Twenty-First Century Fox 2013 Annual Report Download - page 27

requirements and taxation on all advertising that is contracted abroad. While such tax shall primarily be paid by
advertisers, programmers are ultimately responsible for the tax payment, and failure by advertisers to pay the
required tax could subject programmers to fines or penalties. Compliance with the Media Law increases the cost
of doing business in the form of production/acquisition costs as well as third party administrative and legal
expenses.
Europe. The sectors in which the Company operates in Europe are subject to both general competition laws
and sector specific regulation. The regulatory regime applicable to the electronic communications and
broadcasting sectors is, to a large extent, based on European Union (“EU”) law comprised in various EU
directives that require EU member states to adopt national legislation to give effect to the directives’ objectives,
while leaving the precise manner and form of the national legislation to the discretion of each member state. The
Electronic Communications Directives regulate the provision of communication services, including networks and
transmission services that are involved in the broadcasting of television services as well as the provisions of
services and facilities associated with the operation of digital television platforms. The AudioVisual Media
Services Directive sets out the basic principles for the regulation of television broadcasting activity, including
broadcasting licensing, advertising and content regulation and imposes production and investment quotas,
obligations to transmit European content for at least 50% of the day and limitations on advertising time. Each
European country also has the right to adopt more strict rules.
Television
In general, the television broadcast industry in the United States is highly regulated by federal laws and
regulations issued and administered by various federal agencies, including the FCC. The FCC regulates television
broadcasting, and certain aspects of the operations of cable, satellite and other electronic media that compete with
broadcasting, pursuant to the Communications Act of 1934, as amended (the “Communications Act”).
The Communications Act permits the operation of television broadcast stations only in accordance with a
license issued by the FCC upon a finding that the grant of the license would serve the public interest,
convenience and necessity. The FCC grants television broadcast station licenses for specific periods of time and,
upon application, may renew the licenses for additional terms. Under the Communications Act, television
broadcast licenses may be granted for a maximum permitted term of eight years. Generally, the FCC renews
broadcast licenses upon finding that: (i) the television station has served the public interest, convenience and
necessity; (ii) there have been no serious violations by the licensee of the Communications Act or FCC rules and
regulations; and (iii) there have been no other violations by the licensee of the Communications Act or FCC rules
and regulations which, taken together, indicate a pattern of abuse. After considering these factors, the FCC may
grant the license renewal application with or without conditions, including renewal for a lesser term than the
maximum otherwise permitted, or hold an evidentiary hearing. Fox Television Stations has pending renewal
applications for a number of its television station licenses. Seven of the pending applications have been opposed
by third parties. On June 13, 2007 and May 15, 2008, Fox Television Stations entered into agreements with the
FCC that preclude it from objecting, on the grounds that such action is barred by certain statutes of limitations, to
FCC or other governmental action relating to (i) petitions to deny or complaints that have been filed against
several owned and operated stations relating to programming that is alleged to violate the prohibition against
indecent broadcasts or (ii) inquiries from the FCC regarding compliance with its sponsorship identification rules.
For information on the television stations owned and operated by the Company, see “—Fox Television Stations”
above.
In March 2010, the FCC delivered its national Broadband Plan to Congress, which reviews the nation’s
broadband Internet infrastructure and recommends a number of initiatives to spur broadband deployment and
use. In order to free up more spectrum for wireless broadband services, the Broadband Plan proposes to make
spectrum available, including 120 megahertz of broadcast spectrum, by incentivizing current private-sector
spectrum holders to return some of their spectrum to the government by 2015 through such initiatives as
voluntary “incentive” spectrum auctions (with current licensees permitted to share in the auction proceeds) and
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