iHeartMedia 2000 Annual Report Download - page 24

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In addition, the FCC has commenced a proceeding to consider setting strict time limits within which local
zoning authorities must act on zoning petitions by local television stations.
Implementation of digital television will improve the technical quality of television signals
received by viewers and will give television broadcasters the flexibility to provide new services, including
high definition television or multiple programs of standard definition television and data transmission.
However, the implementation of digital television will also impose substantial additional costs on
television stations because of the need to replace equipment and because some stations will need to
operate at higher utility costs. There can be no assurance that our television stations will be able to
increase revenue to offset such costs. In addition, the 1996 Act allows the FCC to charge a spectrum fee
to broadcasters who use the digital spectrum to offer subscription-based services. The FCC has adopted
rules that require broadcasters to pay a fee of 5% of gross revenues received from ancillary or
supplementary uses of the digital spectrum for which they charge subscription fees. We cannot predict
what future actions the FCC might take with respect to digital television, nor can we predict the effect of
the FCC’ s present digital television implementation plan or such future actions on our business. We will
incur considerable expense in the conversion to digital television and are unable to predict the extent or
timing of consumer demand for digital television services.
Digital Audio Radio Service. The FCC has adopted spectrum allocation and servic e rules for
satellite digital audio radio service. Satellite digital audio radio service systems potentially could provide
regional or nationwide distribution of radio programming with fidelity comparable to compact discs. The
FCC has authorized two companies to launch and operate satellite digital audio radio service systems.
Sirius Satellite Radio Inc. has launched three satellites. XM Radio’ s first of two satellite launches is
scheduled for March 2001. Both licensees expect to begin providing service by the end of 2001. The
FCC also has undertaken an inquiry regarding rules for the terrestrial broadcast of digital audio radio
service signals, addressing, among other things, the need for spectrum outside the existing FM band and
the role of existing broadcasters. We cannot predict the impact of either satellite or terrestrial digital
audio radio service on our business.
Low Power FM Radio Service. In January 2000, the FCC created two new classes of
noncommercial low power FM radio stations (“LPFM”). One class (LP100) will operate with a
maximum power of 100 watts and a service radius of about 3.5 miles. The other class (LP10) will operate
with a maximum power of 10 watts and a service radius of about 1 to 2 miles. In establishing the new
LPFM service, the FCC said that its goal is to create a class of radio stations designed “to serve very
localized communities or underrepresented groups within communities.” The FCC has begun accepting
applications for LPFM stations. In December 2000, Congress passed the Radio Broadcasting
Preservation Act of 2000. This legislation requires the FCC to maintain interference protection
requirements between LPFM stations and full-power radio stations on third-adjacent channels. It also
requires the FCC to conduct field tests to determine the impact of eliminating such requirements. We
cannot predict the number of LPFM stations that will be authorized to operate or the impact of such
stations on our business.
Congress and the FCC currently have under consideration, and may in the future adopt, new laws,
regulations and policies regarding a wide variety of matters that could affect, directly or indirectly, the
operation and ownership of our broadcast properties. In addition to the changes and proposed changes
noted above, such matters include, for example, spectrum use fees, political advertising rates, and
potential restrictions on the advertising of certain products such as beer and wine. Other matters that
could affect our broadcast properties include technologic al innovations and developments generally
affecting competition in the mass communications industry, such as direct broadcast satellite service, the
continued establishment of wireless cable systems and low power television stations, “streaming” of
audio and video programming via the Internet, digital television and radio technologies, the establishment