**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the Matter of                 | *  | MM Docket No. 94-150         |
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| Review of the Commission's       | ** | MM Docket No. 92-51          |
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| Regulations Governing            | *  | MM Docket No. 87-154         |
| Attribution                      | *) |                              |
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| Of Broadcast and Cable/MDS       |    |                              |
| Interests                        | *  |                              |
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| Review of the Commission's       | ** |                              |
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| Regulations and Policies         | *  |                              |
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| Affecting Investment             | ** |                              |
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| In the Broadcast Industry        | *  |                              |
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| Reexamination of the             | ** |                              |
| Commission's                     |    |                              |
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| Cross-Interest Policy            | *) |                              |
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**ORDER**

**Adopted:** December 3, 2001 **Released:** December 14, 2001

By the Commission: Commissioner Copps dissenting and issuing a
statement.

1.  In this *Order*, we suspend the Commission's elimination of the
    single majority shareholder exemption under our broadcast and
    cable/multipoint distribution service (MDS)[^1] attribution rules,
    pending resolution of the issues outlined in our recently adopted
    cable *Further Notice of Proposed Rulemaking* (*Cable FNPRM*).[^2]
    Effective immediately, for purposes of the broadcast attribution
    rules, no minority voting interest will be cognizable, subject to
    the equity/debt plus rule, if there is a single holder of more than
    50 percent of the outstanding voting stock of the corporate
    broadcast licensee, cable television system, or daily newspaper in
    which the minority interest is held.[^3] Similarly, for purposes of
    the cable/MDS attribution rules, no minority voting stock interest
    will be cognizable, subject to the equity/debt plus rule, if there
    is a single holder of more than 50 percent of the outstanding voting
    stock of the corporate MDS licensee or cable television system in
    which the minority interest is held.[^4]

2.  On August 6, 1999, the Commission released a *Report and Order* in
    this proceeding amending its broadcast and cable/MDS attribution
    rules, but retaining the single majority shareholder exemption after
    seeking comment on whether to eliminate it.[^5] Upon
    reconsideration, the Commission granted a request to eliminate the
    single majority shareholder exemption, relying, in part, on its
    rationale for eliminating the exemption in the context of cable
    operators in its *1999 Cable Attribution R&O*, and further
    explaining that regardless of whether minority shareholder interests
    have the ability to control a licensee, they should be attributed
    because they potentially have the ability to exert influence over a
    licensee's core operations*.*[^6]

3.  On March 2, 2001, the Court of Appeals for the D.C. Circuit, in
    *Time Warner Entertainment Co. L.P. v. FCC* (*Time Warner*),
    remanded issues to the Commission related to our cable ownership
    rules and, in relevant part, reversed the elimination of the single
    majority shareholder exemption under the cable attribution rules.
    The D.C. Circuit found that the Commission had failed to offer an
    affirmative justification for eliminating the exemption.[^7] Relying
    on the decision in *Time Warner*, certain parties sought
    reconsideration of the Commission's elimination of the exemption in
    the broadcast attribution reconsideration order.[^8] On September
    13, 2001, we adopted the *Cable FNPRM* addressing the issues on
    remand from the D.C. Circuit and seeking evidence regarding whether
    to eliminate or retain the single majority shareholder exemption
    under our cable attribution rules.[^9] We also incorporated the
    pleadings seeking reconsideration of elimination of the single
    majority shareholder exemption for purposes of our broadcast and
    cable/MDS attribution rules by reference into that proceeding and
    asked commenters to provide evidence on whether to reinstate the
    exemption.[^10] We further stated that we would separately issue
    this suspension order pending resolution of the issues in that
    proceeding.[^11]

4.  We find that suspending the repeal of the single majority
    shareholder exemption for purposes of the broadcast and cable/MDS
    attribution rules pending resolution of the issues outlined in the
    *Cable FNPRM* is in the public interest. We recognize that, in
    making its decision to eliminate the exemption, the Commission
    relied in part on the rationale from the *1999 Cable Attribution
    R&O* rejected by the Court in *Time Warner*. We further recognize
    that a suspension will enable us to consider all evidence provided
    in response to our *Cable FNPRM* on whether to reinstate the single
    majority shareholder exemption under our broadcast and cable/MDS
    attribution rules. We find that no harm has occurred or will occur
    by making the suspension effective immediately because applying the
    exemption in determining attributable interests may result in fewer
    restrictions under our ownership rules. We also believe the
    suspension will provide for consistent processing of pending and
    future applications and other relevant documents. Accordingly, for
    good cause shown, we suspend the elimination of the single majority
    shareholder exemption under our broadcast and cable/MDS attribution
    rules, effective immediately upon release of this order.[^12] The
    suspension applies to the processing of all pending and future
    applications and will remain in effect until the issues outlined in
    our *Cable FNPRM* proceeding are resolved.

5.  Authority for issuance of this *Order* is contained in Sections 4(i)
    and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C.
    §§ 154(i), 303(r), and Section 553(d) of the Administrative
    Procedure Act, 5 U.S.C. § 553(d).

6.  Accordingly, IT IS ORDERED that repeal of the single majority
    shareholder exemptions contained in former Note 1(b) to Section
    21.912 of the Commission's rules, 47 C.F.R. § 21.912 Note 1(b)
    (2000), and former Note 2(b) to Section 73.3555 of the Commission's
    rules, 47 C.F.R. § 73.3555 Note 2(b) (2000) IS SUSPENDED effective
    immediately upon release of this order for all pending and future
    applications until resolution of the issues outlined in the *Cable
    FNPRM* proceeding. This action is taken pursuant to Sections 4(i)
    and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C.
    §§ 154(i), 303(r), and Section 553(d) of the Administrative
    Procedure Act, 5 U.S.C. § 553(d).

    FEDERAL COMMUNICATIONS COMMISSION

    Magalie Roman Salas

    Secretary

DISSENTING STATEMENT OF

**COMMISSIONER MICHAEL J. COPPS**

*Review of the Commission's Regulations Governing Attribution of*

*Broadcast and Cable/MDS Interest, Suspension Order*

I dissent from suspending enforcement of the elimination of the single
majority shareholder exemption to the broadcast ownership rules.
Suspension of this rule is tantamount to its elimination. No court has
directed suspending this rule, nor even suggested review of the rule.
Nor has the Commission completed its rulemaking to ascertain whether a
change in policy would serve the public interest. Before considering
such an important policy change, I would need to review the record in
the rulemaking proceeding including the comments of all interested
stakeholders.

I am fully aware that earlier this year the D.C. Circuit ordered the
Commission to revisit its cable ownership rules, including its rules
governing attribution of cable ownership interests, and to build a
strong record upon which to base any new rules. This decision left the
Commission, the cable industry, and the American people temporarily
without clear rules governing cable system ownership. This is an
unfortunate circumstance, and I am pleased that the Commission has
commenced a proceeding to build a record upon which to base new cable
ownership rules.

But broadly as it may have affected our cable ownership rules, the D.C.
Circuit decision did not address any rules governing broadcast ownership
or attribution. These rules, and in fact the entire regulatory scheme
under which broadcast licensees operate, exists independently of the
D.C. Circuit decision. While we all talk about convergence these days --
convergence of technologies, convergence of regulatory schemes -- no one
would assert that broadcast stations and cable television systems have
converged to the point that they are subject to the same regulatory
scheme.

The broadcast attribution rules -- including the elimination of the
single majority shareholder exemption -- were promulgated pursuant to a
rulemaking proceeding with an opportunity for input from all
stakeholders, and with consideration of all viewpoints. While the
Commission relied in part on consistency with the cable attribution
rules in eliminating the single majority shareholder exemption, there
was an additional basis, specific to broadcast licensing -- providing
consistency to applicants in the application of our attribution rules.

Ironically, consistency is the rationale stated by the majority for the
suspension of this rule at this time. While I am sympathetic to
potential broadcast license applicants' concerns that they need clear
rules of the road to plan their business transactions, the point is that
there are rules in effect at this time: the rules adopted by the
Commission eliminating the single majority shareholder exemption.

Until we have completed the proceeding addressing our broadcast
attribution rules, the elimination of the single majority shareholder
exemption should be enforced. Only after I am convinced that such a rule
change would serve the public interest and the principles of competition
and diversity would I support the elimination -- by suspension or by
rulemaking -- of this rule.

[^1]: MDS includes single channel multipoint distribution service and
    multichannel multipoint distribution service.

[^2]: *In re* Implementation of Section 11 of the Cable Television
    Consumer Protection and Competition Act of 1992; Implementation of
    Cable Act Reform Provisions of the Telecommunications Act of 1996,
    CS Docket No. 98-82, *Further Notice of Proposed Rulemaking*, FCC
    01-263 (rel. Sept. 21, 2001) (*Cable FNPRM*).

[^3]: *See* former Note 2(b) to Section 73.3555, 47 C.F.R. § 73.3555
    Note 2(b).

[^4]: *See* former Note 1(b) to Section 21.912 of the Commission's
    rules, 47 C.F.R. § 21.912.

[^5]: *In re* Review of the Commission's Regulations Governing
    Attribution of Broadcast and Cable/MDS Interests, MM Docket No.
    94-150, *Report and Order*, 14 FCC Rcd 12559, 12579, ¶ 36 (1999).

[^6]: *In re* Review of the Commission's Regulations Governing
    Attribution of Broadcast and Cable/MDS Interests, MM Docket No.
    94-150, *Memorandum Opinion and Order on Reconsideration*, 16 FCC
    Rcd 1097, 1116-17, ¶¶ 41-44 (2001) (*Broadcast Attribution MO&O*)
    (citing, in part, *In re* Implementation of the Cable Television
    Consumer Protection and Competition Act of 1992, CS Docket No.
    98-82, *Report and Order*, 14 FCC Rcd 19014, 19046, ¶ 81 (1999)). In
    the *Broadcast Attribution MO&O*, the Commission noted that the
    rationale supporting adoption of the exemption in 1984, was based on
    the conclusion that minority interest shareholders would be unable
    to direct the licensee's affairs or activities. The Commission
    stated that "attribution rules are designed to identify not only
    interests that enable an entity to control a company, but also
    interests that give an entity the potential to exert significant
    influence on a company's major decisions, even if the entity cannot
    control the company. Minority shareholders may not be able to
    control the affairs or activities of licensees, but, in certain
    circumstances, they clearly have the potential to influence a
    licensee's actions." *Broadcast Attribution MO&O*, 16 FCC Rcd at
    1116, ¶ 43. The Commission found that eliminating the exemption for
    purposes of the broadcast and cable/MDS attribution rules would,
    therefore, improve the precision of the attribution rules in
    identifying cognizable interests. *Id*. at 1116, ¶ 42. The
    *Broadcast Attribution MO&O* was published in the Federal Register
    on February 13, 2001, and the rule amendments became effective on
    April 16, 2001. 66 Fed. Reg. 9962 (2001).

[^7]: 240 F.3d 1126, 1143-44 (D.C. Cir. 2001).

[^8]: The National Broadcasting Company, Inc. filed a petition for
    reconsideration of the *Broadcast Attribution MO&O* on March 12,
    2001. Paxson Communications Corporation and Viacom, Inc. each filed
    petitions for reconsideration of the *Broadcast Attribution MO&O* on
    March 15, 2001. On April 19, 2001, the National Association of
    Broadcasters filed comments supporting the petitions.

[^9]: *Cable FNPRM*, FCC 01-263 at ¶¶ 88-90.

[^10]: *Cable FNPRM*, FCC 01-263 at ¶¶ 91-92.

[^11]: *Cable FNPRM*, FCC 01-263 at ¶¶ 91.

[^12]: *See* 5 U.S.C. § 553(d)(1) and (3) (providing that "\[t\]he
    required publication or service of a substantive rule shall be made
    not less than 30 days before its effective date, except . . . (1) a
    substantive rule, which grants or recognizes an exemption or
    relieves a restriction; . . . or (3) as otherwise provided by the
    agency for good cause found and published with the rule").