iHeartMedia 2011 Annual Report Download - page 14

Regulation of our Media and Entertainment Business
General
The following is a brief summary of certain statutes, regulations, policies and proposals affecting our media and
entertainment business. For example, 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.
This summary does not comprehensively cover all current and proposed statutes, regulations and policies affecting our
media and entertainment business. Reference should be made to the Communications Act and other relevant statutes, regulations,
policies and proceedings for further information concerning the nature and extent of regulation of our media and entertainment
business. Finally, several of the following matters are now, or may become, the subject of court litigation, and we cannot predict the
outcome of any such litigation or its impact on our media and entertainment business.
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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 license assignments or transfers involving a substantial change in ownership are subject to a 30-day
period for public comment, during which petitions to deny the application may be filed and considered by the FCC.
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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 for the full eight-year term. While we cannot
guarantee the grant of any future renewal application, our stations’ licenses historically have been renewed for the full eight-year
term.
Ownership Regulation
FCC rules and policies define the interests of individuals and entities, known as “attributable” interests, which implicate
FCC rules governing ownership of broadcast stations and other specified mass media entities. Under these rules, attributable interests
generally include: (1) officers and directors of a licensee or of its direct or indirect parent; (2) general partners, limited partners and
limited liability company members, unless properly “insulated” from management activities; (3) 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 (4) 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 corporate 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.
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