Twenty-First Century Fox 2014 Annual Report Download - page 27

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example by refusing potential subscribers from other EU countries or blocking cross-border access to their services,
may constitute breach of EU law. It is not possible to predict the timing or outcome of the EC’s proceedings or the
impact on the Company’s business.
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 “repacking” of channel
assignments to increase efficient spectrum usage. If voluntary measures fail to yield the amount of spectrum the
FCC deems necessary for wireless broadband deployment, the Broadband Plan proposes various mandates to
reclaim spectrum, such as forced channel sharing. In response to the Broadband Plan, Congress passed legislation in
February 2012 authorizing the FCC to conduct voluntary auctions of television broadcast station spectrum. Stations
that continue their operations may have to change channels once the FCC “repacks” broadcast spectrum. The
legislation requires the FCC to assist stations in retaining their current coverage areas, provides that no stations will
be forced into the VHF band and establishes a fund to reimburse broadcasters for reasonable channel relocation
expenses. The FCC is taking steps to implement the legislation and has said that it expects to conduct the voluntary
auction in mid-2015. The FCC also has announced a plan to “repack” the television broadcast stations that do not
participate in the auction over the subsequent 39 months; the FCC indicated that it will use reasonable efforts to try
to preserve stations’ current coverage areas. The broadcast industry is exploring additional uses for currently
allocated spectrum. In April 2010, Fox Television Stations and eleven other major broadcast station group owners
formed Mobile Content Venture (“MCV”), a joint venture to develop a new national mobile content service utilizing
the stations’ digital broadcast spectrum. MCV launched DyleTM mobile television service, which is currently in 37
markets. It is expected that FCC auctions and repacking will involve multiple rulemaking proceedings and may take
several years to complete. It is not possible to predict the timing or outcome of implementation of the Broadband
Plan, FCC spectrum auctions and repacking, or their effect on the Company.
On December 22, 2011, the FCC commenced the next quadrennial review of its broadcast ownership
regulations required by the 1996 Telecom Act, proposing only minor modifications to its rules. That review was