Regulatory uncertainty around media ownership rules remains

In September 2016, the Federal Communications Commission (FCC), in a 5-0 bipartisan vote, extended to broadcast licensees its streamlined rules for obtaining permission for foreign ownership to exceed the statutory limits. Three of those five commissioners remain on the FCC -- and one is now chairman. The common theme among the commissioners in support of relaxing the restrictions on foreign investment was to give broadcasters greater access to capital similar to that enjoyed by other segments of the communications industry, and to promote investment in the United States.

In 2019, several petitions for Declaratory Ruling were filed by broadcasters to take advantage of the new process, which permits petitioners to request approval of varying degrees of foreign ownership and investment, up to and including 100 percent foreign ownership of the controlling US parent of a broadcast licensee. Among the petitioners are Cumulus Media, Inc., the second largest radio broadcast company in the US with nearly 450 full-power radio broadcast stations in 90 markets; Hemisphere Media Group, Inc., the leading TV station in Puerto Rico, which operates broadcast television stations and cable networks serving audiences in US and Latin America; and Univision Holding, Inc., the leading media company serving Hispanic audiences in America. The petitions offer differing reasons for the need to increase their foreign ownership, including to satisfy claims as part of a bankruptcy proceeding, to spur future foreign investment and encourage reciprocity by other countries, and to permit a wholly owned subsidiary to hold a greater foreign interest without diluting the overall foreign interest cap previously approved by the FCC.

All petitioners assert the requested increased foreign interests presented for approval are in the public interest, which is the governing standard. The FCC's public interest analysis for increased foreign ownership evaluates national security, law enforcement, foreign policy and trade policy issues. The FCC also coordinates with executive branch agencies (including the Departments of Justice, Homeland Security, Defense, State, Commerce, Offices of Science and Technology Policy and US Trade Representative) to evaluate whether or not to approve the foreign investment. Since 2017, the FCC has approved at least four such petitions for foreign ownership interests of up to 100 per cent in companies that include US broadcast licensees. One might expect the 2019 petitions also would be approved with little controversy. However, the current international political environment includes rising tensions over trade and immigration, as well as heightened concern over possible foreign influences in US media and communications. Washington is a buzz with reports and indictments concerning Russia's extensive use of US social media platforms in connection with the 2016 presidential election and fears that such activities may be continuing. More recently, in May of 2019, the FCC denied China Mobile USA's application to provide telecommunications services within the US, concluding that granting the application would raise serious national security and law enforcement risks.

Will the commitment to permit greater foreign investment in broadcast licensees continue, or do recent events suggest the winds have shifted? It is impossible to predict, but these petitions and the pending FCC matters covered in the 2018 and June 2019 International Media Law articles "Are the FCC Media Ownership Rules Still Relevant in the Digital Age?" and "The Future of FCC Media Rules in the Age of Netflix," highlight that the regulatory uncertainty surrounding FCC media ownership rules remains for now.

Previously published in Media Law International

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