# Presentation: 668642

## Form 175 and Overview of Radio Service and Auction Rules

- Full Power Television Auction
- (Auction No. 64)

- Lisa Stover, Auctions Marketing Specialist, ASAD
- Lynne Milne, Attorney, ASAD

## Disclaimer

- Nothing herein is intended to supersede any provision of the Commission's rules or public notices.  These slides should not be used as a substitute for a prospective applicant's review of the Commission's relevant orders, rules, and public notices.  Prospective applicants must familiarize themselves thoroughly and remain current with the Commission's rules relating to the television broadcast service, rules relating to application and auction procedures, and the procedures, terms and conditions contained in the Auction No. 64 public notices.

## Questions?

- If you are viewing this presentation live over the web, please feel free to email your questions to...

- auction64@fcc.gov

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## A legal Classification 

- A legal Classification
- must be selected
- in order to proceed

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## Copy Address If same 

- Copy Address If same
- as Applicant

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## New Entrant Bidding Credit

- Unique to broadcast auctions
- Will be offered in the Full Power Television Auction No. 64

## History

- Adopted August 6, 1998 in *Broadcast First Report and Order* * *(FCC 98-194) 13 FCC Rcd 15920 (1998)
- Fulfills 309(j) obligation
- promotes ownership diversification
- Refined on reconsideration in April 15, 1999 *Memorandum Opinion and Order* (FCC 99-74) 14 FCC Rcd 8724 (1999)
- Applied debt/equity attribution provisions in second *Memorandum Opinion and Order* August 4, 1999 (FCC 99-201) 14 FCC Rcd 12541 (1999)
- Governed by the broadcast attribution rules

## Mechanics

- Bidding Credit:  a percentage discount applied to winning bid amount if bidder meets designated entity criteria established in broadcast auction rules
- Two tiers:  25% and 35%
- Apply on Form 175 -  New Entrant Eligibility page
-  No opportunity to apply after initial filing window deadline

## Rules

- 47 C.F.R. Section 73.5007 - Designated Entity Provisions
- 47 C.F.R. Section 73.5008 - Definitions
- Applies general broadcast attribution provisions of rule 47 C.F.R. Section 73.3555, note 2

## Eligibility

- Whose other media interests are counted in
- establishing eligibility?
- We consider other media interests held by winning bidder, and by any entity or individual with attributable interest in winning bidder
- 35% - no attributable interest in any other media of mass communication
- 25% - attributable interest in no more than 3 existing mass media facilities
- Existing interests may not be in “same area” as a proposed facility

## Eligibility

- “same area” – existing facility in “same area” as proposed if relevant defined service area of existing facility partially overlaps, or is partially overlapped by, proposed facility’s relevant contour
- relevant contours defined in 73.5007
*What* media interests are counted?
- 73.5008 defines a “medium of mass communications”: daily newspaper; cable television system; license or construction permit for television, AM or FM broadcast station; direct broadcast satellite transponder; or multipoint distribution service station

## Eligibility

*Which *interests are counted?
- Attributable interest – determined in accordance with 47 C.F.R. Section 73.3555 and note 2
- Interests held by winning bidder in LPTV, TV translator, or FM translator facilities not counted as mass media interests in determining eligibility
- Full service noncommercial educational stations, on both reserved and nonreserved channels, are included as mass media interests.  *Minnesota Christian Broadcasters, Inc., *18 FCC Rcd 614 (2003)

## Unjust enrichment

- If permittee used bidding credit and seeks to assign or transfer control to entity not meeting eligibility criteria
- Must reimburse Government for bidding credit amount plus interest
- Condition of Commission approval of assignment or transfer
- 5 year reimbursement period
- within first 2 years: 100%
- year 3: 75%
- year 4: 50%
- year 5: 25%.  No reimbursement thereafter

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## Agreements with Other Parties and Joint Bidding Arrangements

-  Anti-Collusion Rule:  Unless properly disclosed,
-   communications concerning bids, bidding strategies, or
-   settlement agreements (including post-auction market
-   structures) generally are prohibited among applicants that bid
-   for licenses in any of the same geographic areas (Section
-   1.2105(c)).
-  Prohibition period is between the short-form deadline –
-   January 20, 2006 at 6:00 p.m. - and the down payment
-   deadline, which will be specified in a future public notice.
-   (Section 1.2105(a)(2)(ix)).

## Agreements with Other Parties and Joint Bidding Arrangements Continued

-  To be in compliance, applicants must certify under penalty
-    of perjury that they have not entered and will not enter
-    into any explicit or implicit agreements, arrangements or
-    understandings of any kind with any parties other than
-    those they have identified regarding the amount of their
-    bids, bidding strategies or particular licenses on which they
-    will or will not bid.
-  The rule prohibits an auction applicant from discussing a
-    competing applicant’s bids or bidding strategies even if the
-    first applicant does not discuss its own bids or bidding
-    strategies.

## Agreements with Other Parties and Joint Bidding Arrangements Continued

- This anti-collusion prohibition applies to all applicants, regardless of whether an applicant becomes a qualified bidder or bids in the auction.
- In Auction No. 64, the rule would apply to applicants bidding for any of the same construction permits.

## Agreements with Other Parties and Joint Bidding Arrangements Continued

-  For the anti-collusion rule, “applicant” includes controlling
-   interests, ownership interests, and officers and directors.
-  Applicants must identify all parties with whom they have
-   entered into agreements of any kind relating to the licenses
-   being auctioned, including the post-auction market
-   structure (Section 1.2105(a)(2)(viii)).
-  The rule requires auction applicants that make or receive a
-    prohibited communication of bids or bidding strategies to
-    report the communication immediately to the Commission
-    in writing.

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## System allows 

- System allows
- for more than
- 3 parties
- to be
- entered

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## DIH information 

- DIH information
- previously
- entered displays

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## FRB

- information previously
- entered displays

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## You can check for errors 

- You can check for errors
- before
- certifying and submitting

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**Notes:**
Applicants and their attributable interest holders, that have cured any default on a Commission license or paid any non-tax debt delinquency can participate in an auction if otherwise qualified, but are required to pay upfront payments that are 50% more than the otherwise required upfront payment.
Applicants must certify whether they are delinquent on any non-tax debt owed to any Federal agency in order to be eligible to participate in the auction.  For these purposes, “applicant” includes the applicant’s controlling interests and affiliates (of both the applicant and controlling interests).  See Part 1 Order on Reconsideration of the Third Report and Order, para. 42, ftnt. 142.  The Red Light Rule imposes a lesser sanction, withholding action on any application by a delinquent debtor.
Applicants are well advised to resolve any concerns regarding outstanding “red lights” for any relevant party prior to filing Form 175.  An applicant will be able to submit Form 175 to the Commission, notwithstanding a “red light.”  So a mistaken “red light” will not, by itself, preclude filing Form 175 and potential participation in the auction.  However, presuming the “red light” accurately reflects the existence of a delinquency, such an applicant will not be permitted to participate in the auction and may be subject to further sanctions, given the apparent falsity of the certification that must be made before submitting Form 175.
Finally, applicants should remember that the “red light” database concerns ONLY CURRENT delinquencies with the COMMISSION.  Auction rules are concerned with both current AND FORMER delinquencies on non-tax debt owed to ANY Federal Agency.  See 47 C.F.R. Sec. 1.2105(a)(2)(x) and (xi).  Applicants should NOT rely on a “green light” as a guarantee that they have no concerns regarding delinquencies, current or former, on non-tax debt to any Federal agency. [At this time Brian turns the presentation back over to Lisa.]

## Former Defaults or Delinquencies

**Applicants and their attributable interest holders, that have cured any default on a Commission license or paid any non-tax debt delinquency can participate in an auction if otherwise qualified, but are required to pay upfront payments that are 50% more than the otherwise required upfront payment.**
**Applicants must certify whether they are delinquent on any non-tax debt owed to any Federal agency in order to be eligible to participate in the auction.  For these purposes, “applicant” includes the applicant’s controlling interests and affiliates (of both the applicant and controlling interests).**
**Applicants are well advised to resolve any concerns regarding outstanding “red lights” for any relevant party prior to filing the Form 175.  An applicant will be able to submit Form 175 to the Commission, notwithstanding a “red light” but the application may not be “accepted” at a later stage.**
**Finally, applicants should remember that the “red light” database concerns only current delinquencies with the Commission.  Auction rules are concerned with both current and former delinquencies on non-tax debt owed to any Federal agency.  See 47 C.F.R. Section 1.2105(a)(2)(x) and (xi).  Applicants should not rely on a “green light” as a guarantee that they have no concerns regarding delinquencies, current or former, on non-tax debt to any Federal agency.**

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