iHeartMedia 2001 Annual Report Download - page 15

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15
Regulation of Our Business
Existing Regulation and 1996 Legislation
Radio and television broadcasting are subject to the jurisdiction of the FCC under the
Communications Act of 1934. The Communications Act prohibits the operation of a radio or television
broadcasting station except under a license issued by the FCC and empowers the FCC, among other
things, to:
• issue, renew, revoke and modify broadcasting licenses;
• assign frequency bands;
• determine stations’ frequencies, locations, and power;
• regulate the equipment used by stations;
• adopt other regulations to carry out the provisions of the Communications Act;
• impose penalties for violation of such regulations; and
• impose fees for processing applications and other administrative functions.
The Communications Act prohibits the assignment of a license or the transfer of control of a licensee
without prior approval of the FCC.
The Telecommunications Act of 1996 represented a comprehensive overhaul of the country’s
telecommunications laws. The 1996 Act changed both the process for renewal of broadcast station
licenses and the broadcast ownership rules. The 1996 Act established a “two-step” renewal process that
limited the FCC’s discretion to consider applications filed in competition with an incumbent’s renewal
application. The 1996 Act also substantially liberalized the national broadcast ownership rules,
eliminating the national radio limits and easing the national restrictions on TV ownership. The 1996 Act
also relaxed local radio ownership restrictions, but left local TV ownership restrictions in place pending
further FCC review.
The new regulatory flexibility engendered aggressive local, regional, and/or national acquisition
campaigns. Removal of previous station ownership limitations on leading media companies, such as
existing networks and major station groups, increased sharply the competition for and the prices of
attractive stations.
License Grant and Renewal
Under the 1996 Act, the FCC grants broadcast licenses to both radio and television stations for
terms of up to eight years. The 1996 Act requires the FCC to renew a broadcast license if it finds that
• the station has served the public interest, convenience, and necessity;
• there have been no serious violations of either the Communications Act or the FCC’s rules and
regulations by the licensee; and
• there have been no other serious violations which taken together constitute a pattern of abuse.
In making its determination, the FCC may consider petitions to deny and informal objections, and may
order a hearing if such petitions or objections raise sufficiently serious issues. The FCC, however, may
not consider whether the public interest would be better served by a person or entity other than the
renewal applicant. Instead, under the 1996 Act, competing applications for the incumbent’s spectrum
may be accepted only after the FCC has denied the incumbent’s application for renewal of license.