In an action expected to facilitate foreign investment in broadcasters and common carriers, the FCC voted unanimously to adopt a Report and Order (R&O) which extends to broadcasters (with certain service-specific modifications) the same streamlined rules and procedures used by the agency in reviewing requests for foreign ownership of common carrier licenses.
Approved unanimously by the FCC’s five commissioners, the R&O maintains the 25% statutory cap on foreign ownership of U.S. broadcast and common carrier licensees but replaces current case-by-case procedures for approving foreign ownership of broadcast licensees with a standardized filing and review process. According to an FCC press release, the new rules aim to “provide the broadcast sector with a clearer path for investment.” Mirroring the Section 310(b)(4) petition process that common carriers use to request declaratory rulings on foreign ownership, the streamlined rules allow broadcasters to seek approval of up to 100% aggregate foreign ownership of a controlling U.S. parent. The streamlined rules also set a minimum five percent threshold for when broadcasters need to seek approval of foreign ownership, or ten percent in the case of foreign institutional investors which include hedge funds. Broadcasters would also be allowed to request approval for a “proposed controlling foreign investor” to increase holdings “at some future time” up to 100 percent, or for a non-controlling foreign investor to increase its ownership interest up to 49.99 percent.
As FCC Commissioner Mignon Clyburn described the R&O as a “praiseworthy example” of how the FCC strives to create new investment opportunities for broadcast and other licensees, Commissioner Ajit Pai predicted that the new rules “will eliminate the need” for publicly-traded and other companies “to conduct costly and often unreliable surveys of individual shareholders” in an effort to ascertain their levels of foreign ownership. Praising the R&O as “an important step,” a spokesman for the National Association of Broadcasters (NAB) told reporters that “NAB applauds the Commission’s decision and looks forward to greater investment in local sources of news and programming.”