit, even if such an interest is non-voting. This action is
a further refinement of the eligibility standards for the New Entrant
Bidding Credit available to bidders in broadcast auctions created by
the Commission as a means to promote and facilitate the diversification
of ownership in the mass media. In an earlier Memorandum Opinion and
Order, 64 FR 24523 (May 7, 1999), the Commission revised the
eligibility standards for the New Entrant Bidding Credit to ensure that
those standards are consistent with the Commission's general
attribution standards. In this Memorandum Opinion and Order, the
Commission determined that it was appropriate to attribute the mass
media interests held by very substantial investors in any broadcast
auction applicant claiming a New Entrant Bidding Credit. The Commission
explained that it was taking this action to ensure that only true new
entrants qualify for the bidding credit, because holders of otherwise
nonattributable interests may well have a ``realistic potential'' to
influence bidders claiming new entrant status. The Commission further
determined, based upon a review of the record in the broadcast
attribution proceeding and the precedent provided by its long-standing
cross-interest policy, that setting the attribution threshold at 33% is
appropriate in the new entrant context.
Supplemental Regulatory Flexibility Analysis (FRFA)
As required by the Regulatory Flexibility Act (RFA), 5 U.S.C. 603,
a Final Regulatory Flexibility Analysis (FRFA) was incorporated in
Appendix B of the First Report and Order, 63 FR 48615 (September 11,
1998) in this proceeding. In addition, a Supplemental Final Regulatory
Flexibility Analysis (First Supplemental FRFA) was incorporated in
Appendix B of the Memorandum Opinion and Order, 64 FR 24523 (May 7,
1999) in this proceeding that resolved various petitions for
reconsideration filed against the First Report and Order. The
Commission's Supplemental Final Regulatory Flexibility Analysis (Second
Supplemental FRFA) in this Memorandum Opinion and Order reflects
revised or additional information to that contained in the FRFA and
First Supplemental FRFA. This Second Supplemental FRFA is thus limited
to issues addressed in this Memorandum Opinion and Order. This Second
Supplemental FRFA conforms to the RFA, as amended by the Contract with
America Advancement Act of 1996, Public Law No. 104-121, 110 Stat. 847
(1996) (CWAAA); see generally 5 U.S.C. 601 et seq. Title II of the
CWAAA is the Small Business Regulatory Enforcement Fairness Act of 1996
(SBREFA).
I. Need For and Objectives of Action
In the First Report and Order in this proceeding, the Commission
adopted rules and procedures to implement provisions of the Balanced
Budget Act of 1997 expanding its competitive bidding authority, under
Sections 309(j) and 309(l) of the Communications Act of 1934, 47 U.S.C.
309(j), 309(l), to include, inter alia, the commercial broadcast
services. In a recent Memorandum Opinion and Order resolving numerous
petitions for reconsideration filed against the First Report and Order
the Commission generally upheld its previous determinations made with
respect to auction rules and procedures for the various broadcast
services. That Memorandum Opinion and Order did, however, refine the
eligibility standards for the ``new entrant'' bidding credit, which, as
adopted in the First Report and Order, provides a tiered credit for
broadcast auction bidders with no, or very few, other media interests.
In particular, the Commission concluded in its previous Memorandum
Opinion and Order that the eligibility standards for the new entrant
bidding credit should be amended to be consistent with the general
broadcast attribution standards, by which the Commission defines what
constitutes an attributable interest in applying the broadcast multiple
ownership rules. In addition to attributing mass media interests for
purposes of the new entrant bidding credit to the same extent that such
media interests are considered attributable for purposes of the
broadcast multiple ownership rules, the Commission determined in that
Memorandum Opinion and Order to also consider, in a further order,
whether to attribute the mass media interests of any individual or
entity who holds a significant equity and/or debt interest in a
broadcast auction bidder claiming new entrant status, even if such an
interest is nonvoting. The above-referenced Memorandum Opinion and
Order does in fact determine to attribute the mass media interests of
investors holding more than a 33% equity and/or debt interest in a
broadcast auction bidder claiming new entrant status, even if such an
interest is nonvoting.
II. Significant Issues Raised by Public in Response to Final Regulatory
Flexibility Analysis
No petitions or comments were received in response to the FRFA or
the First Supplemental FRFA. Small business-related issues were raised
indirectly by some parties filing petitions for reconsideration against
the First Report and Order. These issues were addressed in detail in
the previous Memorandum Opinion and Order and the First Supplemental
FRFA.
III. Description and Estimate of the Number of Small Entities Involved
In the FRFA and First Supplemental FRFA, the Commission utilized
the definition of ``small business'' promulgated by the Small Business
Administration (SBA), even though, as discussed in detail in the FRFA,
we tentatively believed that the SBA's definition of ``small business''
overstated the number of radio and television broadcast stations that
were small businesses and was not particularly suitable for our
purposes. No petitions or comments were received concerning the
Commission's use of the SBA's small business definition for purposes of
the FRFA and First Supplemental FRFA, and we will therefore continue to
employ such definition for this Second Supplemental FRFA. As we are
utilizing the same definition of small business for this Second
Supplemental FRFA, the description and number of small entities
affected by the rule change adopted in this Memorandum Opinion and
Order should be the same as the entities described in both the FRFA and
First Supplemental FRFA, and include, specifically, commercial
broadcast stations (television, low power television, television
translator, AM, FM and FM translator stations).
IV. Description of Projected Reporting, Recordkeeping and Other
Compliance Requirements
The First Report and Order adopted a number of rules that included
reporting, recordkeeping and compliance requirements. These
requirements were described in detail in the FRFA, and, as discussed in
the First Supplemental FRFA, generally remained unchanged by the rule
amendments adopted in the previous Memorandum Opinion and Order. The
rule change adopted in this Memorandum Opinion and Order does not
include any additional or different reporting or recordkeeping
requirements, but only affects the
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standards for qualifying for the new entrant bidding credit.
V. Steps Taken to Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered
The FRFA and First Supplemental FRFA described in considerable
detail the steps taken in the First Report and Order and in the
previous Memorandum Opinion and Order to minimize significant economic
impact on small entities and the alternatives considered. The rule
amendment adopted in this Memorandum Opinion and Order further refines
the eligibility standards for the new entrant bidding credit. The
Commission believes that attributing the mass media interests (if any)
held by very substantial investors in bidders claiming new entrant
status will help properly limit the scope of the bidding credit to
those truly new entities intended to benefit from the credit (and who
are likely to be small businesses). In addition, adoption of this
attribution policy should reduce the likelihood of bidder manipulation
of the eligibility standards for the bidding credit.
The Commission also believes that setting this attribution
benchmark at 33% reasonably balances its interest in capturing investor
relationships that provide a realistic potential to influence the core
operating functions of broadcast auction applicants, and the needs of
prospective auction applicants (including small businesses) to obtain
financing. This 33% equity/debt attribution standard does not preclude
an individual or entity (including any existing broadcaster) from
investing any amount in a prospective broadcast auction applicant. Nor
does this 33% equity/debt standard require an applicant claiming new
entrant status to contribute a minimum amount of equity, or otherwise
affect an applicant's right to participate in a broadcast auction.
Because this standard only establishes that the attributable media
interests (if any) of an investor who holds more than a 33% equity and/
or debt interest in a broadcast auction bidder will be attributable to
that bidder for determining its status as a new entrant, the Commission
concludes that adoption of the 33% equity/debt standard should not
unduly hinder the ability of broadcast licensees generally, or
broadcast auction applicants specifically, to obtain capital.
VI. Report to Congress
The Commission will send a copy of this Memorandum Opinion and
Order, including this Second Supplemental FRFA, in a report to be sent
to Congress pursuant to the Small Business Regulatory Enforcement
Fairness Act of 1996. See 5 U.S.C. 801(a)(1)(A). In addition, the
Commission will send a copy of the Memorandum Opinion and Order,
including the Second Supplemental FRFA, to the Chief Counsel for
Advocacy of the Small Business Administration. A copy of the Memorandum
Opinion and Order and Second Supplemental FRFA (or summaries thereof)
will also be published in the Federal Register. See 5 U.S.C. 604(b).
Authority for issuance of this Memorandum Opinion and Order is
contained in Sections 4 (i) and (j), 301, 303(f), 303(g), 303(h),
303(j), 303(r), 307(c), 308(b), 309(j), 309(l) and 403 of the
Communications Act of 1934, as amended, 47 U.S.C. 154(i), 154(j), 301,
303(f), 303(g), 303(h), 303(j), 303(r), 307(c), 308(b), 309(j), 309(l)
and 403.
List of Subjects in 47 CFR Part 73
Radio broadcasting, Reporting and recordkeeping requirements,
Television broadcasting.
Federal Communications Commission.
Magalie Roman Salas,
Secretary.
Rule Change
Part 73 of Title 47 of the Code of Federal Regulations is amended
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, and 336.
2. Section 73.5008 is amended by revising paragraph (c) to read as
follows:
Sec. 73.5008 Definitions applicable for designated entity provisions.
* * * * *
(c) An attributable interest in a winning bidder or in a medium of
mass communications shall be determined in accordance with Sec. 73.3555
and Note 2. In addition, the attributable mass media interests, if any,
held by an individual or entity with an equity and/or debt interest(s)
in a winning bidder shall be attributed to that winning bidder for
purposes of determining its eligibility for the new entrant bidding
credit, if the equity (including all stockholdings, whether voting or
nonvoting, common or preferred) and debt interest or interests, in the
aggregate, exceed thirty-three (33) percent of the total asset value
(defined as the aggregate of all equity plus all debt) of the winning
bidder.
[FR Doc. 99-21471 Filed 8-17-99; 8:45 am]
BILLING CODE 6712-01-P
