iHeartMedia 2005 Annual Report Download - page 14

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License Grant and Renewal
Under the 1996 Act, the FCC grants broadcast licenses to both radio and television stations for terms of up to
eight years. The 1996 Act requires the FCC to renew a broadcast license if it finds that:
• the station has served the public interest, convenience and necessity;
• there have been no serious violations of either the Communications Act or the FCC’s rules and regulations
by the licensee; and
• there have been no other violations which taken together constitute a pattern of abuse.
In making its determination, the FCC may consider petitions to deny and informal objections, and may order a hearing if
such petitions or objections raise sufficiently serious issues. The FCC, however, may not consider whether the public
interest would be better served by a person or entity other than the renewal applicant. Instead, under the 1996 Act,
competing applications for the incumbent’s spectrum may be accepted only after the FCC has denied the incumbent’s
application for renewal of its license.
Although in the vast majority of cases broadcast licenses are renewed by the FCC, even when petitions to deny
or informal objections are filed, there can be no assurance that any of our stations’ licenses will be renewed at the
expiration of their terms.
Current Multiple Ownership Restrictions
The FCC has promulgated rules that, among other things, limit the ability of individuals and entities to own or
have an “attributable interest” in broadcast stations and other specified mass media entities.
The 1996 Act mandated significant revisions to the radio and television ownership rules. With respect to radio
licensees, the 1996 Act directed the FCC to eliminate the national ownership restriction, allowing one entity to own
nationally any number of AM or FM broadcast stations. Other FCC rules mandated by the 1996 Act greatly eased local
radio ownership restrictions. The maximum allowable number of radio stations that may be commonly owned in a
market varies depending on the total number of radio stations in that market, as determined using a method prescribed
by the FCC. In markets with 45 or more stations, one company may own, operate or control eight stations, with no more
than five in any one service (AM or FM). In markets with 30-44 stations, one company may own seven stations, with no
more than four in any one service. In markets with 15-29 stations, one entity may own six stations, with no more than
four in any one service. In markets with 14 stations or less, one company may own up to five stations or 50% of all of
the stations, whichever is less, with no more than three in any one service. These new rules permit common ownership
of more stations in the same market than did the FCC’s prior rules, which at most allowed ownership of no more than
two AM stations and two FM stations even in the largest markets.
Irrespective of FCC rules governing radio ownership, however, the Antitrust Division of the United States
Department of Justice and the Federal Trade Commission have the authority to determine that a particular transaction
presents antitrust concerns. Following the passage of the 1996 Act, the Antitrust Division became more aggressive in
reviewing proposed acquisitions of radio stations, particularly in instances where the proposed purchaser already owned
one or more radio stations in a particular market and sought to acquire additional radio stations in the same market. The
Antitrust Division has, in some cases, obtained consent decrees requiring radio station divestitures in a particular market
based on allegations that acquisitions would lead to unacceptable concentration levels. The FCC generally will not
approve radio acquisitions when antitrust authorities have expressed concentration concerns, even if the acquisition
complies with the FCC’s numerical station limits.
With respect to television, the 1996 Act directed the FCC to eliminate the then-existing 12-station national limit
for station ownership and increase the national audience reach limitation from 25% to 35%. The 1996 Act left local TV
ownership restrictions in place pending further FCC review, and in August 1999 the FCC modified its local television
ownership rule. Under the current rule, permissible common ownership of television stations is dictated by Nielsen
Designated Market Areas, or “DMA®s.” A company may own two television stations in a DMA® if the stations’ Grade
B contours do not overlap. Conversely, a company may own television stations in separate DMA®s even if the stations’
service contours do overlap. Furthermore, a company may own two television stations in a DMA® with overlapping
Grade B contours if (i) at least eight independently owned and operating full-power television stations, the Grade B
contours of which overlap with that of at least one of the commonly owned stations, will 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