iHeartMedia 2004 Annual Report Download - page 15

remain in the DMA after the combination; and (ii) at least one of the commonly owned stations is not among the top four stations in the market
in terms of audience share. The FCC will presumptively waive these criteria and allow the acquisition of a second same-market television
station where the station being acquired is shown to be “failed” or “failing” (under specific FCC definitions of those terms), or authorized but
unbuilt. 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. Since the revision of the local television
ownership rule, we have acquired a second television station in each of five DMAs where we previously owned a television station.
The FCC has adopted rules with respect to so-called local marketing agreements, or “LMAs,” by which the licensee of one radio or
television station provides substantially all of the programming for another licensee’s station in the same market and sells all of the advertising
within that programming. Under these rules, an entity that owns one or more radio or television stations in a market and programs more than
15% of the broadcast time on another station in the same service (radio or television) in the same market pursuant to an LMA is generally
required to count the LMA station toward its media ownership limits even though it does not own the station. As a result, in a market where we
own one or more radio or television stations, we generally cannot provide programming under an LMA to another station in the same service
(radio or television) if we cannot acquire that station under the various rules governing media ownership.
In adopting its rules concerning television LMAs, however, the FCC provided “grandfathering” relief for LMAs that were in effect at the
time of the rule change in August 1999. Television LMAs that were in place at the time of the new rules and were entered into before
November 5, 1996, were allowed to continue at least through 2004, at which time the FCC planned to consider the future treatment of such
LMAs in a biennial review proceeding. Such LMAs entered into after November 5, 1996 were allowed to continue until August 5, 2001, at
which point they were required to be terminated unless they complied with the revised local television ownership rule.
We provide substantially all of the programming under LMAs to television stations in two markets where we also own a television station.
Both of these television LMAs were entered into before November 5, 1996. Therefore, both of these television LMAs are permitted to continue
at least through the FCC’s next periodic (now quadrennial) ownership rule review, which has not yet commenced. Moreover, we may seek
permanent grandfathering of these television LMAs by demonstrating to the FCC, among other things, the public interest benefits the LMAs
have produced and the extent to which the LMAs have enabled the stations involved to convert to digital operation.
A number of cross-ownership rules pertain to licensees of television and radio stations. FCC rules have generally prohibited an individual or
entity from having an attributable interest in a radio or television station and a daily newspaper located in the same market.
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 at least 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 more than 20 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 current rule. Our acquisition of television stations in five markets in our 2002 merger
with The Ackerley Group resulted in our owning more radio
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