**Before the**

Federal Communications Commission

Washington, D.C. 20554

+----------------------------------+---+------------------------------+
| In the Matter of                 | * | MB Docket No. 06-121         |
|                                  | * |                              |
| 2006 Quadrennial Regulatory      | ) | MB Docket No. 02-277         |
| Review -- Review of the          | * |                              |
| Commission's Broadcast Ownership | * | MM Docket No. 01-235         |
| Rules and Other Rules Adopted    |   |                              |
| Pursuant to Section 202 of the   | * | MM Docket No. 01-317         |
| Telecommunications Act of 1996   | * |                              |
|                                  | ) | MM Docket No. 00-244         |
| 2002 Biennial Regulatory Review  | * |                              |
| -- Review of the Commission's    | * | MB Docket No. 04-228         |
| Broadcast Ownership Rules and    |   |                              |
| Other Rules Adopted Pursuant to  | * |                              |
| Section 202 of the               | * |                              |
| Telecommunications Act of 1996   | ) |                              |
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| Cross-Ownership of Broadcast     | * |                              |
| Stations and Newspapers          |   |                              |
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| Rules and Policies Concerning    | * |                              |
| Multiple Ownership of Radio      | ) |                              |
| Broadcast Stations in Local      | * |                              |
| Markets                          | * |                              |
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| Definition of Radio Markets      | * |                              |
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| Ways to Further Section 257      | ) |                              |
| Mandate and To Build on Earlier  | * |                              |
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+----------------------------------+---+------------------------------+

SECOND further notice of proposed rule making

**Adopted: August 1, 2007 Released: August 1, 2007**

**Comment Date: (October 1, 2007)**

**Reply Comment Date: (October 16, 2007)**

By the Commission: Commissioners Copps and Adelstein approving in part,
dissenting in part, and issuing a joint statement.

**TABLE OF CONTENTS**

[Paragraph]{.underline}

I. INTRODUCTION 1

II\. BACKGROUND 4

III\. DISCUSSION 7

A. Minority and Female Ownership Initiatives 7

1\. Socially and Economically Disadvantaged Businesses ("SDBs") 7

2\. MMTC Proposals 10

B. Constitutional Issues 13

C. Statutory Authority 14

IV\. PROCEDURAL MATTERS 17

A. Comment Information 17

B. Regulatory Flexibility Act 18

C. Paperwork Reduction Act 19

D. Ex Parte Information 20

V. ORDERING CLAUSES 22

APPENDICES

APPENDIX A − Minority Ownership Proposals and Suggestions

APPENDIX B − Second Supplemental Initial Regulatory Flexibility Analysis

# INTRODUCTION

1.  The Commission has before it the "Motion for Withdrawal of the
    Further Notice of Proposed Rulemaking and for the Issuance of a
    Revised Further Notice" filed on August 23, 2006 (the "Motion for
    Withdrawal") by the Diversity and Competition Supporters
    (collectively, "MMTC").[^1] MMTC states that the Commission's
    *Further Notice* in this proceeding[^2] is flawed and should be
    withdrawn, revised, and republished. The *Further Notice* invited
    comment on the several media ownership rules adopted by the
    Commission in its *2002 Biennial Review Order* [^3] and the pending
    petitions for reconsideration of the *2002 Biennial Review Order*,
    and initiates the statutorily mandated 2006 quadrennial review of
    the Commission's media ownership rules. Specifically, MMTC asserts
    that the *Further Notice* is deficient because it fails to: (1)
    identify and describe MMTC's minority ownership proposals remanded
    by the court in *Prometheus Radio Project, et al. v. FCC*;[^4] (2)
    refer to or seek comment on a definition of a socially and
    economically disadvantaged business ("SDB"); and (3) identify
    Section 257 of the Telecommunications Act of 1996 as a central legal
    basis for minority ownership relief.[^5] MMTC requests that the
    Commission restart the ownership proceeding.[^6]

2.  The *Further Notice* sought comment on MMTC's various proposals, as
    well as on the general issue of fostering minority and female
    ownership.[^7] We urged commenters to explain the effects, if any,
    that their rule proposals would have on ownership of broadcast
    outlets by minorities, women and small businesses.[^8] Given the
    impact of these issues on our comprehensive ownership review, we
    believe it would be beneficial to issue this *Second* *Further
    Notice* to set forth in greater detail the proposals MMTC identified
    in its Motion for Withdrawal and to clarify the record as requested
    by MMTC. Thus, in this *Second Further Notice*, we seek comment on
    the proposals MMTC submitted in the 2002 biennial review proceeding,
    as they are described in Appendix A hereto, as well as on the
    proposals submitted to the Commission by the Advisory Committee on
    Diversity for Communications in the Digital Age ("Diversity
    Committee"), which are also described in Appendix A hereto and are
    set forth more fully in the Committee's recommendations to the
    Commission.[^9] In order to consider fully the issues raised by
    MMTC, as discussed further below, we consolidate our ongoing section
    257 proceeding with this proceeding.

3.  We find it unnecessary to adopt the specific approach suggested by
    MMTC that we rescind and reissue the *Further Notice* in its
    entirety. The approach we take today, in conjunction with the
    initial *Further Notice,* provides ample notice to the commenting
    public on the specific issues germane to our media ownership review,
    including those raised by MMTC relating to ownership diversity.

# Background

4.  In comments filed in the Commission's 2002 biennial review
    proceeding, MMTC proposed numerous measures to promote minority
    broadcast ownership.[^10] In the subsequent *2002 Biennial Review
    Order*, the Commission listed 13 of MMTC's proposals, in addition to
    describing proposals other commenters submitted.[^11] The Commission
    stated that, because a "more thorough exploration" of those comments
    was warranted, it would initiate a separate proceeding to address
    MMTC's 13 proposals and the other comments regarding minority and
    female broadcast ownership.[^12] Responding to MMTC's concern that
    minorities lack equal transactional opportunities, the Commission
    also stated that it would create a federal advisory committee to
    study minority and female ownership issues.[^13] In addition, the
    Commission adopted a transfer policy (the so-called "small business
    cluster transfer policy") intended to promote diversity of
    ownership, based largely on a proposal submitted by MMTC, which
    permits sales of grandfathered combinations that exceed the
    ownership limits to and by certain "eligible entities." Entities may
    transfer control of or assign an existing grandfathered combination
    to "eligible entities," defined as entities that would qualify as a
    small business consistent with Small Business Administration ("SBA")
    standards for its industry grouping.[^14] In addition, eligible
    entities may sell existing grandfathered combinations without
    restriction.[^15]

5.  In the *2002 Biennial Review Order*, the Commission repealed its
    failed station solicitation rule ("FSSR"),[^16] which is part of the
    Commission's waiver standard under the local television ownership
    rule. That waiver standard permits a television station purchaser to
    exceed local television ownership limits if the acquired station is
    failed, failing, or unbuilt.[^17] Under the FSSR, a waiver applicant
    was required to demonstrate that serious efforts had been made to
    secure an out-of-market buyer for the troubled station. A waiver was
    not granted unless the applicant could show that the in-market buyer
    was the "only reasonably available entity willing and able to
    operate the station" and that an out-of-market sale would result in
    an "artificially depressed price."[^18] In the *2002 Biennial Review
    Order*, the Commission retained the waiver standard, but eliminated
    the FSSR requirement.[^19]

6.  On review, the U.S. Court of Appeals for the Third Circuit remanded
    the Commission's decision to address MMTC's 13 proposals in a
    separate rulemaking and ordered the Commission to address those
    proposals at the same time that it addresses the other remanded
    issues.[^20] The court also remanded the Commission's decision to
    repeal the FSSR because the Commission did not address the potential
    impact of the repeal on minority television station ownership.[^21]

# Discussion

## Minority and Female Ownership Initiatives

### Socially and Economically Disadvantaged Businesses ("SDBs")

7.  MMTC argues that the Commission erred in the *Further Notice* by
    failing to seek specific comment on how to define SDBs, adding that
    the concept of SDBs is central to most of the minority ownership
    initiatives proposed in the 2002 biennial review proceeding.[^22]
    MMTC states that the *Prometheus* opinion recognizes the importance
    of establishing a definition for SDBs because, in approving the
    small business cluster transfer policy, the court indicated that, by
    the next quadrennial review, the Commission would have the benefit
    of a stable definition of SDBs as well as implementation experience
    in order to reevaluate whether an SDB-based waiver policy would
    better promote the Commission's diversity objectives.[^23] MMTC
    maintains that, without a definition for SDBs, the Commission cannot
    effectively evaluate the existing small business cluster transfer
    policy or its other proposals, as remanded by the *Prometheus*
    court.[^24]

8.  MMTC states that the issue of the SDB definition has already been
    fully briefed in the Commission's proceeding examining market entry
    barriers.[^25] In that proceeding, initiated in 2004, the public was
    invited to comment on constitutionally permissible ways to further
    the mandate of Section 257 of the Telecommunications Act of
    1996,[^26] which directs the Commission to identify and eliminate
    market entry barriers for small telecommunications businesses, and
    Section 309(j) of the Communications Act of 1934, as amended ("the
    Act"),[^27] which requires the Commission to further opportunities
    in the allocation of spectrum-based services for small and rural
    businesses and businesses owned by women and minorities.[^28]

9.  We invite comment on MMTC's proposal that the Commission define SDBs
    for purposes of analyzing policy initiatives in support of media
    ownership diversity. We ask that commenters address whether use of a
    proposed definition raises any constitutional concerns, practical
    concerns, or other considerations unique to the Commission\'s policy
    objectives, and we invite comment on its impact on small entities.
    To ensure full consideration of this issue, we will consolidate the
    MB Docket No. 04-228 proceeding commenced in 2004 with our review of
    the media ownership rules.

### MMTC Proposals

10. We seek comment on the various proposals for increasing minority and
    female broadcast ownership identified by MMTC. As MMTC suggests, we
    have attached its description of these proposals as Appendix A.[^29]
    The proposals include: (1) those that MMTC submitted for
    consideration in the 2002 biennial review proceeding;[^30] (2) the
    MMTC proposals the Commission listed in the *2002 Biennial Review
    Order*, which the Third Circuit ordered the Commission to address on
    remand;[^31] and (3) media-related recommendations of the Diversity
    Committee.[^32] In discussing these proposals, commenters should
    address the various questions and issues set forth below.

11. In addition, as MMTC requests, we also seek comment on the efficacy
    of the FSSR in promoting minority and female broadcast
    ownership.[^33] When out-of-market purchasers for a station are
    unavailable, the Commission permits ownership rule waivers for
    failed, failing and unbuilt stations because the in-market purchase
    of such stations is preferable to having frequencies go unused, even
    where the combination would violate the local television ownership
    rule.[^34] In the *2002 Biennial Review Order*, the Commission
    determined that applicants seeking a waiver of the local television
    ownership rule no longer needed to comply with the FSSR requirement
    that they must first demonstrate the unwillingness of out-of-market
    buyers to offer a reasonable price for the failed, failing, or
    unbuilt station.[^35] In eliminating the FSSR requirement, the
    Commission found that the efficiencies associated with the operation
    of two same-market stations, absent unusual circumstances, will
    always result in the buyer being the owner of another station in the
    same market.[^36] In remanding the Commission's repeal of the FSSR,
    the Third Circuit stated that the purpose of the FSSR was to ensure
    that minority broadcasters received notification of these station
    sales.[^37] The Third Circuit found that the Commission's decision
    was arbitrary and capricious because it failed to discuss the effect
    of the repeal on minority ownership.[^38]

12. We invite comment on the extent to which the FSSR or another
    construction of the rule could promote minority and female
    ownership. We ask commenters to provide concrete evidence rather
    than generalized assertions.

## Constitutional Issues

13. Any measures to facilitate minority and female broadcast entry that
    are based on racial or gender classifications must satisfy the
    heightened constitutional standards that apply to governmental
    preferences for minorities and women under the Equal Protection
    Clause. The Supreme Court's ruling in *Adarand* requires that
    governmental classifications based on race must be analyzed under
    strict scrutiny, and are constitutional only if such classifications
    are narrowly tailored measures that further a compelling
    governmental interest.[^39] Gender classifications are subject to
    intermediate scrutiny, under which the government's action must be
    substantially related to the achievement of an important
    objective.[^40] In discussing a proposal targeted or designed to
    promote minority and female broadcast ownership, commenters should
    describe, consistent with relevant case law, how the proposal would
    satisfy constitutional standards. In particular, proponents of
    initiatives that rely on a definition of SDBs should explain in
    detail whether and how the definition would satisfy constitutional
    standards.

## Statutory Authority

14. We also seek further comment on the Commission's statutory authority
    to address issues of minority and female ownership. Section 257 of
    the Act requires the Commission to identify and eliminate "market
    entry barriers for entrepreneurs and other small businesses in the
    provision and ownership of telecommunications services and
    information services."[^41] The statutory provision also
    specifically directs the Commission to "promote the policies and
    purposes of this Act favoring diversity of media voices" in carrying
    out its Section 257 responsibilities.[^42] In addition, in 1996,
    Congress amended Section 1 of the Act to make it clear that the
    Commission's mandate is to regulate interstate and foreign
    communications services so that they are "available, so far as
    possible, to all people of the United States, *without
    discrimination on the basis of race, color, religion, national
    origin or sex . . .* ."[^43] We ask commenters to address whether
    and how these statutory provisions support the Commission's efforts
    to promote media ownership diversity.

15. Further, Section 309(j) of the Act requires the Commission to
    promote the dissemination of licenses to a wide variety of
    applicants, including members of minority groups and women. Section
    309(j) directs the Commission to "ensure that . . . businesses owned
    by members of minority groups and women are given the opportunity to
    participate in the provision of spectrum-based services."[^44] In
    addition, Section 309(j)(3)(B) requires the Commission, in
    establishing eligibility criteria and bidding methodologies, to
    promote "economic opportunity and competition . . . by avoiding
    excessive concentration of licenses and by disseminating licenses
    among a wide variety of applicants, including small businesses,
    rural telephone companies, and businesses owned by members of
    minority groups and women."[^45]

16. We invite comment on the Commission's statutory authority to
    facilitate the licensing of spectrum-based services to a diversity
    of entities, including businesses owned by minority groups and
    women. Commenters should also address the limitations of these
    statutory provisions in light of recent court decisions as
    discussed, *supra*, regarding equal protection. We also solicit
    comment on any further statutory provisions that would enable the
    Commission to address ownership diversity, particularly in terms of
    fostering diversity of ownership among minorities and women.

# Procedural matters

## Comment Information

17. Pursuant to sections 1.415 and 1.419 of the Commission's rules, 47
    C.F.R. §§ 1.415, 1.419, interested parties may file comments and
    reply comments on or before the dates indicated on the first page of
    this document. Comments may be filed using: (1) the Commission's
    Electronic Comment Filing System (ECFS); (2) the Federal
    Government's eRulemaking Portal; or (3) by filing paper copies. *See
    Electronic Filing of Documents in Rulemaking Proceedings*, 63 FR
    24121 (May 1, 1998).

-   Electronic Filers: Comments may be filed electronically using the
    Internet by accessing the ECFS: <http://www.fcc.gov/cgb/ecfs/> or
    the Federal eRulemaking Portal:
    [http://www.regulations.gov](http://www.regulations.gov/). Filers
    should follow the instructions provided on the website for
    submitting comments.

    -   For ECFS filers, if multiple docket or rulemaking numbers appear
        in the caption of this proceeding, filers must transmit one
        electronic copy of the comments for each docket or rulemaking
        number referenced in the caption. In completing the transmittal
        screen, filers should include their full name, U.S. Postal
        Service mailing address, and the applicable docket or rulemaking
        number. Parties may also submit an electronic comment by
        Internet e-mail. To get filing instructions, filers should send
        an e-mail to <ecfs@fcc.gov>, and include the following words in
        the body of the message, "get form." A sample form and
        directions will be sent in response.

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-   Paper Filers: Parties who choose to file by paper must file an
    original and four copies of each filing. If more than one docket or
    rulemaking number appears in the caption of this proceeding, filers
    must submit two additional copies for each additional docket or
    rulemaking number.

> Filings can be sent by hand or messenger delivery, by commercial
> overnight courier, or by first-class or overnight U.S. Postal Service
> mail (although we continue to experience delays in receiving U.S.
> Postal Service mail). All filings must be addressed to the
> Commission's Secretary, Office of the Secretary, Federal
> Communications Commission.

-   The Commission's contractor will receive hand-delivered or
    messenger-delivered paper filings for the Commission's Secretary at
    236 Massachusetts Avenue, NE, Suite 110, Washington, DC 20002. The
    filing hours at this location are 8:00 a.m. to 7:00 p.m. All hand
    deliveries must be held together with rubber bands or fasteners. Any
    envelopes must be disposed of [before]{.underline} entering the
    building.

-   Commercial overnight mail (other than U.S. Postal Service Express
    Mail and Priority Mail) must be sent to 9300 East Hampton Drive,
    Capitol Heights, MD 20743.

-   U.S. Postal Service first-class, Express, and Priority mail should
    be addressed to 445 12^th^ Street, SW, Washington DC 20554.

> People with Disabilities: To request materials in accessible formats
> for people with disabilities (Braille, large print, electronic files,
> audio format) send an e-mail to <fcc504@fcc.gov> or call the Consumer
> & Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432
> (tty).

## Regulatory Flexibility Act

18. As required by the Regulatory Flexibility Act,[^46] the Commission
    prepared an Initial Regulatory Flexibility Analysis ("IRFA") in the
    initial *Notice of Proposed Rulemaking* in the media ownership
    proceeding and a Supplemental Initial Regulatory Flexibility
    Analysis Act ("Supplemental IRFA") in the initial *Further Notice of
    Proposed Rulemaking* in the media ownership proceeding.[^47] We have
    now prepared a Second Supplemental IRFA, which is set forth in
    Appendix B. Written public comments are requested on the Second
    Supplemental IRFA. These comments must be filed in accordance with
    the same filing deadlines for comments on the *Second Further
    Notice*, and should have a separate and distinct heading designating
    them as responses to the Second Supplemental IRFA*.*

## Paperwork Reduction Act

19. This document does not contain proposed information collections
    subject to the Paperwork Reduction Act of 1995 ("PRA"), Pub. L. No.
    104-13, 109 Stat. 163 (1995). Therefore, it does not contain any
    proposed new or modified "information collection burden for small
    business concerns with fewer than 25 employees," pursuant to the
    Small Business Paperwork Relief Act of 2002, Pub. L. No. 107-198,
    116 Stat. 729 (2002).[^48] However, depending on the rules adopted
    as a result of this *Second Further Notice*, the report and order
    ultimately adopted in this proceeding may contain information
    collections. The Commission will provide a period for public comment
    on any PRA burdens contained in the report and order and will submit
    such burdens to the Office of Management and Budget for approval
    when the report and order is adopted and released.

## Ex Parte Information

20. This is a permit-but-disclose notice and comment rulemaking
    proceeding. Ex parte presentations are permitted, except during the
    Sunshine Agenda period, provided that they are disclosed as provided
    in the Commission's rules.[^49]

21. *[Contact Information.]{.underline}* The Media Bureau contacts for
    this proceeding are Mania Baghdadi and Jamila Bess Johnson, both
    at (202) 418-7200. Press inquiries should be directed to Mary
    Diamond at (202) 418-2388.

# ordering clauses

22. Accordingly, IT IS ORDERED, that pursuant to the authority contained
    in sections 1, 2(a), 4(i), 257, 303, 307, 309, 310, and 613 of the
    Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 152(a),
    154(i), 257, 303, 307, 309, 310, and 533, and section 202(h) of the
    Telecommunications Act of 1996, this *Second Further Notice of
    Proposed Rulemaking* IS ADOPTED.

23. IT IS FURTHER ORDERED that, pursuant to the authority contained in
    sections 1, 2(a), 4(i), 257, 303, 307, 309, 310, and 613 of the
    Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 152(a),
    154(i), 257, 303, 307, 309, 310, and 533, and section 202(h) of the
    Telecommunications Act of 1996, NOTICE IS HEREBY GIVEN of the
    proposals described in this *Second Further Notice of Proposed
    Rulemaking.*

24. IT IS FURTHER ORDERED that MB Docket No. 04-228 SHALL BE
    consolidated with MB Docket No. 06-121 *et al.*

25. IT IS FURTHER ORDERED that MMTC's Motion for Withdrawal of the
    Further Notice of Proposed Rule Making and for the Issuance of a
    Revised Further Notice is granted to the extent described herein,
    and in all other respects, denied.

26. IT IS FURTHER ORDERED that MMTC's Request for Ruling on its Motion
    for Withdrawal of the Further Notice of Proposed Rulemaking and for
    the Issuance of a Revised Further Notice is granted to the extent
    described herein, and in all other respects, denied.

27. IT IS FURTHER ORDERED that comments and reply comments with regard
    to those matters raised in this *Second Further Notice of Proposed
    Rulemaking* will be due October 1, 2007 and October 16, 2007,
    respectively.

28. IT IS FURTHER ORDERED that the Commission's Consumer and
    Governmental Affairs Bureau, Reference Information Center, SHALL
    SEND a copy of this *Second Further Notice of Proposed*

    *Rulemaking,* including the Second Supplemental Initial Regulatory
    Flexibility Analysis, to the Chief Counsel for Advocacy of the Small
    Business Administration.

FEDERAL COMMUNICATIONS COMMISSION

Marlene H. Dortch

Secretary

**APPENDIX A**

**Minority Ownership Proposals and Suggestions** [^50]

Section I (items 1-14) contains the 14 proposals of the Diversity and
Competition Supporters ("MMTC") in MM Docket No. 02-277. The FCC's
Advisory Committee on Diversity for Communications in the Digital Age
("Diversity Committee") also proposed eight of these items, as noted
therein.

Section II (items 15-26) contains 12 informal suggestions made by the
Minority Media and Telecommunications Council at a November 6, 2002
meeting of stakeholders at the Commerce Department. [These were not the
Diversity and Competition Supporters' proposals in the media ownership
proceeding; rather, they were the Minority Media and Telecommunications
Council's informal suggestions to stakeholders]{.underline}. The
Diversity Committee also proposed one of these items, as noted therein.

Section III (items 27-34) contains recommendations issued by the
Diversity Committee that do not track the proposals or suggestions in
items 1-26. Among these, items 27-30 are nonregulatory recommendations,
and items 31-34 are regulatory recommendations. The Diversity Committee
has propounded 17 recommendations germane to media ownership: eight
tracking items in Section I, one tracking an item in Section II, and the
eight items in Section III.

**[SECTION I: MMTC PROPOSALS IN MM DOCKET 02-277]{.underline}**

1\. Equal transactional opportunity policy \-- barring discrimination on
the basis of race or gender in broadcast transactions

> [Location(s) in Record]{.underline}: Initial Comments of Diversity and
> Competition Supporters, MB Docket No. 02-277 (filed January 2, 2003)
> ("MMTC 2003 Comments"), pp. 115-120; MMTC Letter to Hon. Michael
> Powell, MM Docket No. 02-277 (April 28, 2003) ("MMTC April 28, 2003
> [Ex Parte]{.underline}"), pp. 11-19.
>
> [Nature of Item]{.underline}: Formal rulemaking proposal
>
> [Summary of Item]{.underline}: Race and gender discrimination in the
> sale of broadcast stations would be banned, consistent with 47 U.S.C.
> §151. The seller would certify compliance by checking a box on a Form
> 314 or Form 315 application.
>
> [Year First Proposed]{.underline}: 1994
>
> [Parallel Recommendation of Diversity Committee]{.underline}:
> Transactional Transparency Recommendations, May 14, 2004, p. 4; White
> Paper on Equal Transactional Opportunity, April 29, 2004
>
> [Relevance of SDB Definition: No]{.underline}

2\. Transfer Restriction of Grandfathered Clusters to SDBs

> [Location(s) in Record]{.underline}: MMTC 2003 Comments, pp. 107-109
>
> [Nature of Item]{.underline}: Formal rulemaking proposal
>
> [Summary of Item]{.underline}: The seller of a grandfathered cluster
> would not have to break it up if it were sold to an SDB. In the 2002
> Biennial Review, the Commission adopted a provision for the transfer
> intact of a grandfathered cluster, but decided that small businesses,
> rather than SDBs, would constitute the class of eligible buyers. MMTC
> seeks to develop a definition of "socially and economically
> disadvantaged business" (SDB) that would be appropriate for
> broadcasting and be constitutionally sound. SDBs are a subset of small
> businesses. Like other small businesses, they are economically
> disadvantaged; but unlike other small businesses, they are also
> socially disadvantaged. Their social disadvantage stems from
> individualized factors or from their membership in a class (such as a
> racial group in a particular industry) for which discrimination has
> inhibited entry and financing. An SDB definition is desirable because
> it would be less dilute in its impact on minorities by omitting, for
> example, the children of millionaires who, as new entrants, can
> qualify as small businesses although they have never been
> disadvantaged.
>
> [Year First Proposed]{.underline}: 2003
>
> [Parallel Recommendation of Diversity Committee]{.underline}: none
>
> [Relevance of SDB Definition]{.underline}: Yes

3\. Structural rule waiver for selling a station to an SDB, where the
sale to the SDB is ancillary to a transaction that otherwise would be
barred by an ownership rule

> [Location(s) in Record]{.underline}: MMTC 2003 Comments, p. 103
>
> [Nature of Item]{.underline}: Formal rulemaking proposal
>
> [Summary of Item]{.underline}: A company contemplating a transaction
> that would otherwise be barred by an ownership rule (perhaps one that
> would qualify in the future, [e.g.]{.underline}, if the Commission
> adopted a staged implementation of deregulation program;
> [see]{.underline} item 13 [infra]{.underline}) would be permitted to
> complete the transaction if it sells stations to SDBs.
>
> [Year First Proposed]{.underline}: 1995 (concept originally advanced
> by NTIA in 1977)
>
> [Parallel Recommendation of Diversity Committee]{.underline}:
> Financial Issues Recommendations, June 14, 2004, pp. 17-18; White
> Paper on Incentive-Based Regulations, May 23, 2004, pp. 5-6
>
> [Relevance of SDB Definition]{.underline}: Yes

4\. Tolling buildout deadlines for selling expiring construction permits
to SDBs

> [Location(s) in Record]{.underline}: MMTC 2003 Comments, pp. 112-115
> (originally a petition for rulemaking filed by Entravision Holdings
> LLC, RM-9567 (filed March 10, 1998))
>
> [Nature of Item]{.underline}: Formal rulemaking proposal
>
> [Summary of Item]{.underline}: In 1998, Entravision submitted a
> petition for rulemaking which sought to revise the construction permit
> expiration standard established pursuant to 47
>
> U.S.C. §§319(a)-(b) and implemented in 47 C.F.R. §73.3598. Entravision
> proposed that the Commission allow holders of expiring construction
> permits to sell them to entities in which minorities own at least 20%
> of the equity, or to entities which commit to serve the programming
> needs of minority or foreign language groups for at least 80% of their
> operating time. MMTC proposed a modification of Entravision's concept
> to make it applicable to all SDBs.
>
> [Year First Proposed]{.underline}: 1998
>
> [Parallel Recommendation of Diversity Committee]{.underline}:
> Financial Issues Recommendations, June 14, 2004, pp. 17-18; White
> Paper on Incentive-Based Regulations, May 23, 2004, pp. 9-10
>
> [Relevance of SDB Definition]{.underline}: Yes

5\. Structural rule waivers for creating incubator programs

> [Location(s) in Record]{.underline}: MMTC 2003 Comments, pp. 104-105
>
> [Nature of Item]{.underline}: Formal rulemaking proposal
>
> [Summary of Item]{.underline}: The Commission would act on
> still-pending incubator plans developed in 1992 by Chairman Sikes and
> by NABOB. With constitutionally required modifications, these plans
> would allow a company to acquire more than the otherwise-allowable
> number of stations in a market if the company establishes a program
> that substantially promotes ownership by disadvantaged businesses. The
> incubator programs could encompass management or technical assistance,
> loan guarantees, direct financial assistance through loans or equity
> investment, training and business planning assistance.
>
> [Year First Proposed]{.underline}: 1992
>
> [Parallel Recommendation of Diversity Committee]{.underline}:
> Financial Issues Recommendations, June 14, 2004, pp. 17-18; White
> Paper on Incentive-Based Regulations, May 23, 2004, pp. 6-7
>
> [Relevance of SDB Definition]{.underline}: Yes

6\. Bifurcation of channels for share-times with SDBs

> [Location(s) in Record]{.underline}: Comments of the Minority Media
> and Telecommunications Council in MB Docket 01-317 (Radio Ownership)
> (filed March 19, 2002) ("MMTC 2002 Comments"), pp. 111-173; Reply
> Comments of the Minority Media and Telecommunications Council in MB
> Docket 01-317 (Radio Ownership) (filed May 8, 2002) ("MMTC 2002 Reply
> Comments"), pp. 6-10; MMTC 2003 Comments, pp. 106-107
>
> [Nature of Item]{.underline}: Formal rulemaking proposal
>
> [Summary of Item]{.underline}: The Commission would create a new class
> of "Free Speech Stations." They would be independently owned by SDBs,
> have at least 20 non-nighttime hours per week of airtime, and be
> primarily devoted to non-entertainment programming. A Free Speech
> Station would share time on the same channel with a largely
> deregulated "Entertainment Station." A cluster owner that bifurcates a
> channel to accommodate a Free Speech Station and an Entertainment
> Station could buy another fulltime station in the market by taking
> advantage of Section 202(b)(2) of the Telecommunications Act, which
> allows for an exception to the local radio ownership rule when a new
> station is created. That additional fulltime station would also be
> bifurcated into a Free Speech and an Entertainment Station. In this
> way, a cluster could grow steadily up to the limits allowed by
> antitrust law.
>
> [Year First Proposed]{.underline}: 2002
>
> [Parallel Recommendation of Diversity Committee]{.underline}:
> Financial Issues Recommendations, June 14, 2004, pp. 17-18; White
> Paper on Incentive-Based Regulations, May 23, 2004, pp. 7-8
>
> [Relevance of SDB Definition]{.underline}: Yes

7\. Structural rule waivers for financing construction of an SDB's
unbuilt station

> [Location(s) in Record]{.underline}: MMTC 2003 Comments, pp. 109-110
>
> [Nature of Item]{.underline}: Formal rulemaking proposal
>
> [Summary of Item]{.underline}: When a broadcaster provides an SDB with
> an equity/debt plus interest ("EDP Interest") that enables the SDB to
> build out an unbuilt permit, (1) the EDP Interest should be deemed
> nonattributable, and (2) the entity providing the EDP Interest should
> be reserved a place in line to subsequently duopolize or crossown
> another same-market station. This reserved place in the queue, in
> markets where only a limited number of new combinations can be created
> under the local ownership rules, would provide an incentive to
> broadcasters to assist SDBs to build out their unbuilt permits.
>
> [Year First Proposed]{.underline}: 1999
>
> [Parallel Recommendation of Diversity Committee]{.underline}: none
>
> [Relevance of SDB Definition]{.underline}: Yes

8\. Grandfathering of nonattribution of EDP (equity debt-plus) interests
in SDBs

> [Location(s) in Record]{.underline}: MMTC 2003 Comments, pp. 110-112
>
> [Nature of Item]{.underline}: Formal rulemaking proposal
>
> [Summary of Item]{.underline}: The nonattributable nature of EDP
> Interests in SDBs would be grandfathered, irrespective of whether the
> entity providing the EDP Interest (the "EDP Provider") subsequently
> acquires other properties which otherwise would cause the EDP Interest
> to be attributable to the EDP Provider. These arrangements would be
> permissible where (1) the EDP Provider merges with, acquires, or is
> acquired by a company unrelated to the company holding a
> nonattributable EDP Interest in an SDB (an "Unrelated Transaction");
> (2) the Unrelated Transaction occurs at least a year after the EDP
> relationship was formed; (3) the Unrelated Transaction would otherwise
> cause the EDP Provider's EDP Interest in the SDB to become
> attributable; and (4) the EDP Provider and the SDB make an affirmative
> showing that the EDP Provider does not exercise undue influence over
> the SDB.
>
> [Year First Proposed]{.underline}: 1999
>
> [Parallel Recommendation of Diversity Committee]{.underline}:
> Financial Issues Recommendations, June 14, 2004, pp. 17-18; White
> Paper on Incentive-Based Regulations, May 23, 2004, pp. 8-9
>
> [Relevance of SDB Definition]{.underline}: Yes

9\. Mathematical touchstones: tipping points for the nonviability of
independently owned radio stations in a consolidating market, and
quantifying source diversity

> [Location(s) in Record]{.underline}: MMTC 2002 Reply Comments, pp.
> 22-27; MMTC Reply Comments, pp. 17-24; MMTC April 28, 2003 [Ex
> Parte]{.underline}, pp. 6-7
>
> [Nature of Item]{.underline}: Formal rulemaking proposal
>
> [Summary of Item]{.underline}: MMTC offered two formulas suitable for
> crafting and implementing rules to promote diversity: (1) The "Tipping
> Point Formula" established how the Commission could ensure that local
> radio markets could preserve independent owners. This formula was
> based on the premise that independent owners each need determinable
> and quantifiable revenue streams in order to stay afloat and provide
> service to the public. The formula acknowledges the existence of a
> tipping point in the distribution of radio revenue in a market between
> cluster owners and independents. When the combined revenues of a
> market's cluster owners exceed this tipping point, the independents
> can no longer survive. By identifying this tipping point, the formula
> provides a rational basis for determining whether a transaction would
> limit diversity. (2) The "Source Diversity Formula" expresses
> consumers' utility derived from marginal increases in source
> diversity. The Source Diversity Formula is based on the premise that
> increases in consumer utility flow from their access to additional
> sources, with diminishing returns to scale. This formula would require
> field-testing before it could be applied in practice to measure source
> diversity.
>
> [Year First Proposed]{.underline}: 2002
>
> [Parallel Recommendation of Diversity Committee]{.underline}: none
>
> [Relevance of SDB Definition]{.underline}: Yes

10\. Zero tolerance for ownership rule abuse

> [Location(s) in Record]{.underline}: MMTC 2003 Comments, pp. 123-127
>
> [Nature of Item]{.underline}: Formal rulemaking proposal
>
> [Summary of Item]{.underline}: Structural abuse is endemic due to
> limited enforcement resources, the ease of concealing abuse, and the
> high financial rewards for rule breaking. Structural rule relaxation
> would be easier to accept if the Commission holds the line on abuse
> through a Zero Tolerance Policy focused on clear standards, pro-active
> investigations, evidentiary hearings, and strict penalties for rule
> violations.
>
> [Year First Proposed]{.underline}: 2003
>
> [Parallel Recommendation of Diversity Committee]{.underline}: none
>
> [Relevance of SDB Definition]{.underline}: No

11\. Use of Joint Operating Agreements (JOAs) as an alternative to Local
Marketing Agreements (LMAs) and Joint Sales Agreements (JSAs)

> [Location(s) in Record]{.underline}: Comments of the Communications
> Workers of America (CWA) in MB Docket 02-277 (filed January 2, 2003),
> pp. 4-5 and 48; MMTC Reply Comments, pp. 15-16
>
> [Nature of Item]{.underline}: Formal rulemaking proposal
>
> [Summary of Item]{.underline}: The Commission requires ownership
> attribution of most JSAs and LMAs. While this step promotes diversity,
> it also reduces the options available to financially troubled
> facilities seeking to survive. CWA proposed that JOAs, such as those
> used in the newspaper industry, could be used to help companies
> survive and to promote diversity at the same time. A JOA adapted to
> broadcasting would leave each station's program creation, program
> organization and distribution, and sales strategy and implementation
> in the hands of each station's licensees. At the same time, a genuine
> JOA allows both stations to take advantage of operational synergies
> for non-program, non-sales related functions, such as accounting,
> engineering, and physical plant management. A JOA would not be
> attributable.
>
> [Year First Proposed]{.underline}: 2003
>
> [Parallel Recommendation of Diversity Committee]{.underline}: none
>
> [Relevance of SDB Definition]{.underline}: No

12\. Opening FM spectrum for new entrants

> [Location(s) in Record]{.underline}: MMTC 2003 Comments, pp. 128-141;
> MMTC April 28, 2003 [Ex Parte]{.underline}, pp. 10-11
>
> [Nature of Item]{.underline}: Formal rulemaking proposal
>
> [Summary of Item]{.underline}: The Commission has systematically
> broadened spectrum availability as a means of balancing consolidation
> with new entry. MMTC proposed three methods by which the FCC could
> open the FM radio spectrum to new entrants:
>
> \(1\) create two new classes of FM stations suitable for serving small
> communities; (2) perform a comprehensive engineering search of the FM
> spectrum to identify the most-needed new drop-in opportunities; and
> (3) replace FM station classes with pure interference-based criteria.
>
> [Year First Proposed]{.underline}: 2003
>
> [Parallel Recommendation of Diversity Committee]{.underline}:
> Recommendation on Diversifying Ownership in the Commercial FM Radio
> Band, October 4, 2004, as amplified by the Recommendations of the
> Subcommittee on New Technologies, June 11, 2004, containing eight
> relevant subparts: (1) create medium power FM stations; (2) replace
> the FM Table with interference-based allotment criteria; (3) allow
> Class A stations to use low towers and higher-than-standard power
> while retaining appropriate ERP levels; (4) conduct a comprehensive
> channel search for new FM allotments; (5) harmonize regional
> interference protection standards; (6) repeal the third-adjacent FM
> contour rules; (7) relax the community of license and transmitter site
> rules; and (8) authorize interference agreements.
>
> [Relevance of SDB Definition]{.underline}: No

13\. Staged implementation of deregulation, coupled with a negotiated
rulemaking

> [Location(s) in Record]{.underline}: MMTC 2003 Comments, pp. 84-101
> and 145-147; Comments of Paxson Communications Corporation, MB Docket
> 02-277 (filed January 3, 2003), pp. 6-14; MMTC Reply Comments, pp.
> 25-32
>
> [Nature of Item]{.underline}: Formal rulemaking proposal
>
> [Summary of Item]{.underline}: By implementing deregulation in stages,
> the Commission could measure the impact of deregulation while it is
> underway, and implement mid-course corrections when needed to protect
> diversity, competition, localism and minority ownership. MMTC proposed
> that the Commission would implement its new ownership rules over a
> ten-year period in five two-year stages. In even numbered years, the
> Commission would use quantitative tests to measure diversity,
> competition, localism and minority ownership. If these tests showed
> ill health on any of these four factors, the Commission would take
> corrective steps in the odd-numbered years. If a subsequent even-year
> measurement showed continued ill health, the Commission could apply
> the brakes until market conditions change. Paxson Communications
> offered a similar proposal. The coefficients of a staged
> implementation plan could be worked out in a negotiated rulemaking
> involving representatives of all of the stakeholders in the
> proceeding.
>
> [Year First Proposed]{.underline}: 2003
>
> [Parallel Recommendation of Diversity Committee]{.underline}: none
>
> [Relevance of SDB Definition]{.underline}: Yes

14\. Market-based, tradable Diversity Credits as an alternative to voice
tests

> [Location(s) in Record]{.underline}: MMTC Reply Comments, pp. 34-38;
> MMTC April 28, 2003 [Ex Parte]{.underline}, pp. 8-10
>
> [Nature of Item]{.underline}: Formal rulemaking proposal
>
> [Summary of Item]{.underline}: A system of market-based diversity
> credits would be created as an alternative to voice tests. A quantity
> of diversity credits would be given to SDBs, commensurate with the
> extent of their social and economic disadvantages. Diversity credits
> would also be given to the seller at the closing of a transaction that
> would result in greater structural diversity. If a transaction would
> add to concentration, the buyer would return a number of diversity
> credits to the Commission when the transaction closes. Finally,
> companies could buy or sell diversity credits to one another, thereby
> providing a market-based source of access to capital for SDBs. A
> similar paradigm used by the EPA has replaced much command-and-control
> environmental regulation. Diversity credits would (1) incentivize
> diversity, (2) disincentivize consolidation, (3) place on the
> beneficiaries of consolidation the responsibility of paying for the
> remediation of some of consolidation's ill effects, (4) serve as a
> mechanism to provide access to capital to SDBs, (5) capture the
> measure of diversity more precisely than an inherently approximate
> voice test, and (6) allow for easier administration than a system of
> voice tests and waivers.
>
> [Year First Proposed]{.underline}: 2003
>
> [Parallel Recommendation of Diversity Committee]{.underline}:
> Transactional Transparency Recommendations, May 14, 2004, p. 3; White
> Paper on Diversity Credits, May 22, 2004
>
> [Relevance of SDB Definition]{.underline}: Yes

**[SECTION II: MMTC'S INFORMAL SUGGESTIONS TO
STAKEHOLDERS]{.underline}**

15\. Equity for specific and contemplated future acquisitions

> [Location(s) in Record]{.underline}: MMTC, Background Materials:
> Omnibus Media Ownership Proceeding Stakeholders Meeting, U.S.
> Department of Commerce, November 6,\
> 2002, Tab 10 ("Twelve Minority Ownership Solutions")
>
> [Nature of Item]{.underline}: Private industry initiative; [but
> see]{.underline} item 29 [infra]{.underline}, proposing collaborative
> role for FCC in creating a fund of funds)
>
> [Summary of Item]{.underline}: Broadcast companies would collaborate
> with one another and with institutional investors to create new
> targeted funds specializing in providing equity for broadcast new
> entrants.
>
> [Year First Proposed]{.underline}: 1977
>
> [Parallel Recommendation of the Diversity Committee]{.underline}: none
> ([but see]{.underline} item 29 [infra]{.underline})
>
> [Relevance of SDB Definition]{.underline}: No

16\. Debt on favorable terms -- enhanced outreach and access to debt
financing by major financial institutions

> [Location(s) in Record]{.underline}: Twelve Minority Ownership
> Solutions
>
> [Nature of Item]{.underline}: Private industry initiative ([but
> see]{.underline} items 28 and 29 [infra]{.underline}, proposing
> collaborative role for FCC)
>
> [Summary of Item]{.underline}: Broadcast companies would solicit
> commitments from large institutional lenders to work with new entrants
> in providing debt financing for acquisitions, with or without the
> participation of the SBA as a guarantor.
>
> [Year First Proposed]{.underline}: 1977
>
> [Parallel Recommendation of Diversity Committee]{.underline}: none
> ([but see]{.underline} items 28 and 29 [infra]{.underline})
>
> [Relevance of SDB Definition]{.underline}: No

17\. Investments in institutions specializing in minority and small
business financing

> [Location(s) in Record]{.underline}: Twelve Minority Ownership
> Solutions
>
> [Nature of Item]{.underline}: Private industry initiative
>
> [Summary of Item]{.underline}: Broadcast companies would invest in
> existing funds with proven track records of success as participants in
> the financing of new entrants. The Quetzal/J.P. Morgan Fund, the
> Telecommunications Development Fund (TDF), the Broadcast Capital Fund
> and other Small Business Investment Corporations (SBICs) are examples
> of these funds.
>
> [Year First Proposed]{.underline}: 1976\
> [Parallel Recommendation of Diversity Committee]{.underline}: none\
> [Relevance of SDB Definition]{.underline}: No

18\. Assistance -- cash and in-kind -- to institutions that train future
minority media owners

> [Location(s) in Record]{.underline}: Twelve Minority Ownership
> Solutions
>
> [Nature of Item]{.underline}: Private industry initiative
>
> [Summary of Item]{.underline}: Media institutions would provide
> assistance to colleges and other programs that provide minorities the
> skill sets needed to transition from management to ownership. Examples
> of these institutions are Historically Black Colleges and Universities
> (HBCUs), Hispanic Serving Institutions (HSIs) and other programs,
> particularly the National Association of Broadcasters Education Fund
> (NABEF)'s Broadcast Leadership Training (BLT) Program.
>
> [Year First Proposed]{.underline}: 1992\
> [Parallel Recommendation of Diversity Committee]{.underline}: none\
> [Relevance of SDB Definition]{.underline}: No

19\. Creation of business planning centers

> [Location(s) in Record]{.underline}: Twelve Minority Ownership
> Solutions
>
> [Nature of Item]{.underline}: Private industry initiative
>
> [Summary of Item]{.underline}: Business planning centers, typically
> affiliated with universities, would work one-on-one with minority
> entrepreneurs as they develop business plans and strategies, seek
> financing and pursue acquisitions.
>
> [Year First Proposed]{.underline}: 1992\
> [Parallel Recommendation of Diversity Committee]{.underline}: none\
> [Relevance of SDB Definition]{.underline}: No

20\. Executive loans, and engineers on loan to minority owned companies
and applicants

> [Location(s) in Record]{.underline}: Twelve Minority Ownership
> Solutions
>
> [Nature of Item]{.underline}: Private industry initiative
>
> [Summary of Item]{.underline}: The broadcasting industry would create
> an executive loan program, following the examples of similar programs
> in other industries. Loaned executives or engineers would work on the
> staffs of minority broadcasters fulltime for six months to two years.
>
> [Year First Proposed]{.underline}: 1992\
> [Parallel Recommendation of Diversity Committee]{.underline}: none\
> [Relevance of SDB Definition]{.underline}: No

21\. Enhanced access to broadcast transactions

[Location(s) in Record]{.underline}: Twelve Minority Ownership Solutions

[Nature of Item]{.underline}: Private industry initiative

[Summary of Item]{.underline}: Sellers would give minority new entrants
a first look at their

properties, allowing them a headstart for due diligence and financing.

[Year First Proposed]{.underline}: 2002

[Parallel Recommendation of Diversity Committee]{.underline}: none

[Relevance of SDB Definition]{.underline}: No

22\. Nondiscrimination provisions in advertising sales contracts,
designed to expressly avoid such

practices as "no urban/no Spanish" dictates

[Location(s) in Record]{.underline}: Twelve Minority Ownership Solutions

> [Nature of Item]{.underline}: Contemplates FCC or FTC policy statement
> or rule
>
> [Summary of Item]{.underline}: Rep firms, ad agencies, broadcasters
> and advertisers would agree to use a standard provision in advertising
> sales contracts that would confirm that the parties to these contracts
> will not participate in a scheme to restrict advertising because of
> the membership in a minority group of the targets of the foregone
> advertising. The FTC or FCC would obtain certifications that this
> contract provision is always used in ad sales contracts.
>
> [Year First Proposed]{.underline}: 1984
>
> [Parallel Recommendation of Diversity Committee]{.underline}: none
>
> [Relevance of SDB Definition]{.underline}: No

23\. In-house incubation and mentoring programs for future minority
owners

> [Location(s) in Record]{.underline}: Twelve Minority Ownership
> Solutions
>
> [Nature of Item]{.underline}: Private industry initiative
>
> [Summary of Item]{.underline}: Established media companies would
> develop their own in-house programs to incubate and mentor future
> minority owners, including their own executives who might wish to
> transition into ownership. These initiatives would have no regulatory
> tie-ins.
>
> [Year First Proposed]{.underline}: 1976
>
> [Parallel Recommendation of Diversity Committee]{.underline}: none
>
> [Relevance of SDB Definition]{.underline}: No

24\. Enactment of tax deferral legislation designed, to the extent
possible, to foster minority ownership

> [Location(s) in Record]{.underline}: Twelve Minority Ownership
> Solutions
>
> [Nature of Item]{.underline}: Legislation; FCC has recommended it to
> Congress several times
>
> [Summary of Item]{.underline}: The Commission would continue to
> recommend to Congress the adoption of a tax deferral program to
> replace the former Tax Certificate Policy, under which a seller was
> able to defer capital gains taxes on the sale of a media property to a
> minority controlled firm. The new program would be focused on SDBs
> rather than only on minorities, and it would be extended to
> telecommunications. In recent years, Senator John McCain, Congressman
> Charles Rangel and Congressman Bobby Rush have each introduced
> legislation along these lines.
>
> [Year First Proposed]{.underline}: 1977; in effect from 1978-1995 as
> the Tax Certificate Policy ([see]{.underline} 68 FCC2d 979 (1978));
> repealed by Congress in 1995; restoration often proposed since 1995
>
> [Parallel Recommendation of Diversity Committee]{.underline}:
> Financial Issues Recommendations, June 14, 2004, pp. 14-15;
> Transactional Transparency Recommendations, May 14, 2004, pp. 2-3
>
> [Relevance of SDB Definition]{.underline}: Yes (included in bills
> sponsored by Senator John McCain and by Congressman Bobby Rush)

25\. Examination of how to promote minority ownership as an integral
part of all FCC general

media rulemaking proceedings

> [Location(s) in Record]{.underline}: Twelve Minority Ownership
> Solutions
>
> [Nature of Item]{.underline}: Contemplates FCC policy statement or
> procedural rule
>
> [Summary of Item]{.underline}: All general mass media rulemaking
> proceedings (except individual FM or TV allotment proceedings) would
> include a request for comment on how the proposed rules affected
> minority entrepreneurship or could be tailored to have a positive
> impact on minority entrepreneurship.
>
> [Year First Proposed]{.underline}: 1973\
> [Parallel Recommendation of Diversity Committee]{.underline}: none\
> [Relevance of SDB Definition]{.underline}: No

26\. Ongoing longitudinal research on minority and female ownership
trends

> [Location(s) in Record]{.underline}: Twelve Minority Ownership
> Solutions
>
> [Nature of Item]{.underline}: FCC or NTIA research initiative
>
> [Summary of Item]{.underline}: The FCC or NTIA would conduct an
> annual, authoritative survey of minority and female ownership trends.
> As a longitudinal instrument, it could track this data over time,
> enabling scholars to examine the impact of rule changes on minority
> and female ownership.
>
> [Year First Proposed]{.underline}: 1995\
> [Parallel Recommendation of Diversity Committee]{.underline}: none\
> [Relevance of SDB Definition]{.underline}: Yes

**[SECTION III: PROPOSALS SPONSORED BY THE DIVERSITY
COMMITTEE]{.underline}**

27\. Clearinghouse through which licensees could announce availability
of stations for sale

> [Location(s) in Record]{.underline}: Diversity Committee, Financial
> Issues Recommendations, June 14, 2004, pp. 13-14
>
> [Nature of Item]{.underline}: Private industry initiative
>
> [Summary of Item]{.underline}: The National Association of
> Broadcasters and/or the National Association of Media Brokers could
> create a website or other clearinghouse through which licensees with
> stations for sale could seek minority buyers.
>
> [Year First Proposed]{.underline}: 2004
>
> [Relevance of SDB Definition]{.underline}: No

28\. Extension of the Community Reinvestment Act (CRA) to encourage
financial institutions to provide debt financing to broadcasters

> [Location(s) in Record]{.underline}: Diversity Committee, Financial
> Issues Recommendations, June 14, 2004, p. 15
>
> [Nature of Item]{.underline}: Recommendation for FCC to propose rule
> revisions to the Treasury Department
>
> [Summary of Item]{.underline}: The FCC would work with the Treasury
> Department to expand the application of the CRA credit to encourage
> financial institutions to place capital in private equity funds led by
> minority and female entrepreneurs, or in funds that invest in
> communities of color. A similar incentive mechanism could be explored
> with the appropriate regulatory agencies to encourage pension funds,
> insurance companies and other financial institutions to place monies
> with such equity funds.
>
> [Year First Proposed]{.underline}: 2004
>
> [Relevance of SDB Definition]{.underline}: No

29\. Encourage more local and regional banks to participate in SBA
guaranteed loan programs for broadcast and telecom ventures

> [Location(s) in Record]{.underline}: Diversity Committee, Financial
> Issues Recommendations, June 14, 2004, p. 16
>
> [Nature of Item]{.underline}: Recommendation for FCC and SBA to expand
> outreach to banks
>
> [Summary of Item]{.underline}: The FCC would work closely with the SBA
> to educate and encourage more local and regional banks (which have not
> been heavily involved in broadcast or telecom lending) to make loans
> through the SBA's 7(a) or 504 programs.
>
> [Year First Proposed]{.underline}: 2004
>
> [Relevance of SDB Definition]{.underline}: No

30\. Establishment of a fund of funds

> [Location(s) in Record]{.underline}: Diversity Committee, Financial
> Issues Recommendations, June 14, 2004, pp. 16-17
>
> [Nature of Item]{.underline}: Private industry initiative
>
> [Summary of Item]{.underline}: The FCC would initiate discussions with
> the major pension funds to encourage the establishment of a fund of
> funds that would place capital with minority focused private equity
> funds such as those belonging to the National Association of
> Investment Companies (NAIC), which are led by minority management and
> which invest in opportunities led by women and minority entrepreneurs
> and/or in opportunities in underserved markets.
>
> [Year First Proposed]{.underline}: 2004
>
> [Relevance of SDB Definition]{.underline}: No

31\. Revision of the Distress Sale Policy to institute case-by-case
review of purchasers' qualifications

> [Location(s) in Record]{.underline}: Diversity Committee,
> Recommendation on the Distress Sale Policy, June 1, 2004; Financial
> Issues Recommendations, June 14, 2004, pp. 18-19
>
> [Nature of Item]{.underline}: Rulemaking recommendation
>
> [Summary of Item]{.underline}: The Distress Sale Policy, in existence
> since 1978 but seldom used recently, would be revised to ensure that
> it satisfies the narrow tailoring prong of strict scrutiny. In
> particular, a potential buyer, of any race, would demonstrate that its
> proposed service to the community would address needs unmet by
> existing media. Service to minority audiences could be an unmet need.
>
> [Year First Proposed]{.underline}: 2004
>
> [Relevance of SDB Definition]{.underline}: No

32\. Reservation, for a company that finances or incubates an SDB, of
first place in the queue to form a duopoly in a market for which only a
limited number of duopolies are permissible

> [Location(s) in Record]{.underline}: Diversity Committee, Financial
> Issues Recommendations, June 14, 2004, pp. 17-18; White Paper on
> Incentive-Based Regulations, May 23, 2004, p. 9
>
> [Nature of Item]{.underline}: Rulemaking recommendation
>
> [Summary of Item]{.underline}: When the local market voice test limits
> how many LMAs may be created, a company wishing to have its
> application to create an LMA considered first could reserve a place in
> the application queue by financing or incubating an SDB.
>
> [Year First Proposed]{.underline}: 1999
>
> [Relevance of SDB Definition]{.underline}: Yes

33\. Relaxation of foreign ownership restrictions ([see]{.underline} 47
U.S.C. §310(b) (4))

> [Location(s) in Record]{.underline}: Diversity Committee, Adoption of
> a Declaratory Ruling on Section 310(b) (4) Waivers, December 10, 2004
>
> [Nature of Item]{.underline}: Recommendation for rulemaking or policy
> statement
>
> [Summary of Item]{.underline}: The Commission would consider whether a
> noncontrolling
>
> investment from foreigners ([e.g.]{.underline} up to 49%) could be
> permitted where the investment would help eliminate a barrier to
> access to capital for domestic minority owned broadcasters as
> contemplated by 47 U.S.C. §257.
>
> [Year First Proposed]{.underline}: 2004\
> [Relevance of SDB Definition]{.underline}: Yes

34\. Extension of divestiture deadlines in mergers where applicants have
actively solicited bids for spin-off properties from SDBs

> [Location(s) in Record]{.underline}: Diversity Committee,
> Recommendation on Merger Review, October 15, 2004
>
> [Nature of Item]{.underline}: Recommendation for rulemaking or policy
> statement
>
> [Summary of Item]{.underline}: The Commission has recognized that
> minorities, especially new entrants, often need additional time to
> line up financing. Therefore, the Commission would announce a policy
> of generally affording more time for divestitures where the applicants
> solicit bids from SDBs for spinoff properties.
>
> [Year First Proposed]{.underline}: 1999
>
> Relevance of SDB Definition: Yes

**APPENDIX B**

**Second Supplemental Initial Regulatory Flexibility Analysis**

1.  As required by the Regulatory Flexibility Act, as amended
    ("RFA")[^51] the Commission has prepared this Second Supplemental
    Initial Regulatory Flexibility Analysis ("Second Supplemental IRFA")
    of the possible significant economic impact on a substantial number
    of small entities of the policies and rules considered in the
    *Second Further Notice of Proposed Rule Making* ("*Second Further
    Notice*")*.* Written public comments are requested on this Second
    Supplemental IRFA. Comments must be identified as responses to the
    Second Supplemental IRFA and must be filed by the deadlines for
    comments on the *Second Further Notice*. The Commission will send a
    copy of the *Second Further Notice*, including this Second
    Supplemental IRFA, to the Chief Counsel for Advocacy of the Small
    Business Administration ("SBA").[^52] In addition, the *Second
    Further Notice* and the Second Supplemental IRFA (or summaries
    thereof) will be published in the Federal Register.[^53]

## A. Need for, and Objectives of, the Proposed Rules {#a.-need-for-and-objectives-of-the-proposed-rules .unnumbered}

29. The *Further Notice of Proposed Rule Making* in MB Docket Nos.
    06-121, *et al.*,[^54] invites comment on how to address the issues
    raised by the opinion of the U.S. Court of Appeals for the Third
    Circuit in *Prometheus Radio Project v. FCC*,[^55] and, pursuant to
    Section 202(h) of the Telecommunications Act of 1996, on whether the
    media ownership rules are "necessary in the public interest as the
    result of competition."[^56] In *Prometheus,* the court affirmed
    some Commission decisions and remanded others for further Commission
    justification or modification.[^57] In the *Second Further Notice*,
    we seek additional comment on specific proposals advocated by the
    Diversity and Competition Supporters (collectively, "MMTC") to
    foster minority and female ownership. In addition, the Commission
    will consolidate into the broadcast ownership proceeding the record
    established in MB Docket No. 04-228, in which the Commission
    solicited public comment on constitutionally permissible ways to
    further the mandates of Section 257 of the Telecommunications Act of
    1996,[^58] which directs the Commission to identify and eliminate
    market entry barriers for small telecommunications businesses, and
    Section 309(j) of the Communications Act of 1934, as amended (the
    "Act"), [^59] which requires the Commission to further opportunities
    in the allocation of spectrum-based services for small businesses
    and businesses owned by women and minorities. The Commission
    previously published a Supplemental IRFA in connection with the
    *Further Notice.*[^60] We issue this Second Supplemental IRFA in
    order to invite comment on the effects on small entities, including
    minorities and women, of the proposals identified in this *Second
    Further Notice*. We particularly solicit comment from all small
    business entities, including minority-owned and women-owned small
    businesses.

## B. Legal Basis {#b.-legal-basis .unnumbered}

30. The *Second Further Notice* is adopted pursuant to sections 1, 2(a),
    4(i), 257, 303, 307, 309, 310 and 613 of the Act, as amended, 47
    U.S.C. §§ 151, 152(a), 154(i), 257, 303, 307, 309, 310, and 533, and
    Section 202(h) of the Telecommunications Act of 1996.

## C. Description and Estimate of the Number of Small Entities To Which the Proposed Rules Will Apply {#c.-description-and-estimate-of-the-number-of-small-entities-to-which-the-proposed-rules-will-apply .unnumbered}

31. The RFA directs agencies to provide a description of, and, where
    feasible, an estimate of the number of small entities that may be
    affected by the proposed rules, if adopted.[^61] The RFA defines the
    term "small entity" as having the same meaning as the terms "small
    business," "small organization," and "small governmental entity"
    under Section 3 of the Small Business Act.[^62] In addition, the
    term "small business" has the same meaning as the term "small
    business concern" under the Small Business Act.[^63] A small
    business concern is one which: (1) is independently owned and
    operated; (2) is not dominant in its field of operation; and (3)
    satisfies any additional criteria established by the SBA.[^64]

32. **Television Broadcasting.** In this context, the application of the
    statutory definition to television stations is of concern. The Small
    Business Administration defines a television broadcasting station
    that has no more than \$13 million in annual receipts as a small
    business. Business concerns included in this industry are those
    "primarily engaged in broadcasting images together with sound."[^65]
    According to Commission staff review of the BIA Financial Network,
    Inc. Media Access Pro Television Database as of July 10, 2007, about
    880 (68 percent) of the 1,300 commercial television stations in the
    United States have revenues of \$13 million or less. However, in
    assessing whether a business entity qualifies as small under the
    above definition, business control affiliations[^66] must be
    included. Our estimate, therefore, likely overstates the number of
    small entities that might be affected by any changes to the
    ownership rules, because the revenue figures on which this estimate
    is based do not include or aggregate revenues from affiliated
    companies.

33. An element of the definition of "small business" is that the entity
    not be dominant in its field of operation. The Commission is unable
    at this time and in this context to define or quantify the criteria
    that would establish whether a specific television station is
    dominant in its market of operation. Accordingly, the foregoing
    estimate of small businesses to which the rules may apply does not
    exclude any television stations from the definition of a small
    business on this basis and is therefore over-inclusive to that
    extent. An additional element of the definition of "small business"
    is that the entity must be independently owned and operated. It is
    difficult at times to assess these criteria in the context of media
    entities, and our estimates of small businesses to which they apply
    may be over-inclusive to this extent.

34. **Radio Broadcasting.** The Small Business Administration defines a
    radio broadcasting entity that has \$6.5 million or less in annual
    receipts as a small business.[^67] Business concerns included in
    this industry are those "primarily engaged in broadcasting aural
    programs by radio to the public."[^68] According to Commission staff
    review of the BIA Financial Network, Inc. Media Access Radio
    Analyzer Database as of July 10, 2007, about 10,520 (95 percent) of
    11,055 commercial radio stations in the United States have revenues
    of \$6.5 million or less. We note, however, that in assessing
    whether a business entity qualifies as small under the above
    definition, business control affiliations[^69] must be included. Our
    estimate, therefore, likely overstates the number of small entities
    that might be affected by any changes to the ownership rules,
    because the revenue figures on which this estimate is based do not
    include or aggregate revenues from affiliated companies.

35. In this context, the application of the statutory definition to
    radio stations is of concern. An element of the definition of "small
    business" is that the entity not be dominant in its field of
    operation. We are unable at this time and in this context to define
    or quantify the criteria that would establish whether a specific
    radio station is dominant in its field of operation. Accordingly,
    the foregoing estimate of small businesses to which the rules may
    apply does not exclude any radio station from the definition of a
    small business on this basis and is therefore over-inclusive to that
    extent. An additional element of the definition of "small business"
    is that the entity must be independently owned and operated. We note
    that it is difficult at times to assess these criteria in the
    context of media entities, and our estimates of small businesses to
    which they apply may be over-inclusive to this extent.

36. **Daily Newspapers**. The SBA has developed a small business size
    standard for the census category of Newspaper Publishers; that size
    standard is 500 or fewer employees.[^70] Census Bureau data for 2002
    show that there were 5,159 firms in this category that operated for
    the entire year.[^71] Of this total, 5,065 firms had employment of
    499 or fewer employees, and an additional 42 firms had employment of
    500 to 999 employees. Therefore, we estimate that the majority of
    Newspaper Publishers are small entities that might be affected by
    our action.

## D. Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements {#d.-description-of-projected-reporting-recordkeeping-and-other-compliance-requirements .unnumbered}

37. Depending on the rules adopted as a result of this *Second Further
    Notice*, the Report and Order (R&O) ultimately adopted in this
    proceeding may contain new or modified information collections. We
    anticipate that none of the changes would result in an increase to
    the reporting and recordkeeping requirements of broadcast stations,
    newspapers, or applicants for licenses. As noted above, we invite
    small business entities to comment in response to the *Second
    Further Notice*.

## E. Steps Taken to Minimize Significant Impact on Small Entities, and Significant Alternatives Considered  {#e.-steps-taken-to-minimize-significant-impact-on-small-entities-and-significant-alternatives-considered .unnumbered}

38. The RFA requires an agency to describe any significant alternatives
    that it has considered in reaching its proposed approach, which may
    include the following four alternatives (among others): (1) the
    establishment of differing compliance or reporting requirements or
    timetables that take into account the resources available to small
    entities; (2) the clarification, consolidation, or simplification of
    compliance or reporting requirements under the rule for small
    entities; (3) the use of performance, rather than design, standards;
    and (4) an exemption from coverage of the rule, or any part thereof,
    for small entities.[^72]

39. We are directed under law to describe any alternatives we consider,
    including alternatives not explicitly listed above.[^73] The *Second
    Further Notice* describes and seeks comment on the minority
    ownership proposals made by MMTC in comments in the 2002 biennial
    ownership proceeding, as well as the recommendations of the
    Diversity Committee, and consolidates the record developed in MB
    Docket No. 04-228 with the record in MB Docket Nos. 06-121, *et al*.
    The proposals are intended to promote minority and female ownership,
    and we seek comment on the extent to which they would benefit small
    businesses, including those owned by minorities and women. We
    especially encourage small entities to comment on the proposals
    under consideration in this consolidated proceeding. We do not
    propose specific rules in the *Second Further Notice* but rather
    seek comment on a number of different proposals that could have an
    impact on small entities. Accordingly, we will describe the steps
    taken to minimize the significant impact on small entities and the
    significant alternatives that we consider in the Final Regulatory
    Flexibility Analysis.

**F. Federal Rules that May Duplicate, Overlap, or Conflict With the
Proposed Rules**

None.

**JOINT STATEMENT OF**

**COMMISSIONER MICHAEL J. COPPS AND COMMISSIONER JONATHAN A. ADELSTEIN
APPROVING IN PART, DISSENTING IN PART**

**\
***Re: 2006 Quadrennial Review & 2002 Biennial Regulatory Review --
Review of the Commission's Broadcast Ownership Rules and Other Rules
Adopted Pursuant to Section 202 of the Telecommunications Act of 1996,
Cross-Ownership of Broadcast Stations and Newspapers, Rules and Policies
Concerning Multiple Ownership of Radio Broadcast Stations in Local
Markets Definitions of Radio Markets, Ways to Further Section 257
Mandate and to Build on Earlier Studies, Second Further Notice of
Proposed Rule Making*

Yesterday, the Commission provided the public only 60 days to comment on
ten research studies that took dozens of economists and lawyers over
eight months to prepare. Today -- August 1^st^, after 11 months of
inaction, the majority is providing the same truncated time for public
comment on proposals that it neglected to discuss last year, at the
beginning of our review of the media ownership rules.

In *Prometheus*, the Third Circuit took the Commission seriously to task
for failing to consider the impact of potential rule changes on minority
media ownership. The Court also faulted the Commission for sidelining
MMTC's proposals for advancing minority and disadvantaged businesses and
directed that "\[t\]he Commission's rulemaking process in response to
our remand order should address these proposals at the same time."[^74]
Yet, in its July 2006 *Further Notice*, the Commission could only muster
up a few pat questions on this vital subject. On August 23, 2006, the
Diversity and Competition Supporters -- representing a broad array of
minority and women's organizations -- rightly asked the Commission to
seek further comment on the specific proposals. There the matter has
sat, until today.

We dissent to the inadequate time given for public comment. After
mulling this over for almost one year, the Commission is all of a sudden
in a hurry and it is the public that gets punished. Giving the American
people only 60 days to comment on dozens of proposals is outrageous. Not
only is it disturbingly consistent with yesterday's action, it is also
eerily reminiscent of former Chairman Michael Powell's rush to judgment
four years ago when he rammed through consolidation that would have, had
it not been subsequently reversed, inflicted incalculable injury on
America's media.

Now a new agenda seems to be brewing here. And whatever's being cooked
up, the public is not being given sufficient time to take a close look.
Maybe someone's worried that, once again, the public will spit it out.

[^1]: The Diversity and Competition Supporters, which filed the Motion
    for Withdrawal on August 23, 2006, include the following entities:
    Center for Asian American Media, Independent Spanish Broadcasters
    Association, League of United Latin American Citizens, Minority
    Business Enterprise Legal Defense and Education Fund, Minority Media
    and Telecommunications Council, National Association of Latino
    Independent Producers, National Coalition of Hispanic Organizations,
    National Council of Churches, National Council of La Raza, National
    Hispanic Media Coalition, National Indian Telecommunications
    Institute, National Institute for Latino Policy, National Urban
    League, Native American Public Telecommunications, Inc., Puerto
    Rican Legal Defense and Education Fund, UNITY: Journalists of Color,
    Inc., and Women's Institute for Freedom of the Press.

[^2]: *See 2006 Quadrennial Regulatory Review -- Review of the
    Commission's Broadcast Ownership Rules and Other Rules Adopted
    Pursuant to Section 202 of the Telecommunications Act of 1996,*
    Further Notice of Proposed Rule Making, 21 FCC Rcd 8834 (2006)
    ("*Further Notice*").

[^3]: *2002 Biennial Regulatory Review -- Review of the Commission's
    Broadcast Ownership Rules and Other Rules Adopted Pursuant to
    Section 202 of the Telecommunications Act of 1996,* 18 FCC Rcd 13620
    (2003) ("*2002 Biennial Review Order*"), *aff'd in part and remanded
    in part, Prometheus Radio Project, et al. v. F.C.C.*, 373 F.3d 372
    (3d Cir. 2004).

[^4]: 373 F.3d 372 (3d Cir. 2004), *stay modified on rehearing,* No.
    03-3388 (3d Cir. Sept. 3, 2004), *cert. denied*, 73 U.S.L.W. 3466
    (U.S. June 13, 2005) (Nos. 04-1020, 04-1033, 04-1036, 04-1045,
    04-1168 and 04-1177).

[^5]: MMTC Motion for Withdrawal at 1.

[^6]: *Id.* at 20.

[^7]: *See Further Notice*, 21 FCC Rcd at 8837-38 ¶¶ 5-6.

[^8]: *Id.* at 8837-38 ¶ 6.

[^9]: The mission of the Diversity Committee is to make recommendations
    to the Commission regarding policies and practices that will further
    enhance the ability of minorities and women to participate in
    telecommunications related industries. The Diversity Committee
    launched in May 2003, and has made numerous recommendations to the
    Commission in furtherance of its mission. *See*
    http://www.fcc.gov/DiversityFAC/ for a full listing of Diversity
    Committee meetings, recommendations and white papers.

[^10]: *See* Initial Comments of Diversity and Competition Supporters
    (MB Docket No. 02-277), filed Jan. 2, 2003.

[^11]: *2002 Biennial Review Order*, 18 FCC Rcd at 13635-36 ¶¶ 47-49.

[^12]: *Id.* at 13636 ¶ 50.

[^13]: *Id.* at 13637 ¶ 52.

[^14]: *See* 13 C.F.R. § 121.201 (North American Industry Classification
    System (NAICS) code categories).

[^15]: *See 2002 Biennial Review Order*, 18 FCC Rcd at 13811 ¶ 490.

[^16]: *Id.* at 13708 ¶ 225.

[^17]: 47 C.F.R. § 73.3555 Note 7. A "failed" station is one that has
    not been in operation for at least four consecutive months due to
    financial distress or is a debtor in involuntary bankruptcy or
    insolvency proceedings. A station is "failing" if it has an all-day
    audience share of four percent or less and has had negative cash
    flow for three consecutive years. Permittees of unbuilt stations
    must demonstrate that they have made reasonable efforts to construct
    the station. *Id.*

[^18]: *Review of the Commission\'s Regulations Governing Television
    Broadcasting; Television Satellite Stations Review of Policy and
    Rules*, Report and Order, 14 FCC Rcd 12903, 12937-38 ¶¶ 75-76 (1999)
    ("*Local TV Ownership Report and Order*").

[^19]: *2002 Biennial Review Order*, 18 FCC Rcd at 13706-08 ¶¶ 221-26.

[^20]: *Prometheus*, 373 F.3d at 421 n.59.

[^21]: *Id.* at 420-21.

[^22]: MMTC Motion for Withdrawal at 12-13**.**

[^23]: *Id.* at 4-5, 12-13 (citing *Prometheus* 373 F.3d at 428 n.70).

[^24]: *Id.* at 12-13.

[^25]: *Id.* at 12; *see also* Comments of Minority Media and
    Telecommunications Council (MB Docket No. 04-228), filed Oct. 12,
    2004.

[^26]: Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56
    (1996) (the "1996 Act").

[^27]: 47 U.S.C. § 309(j)(3)(B) (directing the Commission to further the
    objectives of "promoting economic opportunity and competition and
    ensuring that new and innovative technologies are readily accessible
    to the American people by avoiding excessive concentration of
    licenses and by disseminating licenses among a wide variety of
    applicants, including small businesses, rural telephone companies,
    and businesses owned by members of minority groups and women").

[^28]: *See Media Bureau Seeks Comment on Ways to Further Section 257
    Mandate and to Build on Earlier Studies,* Public Notice, 19 FCC Rcd
    10491 (MB 2004). The Media Bureau also asked commenters to provide
    specific recommendations for building on the series of market entry
    barrier studies that the Commission released in December 2000. The
    studies are available on the Commission's web site at
    http://www.fcc.gov/opportunity/meb_study/ and
    http://www.fcc.gov/Bureaus/Mass_Media/Informal/ad-study/.

[^29]: MMTC Motion for Withdrawal at 18 n.82; *see also id.* at App. B.
    We have included the text of Appendix B to MMTC\'s Motion for
    Withdrawal as Appendix A hereto. Although we have modified the MMTC
    Appendix to eliminate a non-substantive footnote and to correct a
    few apparent minor typographical errors, we have not altered the
    descriptions, assessments, or legal analyses of the proposals, as
    submitted by MMTC. By incorporating these materials, we do not adopt
    any such descriptions, assessments, or analyses as official
    Commission policy; we are providing them only to specifically invite
    public comment on them.

[^30]: App. A, Proposals 1-14.

[^31]: App. A, Proposals 15-26; *see also 2002 Biennial Review Order*,
    18 FCC Rcd at 13636 ¶ 49; *Prometheus*, 373 F.3d at 421 n.59.

[^32]: App. A, Proposals 27-34. The descriptions of the Diversity
    Committee recommendations are provided by MMTC, which is a member of
    the Diversity Committee but which does not represent the Diversity
    Committee as a whole. Although the Diversity Committee
    recommendations are not subject to the Third Circuit's remand, we
    are seeking comment on them to ensure a more complete record.

[^33]: MMTC Motion for Withdrawal at 5.

[^34]: *Local TV Ownership Report and Order*, 14 FCC Rcd at 12936-41 ¶¶
    73-87.

[^35]: *2002 Biennial Review Order*, 18 FCC Rcd at 13706-08 ¶¶ 221-26.

[^36]: *Id.* at 13708 ¶ 225.

[^37]: *Prometheus*, 373 F.3d at 420-21.

[^38]: *Id.*

[^39]: *Adarand Constructors, Inc. v. Pena,* 515 U.S. 200 (1995). The
    strict scrutiny standard for racial classifications was reaffirmed
    in the Supreme Court's decision upholding student body diversity in
    the context of higher education. *Grutter v. Bollinger*, 539 U.S.
    306 (2003); *see also Parents Involved in Community Schools,
    Petitioner v. Seattle School District et al.,* 127 S. Ct. 2738, 75
    USLW 4577 (No. 05-908, 05-915) (2007).

[^40]: *United States v. Virginia,* 518 U.S. 515 (1996); *see also
    Nevada Dept. of Human Resources v. Hibbs, et al.*, 538 U.S. 721
    (2003).

[^41]: 47 U.S.C. § 257(a). Despite the apparent limitation of Section
    257(a) to telecommunications and information services, the
    congressional directive to promote "the policies and purposes of
    this Act favoring diversity of *media* voices" in implementing
    Section 257(a) arguably brings broadcasting within the scope of
    Section 257. *Id.* (emphasis added). We invite comment on this
    interpretation of the statute.

[^42]: 47 U.S.C. § 257(b).

[^43]: 47 U.S.C. § 151, as amended (1997) (italicized clause added by
    the 1996 Act).

[^44]: 47 U.S.C. § 309(j)(4)(D).

[^45]: 47 U.S.C. § 309(j)(3)(B). Moreover, Section 309(j)(4)(D) requires
    the Commission "to consider the use of tax certificates, bidding
    preferences, and other procedures" to achieve its goals. 47 U.S.C. §
    309(j)(4)(D).

[^46]: *See* 5 U.S.C. § 603.

[^47]: *See Further Notice*, 21 FCC Rcd at 8854, App. B; *Review of the
    Commission's Broadcast Ownership Rules and Other Rules Adopted
    Pursuant to Section 2020 of the Telecommunications Act of 1996,
    Cross-Ownership of Broadcast Stations and Newspapers, Rules and
    Policies Concerning Multiple Ownership of Radio Broadcast Stations
    in Local Markets, Definition of Radio Markets*, 17 FCC Rcd 18503,
    18558, App. A (2002).

[^48]: *See* 44 U.S.C. § 3506(c)(4).

[^49]: *See generally* 47 C.F.R. §§ 1.1202, 1.1203, 1.1206(a).

[^50]: This Appendix is a verbatim copy of Appendix B to MMTC's Motion
    for Withdrawal, except that this Appendix reflects minor
    typographical corrections and the omission of a non-substantive
    footnote.

[^51]: *See* 5 U.S.C. § 603. The RFA, *see* 5 U.S.C. §§ 601-612, has
    been amended by the Contract With America Advancement Act of 1996,
    Pub. L. No. 104-121, 110 Stat. 847 (1996) ("CWAAA"). Title II of the
    CWAAA is the Small Business Regulatory Enforcement Fairness Act of
    1996 ("SBREFA").

[^52]: *See* 5 U.S.C. § 603(a).

[^53]: *See id*.

[^54]: *2006 Quadrennial Regulatory Review -- Review of the Commission's
    Broadcast Ownership Rules and Other Rules Adopted Pursuant to
    Section 202 of the Telecommunications Act of 1996*, Further Notice
    of Proposed Rule Making, 21 FCC Rcd 8834 (2006) ("*Further
    Notice*").

[^55]: *Prometheus Radio Project, et al. v. F.C.C.*, 373 F.3d 372 (2004)
    ("*Prometheus*"), *stay modified on rehearing*, No. 03-3388 (3d Cir.
    Sept. 3, 2004) ("*Prometheus Rehearing Order*"), *cert. denied,* 73
    U.S.L.W. 3466 (U.S. June 13, 2005) (Nos. 04-1020, 04-1033, 04-1036,
    04-1045, 04-1168 and 04-1177); *see also 2002 Biennial Regulatory
    Review -- Review of the Commission's Broadcast Ownership Rules and
    Other Rules Adopted Pursuant to Section 202 of the
    Telecommunications Act of 1996,* 18 FCC Rcd 13620 (2003) ("*2002
    Biennial Review Order*").

[^56]: *See* Telecommunications Act of 1996, Pub. L. No. 104-104, 110
    Stat. 56, § 202(h) (1996) ("1996 Act"); Consolidated Appropriations
    Act, 2004, Pub. L. No. 108-199, § 629, 118 Stat. 3 (2004)
    ("Appropriations Act") (amending Sections 202(c) and 202(h) of the
    1996 Act). Section 202(h) requires the Commission to periodically
    review its media ownership rules to determine "whether any of such
    rules are necessary in the public interest as the result of
    competition" and to "repeal or modify any regulation it determines
    to be no longer in the public interest."

[^57]: *See Prometheus Rehearing Order*. Accordingly, except for
    revisions to the local radio ownership rule, the rule changes made
    in the *2002 Biennial Review Order* remain stayed, and the
    preexisting ownership rules remain in effect. *See Further Notice,*
    21 FCC Rcd at 8836 n.10.

[^58]: 47 U.S.C. § 257.

[^59]: 47 U.S.C. § 309(j).

[^60]: *See Further Notice*, 21 FCC Rcd 8834, 8854, App. B (2006).

[^61]: 5 U.S.C. § 603(b)(3).

[^62]: *Id*. § 601(3) (incorporating by reference the definition of
    "small business concern" in 15 U.S.C. § 632). Pursuant to the RFA,
    the statutory definition of a small business applies, "unless an
    agency, after consultation with the Office of Advocacy of the Small
    Business Administration and after opportunity for public comment,
    establishes one or more definitions of such term which are
    appropriate to the activities of the agency and publishes such
    definition(s) in the Federal Register."

[^63]: *Id.*

[^64]: 15 U.S.C. § 632.

[^65]: OMB, North American Industry Classification System: United
    States, 1997, at 508-09 (1997) (NAICS Code 513120, which was changed
    to 515120 in October 2002). This category description continues,
    "These establishments also produce or transmit visual programming to
    affiliated broadcast television stations, which in turn broadcast
    the programs to the public on a predetermined schedule. Programming
    may originate in their own studio, from an affiliated network, or
    from external sources." Separate census categories pertain to
    businesses primarily engaged in produced programming. *See* *id.* at
    502-505, NAICS Code 512110, Motion Picture and Video Production;
    Code 512120, Motion Picture and Video Distribution; Code 512191,
    Teleproduction and Other Post-Production Services; and Code 512199,
    Other Motion Picture and Video Industries.

[^66]: "\[Business concerns\] are affiliates of each other when one
    \[business concern\] controls or has the power to control the other,
    or a third party or parties controls or has the power to control
    both." 13 C.F.R. § 121.103(a)(1).

[^67]: 13 C.F.R. § 121.201.

[^68]: *See* NAICS Code 515112.

[^69]: "\[Business concerns\] are affiliates of each other when one
    \[business concern\] controls or has the power to control the other,
    or a third party or parties controls or has the power to control
    both." 13 C.F.R. § 121.103(a)(1).

[^70]: 13 C.F.R. § 121.201; NAICS Code 511110.

[^71]: U.S. Census Bureau, 2002 Economic Census, Subject Series:
    Information, "Establishment and Firm Size (Including Legal Form of
    Organization)," Table 5, NAICS Code 511110 (issued Nov. 2005).

[^72]: 5 U.S.C. § 603(c).

[^73]: [5 U.S.C. §
    603(b)](http://web2.westlaw.com/find/default.wl?DB=1000546&DocName=5USCAS603&FindType=L&AP=&mt=Westlaw&fn=_top&sv=Full&vr=2.0&rs=WLW5.06).

[^74]: *Prometheus Radio Project v. FCC*, 373 F.3d 372, 421 n.59 (3d
    Cir. 2004).