On March 31, 2017, Frontier Media, LLC will close on its purchase of 15 radio stations (8 FM/7 AM) in Alaska, Texas and Arkansas, becoming the first 100 percent foreign owned entity to own U.S. broadcast stations. The Federal Communications Commission (FCC) approved Frontier’s applications for transfer of control and Petition for Declaratory Ruling on February 23, 2017, about 8 ½ months after they were filed.
Frontier is owned by an Australian couple, Richard and Sharon Burns, who have been living in Juneau, Alaska and managing these radio stations since 2006. They previously held a 20 percent ownership interest in the stations, but in this landmark ruling, the Burns’ will be permitted to buy out the 80 percent US owners of these stations and become the sole (indirect) and first 100 percent foreign owners of these US radio stations. DWT represented the Burns' in the application process before the FCC.
The actual licensees of these stations are all US companies as required by law, although the ultimate 100 percent owners of these licensee companies are Richard and Sharon Burns. Section 310(b) of the Communications Act (47 USC) requires that all broadcast stations be licensed to US entities that can be directly owned up to 20 percent by foreign persons or entities. However, Section 310(d) of the Act allows “indirect” (i.e. at least two steps removed from the licensee) foreign ownership of US broadcast stations up to 25 percent without FCC approval, or more if the FCC determines that such increased foreign ownership would be in the public interest. In reality, though, the 25 percent threshold has consistently been treated as a hard limit on indirect foreign ownership until 2013.
In 2013, the FCC issued a Declaratory Ruling inviting increased foreign ownership of US broadcast stations for the purposes of facilitating foreign investment in the US broadcast market and encouraging reciprocal investment opportunities for US companies in foreign markets. Since then, the FCC has considered three different applications to exceed the 25 percent limit which, up until now, resulted in FCC approval of up to 49.99 percent foreign ownership in US broadcast stations. But the FCC had never previously considered majority foreign control over any US broadcast station until the Burns’ requested it through their wholly owned (US) subsidiary, Frontier Media, LLC. Although this decision was described by the FCC as “fact specific,” and any future foreign ownership proposal will be subject to the FCC’s case-by-case approach, including review by various Executive Branch agencies such as Homeland Security, this decision signals the FCC’s willingness to both consider and approve foreign ownership and control of US broadcast stations. In this case, the US licensee companies will be 100 percent owned by Frontier Media, LLC, which is in turn owned 100 percent by Richard and Sharon Burns.
The applications were aided by the fact that the Burns’ have been living in the US and managing these stations for 10 years, and both of them have been model residents of Juneau, including Richard Burns having been named “Citizen of the Year” by the Juneau Chamber of Commerce in 2010. It was also helpful that their country of citizenship—Australia—is not considered a source of terrorist activity or any type of security threat to the US.