iHeartMedia 2003 Annual Report Download - page 15

Under the FCC’s ownership rules, an officer or director of our company or a direct or indirect purchaser of certain types of our securities
could cause us to 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 o
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our knowledge at present, none of our officers, directors or five percent or greater 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.
Recent Developments and Future Actions Regarding Multiple Ownership Rules
Expansion of our broadcast operations in particular areas and nationwide will continue to be subject to the FCC’s ownership rules and any
further changes the FCC or Congress may adopt. Recent actions by and pending proceedings before the FCC, Congress and the courts may
significantly affect our business.
The 1996 Act requires the FCC to review its remaining ownership rules biennially as part of its regulatory reform obligations (although,
under recently enacted appropriations legislation, the FCC will be obligated to review the rules every four years rather than biennially). The
first two biennial reviews did not result in any significant changes to the FCC’s media ownership rules, although the first such review led to the
commencement of several separate proceedings concerning specific rules. One such proceeding solicited public comment on a variety of
possible changes in the methodology by which the FCC defines a radio “market” and counts stations for purposes of determining compliance
with the local radio ownership restrictions. In that proceeding, the FCC announced a policy of deferring certain pending and future radio sale
applications which raise “concerns” about how the FCC counts the number of stations a company may own in a market. This deferral policy
has delayed FCC approval of our acquisition of two radio stations in one pending transaction, and may delay additional acquisitions for which
we seek FCC approval in the future. In November 2001, the FCC subsumed its pending market definition/station counting rulemaking into a
larger, more comprehensive proceeding to review all aspects of the agency’s local radio multiple ownership rules.
In its third biennial review, which commenced in September 2002, the FCC undertook a comprehensive review and reevaluation of all of its
media ownership rules. It incorporated into this omnibus review a number of its separate pending proceedings on various rules, including its
previously commenced rulemakings concerning the local radio ownership rules and radio market definition/station counting methodology. This
biennial review culminated in a decision adopted by the FCC in June 2003, in which the agency made significant changes to virtually all
aspects of the existing media ownership rules. Among other things:
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• The FCC relaxed the local television ownership rule, allowing common ownership of two television stations in any DMA with at
least five operating commercial and non-commercial television stations. Under the modified rule, a company may own three
television stations in a DMA with at least 18 television stations. In either case, no single entity may own more than one television
station that is among the top four stations in a DMA based on audience ratings. In markets with eleven or fewer television stations,
however, the FCC will allow parties to seek waivers of the “top four” restriction and will evaluate on a case-by-case basis whether
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oint ownership would serve the public interest, based on a liberalized set of waiver criteria.