Radio and television broadcasting: Competitive bidding procedures— Commercial broadcast and instructional television fixed service licenses,

[Federal Register: August 18, 1999 (Volume 64, Number 159)]

[Rules and Regulations]

[Page 44856-44858]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr18au99-11]

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.

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

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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 filedagainst 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).

1. 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 filedagainst 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.

2. 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.

3. 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).

4. 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.

5. 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.

6. 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. 99-21471Filed8-17-99; 8:45 am]

      BILLING CODE 6712-01-P