iHeartMedia 2001 Annual Report Download - page 18

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Prior to August 1999, FCC rules also generally prohibited common ownership of a television
station and one or more radio stations in the same market, although the FCC in many cases allowed such
combinations under waivers of the rule. In August 1999, however, the FCC comprehensively revised its
radio/television cross-ownership rule. The revised rule permits the common ownership of one television
and up to seven same-market radio stations, or up to two television and six same-market radio stations, if
the market will have at least twenty separately owned broadcast, newspaper and cable “voices” after the
combination. Common ownership of up to two television and four radio stations is permissible when ten
“voices” will remain, and common ownership of up to two television stations and one radio station is
permissible in all markets regardless of voice count. The radio/television limits, moreover, are subject to
the compliance of the television and radio components of the combination with the television duopoly
rule and the local radio ownership limits, respectively. Waivers of the radio/television cross-ownership
rule are available only where the station being acquired is “failed” (i.e., off the air for at least four
months or involved in court-supervised involuntary bankruptcy or insolvency proceedings). A buyer
seeking such a waiver must also demonstrate, in most cases, that it is the only buyer ready, willing, and
able to operate the station, and that sale to an out-of-market buyer would result in an artificially
depressed price.
There are twelve markets where we own both radio and television stations. In the majority of
these markets, the number of radio stations we own complies with the limit imposed by the revised rule.
In those markets where our number of radio stations exceeds the limit under the revised rule, we are
nonetheless authorized to retain our present television/radio combinations at least until 2004, when the
FCC is scheduled to undertake a comprehensive review and re-evaluation of its broadcast ownership
rules. As with grandfathered television LMAs, we may seek permanent authorization for our non-
compliant radio/television combinations by demonstrating to the FCC, among other things, the public
interest benefits the combinations have produced and the extent to which the combinations have enabled
the television stations involved to convert to digital operation.
Under the FCC’s ownership rules, a direct or indirect purchaser of certain types of our securities
could violate FCC regulations or policies if that purchaser owned or acquired an “attributable” interest in
other media properties in the same areas as our stations or in a manner otherwise prohibited by the FCC.
All officers and directors of a licensee and any direct or indirect parent, general partners, limited partners
and limited liability company members who are not properly “insulated” from management activities,
and stockholders who own five percent or more of the outstanding voting stock of a licensee or its parent,
either directly or indirectly, generally will be deemed to have an attributable interest in the licensee.
Certain institutional investors who exert no control or influence over a licensee may own up to twenty
percent of a licensee’s or its parent’s outstanding voting stock before attribution occurs. Under current
FCC regulations, debt instruments, non-voting stock, minority voting stock interests in corporations
having a single majority shareholder, and properly insulated limited partnership and limited liability
company interests as to which the licensee certifies that the interest holders are not “materially involved”
in the management and operation of the subject media property generally are not subject to attribution
unless such interests implicate the FCC’s “equity/debt plus,” or “EDP,” rule. Under the EDP rule, an
aggregate interest in excess of 33% of a licensee’s total asset value (equity plus debt) is attributable if the
interest holder is either a major program supplier (providing over 15% of the licensee’s station’s total
weekly broadcast programming hours) or a same-market media owner (including broadcasters, cable
operators, and newspapers). To the best of our knowledge at present, none of our officers, directors or
five percent stockholders holds an interest in another television station, radio station, cable television
system or daily newspaper that is inconsistent with the FCC’s ownership rules and policies.