In the Matter of Promoting Diversification of Ownership in the Broadcasting Services, 28361-28370 [E8-11039]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 73, Number 96 (Friday, May 16, 2008)]
[Rules and Regulations]
[Pages 28361-28370]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-11039]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 73

[MB Docket Nos. 07-294; 06-121; 02-277; 04-228, MM Docket Nos. 01-235; 
01-317; 00-244; FCC 07-217]


In the Matter of Promoting Diversification of Ownership in the 
Broadcasting Services

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: This document adopts rule changes designed to expand 
opportunities for participation in the broadcasting industry by new 
entrants and small businesses, including minority- and women-owned 
businesses.

DATES: The rule amendments to Sec. Sec.  73.2090, 73.3555, 73.3598 and 
73.5008 adopted in this Report and Order will be effective July 15, 
2008. Changes to FCC Forms required as the result of the rule 
amendments adopted herein will become effective 30 days after the 
Commission publishes a notice in the Federal Register announcing 
approval by the Office of Management and Budget of the forms.

FOR FURTHER INFORMATION CONTACT: Mania Baghdadi, (202) 418-2133.

SUPPLEMENTARY INFORMATION: This is a summary of the Federal 
Communications Commission's Report and Order and Third Further Notice 
of Proposed Rulemaking (the ``Order'') in MB Docket Nos. 07-294; 06-
121; 02-277; 04-228, MM Docket Nos. 01-235; 01-317; 00-244; FCC 07-217, 
adopted December 18, 2007, and released March 5, 2008. The full text of 
this document is available for public inspection and copying during 
regular business hours in the FCC Reference Center, Federal 
Communications Commission, 445 12th Street, SW., CY-A257, Washington, 
DC 20554. These documents will also be available via ECFS (https://
www.fcc.gov/cgb/ecfs). The complete text may be purchased from the 
Commission's copy contractor, 445 12th Street, SW., Room CY-B402, 
Washington, DC 20554. To request this document in accessible formats 
(computer diskettes, large print, audio recording and Braille), send an 
e-mail to fcc504@fcc.gov or call the FCC's Consumer and Governmental 
Affairs Bureau at (202) 418-0530 (voice)(202) 418-0432 (TTY).

Summary of the Report and Order

    1. This Order was adopted to expand opportunities for participation 
in the

[[Page 28362]]

broadcasting industry by new entrants and small businesses, including 
minority- and women-owned businesses. It has long been a basic tenet of 
national communications policy that the widest dissemination of 
information from diverse and antagonistic sources is essential to the 
welfare of the public. By broadening participation in the broadcast 
industry, the Commission seeks to strengthen the diverse and robust 
marketplace of ideas that is essential to our democracy. As the Supreme 
Court has recognized, ``Safeguarding the public's right to receive a 
diversity of views and information over the airwaves is * * * an 
integral component of the FCC's mission.'' Metro Broadcasting, Inc. v. 
FCC, 497 U.S. 547, 567 (1990), overruled in part on other grounds in 
Adarand Constructors Inc. v. Pena, 515 U.S. 200, 227 (1995). Beyond 
fostering viewpoint diversity, the Commission also believes that taking 
steps to facilitate the entry of new participants into the broadcasting 
industry may promote innovation in the field because in many cases, the 
most potent sources of innovation often arise not from incumbents but 
from new entrants. The Commission believes that this may be 
particularly true with respect to small businesses, including those 
owned by minorities and women. Expanding the pool of potential 
competitors in media markets to include such businesses should bring 
new competitive strategies and approaches by broadcast station owners 
in ways that benefit consumers in those markets. The new rules will 
help eligible entities with access to financing and availability of 
spectrum.

A. Definition of Eligible Entities

    2. To define the group intended to receive the benefits of the 
measures adopted in the Order, the Commission uses the term ``eligible 
entity,'' defined as an entity that would qualify as a small business 
consistent with Small Business Administration (``SBA'') standards for 
its industry grouping, based on revenue. At present, the SBA defines as 
a small business a television broadcasting station that has no more 
than $13 million in annual receipts and a radio broadcasting entity 
that has no more than $6.5 million in annual receipts. To determine 
qualifications as a small business, the SBA considers the revenues of 
the parent corporation and affiliates of the parent corporation, not 
just the revenues of individual broadcast stations. In addition, in 
order to ensure that ultimate control rests in an eligible entity that 
satisfies the revenue criteria, the entity must satisfy one of several 
control tests. The eligible entity must hold: (1) 30 percent or more of 
the stock/partnership shares and more than 50 percent voting power of 
the corporation or partnership that will hold the broadcast license; or 
(2) 15 percent or more of the stock/partnership shares and more than 50 
percent voting power of the corporation or partnership that will hold 
the broadcast licenses, provided that no other person or entity owns or 
controls more than 25 percent of the outstanding stock or partnership 
interests; or (3) more than 50 percent of the voting power of the 
corporation if the corporation that holds the broadcast licenses is a 
publicly traded company. The Commission concludes that use of this 
definition of ``eligible entity'' will advance its objectives of 
promoting diversity of ownership in the broadcast industry by making it 
easier for small businesses and new entrants--that otherwise might find 
it difficult or impossible to compete--to acquire a license and attract 
the capital necessary to compete in the marketplace with larger and 
better financed companies. In addition, by facilitating entry into the 
broadcast industry by new entrants, the Commission hopes that these 
measures will result in a wider array of programming services, 
including some that are responsive to local needs and interests and 
audiences that are currently underserved. The Commission anticipates 
that small businesses will be more likely than large corporations to 
have ties to the communities that they seek to serve, and thus be more 
attuned to local needs and interests.

B. Actions To Expand Opportunities for Eligible Entities

    3. Revision of Rules Regarding Construction Permit Deadlines. The 
Order revises Sec.  73.3598 of the Commission's rules to afford 
eligible entities that acquire an expiring construction permit 
additional time to build out the facility. Specifically, the Commission 
allows eligible entities the time remaining on the original 
construction permit or 18 months, whichever is greater. Section 73.3598 
requires that each construction permit for the construction of a new 
TV, AM, FM, international broadcast, low power TV, TV translator, TV 
booster, FM translator or FM booster station must specify a period of 
three years from the date of issuance of the original construction 
permit within which construction shall be completed and an application 
for license filed. Construction permits for new LPFM stations allow 
permittees 18 months to complete construction and file a license 
application. Generally, any construction permit for which construction 
has not been completed, and for which an application for license has 
not been filed, is automatically forfeited upon expiration without any 
further affirmative cancellation by the Commission. The Commission 
believes that the extra time the Order provides to eligible entities 
acquiring an expiring construction permit will advance diversity of 
ownership, as broadcasters that otherwise would forfeit their 
construction permits would be motivated to sell them to eligible 
entities as an alternative. Moreover, it will serve as an appropriate 
accommodation of the capital constraints and other financial issues 
that small businesses often confront. The Commission believes that 
service to the public would be expedited by providing eligible entities 
up to 18 months additional time to complete construction of an expiring 
permit, rather than allowing the permit to expire and auctioning the 
allotment a second time.
    4. Modification of Attribution Rule. The Order revises the 
Commission's equity/debt plus (``EDP'') attribution standard to 
facilitate investment in eligible entities. The Commission's broadcast 
attribution rules define which financial or other interests in or 
relationships with a licensee are counted in applying the broadcast 
ownership rules. The rules ``seek to identify those interests in or 
relationships to licensees that confer on their holders a degree of 
influence or control such that the holders have a realistic potential 
to affect the programming decisions of licensees or other core 
operating functions.'' At the same time, the attribution rules are 
designed to ``permit arrangements in which a particular ownership or 
positional interest involves minimal risk of influence, in order to 
avoid unduly restricting the means by which investment capital may be 
made available to the broadcast industry.'' With regard to corporate 
entities, the broadcast attribution rules generally attribute voting 
stock interests of five percent or more. Minority stock interests in a 
corporation with a single-majority shareholder, non-voting stock 
interests, warrants, debt, properly insulated limited partnership and 
LLC interests, and unexercised options are not attributable, unless the 
EDP rule is triggered.
    5. The EDP rule is designed to resolve concerns that multiple non-
attributable interests could be combined to allow the holders to exert 
significant influence over licensees such that these interests should 
be counted in applying the multiple ownership rules. Under the

[[Page 28363]]

EDP rule, where an investor is either (1) a major program supplier 
(providing programming constituting over 15 percent of a broadcast 
station's total weekly broadcast programming hours); or (2) a same-
market media entity subject to the broadcast multiple ownership rules, 
its interest in a licensee or other media entity will be attributed if 
that interest, aggregating both debt and equity holdings, exceeds 33 
percent of the total assets (equity plus debt) of the licensee or media 
entity. In other words, attribution results where the financial 
interest exceeds 33 percent and there is a triggering relationship, 
i.e., either the investor is a major program supplier or a same-market 
media entity subject to the broadcast multiple ownership rules. The EDP 
rule limits the single majority shareholder attribution exemption, as 
well as the exemptions from attribution applicable to non-voting stock, 
debt, and properly insulated interests in limited partnerships and 
LLCs. The EDP rule applies to all of the broadcast ownership rules.
    6. Under the revision adopted in the Order, the Commission will 
allow the holder of an equity or debt interest in a media outlet 
subject to the media ownership rules to exceed the 33 percent threshold 
set forth in Note 2(i) to Sec.  73.3555 of the rules without triggering 
attribution where such investment would enable an eligible entity to 
acquire a broadcast station, provided that: (1) The combined equity and 
debt of the interest holder in the eligible entity is less than 50 
percent, or (2) the total debt of the interest holder in the eligible 
entity does not exceed 80 percent of the asset value of the station 
being acquired by the eligible entity and the interest holder does not 
hold any equity interest, option, or promise to acquire an equity 
interest in the eligible entity or any related entity. These higher 
investment limits in eligible entities also apply for purposes of 
determining eligibility for the new entrant bidding credit in broadcast 
auctions, as the standards for determining attribution in a winning 
bidder parallel the attribution standards in Sec.  73.3555, Note 2, 
which the Commission revises in this Order.
    7. The Commission finds sufficient evidence in the record to show 
that difficulty in accessing capital investment currently is inhibiting 
diversity of ownership of broadcast stations and new entry. Moreover, 
the Commission thinks it is reasonable to conclude that modification of 
the EDP rule could alleviate or, at the least, minimize this problem. 
The Commission believes that this modification will further its goal of 
improving access to capital in order to foster diversity of ownership, 
new entry, and, ultimately, the provision of new programming and other 
services to the public. The Commission finds sufficient evidence in the 
record warrants a change in its policy. The Commission also believes 
that the changes it is making in the Order will retain regulatory 
certainty for entities in planning their financial transactions, an 
important goal of the attribution rules, which are designed as bright 
line tests. Finally, it believes that the public interest weighs in 
favor of allowing existing broadcasters to acquire a minority equity 
ownership interest in an eligible entity in order to provide the 
opportunity for such a new entrant to enter the broadcasting market.
    8. Distress Sale Policy. The Commission's distress sale policy 
permits ``a licensee whose license has been designated for revocation 
hearing, or whose renewal application has been designated for hearing 
on basic qualifications issues, to assign its license prior to 
commencement of the hearing to a minority controlled entity'' at a 
price that is substantially below its fair market value. Under this 
policy, a licensee facing the possible loss of its license can sell the 
station in a ``distress sale.'' The licensee faces a substantial 
financial penalty as a result of the ``distress'' sale but recoups a 
portion of the value of its station and avoids the revocation or 
renewal hearing. The Commission saves the time and expense of 
conducting a revocation or renewal hearing and subsequent appeals. Most 
important, the station is placed expeditiously in the hands of a 
qualified operator that might otherwise have few opportunities to 
acquire a station, and the public does not lose service from a local 
broadcast station. In the Order, the Commission decided to place the 
distress sale policy on a sound constitutional and administrative 
footing by allowing a licensee whose license has been designated for a 
revocation hearing or whose renewal application has been designated for 
a hearing on basic qualifications issues to sell its station prior to 
the commencement of the hearing to an ``eligible entity,'' as defined 
in the Order. The Commission believes that this action will promote 
diversity of ownership in the broadcast industry by making it easier 
for small businesses and new entrants, including minority-owned 
businesses, to purchase stations. This, in turn, may result in a 
greater diversity of program services, including services that are 
responsive to local needs and interests and the interests of 
underserved audiences. Similar to the Commission's new rule 
facilitating the transfer of expiring construction permits to eligible 
entities, the modified distress sale policy can expedite new service or 
facilitate the continuation of existing service to the public by 
avoiding lengthy revocation or renewal hearings and subsequent appeals, 
and it also conserves substantial private and Commission resources that 
would otherwise be devoted to such proceedings. The Commission believes 
this action will serve the public interest by aiding the swift delivery 
of new services to the public, and the conservation of public and 
private resources.
    9. Ban on Discrimination in Broadcast Transactions. The Order 
adopts a rule that bars discrimination on the basis of race or gender 
and related protected categories in broadcast transactions. 
Specifically, the rule states that, ``No qualified person or entity 
shall be discriminated against on the basis of race, color, religion, 
national origin or sex in the sale of commercially operated AM, FM, TV, 
Class A TV or international broadcast stations (as defined in this 
part).'' Adoption of a nondiscrimination rule with respect to sales is 
consistent with the Commission's statutory mandate under 47 U.S.C. 257, 
which directs the Commission to identify and eliminate, through 
regulatory action, market entry barriers for entrepreneurs and other 
small businesses in the provision and ownership of telecommunications 
and information services, in order to promote the policies and purposes 
of the Act favoring diversity of media voices, vigorous economic 
competition, technological advancement, and the promotion of the public 
interest, convenience and necessity. The new rule will also advance the 
statutory goal of fostering minority and female ownership in the 
provision of commercial spectrum-based services and will advance the 
Commission's public-interest mandate to foster viewpoint diversity by 
promoting the dissemination of licenses to a wide variety of 
applicants. The new rule will require sellers to certify compliance 
with this rule against discrimination by checking a box on Form 314 or 
315 applications, which will be amended accordingly.
    10. ``Zero Tolerance'' Policy for Ownership Fraud. The Commission 
adopts a ``zero tolerance'' policy for ownership fraud and reaffirms 
its principle that applicants' representations to the Commission must 
be complete and correct. A commenter

[[Page 28364]]

notes that ownership fraud occurs when real-parties-in-interest 
structure transactions so that the principals of the putative applicant 
entity have no real voice in practice. The commenter states that such 
fraud may be relatively common. Ownership fraud could impede the 
Commission's efforts to assess or increase media ownership diversity. 
The Commission recognizes that rules granting preferences to qualified 
applicants encourage applicants to qualify for the preference and that 
some potential applicants will try to claim the preference by creating 
an appearance of qualification that does not accord with reality. 
Because the risk of such fraud arises whenever some applicants can 
obtain a preference, the Commission concludes that adopting a ``zero 
tolerance'' policy will help deter and detect ownership fraud. 
Accordingly, the Order adopts a ``zero-tolerance'' policy for ownership 
fraud and states that the Commission should ``fast-track'' ownership-
fraud claims and seek to resolve them within 90 days.
    11. Non-Discrimination Provisions in Advertising Sales Contracts. 
The Commission adopts a proposal to require broadcasters renewing their 
licenses to certify that their advertising sales contracts contain 
nondiscrimination clauses that prohibit all forms of discrimination. 
The Commission adopts this requirement in light of reports that some 
advertising contracts contain ``no urban/no Spanish dictates'' that are 
intended to minimize the proportion of African American or Hispanic 
customers patronizing an advertiser's venue--or that presume that 
African Americans or Hispanics cannot be persuaded to buy an 
advertiser's product or service. The Order observes that such clauses 
may violate U.S. nondiscrimination laws. For over 20 years, the 
Commission has been aware of the insidious practices of certain 
advertisers, rep firms and advertising agencies of imposing written or 
unwritten ``no urban/no Spanish'' dictates. The Commission finds that 
discriminatory practices have no place in broadcasting and concludes 
that it is appropriate for the Commission to require broadcasters 
renewing their licenses to certify that their advertising contracts do 
not discriminate on the basis of race or gender and that such contracts 
contain nondiscrimination clauses. Broadcasters will be required to 
certify compliance with the new rule on their renewal applications 
prepared on Form 303-S. The Commission declined to dictate the specific 
language that advertising contracts can or should contain, given that 
serious First Amendment concerns could arise were the Commission to do 
so.
    12. Longitudinal Research on Minority and Women Ownership Trends. 
Commenters argue that the Commission should conduct annual longitudinal 
studies of minority and female ownership. The Order agrees with these 
concerns, and the Commission will commence such research once it has 
resolved the data-gathering issues raised in the Third Further Notice 
accompanying the Order. The Commission agrees that longitudinal studies 
could help the Commission track ownership trends over time and that 
such studies could help scholars and other interested parties assess 
the impact of rule changes on minority and female ownership. It agrees 
that this, in turn, could help provide real-time feedback on the impact 
of the Commission's rules and policies on access to capital, the 
availability of spectrum and opportunity to minority and female-owned 
entities, and the ability of such entities to serve the public. It also 
agrees that conducting such studies annually would help it build a more 
robust database that could better illuminate the optimal intervals for 
conducting future studies. Once the Commission has collected improved 
information on FCC Form 323, it will conduct longitudinal studies as 
suggested by the commenters.
    13. Local and Regional Bank Participation in SBA Guaranteed Loan 
Programs. The Commission adopts a proposal to increase Commission 
efforts to encourage local and regional banks to participate in SBA-
guaranteed loan programs to facilitate broadcast and 
telecommunications-related transactions. Through its Office of 
Communications Business Opportunities, the Commission will work closely 
with the SBA to educate and encourage more local and regional banks 
(which historically have not been heavily involved in broadcast and 
telecommunications lending) to make loans through the SBA's 7(a) or 504 
programs. The Commission believes that by increasing outreach to local 
and regional banks and to the SBA, the Commission can better assist 
both local banks and SBA programs to facilitate such transactions and 
provide potential lenders with special expertise regarding 
transactions. Absent such efforts, uncertainty about asset valuation 
could cause local and regional banks to refuse to facilitate otherwise 
viable transactions. Because such outcomes could frustrate Commission 
efforts to promote ownership and viewpoint diversity, the Commission 
concludes that this action is appropriate.
    14. Duopoly Priority for Companies That Finance or Incubate an 
Eligible Entity. The Order adopts a proposal to give any entity that is 
financing or incubating an ``eligible entity'' (as that term is defined 
in the Order) priority if it files for a duopoly simultaneously with 
non-eligible entities in a market that can only support one additional 
duopoly. Commenters argue that ``when the local television ownership 
rules permit only one additional duopoly in a market, a `race to the 
courthouse,' could determine which duopoly application is processed 
first.'' The Order agrees that one way to cure this problem is to 
create an incentive plan under which a company financing or incubating 
an eligible entity would be guaranteed a priority if it files for a 
duopoly simultaneously with other entities in a market that can support 
only one additional duopoly. This vested priority in a duopolization 
queue would reward the large broadcaster that had incubated or financed 
an eligible entity if it filed simultaneously for a duopoly with a non-
incubating entity. Moreover, such a priority in the duopolization queue 
could have substantial value and therefore provide the added benefit of 
an incentive for eligible entity financing. The Commission agrees that 
in this situation, a general statement of policy that grants priority 
to entities funding or incubating eligible entities would promote 
ownership diversity.
    15. Extension of Divestiture Deadlines in Certain Mergers. The 
Order adopts a proposal to consider requests to extend divestiture 
deadlines in mergers in which applicants have actively solicited bids 
for divested properties from eligible entities. The Commission has 
encouraged companies undertaking major transactions to assist small 
businesses, including those owned by minority and female entrepreneurs 
interested in purchasing divested properties. But such efforts may take 
time, and such entities may need additional time to secure funding to 
complete potential transactions. Consequently, while rigidly enforced 
divestiture deadlines might be intended to increase minority ownership 
and viewpoint diversity, they could sometimes have the perverse effect 
of disadvantaging potential minority owners. Because divestiture 
deadlines are intended to prevent undue concentration of media 
ownership, requests to extend these deadlines in order to facilitate 
acquisition of divested properties by small businesses could promote 
both diversity in media ownership and the objective that

[[Page 28365]]

divestiture seeks to achieve. Consequently, the Commission will adopt a 
policy of considering requests to extend divestiture deadlines when 
applicants have actively solicited bids for divested properties from 
eligible entities. The Order also adopts a proposal requiring that 
entities availing themselves of an extension must either sell a given 
property to an eligible entity within the extended deadline or have the 
property placed in an irrevocable trust for sale by an independent 
trustee to an eligible entity. This action is designed to prevent 
potential abuse of the extensions and ensure that the extensions will 
actually result in sales to eligible entities.
    16. Transfer of Grandfathered Radio Station Combinations to Non-
Eligible Entities. The Order adopts a proposal that the Commission 
permit the assignment or transfer of grandfathered radio station 
combinations intact to any buyer, not just an eligible entity as 
currently permitted, provided that such a buyer files an application to 
assign the excess stations to an eligible entity, or to an irrevocable 
divestiture trust for purposes of ultimate assignment to an eligible 
entity, within 12 months after consummation of the purchase of the 
grandfathered cluster. The Commission agrees with commenting parties 
that this proposal will promote small business investment in 
broadcasting by providing additional time and flexibility to raise the 
capital necessary to purchase the excess stations. In order to ensure 
that this proposal will not undermine the Commission's local radio 
ownership rule, the rules will require non-eligible entities seeking to 
acquire a grandfathered radio station group to file the divestiture 
trust agreement with its initial application to allow the Commission to 
evaluate the proposed trust at the outset.
    17. ``Access to Capital'' Conference. The Order also adopts a 
proposal that the Commission convene an access-to-capital conference. 
This conference will focus on the investment banking and private equity 
communities, and the opportunities for small businesses, new entrants, 
and designated entities to acquire access to financing and thereby 
facilitate entry to ownership in the communications sector. Moreover, 
the Commission will seek to facilitate the creation of educational 
conferences whenever a significant ownership transaction is proposed to 
the Commission.
    18. Guidebook on Diversity. The Commission adopts a proposal to 
create a guidebook on diversity that will focus on what companies can 
do to promote diversity in ownership and contracting in order to 
provide the public with more information and guidance on this subject.

C. Other Proposals

    19. Transfers of Grandfathered Station Combinations to SDBs. The 
Commission declines to adopt a proposal to permit the licensee of a 
grandfathered station combination to sell the cluster intact to a 
socially disadvantaged business (``SDB''). In the 2002 Biennial Review 
Order, the Commission permitted the sale of grandfathered station 
combinations to ``eligible entities,'' which were defined as entities 
that would qualify as a small business consistent with SBA standards 
for its industry grouping. The Order adopts the same definition for the 
class of entities that benefit initially from the actions taken in the 
Order. Should the Commission adopt a definition of SDB at the 
conclusion of the proceeding initiated by the Third Further Notice 
accompanying the Order, by operation of the existing rule such SDBs 
would be permitted to acquire grandfathered combinations.
    20. Structural Rule Waiver for Selling a Station to an SDB; Staged 
Implementation of Deregulation. The Commission declines to adopt a 
``structural'' waiver of its broadcast ownership rules, under which an 
applicant selling a station to an SDB would be permitted to complete a 
transaction that otherwise would be barred by an ownership rule. This 
proposal is linked to another, which urges the Commission, should it 
decide to relax its broadcast ownership rules, to implement such 
deregulation in stages, measuring its impact and adopting ``mid-course 
corrections'' as needed. A commenter suggests that the confluence of 
these two proposals would have the effect of permitting an applicant 
selling a station to an SDB to have its transaction evaluated under the 
more liberal ownership rules that would take effect later in the staged 
deregulation process. The Commission states that the short-term benefit 
of the waiver proposal--an immediate increase in the number of stations 
owned by SDBs--would likely be offset by the public interest harms 
resulting from the approval of station combinations that exceed the 
ownership rules. The Commission states that it has no current plans to 
implement the type of deregulation envisioned by proponents of a staged 
approach and finds the proposal to be premature.
    21. Structural Rule Waivers for Creating Incubator Programs. The 
Commission declines to adopt a proposal that it waive its broadcast 
ownership rules to allow an applicant to acquire stations in a market 
beyond the permissible limit if it establishes and implements an 
``incubator'' program designed to promote ownership by disadvantaged 
businesses. While it appreciates the value that incentives-based 
programs such as this can have, the Commission is concerned that 
companies participating in such a program will expend only the barest 
minimum in financial and other support required to qualify for the 
waiver. Moreover, the Commission is concerned that, by allowing the 
incubating party to acquire stations in excess of local ownership caps, 
the proposal could create a significant potential for undermining its 
broadcast ownership restrictions.
    22. Opening FM Spectrum for New Entrants. The Commission declines 
to take three steps to open FM spectrum for new entrants proposed by a 
commenter. First, it does not relax the current limit on the filing of 
contingent applications set forth in Sec.  73.3517(e) of the rules, 
which provides that the Commission will accept up to four contingent 
applications filed by FM licensees or permittees for minor modification 
of facilities. Second, it does not repeal the third adjacent channel 
requirements found in Sec.  73.215(a) of the rules. Finally, it does 
not relax its FM service and allotment rules and policies: (1) By 
replacing the community of license coverage requirement for commercial 
FM stations, set forth in Sec.  73.315(a) of the rules, with the less 
stringent coverage requirement for noncommercial FM stations, set forth 
in Sec.  73.515 of the rules; or (2) by authorizing stations to change 
their community of license to any community located within the same 
market, as defined by Sec.  73.3555(a) of the rules.
    23. In amending Sec.  73.3517 of the rules to permit the filing of 
contingent applications, the Commission concludes that a limit of four 
struck the proper balance between the desire of broadcasters for 
additional flexibility in proposing coordinated changes and the limited 
staff resources that are available to review the substantially more 
complex facilities change applications that the revised rule permits. 
Commenters have not presented evidence sufficient to persuade the 
Commission to upset this balance. With respect to the second proposed 
step, the Commission notes that the third adjacent channel requirements 
are statutory. The Commission issued a report to Congress in 2004, 
based on the FCC-commissioned Mitre Study, advising that, because LPFM 
stations do

[[Page 28366]]

not pose a significant risk of causing interference to existing full 
service FM stations or FM translator and FM booster stations, Congress 
should eliminate the third adjacent channel protection requirement. The 
Commission states that it will continue to recommend such legislation. 
Finally, the Commission concludes that relaxing community of license 
coverage requirements for commercial FM stations and increasing the 
ability of radio stations to change their communities of license to any 
community within the same market will undermine its broadcast 
regulatory policy of enhancing localism. Such actions would result in 
the licensing of stations that technically cannot serve their 
communities of license, a result antithetical to the concept of 
localism. Furthermore, the Commission notes that it recently declined 
to abandon its policy against removing the sole local transmission 
service at a community in order to allow it to become the first local 
transmission service at another community. It also notes, however, that 
a commenter revised this last proposal in accordance with a recent 
recommendation of the federal advisory committee on diversity, and it 
seeks comment on this revised proposal in the Third Further Notice that 
accompanies the Order.
    24. Advocacy of Tax Deferral Legislation; Promotion of Minority 
Ownership in All General Media Rulemaking Proceedings. The Commission 
believes it already satisfied a proposal that the Commission recommend 
to Congress that it reinstate the Commission's authority to adopt the 
former Tax Certificate Policy. That policy, originally adopted by the 
Commission in 1978, allowed a seller to defer capital gains taxes on 
the sale of a media property to a minority-controlled firm. The 
Commission recommended reinstatement of the necessary statutory 
authority in its recently adopted Section 257 Triennial Report to 
Congress. The Commission therefore declines to commit to further action 
in the Order.
    25. The Commission also believes it has satisfied a proposal that 
the Commission consider, as part of all general media rulemaking 
proceedings (except for individual FM or TV allotment proceedings), how 
the proposed rules would impact minority ownership. The Commission's 
Office of Communications Business Opportunities currently provides 
outreach services to assist small businesses and new entrants into the 
communications industry and input on how proposed rules impact minority 
ownership. The Commission therefore declines to commit to further 
action in the Order.
    26. Extension of the Community Reinvestment Act. The Commission 
declines to adopt a proposal that it work with the Treasury Department 
to expand application of the Community Reinvestment Act (``CRA'') 
credit to encourage institutions to place capital in minority-focused 
private equity funds. The Commission notes that the CRA already 
encourages debt financing to small broadcasters and, to the extent that 
the proposal advocates adding a race-based dimension to the CRA, it 
concludes that judicial precedent constrains the Commission from 
enacting it.
    27. Establish a ``Fund of Funds.'' The Commission declines to adopt 
at this time a proposal that it initiate discussions with the major 
pension funds to encourage the establishment of a special fund to place 
capital with minority-focused private equity funds. The Commission 
concludes that it lacks statutory authority to hold such discussions 
and, while it recognizes that eligible entities, as defined in the 
Order, have difficulty accessing capital, it has taken action that will 
help mitigate that difficulty and does not believe that the additional 
measures proposed are appropriate Commission functions.
    28. Relax Ownership Restrictions. The Commission declines to adopt 
a proposal that it relax restrictions on foreign ownership to permit 
non-controlling foreign investment where such investment would help 
eliminate a barrier to access to capital for domestic, minority-owned 
broadcasters. Commenters do not explain why the Commission's concerns 
about foreign ownership of broadcast interests generally would not 
apply in this context. At a minimum, the Commission would be required 
to undertake a significant rulemaking proceeding to examine this issue 
in greater depth. The Commission is not convinced, on the basis of the 
record before it, that taking the extraordinary step of relaxing its 
foreign ownership rules would promote diversification among broadcast 
licensees, including women and minorities.
    29. Permit AM Stations To Use FM Translators. The Commission 
concludes that it is not necessary to take action in the Order to 
permit AM stations to rebroadcast their signals on FM translator 
stations. It notes that it already has released a Notice of Proposed 
Rulemaking to seek comment on such a rule change and expects to issue 
an order resolving that proceeding soon.
    30. Repeal Radio Subcaps. The Commission takes no action in the 
Order on a proposal that it repeal the subcaps on ownership of same-
service (AM or FM) stations contained in the local radio ownership 
rule. It notes that it retains the subcaps as a component of the local 
radio ownership rule in its Report and Order in the 2006 Quadrennial 
Review proceeding.

Report and Order

    Final Paperwork Reduction Act of 1995 Analysis:
    31. This Order contains modified information collection 
requirements subject to the Paperwork Reduction Act of 1995, Public Law 
104-13. It will be submitted to the Office of Management and Budget 
(OMB) for review under section 3507(d) of the PRA. OMB, the general 
public, and other Federal agencies will be invited to comment on the 
modified information collection requirements contained in this 
document, as required by the Paperwork Reduction Act of 1995, Public 
Law 104-13. The Commission will publish a separate Federal Register 
Notice seeking those comments. In addition, we note that pursuant to 
the Small Business Paperwork Relief Act of 2002, Public Law 107-198, 
see 44 U.S.C. 3506(c)(4), the Commission seeks specific comment on how 
it might ``further reduce the information collection burden for small 
business concerns with fewer than 25 employees.''

Final Regulatory Flexibility Analysis

    32. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was 
incorporated in the Notice of Proposed Rulemaking (NPRM) in MB Docket 
No. 02-277. The Commission sought written public comment on the 
proposals in the NPRM including comment on the IRFA. The Commission 
also prepared a Supplemental Initial Regulatory Flexibility Analysis 
(Supplemental IRFA) and a Second Supplemental Initial Regulatory 
Flexibility Analysis (Second Supplemental IRFA) of the possible 
significant economic impact on small entities of the proposals in the 
Further Notice of Proposed Rulemaking (Further Notice) and the Second 
Further Notice of Proposed Rulemaking (Second Further Notice), 
respectively. The Commission sought written public comment on the 
Further Notice, including comment on the Supplemental IRFA, and written 
public comment on the Second Further Notice, including comment on the 
Second Supplemental IRFA. This present Final

[[Page 28367]]

Regulatory Flexibility Analysis (FRFA) conforms to the RFA.

A. Need for, and Objectives of, the Report and Order and Order on 
Reconsideration (Order)

    33. The Order takes several steps to increase participation in the 
broadcasting industry by new entrants and small businesses, including 
minority- and women-owned businesses, which historically have not been 
well-represented in the broadcasting industry. The Order sets forth the 
Commission's objectives, defines the entities that will benefit 
initially from the Commission's actions, and adopts a number of 
measures modifying certain Commission rules and policies to encourage 
ownership diversity and new entry in broadcasting.

B. Legal Basis

    34. This Order is adopted pursuant to sections 1, 2(a), 4(i), 257, 
303, and 307-310 of the Communications Act of 1934, as amended, 47 
U.S.C. 151, 152(a), 154(i), 257, 303, and 307-310.

C. Summary of Significant Issues Raised by Public Comments in Response 
to the IRFA and the Supplemental IRFA

    35. The Commission received no comments in direct response to the 
IRFA, the Supplemental IRFA, or the Second Supplemental IRFA. However, 
the Commission received comments that discuss issues of interest to 
small entities. These comments were taken into account during the 
Commission's decision-making process to adopt certain rule 
modifications to promote broadcast ownership among new entrants and 
small businesses, including minority- and women-owned businesses. These 
rule modifications are summarized in the section of this FRFA 
discussing the steps taken to minimize a significant impact on small 
entities, and the significant alternatives considered.

D. Description and Estimate of the Number of Small Entities To Which 
the Rules Will Apply

    36. The RFA directs agencies to provide a description of, and, 
where feasible, an estimate of the number of small entities that may be 
affected by the proposed rules, if adopted. The RFA defines the term 
``small entity'' as having the same meaning as the terms ``small 
business,'' ``small organization,'' and ``small governmental entity'' 
under section 3 of the Small Business Act. In addition, the term 
``small business'' has the same meaning as the term ``small business 
concern'' under the Small Business Act. A small business concern is one 
which: (1) Is independently owned and operated; (2) is not dominant in 
its field of operation; and (3) satisfies any additional criteria 
established by the SBA.
    37. Television Broadcasting. In this context, the application of 
the statutory definition to television stations is of concern. The 
Small Business Administration defines a television broadcasting station 
that has no more than $13 million in annual receipts as a small 
business. Business concerns included in this industry are those 
``primarily engaged in broadcasting images together with sound.'' 
According to Commission staff review of the BIA Financial Network, Inc. 
Media Access Pro Television Database as of December 7, 2007, about 825 
(66 percent) of the 1,250 commercial television stations in the United 
States have revenues of $13 million or less. However, in assessing 
whether a business entity qualifies as small under the above 
definition, business control affiliations must be included. Our 
estimate, therefore, likely overstates the number of small entities 
that might be affected by any changes to the ownership rules, because 
the revenue figures on which this estimate is based do not include or 
aggregate revenues from affiliated companies.
    38. An element of the definition of ``small business'' is that the 
entity not be dominant in its field of operation. The Commission is 
unable at this time and in this context to define or quantify the 
criteria that would establish whether a specific television station is 
dominant in its market of operation. Accordingly, the foregoing 
estimate of small businesses to which the rules may apply does not 
exclude any television stations from the definition of a small business 
on this basis and is therefore over-inclusive to that extent. An 
additional element of the definition of ``small business'' is that the 
entity must be independently owned and operated. It is difficult at 
times to assess these criteria in the context of media entities, and 
our estimates of small businesses to which they apply may be over-
inclusive to this extent.
    39. Radio Broadcasting. The Small Business Administration defines a 
radio broadcasting entity that has $6.5 million or less in annual 
receipts as a small business. Business concerns included in this 
industry are those ``primarily engaged in broadcasting aural programs 
by radio to the public.'' According to Commission staff review of the 
BIA Financial Network, Inc. Media Access Radio Analyzer Database as of 
December 7, 2007, about 10,500 (95 percent) of 11,050 commercial radio 
stations in the United States have revenues of $6.5 million or less. We 
note, however, that in assessing whether a business entity qualifies as 
small under the above definition, business control affiliations must be 
included. Our estimate, therefore, likely overstates the number of 
small entities that might be affected by any changes to the ownership 
rules, because the revenue figures on which this estimate is based do 
not include or aggregate revenues from affiliated companies.
    40. In this context, the application of the statutory definition to 
radio stations is of concern. An element of the definition of ``small 
business'' is that the entity not be dominant in its field of 
operation. We are unable at this time and in this context to define or 
quantify the criteria that would establish whether a specific radio 
station is dominant in its field of operation. Accordingly, the 
foregoing estimate of small businesses to which the rules may apply 
does not exclude any radio station from the definition of a small 
business on this basis and is therefore over-inclusive to that extent. 
An additional element of the definition of ``small business'' is that 
the entity must be independently owned and operated. We note that it is 
difficult at times to assess these criteria in the context of media 
entities, and our estimates of small businesses to which they apply may 
be over-inclusive to this extent.
    41. Class A TV, LPTV, and TV translator stations. The rules and 
policies adopted herein may also apply to licensees of Class A TV 
stations, low power television (``LPTV'') stations, and TV translator 
stations, as well as to potential licensees in these television 
services. The same SBA definition that applies to television broadcast 
licensees would apply to these stations. The SBA defines a television 
broadcast station as a small business if such station has no more than 
$13.0 million in annual receipts. Currently, there are approximately 
567 licensed Class A stations, 2,227 licensed LPTV stations, and 4,518 
licensed TV translators. Given the nature of these services, we will 
presume that all of these licensees qualify as small entities under the 
SBA definition. We note, however, that under the SBA's definition, 
revenue of affiliates that are not LPTV stations should be aggregated 
with the LPTV station revenues in determining whether a concern is 
small. Our estimate may thus overstate the number of small entities, 
since the revenue figure on which it is based does not include or 
aggregate revenues from non-LPTV affiliated companies. We do not have 
data on revenues of TV translator or TV booster stations, but virtually 
all of

[[Page 28368]]

these entities are also likely to have revenues of less than $13.0 
million and thus may be categorized as small, except to the extent that 
revenues of affiliated non-translator or booster entities should be 
considered.
    42. FM Translator Stations and Low Power FM Stations. The proposed 
rules and policies could affect licensees of FM translator and booster 
stations and low power FM (LPFM) stations, as well as potential 
licensees in these radio services. The same SBA definition that applies 
to radio broadcast licensees would apply to these stations. The SBA 
defines a radio broadcast station as a small business if such station 
has no more than $6.5 million in annual receipts. Currently, there are 
approximately 5,540 licensed FM translator stations and 262 FM booster 
stations and 820 licensed LPFM stations. Given the nature of these 
services, we will presume that all of these licensees qualify as small 
entities under the SBA definition.
    43. International Broadcast Stations. Commission records show that 
there are approximately 24 international high frequency broadcast 
station authorizations. We do not request nor collect annual revenue 
information, and are unable to estimate the number of international 
high frequency broadcast stations that would constitute small 
businesses under the SBA definition.
    44. Daily Newspapers. The SBA has developed a small business size 
standard for the census category of Newspaper Publishers; that size 
standard is 500 or fewer employees. Census Bureau data for 2002 show 
that there were 5,159 firms in this category that operated for the 
entire year. Of this total, 5,065 firms had employment of 499 or fewer 
employees, and an additional 42 firms had employment of 500 to 999 
employees. Therefore, we estimate that the majority of Newspaper 
Publishers are small entities that might be affected by our action.

E. Description of Projected Reporting, Recordkeeping and Other 
Compliance Requirements

    45. Licensees engaged in the sale of a commercially operated AM, 
FM, TV, Class A TV, or international broadcast station will be required 
to certify on Form 314 or 315 that they did not discriminate on the 
basis of race, color, religion, national origin, or sex in the sale of 
their station. Broadcasters that are renewing their licenses will have 
to certify on Form 303-S that their advertising sales contracts do not 
contain discriminatory clauses.
    46. The Commission revised its rules to afford eligible entities 
that acquire an expiring construction permit additional time to build 
out the facility (either the time remaining on the original 
construction permit or 18 months, whichever is greater). To obtain this 
benefit, eligible entities will have to demonstrate that they meet the 
eligibility criteria. In addition, the Commission relaxed its equity/
debt plus attribution standard for interest holders in eligible 
entities in order to encourage investment in smaller companies. For 
both these rule changes, there will be revisions to application forms 
or the forms' instructions.

F. Steps Taken To Minimize Significant Impact on Small Entities and 
Significant Alternatives Considered

    47. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its proposed approach, 
which may include the following four alternatives (among others): (1) 
The establishment of differing compliance or reporting requirements or 
timetables that take into account the resources available to small 
entities; (2) the clarification, consolidation, or simplification of 
compliance or reporting requirements under the rule for small entities; 
(3) the use of performance, rather than design, standards; and (4) an 
exemption from coverage of the rule, or any part thereof, for small 
entities.
    48. The Commission's intent in adopting the rule modifications in 
the Order was to expand broadcast ownership opportunities for new 
entrants and small businesses, including minority- and women-owned 
businesses. Therefore, it is anticipated that the adopted rule changes 
will benefit small businesses, not burden them. Although the Commission 
adopted numerous proposals to benefit small businesses, it declined to 
adopt certain other proposals after considering the various 
ramifications involved. The Order describes in detail the Commission's 
reasoning for each proposal adopted or declined.
    49. To promote and expand media ownership diversity, the 
Commission: (1) Changed the construction permit deadlines to allow 
eligible entities that acquire expiring construction permits additional 
time to build out the facility; (2) revised the equity/debt plus 
attribution standard to facilitate investment in eligible entities; (3) 
modified the distress sale policy to allow certain licensees--those 
whose license has been designated for a revocation hearing or whose 
renewal application has been designated for a hearing on basic 
qualifications issues--to sell the station to an eligible entity prior 
to the commencement of the hearing; (4) adopted an Equal Transactional 
Opportunity rule that bars race or gender discrimination in broadcast 
transactions; (5) adopted a ``zero-tolerance'' policy for ownership 
fraud and agreed to ``fast-track'' ownership-fraud claims; (6) required 
broadcasters renewing their licenses to certify that their advertising 
sales contracts do not discriminate on the basis of race or gender; (7) 
resolved to conduct annual longitudinal studies of minority and female 
ownership after the Commission improves its data gathering process; (8) 
encouraged local and regional banks to participate in SBA-guaranteed 
loan programs in order to facilitate broadcast and telecommunications-
related transactions; (9) adopted modifications to give priority to any 
entity financing or incubating an eligible entity in certain duopoly 
situations; (10) permitted the consideration of requests to extend 
divestiture deadlines in mergers in which applicants have actively 
solicited bids for divested properties from eligible entities; (11) 
revised the exception to the prohibition on the assignment or transfer 
of grandfathered radio station combinations; (12) agreed to convene an 
access-to-capital conference; and (13) decided to create a guidebook on 
increasing diversity in the media and telecom industries.

Congressional Review Act

    50. The Commission will send a copy of this Order, including this 
FRFA, in a report to Congress and the Government Accountability Office, 
pursuant to the Congressional Review Act. In addition, the Commission 
will send a copy of this Order, including this FRFA, to the Chief 
Counsel for Advocacy of the Small Business Administration. A copy of 
this Order and FRFA (or summaries thereof) will also be published in 
the Federal Register.

Ordering Clauses

    51. Accordingly, it is ordered, that pursuant to the authority 
contained in sections 1, 2(a), 4(i), 257, 303(r), and 307-310 of the 
Communications Act of 1934, as amended, 47 U.S.C. 151, 152(a), 154(i), 
257, 303(r), and 307-310, this Report and Order is adopted.
    52. It is further ordered, that pursuant to the authority contained 
in sections 1, 2(a), 4(i), 257, 303(r), and 307-310 of the 
Communications Act of 1934, as amended, 47 U.S.C. 151, 152(a), 154(i), 
257, 303(r), and 307-310, the Commission's rules are hereby amended as 
set forth in Appendix A.

[[Page 28369]]

    53. It is further ordered, that the rule amendments adopted herein 
will become effective July 15, 2008. Changes to FCC Forms required as 
the result of the rule amendments adopted herein will become effective 
30 days after the Commission publishes a notice in the Federal Register 
announcing approval by the Office of Management and Budget of the 
forms.
    54. It is further ordered, that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, shall send a 
copy of this Report and Order, including the Final Regulatory 
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small 
Business Administration.
    55. It is further ordered, that the Commission shall send a copy of 
this Report and Order and Third Further Notice of Proposed Rulemaking 
in a report to be sent to Congress and the Government Accountability 
Office pursuant to the Congressional Review Act, see 5 U.S.C. 
801(a)(1)(A).
    56. It is further ordered, that pursuant to the authority contained 
in sections 1, 2(a), 4(i, j), 257, 303(r), 307-10, and 614-15 of the 
Communications Act of 1934, as amended, 47 U.S.C. 151, 152(a), 154(i, 
j), 257, 303(r), 307-10, 534-35, this Third Further Notice of Proposed 
Rule Making is adopted.
    57. It is further ordered, that pursuant to the authority contained 
in sections 1, 2(a), 4(i, j), 257, 303(r), 307-10, 336, and 614-15 of 
the Communications Act of 1934, as amended, 47 U.S.C. 151, 152(a), 
154(i, j), 257, 303(r), 307-310, 336, 534-35, notice is hereby given of 
the proposals described in this Third Further Notice of Proposed Rule 
Making.
    58. It is further ordered, that the Petition for Rulemaking of 
Entravision Holdings, LLC, RM-9567, is granted in part.
    59. It is further ordered that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, shall send a 
copy of this Third Further Notice of Proposed Rule Making, including 
the Initial Regulatory Flexibility Analysis, to the Chief Counsel for 
Advocacy of the Small Business Administration.

List of Subjects in 47 CFR Part 73

    Radio, Television.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.

Final Rules

0
For the reasons discussed in the preamble, the Federal Communications 
Commission amends 47 CFR part 73 as follows:

PART 73--RADIO BROADCAST SERVICES

0
1. The authority citation for part 73 continues to read as follows:

    Authority: 47 U.S.C. 154, 303, 334, 336, and 339.


0
2. Section 73.2090 is added to read as follows:


Sec.  73.2090  Ban on discrimination in broadcast transactions.

    No qualified person or entity shall be discriminated against on the 
basis of race, color, religion, national origin or sex in the sale of 
commercially operated AM, FM, TV, Class A TV or international broadcast 
stations (as defined in this part).

0
3. Section 73.3555 is amended by revising paragraph i. to ``Note 2'', 
Sec.  73.3555 to read as follows:


Sec.  73.3555  Multiple ownership.

* * * * *
     i. Notwithstanding paragraphs e. and f. of this note, the holder 
of an equity or debt interest or interests in a broadcast licensee, 
cable television system, daily newspaper, or other media outlet subject 
to the broadcast multiple ownership or cross-ownership rules 
(``interest holder'') shall have that interest attributed if:
    1. Where the entity in which the interest is held is not an 
eligible entity, the equity (including all stockholdings, whether 
voting or nonvoting, common or preferred) and debt interest or 
interests, in the aggregate, exceed 33 percent of the total asset 
value, defined as the aggregate of all equity plus all debt, of that 
media outlet, or where the entity in which the interest is held is an 
eligible entity, the combined equity and debt of the interest holder in 
the eligible entity is less than 50 percent or the total debt of the 
interest holder in the eligible entity does not exceed 80 percent of 
the asset value of the station being acquired by the eligible entity 
and the interest holder does not hold any equity interest, option, or 
promise to acquire an equity interest in the eligible entity or any 
related entity; and
    2. i. The interest holder also holds an interest in a broadcast 
licensee, cable television system, newspaper, or other media outlet 
operating in the same market that is subject to the broadcast multiple 
ownership or cross-ownership rules and is attributable under paragraphs 
of this note other than this paragraph i.; or
    ii. The interest holder supplies over 15 percent of the total 
weekly broadcast programming hours of the station in which the interest 
is held. For purposes of applying this paragraph, the term, ``market,'' 
will be defined as it is defined under the specific multiple or cross-
ownership rule that is being applied, except that for television 
stations, the term ``market,'' will be defined by reference to the 
definition contained in the local television multiple ownership rule 
contained in paragraph (b) of this section.
    iii. For purposes of paragraph i. 1. of this note, an ``eligible 
entity'' shall include any entity that qualifies as a small business 
under the Small Business Administration's size standards for its 
industry grouping, as set forth in 13 CFR 121 through 201, at the time 
the transaction is approved by the FCC, and holds.
    A. 30 percent or more of the stock or partnership interests and 
more than 50 percent of the voting power of the corporation or 
partnership that will own the media outlet; or
    B. 15 percent or more of the stock or partnership interests and 
more than 50 percent of the voting power of the corporation or 
partnership that will own the media outlet, provided that no other 
person or entity owns or controls more than 25 percent of the 
outstanding stock or partnership interests; or
    C. More than 50 percent of the voting power of the corporation that 
will own the media outlet if such corporation is a publicly traded 
company.

0
4. Section 73.3598 is amended by revising paragraph (a) to read as 
follows:


Sec.  73.3598  Period of construction.

    (a) Except as provided in the last two sentences of this paragraph, 
each original construction permit for the construction of a new TV, AM, 
FM or International Broadcast; low power TV; TV translator; TV booster; 
FM translator; or FM booster station, or to make changes in such 
existing stations, shall specify a period of three years from the date 
of issuance of the original construction permit within which 
construction shall be completed and application for license filed. 
Except as provided in the last two sentences of this paragraph, each 
original construction permit for the construction of a new LPFM station 
shall specify a period of eighteen months from the date of issuance of 
the construction permit within which construction shall be completed 
and application for license filed. A LPFM permittee unable to complete 
construction within the time frame specified in the original 
construction permit may apply for an eighteen month extension upon a 
showing of good cause. The LPFM

[[Page 28370]]

permittee must file for an extension on or before the expiration of the 
construction deadline specified in the original construction permit. An 
eligible entity that acquires an issued and outstanding construction 
permit for a station in any of the services listed in this paragraph 
shall have the time remaining on the construction permit or eighteen 
months from the consummation of the assignment or transfer of control, 
whichever is longer, within which to complete construction and file an 
application for license. For purposes of the preceding sentence, an 
``eligible entity'' shall include any entity that qualifies as a small 
business under the Small Business Administration's size standards for 
its industry grouping, as set forth in 13 CFR 121 through 201, at the 
time the transaction is approved by the FCC, and holds
    (1) 30 percent or more of the stock or partnership interests and 
more than 50 percent of the voting power of the corporation or 
partnership that will hold the construction permit; or
    (2) 15 percent or more of the stock or partnership interests and 
more than 50 percent of the voting power of the corporation or 
partnership that will hold the construction permit, provided that no 
other person or entity owns or controls more than 25 percent of the 
outstanding stock or partnership interests; or
    (3) More than 50 percent of the voting power of the corporation 
that will hold the construction permit if such corporation is a 
publicly traded company.
* * * * *

0
5. 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