NAB, NCTA Agree on Ownership Issue

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In a rare alliance, the National Association of Broadcasters and the National
Cable & Telecommunications Association agreed that certain media-ownership
rules need to be overhauled.

The NAB and the NCTA are longtime combatants on a range of regulatory issues
at the Federal Communications Commission, but the television and cable trade
groups have found common ground on portions of FCC ownership rules that the
groups consider too restrictive.

In comments filed Tuesday, the NAB said it shared the NCTA's view that the
FCC needed to change ownership-attribution rules to better reflect the limited
role minority investors can play in influencing the entity or entities that
actually control broadcast or cable properties.

Under FCC rules, a 5 percent voting-stock interest is deemed
attributable.

By way of example, if a cable operator with 1 million subscribers owned 5
percent of the voting stock in a cable operator with 10 million subscribers, the
smaller cable operator would be deemed to be serving 11 million subscribers.
Assuming that the FCC enforced a rule that limited cable ownership at 10.5
million subscribers, the smaller cable operator would be in violation of the
rule.

Both trade groups told the FCC the 5 percent threshold is too low and fails
to reflect the reality that minority investors have legal limitations under
corporate law to dictate decisions by corporate boards that would run counter to
the interests of majority shareholders.

Supports of the 5 percent threshold maintained that the rule is necessary not
to identify control, but to recognize that minority interests can exert
influence that can lead to coordinated action among companies in the same line
of business.

In its comments, the NAB said the FCC had to raise the 5 percent cap in part
to make broadcasting properties more attractive to passive investors that want
to hold ownership stakes without getting entangled in FCC ownership
restrictions.

'The current economic climate presents difficult challenges to the broadcast
industry,' the NAB said. 'Advertising revenues have been down for some time, and
the events of Sept. 11, 2001, only exacerbated the situation.'

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