iHeartMedia 2002 Annual Report Download - page 17

Recent court developments may have an impact on the FCC’s media ownership rules and the FCC’s pending review of those rules. In
February 2002, the U.S. Court of Appeals for the D.C. Circuit issued a decision requiring the FCC to initiate further proceedings to justify its
decision, as part of its initial biennial review, to retain the 35% national television reach limitation. The FCC intends its pending omnibus
review to comply with this decision. In the same decision, the court also vacated the FCC’s rule prohibiting common ownership of a television
station and a cable television system in the same market. Additionally, in April 2002, the same court required the FCC to initiate further
proceedings to justify certain aspects of its local television ownership rule. Again, the FCC is seeking to respond to this mandate through its
pending omnibus review.
We cannot predict the impact of any of these developments on our business. In particular, we cannot predict the outcome of the FCC’s
pending omnibus media ownership rulemaking or its effect on our ability to acquire broadcast stations in the future, to complete acquisitions
that we have agreed to make, or to continue to own and freely transfer groups of stations that we have already acquired. We also cannot predict
the effect of the pending rulemaking on our radio and television LMAs and JSAs. Moreover, we cannot predict the impact of future biennial
reviews or any other agency or legislative initiatives upon the FCC’s broadcast rules. Further, the 1996 Act’s relaxation of the FCC’s
ownership rules has increased the level of competition in many markets in which our stations are located.
Alien Ownership Restrictions
The Communications Act restricts the ability of foreign entities or individuals to own or hold certain interests in broadcast licenses. Foreign
governments, representatives of foreign governments, non-U.S. citizens, representatives of non-U.S. citizens, and corporations or partnerships
organized under the laws of a foreign nation are barred from holding broadcast licenses. Non-U.S. citizens, collectively, may own or vote up to
twenty percent of the capital stock of a corporate licensee. A broadcast license may not be granted to or held by any corporation that is
controlled, directly or indirectly, by any other corporation more than one-fourth of whose capital stock is owned or voted by non-U.S. citizens
or their representatives, by foreign governments or their representatives or by non-U.S. corporations, if the FCC finds that the public interest
will be served by the refusal or revocation of such license. The FCC has interpreted this provision of the Communications Act to require an
affirmative public interest finding before a broadcast license may be granted to or held by any such corporation, and the FCC has made such an
affirmative finding only in limited circumstances. Since we serve as a holding company for subsidiaries that serve as licensees for our stations,
we are effectively restricted from having more than one-fourth of our stock owned or voted directly or indirectly by non-U.S. citizens or their
representatives, foreign governments, representatives of non-foreign governments or foreign corporations.
Other Regulations Affecting Broadcast Stations
General. The FCC has significantly reduced its past regulation of broadcast stations, including elimination of formal ascertainment
requirements and guidelines concerning amounts of certain types of programming and commercial matter that may be broadcast. There are,
however, FCC rules and policies, and rules and policies of other federal agencies, that regulate matters such as network-affiliate relations, the
ability of stations to obtain exclusive rights to air syndicated programming, cable and satellite systems’carriage of syndicated and network
programming on distant stations, political advertising practices, application procedures and other areas affecting the business or operations of
broadcast stations.
Public Interest Programming. Broadcasters are required to air programming addressing the needs and interests of their communities of
license, and to place “issues/programs lists”in their public inspection files to provide their communities with information on the level of
“public interest”programming they air. In October 2000, the FCC commenced a proceeding seeking comment on whether it should adopt a
standardized form for reporting information on a station’s public interest programming and whether it should require television broadcasters to
post the new form —as well as all other documents in their public inspection files —either on station websites or the websites of state
broadcasters’associations.
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