FCC Will Extend CPs for Small Businesses


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In March, the FCC adopted numerous policy and rule changes dealing with media diversity. Some of these initiatives were mere proposals, but others were incorporated into the agency's rules effective July 15, 2008.

CP Extensions. One of the new rules permits an 18-month extension of a construction permit when it is sold to a small business as defined by the SBA. To meet the SBA's definition of small business, a radio station owner must have revenue of less than $6.5 million per year, and a television station owner must take in less than $13 million per year. To avoid abuse of this definition by larger companies creating new subsidiaries with little or no revenue, the FCC also adopted control tests requiring that certain percentages of equity and voting power reside in the qualified permit-holding entity.

For someone holding a close-to-expiring permit, this new provision provides a powerful incentive to sell the permit to a small business. An 18-month extension is available for any Cps for new TV, AM, FM, translators, boosters, TV translators, Class A TV and even LPFM stations. The extensions do not apply to construction permits for modification of licenses of already-existing broadcast stations.

Although the precise procedures for obtaining a construction permit extension have not yet been spelled out, it appears that requests for the extension will be part of the normal application process for assignment/transfer of the permit. In the application, the proposed buyer should notify the FCC that it is seeking an extension and must submit evidence to the FCC that it qualifies as an eligible small business under the SBA revenue limits and the control tests. After the sale is completed and an official consummation notice has been filed, the staff will update the FCC's database to reflect the extended expiration date.

Importantly, no extension will be issued until after the transaction has been consummated and the permit is held by the small business — and no extension can be granted if the permit has already expired. That means that anyone hoping to take advantage of this new provision should be sure to get the necessary assignment/transfer application filed and granted with enough time to get the deal closed before the permit is set to expire. (Normally, that kind of application takes at least 45 to 60 days to get granted in simple, uncontested situations.)

Increased EDP in Qualified Entities. Also effective July 15, the FCC relaxed the limits on financial involvement for multiple-ownership purposes, permitting station owners to invest to a greater degree than previously permitted in small business entities acquiring other stations in their markets. Specifically, an investor otherwise ineligible to acquire new stations in a market would be permitted to invest in a small business entity acquiring a market station, provided the combined equity and debt interests of the investor, under certain circumstances, do not exceed 80 percent.

Racial Discrimination Banned in Commercial Contracts. Under another new rule, discrimination in broadcast station commercial-time. transactions will be formally prohibited. This rule will require renewal applicants to certify that their advertising contracts do not discriminate on the basis of race or gender and those contracts contain nondiscrimination clauses. According to the Commission, the goal here is eliminate “no urban/no Spanish” provisions that are purported to have been included in advertising contracts in the past.


Dateline

October 1 is the deadline for submission of biennial ownership reports by radio stations in Colorado, Minnesota, Montana, North Dakota and South Dakota.

On October 1, radio stations with more than 10 full-time employees located in Colorado, Minnesota, Montana, North Dakota and South Dakota must electronically file their Broadcast EEO Mid-Term Reports (Form 397) with the FCC.

Also on or before October 1, radio stations licensed in the following states must place their annual EEO Reports in their public files: Alabama, Colorado, Connecticut, Georgia, Maine, Massachusetts, Minnesota, Montana, New Hampshire, North Dakota, South Dakota, Vermont and Rhode Island.


Martin is a past president of the Federal Communications Bar Association and a member of Fletcher, Heald & Hildreth, Arlington, VA. E-mail martin@fhhlaw.com.




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