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FCC Adopts Ownership Diversity Proposals
WASHINGTON -- December 18, 2007: The FCC at its open meeting Tuesday morning adopted a number of proposals that are, as FCC Associate Media Bureau Chief Chris Robbins said, "intended to assist any eligible entities with access to financing and opportunities for spectrum -- areas that have been identified as challenges for new entrants and small businesses."
Robbins explained that, for purposes of the FCC order, an "eligible entity," is an entity that qualifies under Small Business Administration standards, based on revenue -- a definition that brought disagreement from Democratic Commissioners Jonathan Adelstein and Michael Copps.
Copps said, "I think that by adopting this definition of small business, and making that the keystone and the definer of who's going to be eligible for these programs, we are making it worse." Copps said he will dissent from those items that depend that definition" of "eligible entity" and concur in other parts of the order.
Adelstein agreed, saying, "Despite the significance of some of the reform measures that we adopt today, with regard to the most fundamental measure, the definition of the class of businesses that we make eligible for relief, we've simply failed to do our homework." He said the commission has, at best, taken a "step to the side" with its definition, and "justice is deferred once more."
Adelstein said the definition of "eligible entity" is "so broad that women and minorities are likely to be incidential beneficiaries at best, and at worst, they may actually be harmed by this proposal." He reiterated his frequently stated request for an independent panel to study the issue and make recommendations. Like Copps, Adelstein dissented from the items that depend on the SBA-based definition, though he said of the other provisions in the order, "We do some good things here."
Commissioner Robert McDowell, after noting that "many positive and constructive ideas may be hobbled" by Supreme Court restrictions on race-based programs and the FCC's lack of statutory authority in this area, said the order focuses "on the possible and the legally sustainable."
"We have heard from many who are concerned that this definition [of groups eligible for relief] will not benefit women- and minority-owned broadcasters," McDowell said. "I disagree. As the order explains, concerns that our definition of 'eligible entities' would be regressive are based on flawed calculations. Large companies controlling smaller subsidiaries are not included in our definition, despite allegations to the contrary."
The order is not perfect, he said, but it is "the best we can do right now."
Tate disagreed with those who are calling for delay in making a decision on these issues, saying, "The time to act is now, and we do so today." The rules address access to financing, spectrum, and opportunity, she said, and "they can have immediate, and, hopefully, lasting impact on improving opportunity."
Tate singled out for praise a proposed annual "access to capital conference" that would bring would-be owners together with potential investors, and the modification of the equity-plus attribution rule.
FCC Chairman Kevin Martin also defended the eligibility standard, saying, "Some maintain that the commission's definition of an eligible entity ... is insufficient. They argue that the adoption of this definition is regressive and that the commission would be better off doing nothing than adopting it. I disagree."
Like McDowell, Martin said he disagrees with the methodology some critics have used to determine that the definition would be harmful to female and minority ownership prospects.
"It's far better to adopt these proposals than to wait for a more perfect definition of eligible entities," Martin said, noting that the FCC has asked for better definitions of "eligible entity." He said, "Ultimately, any delay in the implementation of these rules would be a mistake."
The new rules adopted today also allow the extension of construction-permit deadlines for eligible entities that acquire expired permits; adjust the equity-debt-plus attribution standard; modify the FCC's distress-sale policy; and allow grandfathered radio combinations to be sold intact to any buyer that, if it's not itself an eligible entity, files an application to assign the excess stations to an eligible entity or to an irrevocable divestiture trust within a year.
Other items approved include a rule that bars discrimination on the basis of race or gender in broadcast transactions, a "zero-tolerance" policy for ownership fraud, and a requirement that broadcasters renewing their licenses certify that their advertising-sales contracts do not discriminate on the basis of race or gender.
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