Broadcasters launch effort to promote greater alien ownership in broadcasting (while H.G. Wells rolls over in his grave).

Hot on the heels of the FCC’s recent liberalization of the restrictions on alien ownership of common carrier licensees, a group dubbed the Coalition for Broadcast Investment (the Coalition) has filed a petition seeking similar leeway for broadcast licensees.  The Coalition is an ad hoc group comprised of minority-oriented station owners as well as some of the largest multi-station group owners in the country.   The Coalition’s petition is styled as a “Request for Clarification” of the Commission’s policy with respect to alien ownership of broadcast stations, but it’s effectively a petition for a declaratory ruling on the issue presented.

Our regular readers will remember that in August the FCC released an order designed to clarify the power of the Commission to authorize significant indirect, non-controlling foreign interests in common carrier licensees. The August order addressed the fact that, as interpreted by the FCC, Section 310(b)(3) of the Communications Act bars aliens from indirectly owning 20% to 50% of a radio licensee but Section (b)(4) permits indirect alien ownership – with prior FCC approval – of controlling interests in radio licensees.   The FCC dealt with this odd anomaly by “forbearing” from enforcing the Section 310(b)(3) restriction on non-controlling alien interests.

There were two catches to this solution.

First, the FCC’s authority (found in Section 10 of the Communications Act) to forbear applies only to common carrier licensees – not broadcasters. So even if it had wanted to, the FCC could not have ceased enforcement of the non-controlling interest prohibition as it applies to broadcasters. But there’s the rub: as far as we can tell, the FCC didn’t want to allow greater alien involvement in broadcast licensees. It has traditionally refused to countenance even non-controlling alien ownership interests of greater than 20% in broadcast licensees. This despite the fact that Section 310(b)(4) of the Act expressly grants the Commission the discretion to make a determination as to whether control of broadcast licensees by aliens is in the public interest or not. This broadcast-specific xenophobia seems to have been rooted in the classic sci-fi conceit that aliens, through their insidious control of broadcast stations, could take over American brains and, thereby, American society – with generally unpleasant consequences for all of us.

But now the Coalition, representing a broad sample of American broadcast entities, has decided that the time has come to revisit this policy.

The Coalition’s petition requests that the Commission declare that, rather than simply closing its ears to any petitions for alien control of broadcast licensees, it should now conduct a case by case review of whether such ownership is in the public interest – as the statute has always contemplated and allowed. In support of this change in policy, the Coalition points to a number of persuasive factors: the diversified and fragmented media market that now diminishes the potential dominance of broadcast stations; the significant benefits to the industry which would accrue from foreign investment in broadcast stations; and the current U.S. policy which in all other spheres of the economy encourages offshore investment in US assets.

Of course, even if the FCC were to agree with the Coalition here, aliens would still be left without the right or opportunity under any circumstances to own greater than 20% non-controlling interests in broadcast licensees, since, as noted above, the forbearance action taken by the Commission for such interests does not cover broadcast licensees. Still, the relief sought by the Coalition would be a solid step in the direction of rationalizing and regularizing the treatment of aliens under our communications laws.

The Coalition petition was filed on August 31. As of September 5, the Commission had not yet requested public comment on it. Check back here for updates.