iHeartMedia 2010 Annual Report Download - page 12

Seasonality
Required information is located within Item 7 of Part II of this Annual Report on Form 10-K.
Federal Regulation of Radio Broadcasting
General
Radio broadcasting is subject to the jurisdiction of the FCC under the Communications Act. The Communications Act permits
the operation of a radio broadcast station only under a license issued by the FCC upon a finding that grant of the license would serve
the public interest, convenience and necessity. Among other things, the Communications Act empowers the FCC to: issue, renew,
revoke and modify broadcasting licenses; assign frequency bands for broadcasting; determine stations’ frequencies, locations, power
and other technical parameters; impose penalties for violation of its regulations, including monetary forfeitures and, in extreme cases,
license revocation; impose annual regulatory and application processing fees; and adopt and implement regulations and policies
affecting the ownership, program content, employment practices and many other aspects of the operation of broadcast stations.
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icense Assignments
The Communications Act prohibits the assignment of a license or the transfer of control of an FCC licensee without prior FCC
approval. Applications for assignments or transfers that involve a substantial change in ownership or control are subject to a 30-day
period for public comment, during which petitions to deny the application may be filed.
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icense Renewal
The FCC grants broadcast licenses for a term of up to eight years. The FCC will renew a license for an additional eight year term
if, after consideration of the renewal application and any objections thereto, it finds that the station has served the public interest,
convenience and necessity and that, with respect to the station seeking renewal, there have been no serious violations of either the
Communications Act or the FCC’s rules and regulations by the licensee and no other such violations which, taken together, constitute
a pattern of abuse. The FCC may grant the license renewal application with or without conditions, including renewal for a term less
than eight years. The vast majority of radio licenses are renewed by the FCC. While we cannot guarantee the grant of any future
renewal application, all of our stations’ licenses have historically been renewed.
Ownership Regulation
The Communications Act and FCC rules define the positions and interests of individuals and entities, known as “attributable”
interests, that implicate FCC rules governing ownership of broadcast stations and other specified mass media entities. Under these
rules, attributable interests generally include: officers and directors of a licensee or of its direct or indirect parent; general partners;
limited partners and limited liability company members, unless properly “insulated” from management activities; a 5% or more direct
or indirect voting stock interest in a corporate licensee or parent, except that, for a narrowly defined class of passive investors, the
attribution threshold is a 20% or more voting stock interest; and combined equity and debt interests in excess of 33% of a licensee’s
total asset value, if the interest holder provides over 15% of the licensee station’s total weekly programming, or has an attributable
broadcast or newspaper interest in the same market (the “EDP Rule”). An entity that owns one or more radio stations in a market and
programs more than 15% of the broadcast time, or sells more than 15% per week of the advertising time, on a radio station in the
same market is generally deemed to have an attributable interest in that station.
Debt instruments, non-voting stock, minority voting stock interests in corporations having a single majority stockholder, and
properly insulated limited partnership and limited liability company interests generally are not subject to attribution unless such
interests implicate the EDP Rule. To the best of our knowledge at present, none of our officers, directors or 5% or greater
shareholders holds an interest in another television station, radio station or daily newspaper that is inconsistent with the FCC’s
ownership rules.
The FCC is required to conduct periodic reviews of its media ownership rules. In 2003, the FCC, among other actions, modified
the radio ownership rules and adopted new cross-media ownership limits. The U.S. Court of Appeals for the Third Circuit initially
stayed implementation of the new rules. Later, it lifted the stay as to the radio ownership rules, allowing the modified rules to go into
effect. It retained the stay on the cross-media rules and remanded them to the FCC for further justification (leaving in effect separate
pre-existing FCC rules governing newspaper/broadcast and radio/television cross-ownership). In December 2007, the FCC adopted a
decision that revised the newspaper-broadcast cross-ownership rule but made no changes to the radio ownership or radio-television
cross-ownership rules. This decision, including the determination not to relax the radio ownership limits, is the subject of a request for
reconsideration and various court appeals, including by us. The FCC began its next periodic review in 2010; the proceeding is
currently pending. We cannot predict the outcome of the FCC’s media ownership proceedings or their effects on our business in the
future.
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