Broadcast Advisory Bulletin
Broadcast
Station Update: Biennial Ownership Report Deadline – December
1
Affected States:
- Radio: Alabama, Connecticut, Georgia, Massachusetts,
Maine, New Hampshire, Vermont, and Rhode Island
- TV: Colorado, Minnesota, Montana, North Dakota, and
South Dakota
Published
by DWT's
Broadcast Group
[November 2007]
By December 1, 2007, radio stations in Alabama,
Connecticut, Georgia, Massachusetts, Maine, New Hampshire, Vermont,
and Rhode Island, and television stations in Colorado, Minnesota,
Montana, North Dakota, and South Dakota must prepare and file an
FCC Form 323 Biennial Ownership Report with the Federal Communications
Commission (FCC). Similarly, noncommercial stations in these states
must file a Biennial Ownership Report on FCC Form 323-E.
Ownership Reports are to be filed every other year, reporting
on changes in the licensee’s ownership and updating the information
requested by the form. Ownership information must be provided for
all attributable owners of the licensee (see below). Other changes
to be noted in the report would include changes in broadcast interests
of the licensee, and changes in the list of documents that need
to be filed with the Commission pursuant to Section 73.3613 of the
rules. Those documents are described in Attachment
A hereto, but principally deal with agreements that could affect
future ownership, or ones that in some way restrict the operations
of the licensee. Examples of such agreements include Options, Rights
of First Refusals, Stock Pledge Agreements, Security Agreements
that place significant restrictions on the operations of the licensee,
and programming agreements such as Time Brokerage Agreements or
Television Network Affiliation Agreements.
Note that stations that are co-owned with stations in other states
can elect a unified Ownership Report filing date, as long as the
licensee has at least one station in a state with that reporting
date. In that case, the licensee will file its report on every other
anniversary of the renewal filing of the stations in the state it
elects. If the licensee of a station in one of the states listed
above has made the election to file a consolidated report for all
of its stations, and notified the Commission of that election, there
is no additional obligation to file an Ownership Report on December
1.
Attributable interests
While a full discussion of who has an attributable interest in
a licensee would take many pages, there are some generalities that
can be summarized here. In a corporate licensee, officers, directors,
and shareholders with a 5 percent or greater interest in the voting
stock of a company are deemed to have an attributable interest.
In general and limited partners, all general partners have attributable
interests. In addition, in limited partnerships, any limited partner
who is not insulated from control, both by the written terms of
the limited partnership agreement and in day-to-day practice, has
an attributable interest. To be exempt from attribution, the written
terms of the limited partnership agreement must contain “magic
language” restricting the activities of the limited partner
in a number of areas. Attachment
B to this memo contains the magic language required for insulating
a limited partner. The remainder of the partnership agreement must
not contradict this restrictive language.
With respect to a limited liability company, managers of the company
are attributable, as are all members unless they are insulated in
the same manner as limited partners, as described above. In order
for the interests of members to be nonattributable, the LLC agreement
would need to contain the same “magic language” as a
limited partnership agreement, and the members would have to act
in accordance with those restrictions to preserve their insulation.
In noncommercial entities, the attributable owners are those who
make decisions for the entity. In most non-profit corporations,
that would be the company’s officers and directors. For other
non-profit entities such as a college or other institution, it would
normally be the governing board.
An Ownership Report is not required for individuals or LPTV stations
Under the FCC’s Rules, if you hold a station’s license
as an individual, or as a general partnership made up entirely of
natural persons ( i.e. individuals as opposed to corporations or
other business entities), then you are not required to file a biennial
Ownership Report. The reason for this is that if there are any changes
in the ownership of a licensee owned by an individual or general
partnership, prior FCC permission is required. For instance, if
an individual adds a second owner, he has created a partnership,
requiring approval on an FCC Form 314 (or possibly a Form 316 if
the new owner has less than a 50 percent voting interest). Similarly,
the FCC takes the common law view that change of partners in a general
partnership creates a new partnership, thus requiring prior FCC
approval.
Because the FCC has traditionally collected less ownership information
from licensees of low power television stations and Class A television
stations, those licensees are not required to file ownership reports.
Basic questions when preparing the Biennial
Ownership Report
In the event your station’s information may have changed
since the last time you prepared and filed a biennial Ownership
Report, you should review it carefully and make any necessary changes.
In particular, you should consider the following basic information
as you review the report. While the FCC should be notified when
some of this information changes even apart from the ownership filing
deadline, the preparation of the biennial report gives the licensee
a good opportunity to review the continuing accuracy of all this
information.
- Is the licensee’s contact information still accurate?
If the address of the licensee has changed, that should be reported
on FCC Form 5072 when the change occurs. Waiting to report that
change until the Ownership Report could mean that important communications
from the FCC may be missed.
- Are the call signs and communities of license listed on the
form still accurate? Make sure that the actual community of license
for each station is reported on the Form, not the market the station
may serve.
- Have any of the officers, directors, or other parties directing
the management of the licensee changed since the last report?
- Have the voting and equity percentages listed for the shareholders,
partners, or members changed since the last report?
- Have any of the names or addresses of the principals changed
since the last report?
- Has the station entered into any agreements that need to be
filed at the Commission pursuant to Section 73.3613 (see Attachment
A)? If so, do the changes need to be listed on the report
and filed with the FCC?
Reports for companies with attributable owners
who are not individuals
If the licensee company has attributable owners who are not individuals,
then ownership reports for each of those companies also need to
be filed. Ownership Reports need to be filed for each company that
has an attributable interest in the licensee. Ownership reporting
is cut off only when an owner “up the chain” is insulated
from control ( e.g. using the “magic language” for an
LLC or limited partnership) or if their interest is less than 5
percent in a corporate licensee (the Form 323 sets out a “multiplier”
formula to be used for companies to compute whether their holdings
in other companies exceed the 5 percent benchmark).
Additional considerations for public companies
At the time of the filing of the Ownership Report, public companies
and other companies with widely dispersed ownership need to assure
that they are in compliance with the FCC’s restrictions on
alien ownership. If the company cannot, simply by reviewing the
rolls of its shareholders, determine that 80 percent of the corporate
licensee’s stock (or 75 percent of a parent company) is owned
by U.S. citizens, the Company must take other steps to make sure
that the company is in compliance. A random survey of shareholders
has been suggested by the FCC as one means for a licensee to make
such a determination. Alien ownership considerations for non-corporate
entities are complex. Counsel should be consulted with any questions.
Character qualifications
While not actually filed with the Ownership Report, Section 1.65
of the Commission’s rules requires that each licensee report
to the Commission any adverse legal findings that could affect the
character qualifications of a licensee. If there has been an adverse
finding of a felony, any antitrust or unfair competition issue relating
to media matters, any fraudulent statement to another government
agency, or any discrimination matter, then the licensee must file
a report with the Commission. A report must also be filed if any
business owned or controlled by an attributable owner is involved
in such conduct, or if an attributable owner is directly involved
in such conduct at another business. That report is to be filed
on the anniversary date of the filing of the license renewal, so
a report would be due at the same time as your ownership report.
If such conduct occurs in the year that a Biennial Ownership Report
is not due, then a report would still need to be filed on the anniversary
date of the filing of the renewal. For companies with widely disbursed
ownership, the licensee should survey its attributable owners to
make sure that they have not been involved in such conduct.
Preparing and filing the Biennial Ownership
Report
The FCC Form 323 Ownership Report, and the Form 323-E, must be
filed with the FCC electronically. Accordingly, the report must
be prepared and submitted through the FCC’s CDBS filing system,
which can be accessed at the following web site: www.fcc.gov/mb/cdbs.html.
If there have been no changes in the station’s ownership
since the last biennial Ownership Report, the station must still
prepare and file a new report; however, the CDBS filing system allows
you to utilize information from a prior electronic ownership report,
which should simplify the completion of the new form. If you do
not already have a CDBS filing account, you can create one by following
the directions at the FCC’s website. In addition to the CDBS
account number and password, you will also need the licensee’s
FCC Registration Number (FRN) and password when you are ready to
submit the Form.
Once the report has been submitted electronically, commercial stations
must then submit the necessary FCC filing fee, which is $60.00 per
call sign. The fee can either be paid electronically via credit
card, or in paper with a check payable to the FCC.
For more information about the FCC’s ownership rules, or
for assistance in preparing and filing your Form 323 Ownership Report,
please contact any of the lawyers in the Davis Wright Tremaine LLP
Broadcast Practice Area.
For more information, please contact:
This advisory is a publication
of the Broadcast Group of Davis Wright Tremaine LLP. Our purpose
in publishing this advisory is to inform our clients and friends
of recent developments in the broadcasting industry. It is not intended,
nor should it be used, as a substitute for specific legal advice
as legal counsel may only be given in response to inquiries regarding
particular situations. Attorney
advertising. Prior results do not guarantee a similar outcome. Thank
you.
Copyright © 2007, Davis Wright Tremaine LLP.
return to broadcast group main page
|
