United States: Expanded Use Of FRNs Proposed For Ownership Report

Last Updated: February 12 2013
Article by Howard M. Liberman, Mark B. Denbo and Lee G. Petro

The FCC has proposed to increase the scope of the use of FCC Registration Numbers (or "FRNs") in connection with reporting attributable broadcast interests in the Ownership Reports that all broadcast licensees (and certain entities related to them) must file with the Commission. Ownership Reports are submitted on Form 323 for commercial stations, and Form 323-E for noncommercial stations. Licensees and permittees must file such reports within 30 days of the grant of an application for a new station or within 30 days of completing an assignment or transfer of control of an existing station. Beyond that, all licensees must submit reports biennially.

FRNs are generated by submitting identification information to the Commission's Registration System ("CORES"). Every person or business entity with an attributable interest in a broadcast station must be identified in the Ownership Report and associated with his/her/its specific FRN. Among the identification data required to get an FRN is the party's Tax Identification Number, which for individuals is the Social Security Number ("SSN"). Attributable interests include being an officer, director or significant equity holder in a licensee entity.

The obligation to furnish an FRN for each person with an attributable interest is relatively new, having been instituted in 2009. Since its inception, a controversial element of the process has been the requirement for individuals to submit their personal SSNs to the FCC's CORES in order to obtain an FRN. The opposition to the use of SSNs was so adamant that the Commission resorted to a temporary fix so that it could collect ownership data smoothly without the distraction of litigation over the SSN issue. It created a device known as a "Special Use FRN." If, after a diligent and good faith effort, the preparer/filer of the Ownership Report is unable to obtain or does not have permission to use an SSN in order to generate an FRN for an individual, the filer may use a Special Use FRN. The Special Use FRN is a place-holder number generated on demand by the Commission's online system without the need to input an SSN.

The Commission says that all reportable interest holders who are individuals need to be identified by SSNs in order to ensure the most complete and accurate ownership database. The concern for database accuracy stems from the judicial criticism that the Commission received about its diversity efforts. The Court of Appeals observed that it was impossible to know the status of diversification of ownership of the broadcast industry without accurate data. The agency states that a fundamental objective of the biennial From 323 filing requirement is to track trends in media ownership by individuals with particular racial, ethnic and gender characteristics. In furtherance of that objective, the Commission now proposes to eliminate the Special Use FRN so that every reportable interest holder would have to obtain a real FRN.

In the alternative, the Special Use FRN use could be limited to situations where an individual absolutely refuses to submit his or her SSN to the FCC in order to obtain a personal FRN. In such cases, the filer of the Report could obtain a Special Use FRN for the reluctant interest holder, and the filer's Ownership Report would be deemed to be rule-compliant. However, the Commission poses the possibility of using its enforcement powers to fine the individuals who refuse to comply with the FRN requirement. Comment is invited.

The Commission proposes to require FRNs of holders of interests that are not attributable under the current rules. These include minority shareholders in a company where a majority of the stock is held by a signal shareholder, and interests held in eligible entities.

Further expansion of the use of personal FRNs is proposed for noncommercial broadcasters. While officers and directors of the nonprofit licensees of noncommercial stations are considered to have attributable interests, they have not yet been required to obtain personal FRNs in connection with the Ownership Reports for these stations on Form 323- E. For this entire category of holders of attributable interests, the question of SSN submission to obtain personal FRNs has not yet arisen. However, the Commission now proposes to require all such interest holders to obtain FRNs, and therefore, to submit their SSNs.

These proposals are published in the Sixth Further Notice of Proposed Rulemaking in Docket 07-294. The Commission solicits public comments – to be filed by February 14. Reply comments can be submitted until March 1.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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