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                            Before the
                Federal Communications Commission
                      Washington, D.C. 20554

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


                        REPORT AND ORDER


   Adopted:   August 5, 1999            Released:   August 6, 1999

By the Commission:  Chairman Kennard and Commissioners Ness and Powell issuing separate statements;
Commissioner Furchtgott-Roth dissenting in part, concurring in part and issuing a statement; Commissioner
Tristani dissenting in part and issuing a statement.

                        Table of Contents

                                                      Paragraph

I. Introduction                                             1
II. Background                                         2
III. Issue Analysis                                    7
     A. Stockholding Benchmarks                             7
          1. Non-passive Investor Benchmarks                8
          2. Passive Investor Benchmarks                    16
          3. Definition of Passive Investors                     23
     B. Equity/Debt Plus and Attribution Exemptions              26
          1. Background                                26        
          2. Comments                                  28
          3. Decision                                  35
     C. Time Brokerage Agreements or LMAs                   66
          1. Background                                66
          2. Comments                                  68
          3. Decision                                  83
     D. Cross-Interest Policy                          100
          1. Background                                100
          2. Comments                                  105
          3. Decision                                  112
     E. Joint Sales Agreements (JSAs)                       117
     F. Partnership Interests                               124
     G. LLCs and Other Hybrid Business Forms                134
     H. Cable/MDS Cross-Ownership Attribution                    142
     I.  Broadcast-Cable Cross-Ownership Attribution             160
     J. Transition Issues                                   162       
     
     K. Ownership Report, Form 323                     174  
IV. Administrative Matters                                  175
Appendix A, Rule Changes
Appendix B, Final Regulatory Flexibility Analysis
Appendix C, List of Commenting Parties


I.  Introduction

     1.  The mass media attribution rules seek to identify those interests in or relationships to licensees that
confer on their holders a degree of influence or control such that the holders have a realistic potential to affect
the programming decisions of licensees or other core operating functions.  In this Report and Order, we amend
our broadcast and our cable/Multipoint Distribution Service ("MDS") attribution rules to improve the precision
of the attribution rules, avoid disruption in the flow of capital to broadcasting, afford clarity and certainty to
regulatees and markets, and facilitate application processing -- our goals in initiating this proceeding.  In taking
these steps, we have sought to avoid undue impact on our goal of promoting the rapid conversion of broadcast
television licensees to a digital mode.  We initiated this long-pending proceeding in 1995, sought further
comment after the passage of the Telecommunications Act of 1996, and have had the benefit of  numerous
comments on the variety of issues resolved herein.  The new attribution rules we adopt today are integrally
related to the rules adopted in our companion local television ownership and national television ownership
proceedings. A reasonable and precise definition of what interests should be counted in applying the multiple
ownership rules is a critical element in assuring that those rules operate to promote the goals they were designed
to achieve.
 
II.  Background

     2.  The attribution rules that are the subject of this proceeding define what constitutes a "cognizable
interest" in applying the broadcast multiple ownership rules, the broadcast/cable cross-ownership rule, and
the cable/MDS cross-ownership rule.  We issued the Attribution Notice to review the attribution rules based
on several considerations, including: (1) changes in the broadcasting industry and in the multiple ownership
rules since our last revision of the attribution rules over ten years ago and our consequent desire to ensure that
the attribution rules remain effective in identifying interests that should be counted for purposes of applying
the multiple ownership rules; (2) concerns raised that certain nonattributable investments, while permissible
under current rules, might permit a degree of influence that warrants their attribution; (3) concerns that
individually permissible cooperative arrangements between broadcasters are being used in combination so as
to result in significant influence in multiple stations that is intended to be prohibited by the multiple ownership
rules; and (4) the need to address attribution treatment of Limited Liability Companies ("LLCs").

     3.  We solicited comment in the Attribution Notice on several issues, including: (1) whether to increase
the voting stock benchmark from 5 percent to 10 percent and the passive investor benchmark from 10 percent
to 20 percent; (2) whether to expand the category of passive investors; (3) whether and, if so, under what
circumstances to attribute nonvoting shares; (4) whether to retain our single majority shareholder exemption
from attribution; (5) whether to revise our insulation criteria for limited partners, and whether to adopt an
equity benchmark for noninsulated limited partners; (6) how to treat interests in LLCs and other new business
forms under our attribution rules; (7) whether to eliminate the remaining aspects of our cross-interest policy;
and (8) how to treat financial relationships and multiple business interrelationships which, although not
individually attributable, should perhaps be treated as attributable interests when held in combination.   

     4.  Congress subsequently enacted the Telecommunications Act of 1996 ("1996 Act"), which
substantially relaxed several of our ownership rules.  We issued the Attribution Further Notice to seek
comment as to how these ownership rule revisions should affect our review of the attribution rules.  We also
sought comment on new proposals, including a proposal to attribute the otherwise nonattributable interests of
holders of equity and/or debt in a licensee where the interest holder is a program supplier to a licensee or a
same-market media entity and where the equity and/or debt holding exceeds a specified threshold.  Additionally,
we sought comment on: (1) proposals to attribute television Local Marketing Agreements ("LMAs") and to
modify the scope of the radio LMA attribution rules; (2) whether we should revise our approach to joint sales
agreements ("JSAs") in specified circumstances; (3) a study conducted by Commission staff, appended to the
Further Notice, on attributable interests in television broadcast licensees and on the implications of this study
for our attribution rules, particularly on the voting stock benchmarks; (4) whether we should amend the
cable/MDS cross-ownership attribution rule; and (5) transition issues.

     5.  In the Attribution Notice, we stated our goals in initiating this proceeding as follows:

          While our focus is on the issues of influence or control, at the same time, we must tailor the
     attribution rules to permit arrangements in which a particular ownership or positional interest
     involves minimal risk of influence, in order to avoid unduly restricting the means by which
     investment capital may be made available to the broadcast industry.  We intend to ensure that
     any revisions we make to the attribution rules meet these stated goals.  We also seek to ensure
     that any new rules adopted are clear to our broadcast regulatees, provide reasonable certainty
     and predictability to allow transactions to be planned, ensure ease of processing, and provide
     for the reporting of all the information we need in order to make our public interest finding
     with respect to broadcast applications.

     6.  We believe the rule revisions we adopt today promote these goals.  In this Report and Order, we:
(1) adopt an equity/debt plus attribution rule that would narrow, but not eliminate, the current exemptions from
attribution for nonvoting stock and debt, as well as the single majority shareholder exemption; (2) attribute
certain television LMAs and modify the radio LMA rules; (3) retain the 5 percent voting stock attribution
benchmark, but raise the passive investor voting stock benchmark to 20 percent; (4) retain the current definition
of passive investor; (5) eliminate the cross-interest policy; (6) decline to adopt attribution rules for JSAs; (7)
adopt as an attribution rule our interim processing policy under which we apply limited partnership insulation
criteria to LLCs; (8) retain the current insulation criteria for attribution of limited partnerships; (9) revise the
cable/MDS cross-ownership attribution rule to conform it to the broadcast attribution rules, as revised in this
Report and Order; and (10) establish transition measures with respect to interests made attributable as a result
of rules adopted in this Report and Order that would result in violations of the multiple ownership rules. So
that our broadcast attribution rules remain consistent, we also modify the attribution rules that apply to the
broadcast/cable cross-ownership rule, Section 76.501(a) to incorporate the attribution rule changes adopted
today.          

III.  Issue Analysis

A. Stockholding Benchmarks

     7.  Background.  The Attribution Notice sought comment on whether we should increase the voting
stock benchmarks from five to ten percent for non-passive investors and from ten to twenty percent for passive
investors.  This issue was originally raised in the Notice of Proposed Rule Making and Notice of Inquiry in
MM Docket No. 92-51, ("Capital Formation Notice") which cited concerns about the availability of capital
to broadcasters.  Insufficient evidence was submitted in comments to the Capital Formation Notice to warrant
raising the benchmarks, and, therefore, the Attribution Notice again raised the issue of whether to increase the
voting stock benchmarks.  In the Attribution Further Notice, the Commission noted that commenters
responding to the Attribution Notice had again not submitted specific empirical data sufficient to conclude that
the benchmarks should be raised.  The Attribution Further Notice thus asked for additional information to
justify raising the benchmarks, including information on changes in the economic climate and competitive
marketplace, and the link between additional capital investment and raising the voting stock benchmarks. 

1.  Non-passive investor benchmarks

     8.  Comments.  Few commenters responded to our requests in the Attribution Further Notice for
additional comments supporting the increase in the active investor benchmark to 10 percent.  The National
Association of Broadcasters ("NAB") argued that a 10 percent benchmark would not adversely affect the
Commission's regulatory interests since, according to the NAB, it is difficult to envision how an investor
holding 10 percent or less of the voting stock of a company could exercise effective control if the investor or
his representatives are neither officers nor directors of the company.  Tele-Communications, Inc. ("TCI")
argued that voting stock holdings at 10 percent or below are not controlling interests and that raising the
benchmark to 10 percent will make more capital available to media entities.  Paxson Communications
Corporation ("Paxson") generally supported an increase in the voting stock benchmark to 25 percent, noting
that, as a practical matter, stockholders holding less than this level of interest are not in a position to exercise
effective day-to-day control over station operations.  CBS, Inc. ("CBS") noted its support for raising the
voting stock benchmark but only if the increase is not accompanied by the introduction of a multi-factor
analysis making attribution less predictable.  CBS added that raising the benchmark would enhance capital flow
to the industry, without permitting exercise of undue influence or control.  None of these commenters provided
the empirical studies requested by the Commission to justify an increase in the benchmark.

     9.  Some commenters opposed any relaxation of the attribution rules, which include the attribution
benchmarks.  In its Comments in response to the Attribution Notice, the National Association of Black Owned
Broadcasters ("NABOB") generally opposed relaxing the attribution rules, arguing that such relaxation would
permit increased concentration of broadcast industry control, which works against viewpoint diversity and
minority ownership.  Press Broadcasting Company, Inc. ("Press") noted that unprecedented consolidation of
broadcast ownership has resulted from Congressional relaxation of ownership limitations and argued that the
Commission should not encourage further broadcast industry consolidation at this time through modification
of the attribution rules.  Press urged that consolidation reduces diversity of broadcast voices and that the
Commission should therefore not relax the attribution rules, until the effect of the Congressional action is
known.  BET Holdings ("BET") argued that the Commission should not increase the voting stock benchmark
for existing television licensees, allowing incumbent group owners to extend their influence and control, but
should increase the voting stock benchmark for  new TV and DTV entrants to promote diversity in new entry. 
Additionally, the National Telecommunications and Information Administration ("NTIA") urged the
Commission not to raise the benchmark to 10 percent unless it can determine with confidence that stock
ownership of less than 10 percent in a licensee with no majority shareholder does not convey an ability to
influence or control the licensee's operations.
       
     10.  Decision.  We have decided to retain the current active voting stock benchmark at 5 percent. 
First and most importantly, in reviewing the evidence related to the issue of non-passive voting equity
benchmarks, we remain convinced that shareholders with ownership interests of 5 percent or greater may well
be able to exert significant influence on the management and operations of the firms in which they invest.  In
this regard, we have not been presented with empirical evidence to rebut our conclusion in the Attribution
Order that a "5% benchmark is likely to identify nearly all shareholders possessed of a realistic potential for
influencing or controlling the licensee, with a minimum of surplus attribution."

     11.  In this regard, a growing body of academic evidence indicates that an interest holder with 5 percent
or greater ownership of voting equity can exert considerable influence on a company's management and
operational decisions.  This is particularly true with widely-held corporations where a 5 percent stockholder
is likely to be among the largest shareholders in the firm.  One recent study demonstrated that block trades
involving 5 to 10 percent of the firm's voting stock resulted in a 27 percent turnover rate of the CEO of the
traded firm, that a 20 to 35 percent block trade resulted in a 40 percent turnover rate of the CEO of the traded
firm, and that block trades over 35 percent of the voting equity resulted in a 56 percent turnover rate.  The
turnover of the CEO was tracked over a one year period following the date of the trade.  These results,
spanning an increasing level of ownership starting at 5 percent, demonstrate a consistent relationship between
ownership trades and the rate of replacement of top management.  The results imply that investors who acquire
and hold such large blocks of voting stock can influence the choice of management of the firms in which they
invest.

     12.  Another study presents evidence that 5 percent or greater stockholders vote more actively than
less-than-five percent shareholders, and they tend to vote more often against the recommendations of
management in votes over corporate anti-takeover amendments.  This study suggests that larger owners,
starting at a 5 percent level of ownership, tend to be more active in influencing management than smaller
owners.  The two studies considered together provide evidence that ownership percentages starting at 5 percent
can influence management policies and have an impact on firm value.

     13.  In addition, notwithstanding our requests for empirical evidence, in the Attribution Notice and
again in the Attribution Further Notice, commenters have not provided the kind of specific data to justify
raising the non-passive investor benchmark even though they generally supported raising the benchmark.  And,
while commenters have not provided sufficient empirical evidence to justify raising the active voting stock
benchmark, the Attribution Further Notice did incorporate and invite comment on a Commission staff study
that categorized and quantified attributable interests in commercial broadcast television licensees, as reported
in the Ownership Reports that licensees are required to file.  Several facts emerge from that study that are
relevant to our decision concerning the voting stock benchmarks.  First, the study found and reported that
increasing the attribution benchmark for non-passive investors from 5 percent to 10 percent would decrease
by approximately one third the number of currently-attributable owners.  This increase in the non-passive
investor benchmark would also increase from 81 to 134 the number of stations (out of 389 commercial for-
profit television stations studied that are incorporated and are not single majority shareholder stations), for
which no stockholders and only officers and directors would be held attributable.  These large potential changes
in the number of attributable owners heighten our concern about the impact of raising the 5 percent benchmark. 
In light of the lack of sufficient evidence that such an increase is necessary or appropriate, we are reluctant to
institute a change that would have such a major impact.   

     14.  Further, we note that our concerns over capital availability that originally prompted the proposal
to increase the active voting stock benchmark have eased somewhat, particularly in light of the increasing
strength shown by the communications sector and financial markets in general over the past several years.  For
example, communications transactions increased by 38 percent during 1996, with the total value of mergers,
acquisitions, share offerings and other deals totalling $113 billion.  Within the communications sector, TV
transfers of ownership in 1996 increased by 121.26 percent in dollar terms over 1995 figures, and FM and AM
transfers increased by 283.27 percent and 99.34 percent, respectively.  In total, dollars spent on radio and
television transactions increased from $8.32 billion in 1995 to $25.362 billion in 1996, with the number of
transactions increasing from 849 to 1115 over the same period.  Station trading remained strong in 1997, with
a total of 1067 radio and television transactions worth $23.44 billion.  In 1998, the total number of radio and
television transactions fell slightly, as a result of the slower pace of radio consolidation, to 950 transactions,
with the value of these transactions remaining fairly stable at $22.8 billion.  This overall increase in capital
spending from 1995 to 1998 occurred while our current attribution rules were in effect, and therefore provides
us with strong evidence that those rules do not impede the availability of capital in the communications
industry.  And, to the extent that there are still concerns about not impeding capital flow to broadcasting, we
believe that they will be adequately addressed by our increase in the passive investor benchmark.   In sum, in
reviewing the overall body of evidence on this issue, we believe that our original decision to set a 5 percent
benchmark to capture influential interests remains valid and will not unduly restrict capital availability.

     15.  Finally, retention of the 5 percent benchmark remains consistent with the SEC's analogous 5
percent benchmark.  Pursuant to Section 13(d)(1) of the Exchange Act, 15 U.S.C.  78m(d)(1), any person who
becomes a direct or indirect owner of more than 5 percent of any class of stock of a company  through a stock
acquisition must file a statement with the Securities and Exchange Commission (SEC).  The purpose of this
reporting requirement is generally to ensure that investors are alerted to potential changes in control.  The
broadcast attribution rules have a similar objective as they are intended to identify ownership interests that
confer on their holders the potential to influence or control a licensee's day-to-day operations.

2.  Passive Investor Benchmarks

     16.  Comments.  Most commenters that responded to this issue favored raising the passive investor
benchmark.  ALTV urged the Commission to increase the benchmark to 20 percent.  CG asserted that the
growth in stock mutual funds has exceeded the growth of capital markets in general, and that the current 10
percent benchmark has been a barrier to further investment by this rapidly growing sector.  CG additionally
noted that the vast majority of mutual funds have adopted restrictions against investing for purposes of
management or control.  Investment Company Institute ("ICI") similarly pointed to the rapid growth in mutual
fund assets over the past several years, and argued that mutual fund policy and conduct have given little cause
for concern over their exerting influence or control.  NAB argued that an increase in the passive investor
benchmark carries no risk that institutions will control broadcast stations without the Commission's knowledge
because licensees with large institutional investors will continue to be required to certify that they have not
sought to exercise control in order for the higher attribution benchmark to apply.  Paxson urged the
Commission to increase the passive investor benchmark to 25 percent, urging that stockholders holding less
cannot exercise day-to-day control over station operations.  For similar reasons, TCI urged an increase in the
passive investor benchmark to 49 percent.  In contrast, as discussed above, Press generally opposed relaxation
of the attribution rules at this time.

     17.  Decision.  We will increase the voting stock benchmark from 10 percent to 20 percent for passive
investors.  We believe that increasing the passive investor benchmark to 20 percent will give broadcasters
increased access to investment capital, while preserving the Commission's ability to enforce its ownership
rules effectively.  This decision takes into account the special nature of the passive investor category, in terms
of the legal and fiduciary requirements that constrain passive investors' involvement in the management and
operational affairs of the firms in which they invest.

     18.  We believe that we can increase the passive investor benchmark without incurring substantial risk
that investors who should be counted for purposes of applying the multiple ownership rules will avoid
attribution.  As we have stated: 

          passive institutional investors generally invest funds on behalf of others, play passive
     investment roles, and are generally prohibited either by law or by fiduciary duties from
     becoming involved in the operation or control of the companies in which they invest.  To
     ensure that these institutional investors maintain a truly passive role in the affairs of the
     licensee, we require them to refrain from contact or communication with the licensee on any
     matters pertaining to the operation of its stations, and we prohibit such investors or their
     representatives from acting either as officers or directors of the licensee corporation. 
     (footnotes omitted)

     19.  Despite recognizing these principles, we have not previously had sufficient evidence to justify
raising the passive investor benchmark and have sought additional assurance and evidence of the passivity of
such investors and of the positive impact on investment of an increase in the benchmark.  We have, however,
become convinced that an increase in the passive investor benchmark is warranted at this time.  Clearly, passive
investors continue to face multiple constraints on their ability to become directly involved with the management
and operations of the firms in which they invest, including statutory and regulatory restrictions as well as
fiduciary obligations.

     20.  In setting the limit at 10 percent, we noted that an increase above 10 percent was not advisable
at that time based on our concern about the impact on corporate management that could result, even
unintentionally, from the trading and voting of large blocks of stock by purportedly passive investors.  We
have not been presented with any evidence to indicate that our ten percent benchmark has resulted in any such
block trading problems.  Further, as TCI noted in its Comments, if passive investors vote or trade or threaten
to vote or trade their shares in an attempt to control a media entity, that action would violate the Commission's
rules concerning their passivity.  Moreover, any inadvertent effect of a passive investor's decision to sell its
stock, for example, because it is dissatisfied with the return on its investment, simply reflects the marketplace
at work, and a responsive action by management to make the entity more profitable in response to a sale is
simply an appropriate reaction to market demands.

     21.  While we note that our concerns about capital availability have eased somewhat, to the extent that
these concerns remain, particularly based on funding needs related to the conversion to digital television, we
believe that increasing the passive investor benchmark is a relatively safe way to facilitate such further
investment in broadcasting, without compromising the ability of our attribution rules to capture influential
interests.  Raising that benchmark will reduce barriers to investment in broadcasting and result in greater
efficiencies in the use of capital.  Both CG and ICI, for example, commented on the rapid growth of passively-
managed funds over the last decade.  ICI also noted that since the broadcast attribution rules aggregate the
holdings of funds under common management, the 10 percent benchmark can readily become a barrier for
further mutual fund investment in broadcasting.  Both CG and ICI cited restrictions that limit the involvement
of mutual funds in the operations of their investments and argued that increasing the benchmark would lead
to a growth in passive investments in broadcasting.

     22.  As discussed above, we have been requested by some parties to raise the benchmark even higher
than 20 percent.  We decline to do so.  Although passive investors are subject to constraints that limit their
ability and incentive to become actively involved in the management and operations of the firms in which they
invest, we believe that we should nonetheless act cautiously in raising the benchmark to ensure that our
relaxation does not serve to undermine the purposes of the attribution rules.  In this regard, as noted by FOE,
the voting stock held by passive investors could become decisive in proxy disputes, and passive investors
cannot therefore be considered as equivalent to limited partners or non-voting shareholders.  Should our
experience with a 20 percent benchmark suggest that even further relaxation might be advisable, we can
address that issue at an appropriate time.

3.  Definition of Passive Investors

     23.  Background.  In response to the Capital Formation Notice, several commenters raised the issue
as to whether the Commission should expand its definition of "passive investors" to include such institutional
investors as pension funds, commercial and investment banks, and certain investment advisors.  These
commenters argued that these largely institutional investors invest primarily for reasons of financial returns,
rather than to exert significant influence or control, and therefore their interests should be treated as passive
investments.  In the Attribution Notice, the Commission stated that it did not intend to revisit its 1984 decision,
which defined the passive-investor category to include only bank trust departments, insurance companies and
mutual funds, and we tentatively concluded that we would not expand the passive investor category to include
Small Business Investment Companies ("SBICs") and Special Small Business Investment Companies
("SSBICs"), as we had not been able to conclude that these entities met our definition of "passive." 
Nonetheless, we invited further comment on these tentative conclusions.

     24.  Comments.  Several commenters, including California Public Employees' Retirement System
("CalPERS"), Communications Corporation of America ("CCA"), CG, ICI, ALTV and M/C, urged the
Commission to expand its passive investor category.  CG, ICI and M/C argued that investment advisors should
be included in the expanded definition.  ALTV, however, disagreed, stating that an investment advisor could
work on behalf of an entity or individual that has a strong interest in the day-to-day operations of a broadcast
station.  ALTV supported broadening the definition to include commercial banks, arguing that the Commission
has failed to justify their exclusion.  Capital Cities/ABC, Inc. ("Capital Cities/ABC"), proposed that other
investment entities, including SBICs and SSBICs, pension funds, and investment and commercial banks should
be incorporated in the passive investor category so long as they met the passivity standard currently applied
to the approved types of passive investors.  Finally, CalPERS urged the Commission to include pension funds
in the passive investor category, or in lieu of their inclusion, argued that pension funds should be allowed higher
levels of non-attributable investments if they certify their non-involvement in the media operations of firms in
which they invest.

     25.  Decision.  We reaffirm our earlier decision to retain the current definition of "passive investors,"
which is limited to bank trust departments, insurance companies and mutual funds.  We noted that we earlier
stated that we "do not intend to revisit our decision of 1984 in order to broaden the category of passive
investors...."  We are not convinced that other types of investors lack the interest and/or the ability to actively
participate in the affairs of the firms in which they invest.  This is particularly true of public pension funds,
many of which have apparently become increasingly active in proxy fights and other devices to put pressure
on management perceived to be underperforming.  Furthermore, commercial and investment bank activities
do not fall under the same fiduciary restrictions, discussed above, that apply to bank trust departments.  And,
we have not been presented with sufficient evidence thus far to revise our earlier tentative conclusion not to
include SBICs and SSBICs in the definition of passive investors.  As we have noted, under certain
circumstances, these entities are authorized to exercise control over debtor companies for temporary periods. 
Finally, we agree with ALTV that an investment advisor, acting on behalf of its client, might exert the same
level of influence or control as the client might exert on its own accord.  Therefore, unlike the categories
currently defined as passive investors, we do not find evidence of regulatory or other safeguards ensuring that
the other types of investors proposed to be included will remain passive.  While several commenters favored
expanding the definition of the passive investor category, they did not supply persuasive evidence or analysis
to support their case and, in particular, to contradict evidence that these institutional investors can be actively
involved in the companies in which they invest.

B. Equity/Debt Plus and Attribution Exemptions 

1.  Background

     26.  In the Attribution Notice, we invited comment as to whether multiple cross-interests or currently
nonattributable interests, when held in combination, raise diversity and competition concerns warranting
regulatory oversight.  We anticipated that any regulation of such inter-relationships would require case-by-
case review of applications, but we did not otherwise delineate specific proposals to address these concerns. 
We also invited comment as to whether to restrict or eliminate the current nonvoting stock and single-majority
shareholder attribution exemptions, expressing concerns that some interest holders that are eligible for these
exemptions might nonetheless exert significant influence such that the interest should be attributed.

     27.  In the Attribution Further Notice, we proposed to adopt a targeted equity/debt plus ("EDP")
attribution approach to deal with the foregoing concerns.  We noted that our proposed new EDP rule would
operate in addition to other attribution standards and would attempt to increase the precision of the attribution
rules, address our concerns about multiple nonattributable relationships, and respond to concerns about whether
the single majority shareholder and nonvoting stock attribution exemptions were too broad.  This approach
would not eliminate the nonvoting and single majority shareholder exemptions from attribution, but would limit
their availability in certain circumstances.  Under this approach, we proposed to attribute the otherwise
nonattributable debt or equity interests in a licensee where: (1) the interest holder was also a program supplier
to the licensee or a same-market broadcaster or other media outlet subject to the broadcast cross-ownership
rules, including newspapers and cable operators; and (2) the equity and/or debt holding exceeds 33 percent. 
Under our EDP proposal, a finding that an interest is attributable would result in that interest being counted
for all applicable multiple ownership rules, local and national.

2.  Comments 

     28.  Single Majority Shareholder and Nonvoting Stock Attribution Exemptions.  As discussed in the
Attribution Further Notice, most commenters in response to the Attribution Notice urged us to retain the single
majority shareholder and nonvoting stock attribution exemptions, but network affiliates have expressed
concerns that the exemptions have allowed networks to extend their nationwide reach by structuring
nonattributable deals in which the networks effectively exert significant influence if not control over licensees.

     29.  Propriety of EDP Rule.  Commenters filing in support of the EDP proposal included Media Access
Project ("MAP"), Network Affiliated Stations Alliance ("NASA"), representing affiliates of the three major
networks, Viacom, Inc. ("Viacom"), Knight-Ridder and Paxson.  NASA noted that current attribution rules
"allow networks to evade the intent and spirit of the Commission's ownership rules."  According to NASA,
networks can use non-attributable investments to create fiduciary obligations that might require the station
owner to favor the network or as a quid pro quo for long-term affiliation agreements.  Knight-Ridder, a
newspaper publishing company, supported the equity/debt plus proposal as a bright line attribution test, which
would allow greater certainty and predictability in transactions and be preferable to the ad hoc cross-interest
policy.  Knight-Ridder also noted that the EDP approach would prevent abuses of the single-majority
shareholder and non-voting stock exemptions.  Viacom strongly supported the Commission's "equity or debt
plus" proposal and, indeed, argued that it should be tightened.  MAP supported an equity/debt plus rule but
also argued for a tighter rule than that proposed by the Commission.  MAP argued that the proposal, as a
bright line test, is superior to a case-by-case approach, and that the Commission's proposal avoided unduly
disrupting capital flow because it did not fully repeal the nonvoting shareholder and single majority shareholder
attribution exemptions, and, specifically, would not discourage investors from assisting in the conversion to
digital television.  Additionally, NTIA generally supported the proposal but asked the Commission to consider
refinements "so that all relationships providing the ability to exercise significant influence are recognized and
attributed."  The Department of Justice, Antitrust Division ("DOJ"), supported the proposed EDP rule and
suggested that the Commission retain the flexibility to address other relationships that, combined with equity
or debt interests below the applicable threshold, confer significant control and influence.  Finally, while CBS
opposed adoption of the equity/debt plus proposal, it noted that the proposal would be preferable to continued
use of the "amorphous" cross-interest policy.

     30.  Opposition to the "equity or debt plus" proposal was voiced by ABC, Pappas Stations Partnership
("Pappas"), and TCI, among others, which argued that it was overly broad.  While ABC agreed that the current
attribution rules could be subject to abuse by parties that structure transactions to avoid attribution while
retaining control, it argued that instead of adopting the equity/debt plus proposal, the Commission should apply
a rebuttable presumption of attribution for an investment or equity stake over 50 percent.  TCI argued that
the equity/debt plus proposal is overinclusive insofar as it would apply to debt.  Pappas argued for retention
of the current case-by-case approach of reviewing contractual language in those cases involving nonattributable
interests that raise control questions.  Tribune also opposed adoption of the proposed rule, arguing that there
has been no finding that the single majority shareholder or nonvoting stock exemptions have resulted in even
a single instance of unauthorized transfer of control or the exercise of undue influence over the affairs of a
broadcast outlet, and that, under the proposal, capital availability would be greatly restricted, particularly to
small and minority broadcasters, the entities that need capital the most, as broadcasters enter the transition to
DTV, which will require large amounts of capital.
  
     31.  Scope of Rule.  MAP urged that the EDP rule should encompass same-market media entities,
including cable operators and daily newspapers, as well as program suppliers.  According to MAP, the
incentive and ability for cable operators and newspapers to exercise influence are nearly the same as for
broadcasters.  However, Paxson argued that newspapers or cable systems should not be included, since rules
already exist restricting cross-ownership by those entities, and an equity/debt plus gloss would make these
"onerous existing regulations even more burdensome."  Knight-Ridder also argued that newspapers should
not be subject to the EDP rule, noting that as competition for viewers has increased, newspapers have sought
to work more closely with broadcasters in producing news reports, documentaries and other public service
programs to realize synergies between print and broadcast newsgathering operations, and that the explosion
of services means that the concern about diversity that underlies the cross-ownership rules is now a thing of
the past.  Knight-Ridder asked that if the Commission believes that the EDP rule should apply to the broadcast-
newspaper cross-ownership rule, it should at least defer any decision to include newspapers as same-market
broadcasters until the next mandated review of the broadcast-newspaper cross-ownership rule.  Knight-Ridder
also argued that if the Commission does include newspapers as same-market media entities, it should apply the
same definition of "market" as used for the underlying cross-ownership rule, in order to minimize confusion
among the regulated parties.  

     32.  Fox opposed application of the equity/debt plus proposal to program suppliers, noting that it
would deprive local broadcast outlets of needed capital and limit the ability of program suppliers to make
needed investments in their distribution infrastructure, thereby undermining the goals of competition and
diversity.  TCI and BET also opposed applying the proposal to program suppliers.  BET noted that new
entrants, particularly in DTV where programming may be scarce, need flexibility to form joint ventures with
program suppliers to enter the DTV market.  
       
     33.  Definition of Program Supplier.  CBS and MAP argue for a broader definition of program
supplier.  CBS argued that any supplier of 20 percent or more of the licensee's prime-time programming should
be defined as a program supplier under the proposed rule and that the attribution rules should be applied in
determining how great an interest in a program supplier a person or entity can hold without being deemed a
program supplier for purposes of applying an equity/debt plus rule.  MAP also argued that program suppliers
should include networks, syndicators, program producers, and program providers pursuant to LMAs.

     34.  Most commenters addressing this issue, however, argued for a narrower definition of program
supplier.  Paxson argued that the Commission should limit the "equity or debt plus" standard to the four major
networks because they have historically exercised extraordinary influence over their affiliates.  King World
Productions, Inc. ("King") argued that the definition should be limited to networks as defined by Section
73.658(g)(1) of the Commission's rules.  NASA agreed that "program suppliers" should include only networks
as defined by former Section 73.662(f) of the Commission's rules (15 hours of prime time programming/75
percent of households), and other suppliers that provide substantial quantities of programming to licensees. 
Tribune suggested that "program supplier" should be narrowly defined so as not to include syndicators that
typically sell programming in separate transactions to a variety of stations within and across markets, because
they have neither the means nor the incentive to control their distribution networks, and that the term should
apply only to those entities that exercise control over the operations of the program supplier.  And, Viacom
argued that syndicators should be distinguished from both networks and LMA brokers, with the networks and
LMA brokers subjected to a lower capitalization benchmark.

3.  Decision  

     35.  Overview.  As we noted in the Attribution Further Notice, the relaxation of the multiple ownership
rules resulting from the 1996 Act requires neither relaxation nor tightening of our attribution rules but does
underscore the importance of maximizing the precision of the attribution rules.  We should take care in
enforcing the multiple ownership limits, which have been deliberately set at certain levels, to ensure that the
attribution rules neither unduly loosen nor restrict those limits, but rather apply them with the greatest precision
to entities that have the power to influence a licensee's operations.  We have been mindful of this goal in the
decisions that follow.

     36.  We will not eliminate the single majority shareholder or nonvoting stock exemptions, but, rather,
to address the concerns that we raised in the Attribution Notice and Attribution Further Notice, we will adopt
our equity/debt plus attribution proposal, modified as discussed herein, as a new rule that would function in
addition to the other attribution rules.  Under this new EDP rule, where the investor is either (1) a "major
program supplier," as defined herein to include all programming entities (including networks and inter-market
time brokers) that supply over 15 percent of a station's total weekly broadcast programming hours, or (2) a
same-market media entity subject to the broadcast multiple ownership rules (including broadcasters, cable
operators, and newspapers), its interest in a licensee or other media entity in that market will be attributed if
that interest, aggregating both debt and equity holdings, exceeds 33 percent of the total asset value (equity plus
debt) of the licensee or media entity.  As a shorthand, we will use the term, "total assets," herein to refer to the
total asset value of the licensee.  In the case of a major program supplier, the EDP rule will apply and the
interest will be attributable only if the investment is in a licensee to which the requisite triggering amount of
programming is provided.  A finding that an interest is attributable under EDP would result in attribution for
purposes of applying all relevant multiple ownership rules, local and national, except that, as discussed in the
TV National Ownership Order, we will not double-count same-market TV stations towards application of the
national TV ownership rules.

     37.  We will define equity to include all stock, whether common or preferred and whether voting or
nonvoting.  We will also include equity held by insulated limited partners in limited partnerships.  Debt includes
all liabilities, whether short-term or long-term.  Total assets, by definition, is equal to the sum of all debt plus
all equity.  Finally, an interest that is attributable pursuant to the EDP rule will count in determining
compliance with all applicable ownership rules, national as well as local.

     38.  We note that parties, such as ABC, while agreeing that our current attribution rules are subject
to abuse and that revision is necessary, argued for a 50 percent attribution benchmark test instead, based on
a control concept, or in the alternative that the EDP rule should not be adopted because the kinds of
relationships it would reach do not confer control.  Parties have similarly argued that there is no evidence of
unauthorized transfer of control in such relationships.  However, attribution is not limited to relationships that
permit control, but also extends to relationships that permit sufficient influence over core operations of the
licensee such that they should be subject to the multiple ownership rules.  We believe that the EDP standard
will address such relationships that may inappropriately avoid attribution under our current rules.

     39.  The equity/debt plus approach is intended to resolve our concerns, expressed in the Attribution
Notice, that multiple nonattributable business interests could be combined to exert influence over licensees. 
As we stated in the Attribution Notice, we are concerned that our nonvoting stock, single majority shareholder,
and debt attribution exemptions can permit nonattributable investments that could carry the potential for
influence such that they implicate diversity and competition concerns and should be attributed.  The record in
this proceeding, including comments filed in response to the Attribution Notice and to the Attribution Further
Notice, amply underscores the need to increase the precision of the attribution rules by adopting an equity/debt
plus standard.  In this regard, NASA, MAP, and Viacom have supported adoption of an EDP rule.

     40.  Fox argued that none of the proponents of the EDP rule have "clearly identified the harmful
conduct -- an amorphous concept of undesirable 'influence' -- that needs to be remedied by the proposed
standard, or demonstrated how it will alleviate those harms."  According to Fox, unless they do so, the
Commission should refrain from increasing restrictions on broadcast ownership.  Fox cited NAACP v. FCC,
682 F.2d 993, 1000-01 (D.C. Cir. 1982) and Home Box Office, Inc. v. FCC, 567 F.2d 9 (D.C. Cir.), cert.
denied, 434 U.S. 829 (1977) for the proposition that the Commission can not regulate unless it can identify
the "harm" to be remedied.  However, the Commission has identified the potential harm it seeks to remedy. 
The current attribution exemptions are too broad with respect to certain currently non-attributable interests held
by major program suppliers and same-market broadcasters, thus permitting them to wield a level of influence
that should be subject to limitation by the multiple ownership rules.  A holding that such an interest should be
attributable does not rest on a specific finding that it is harmful per se, but rather on a finding that it is the sort
of interest that should be counted in applying the multiple ownership rules.  It is the multiple ownership rules,
not the attribution rules, that determine how many and what kinds of interests in stations can be combined
before harm to diversity and competition results.  The finding necessary for attribution relates to the finding
of control or influence over the core operations of the licensee.

     41.  The EDP rule addresses the most serious concerns we raised in the Attribution Notice and
Attribution Further Notice concerning the underinclusiveness of the attribution rules, particularly those that
were supported in the record.  Based on the record, we have targeted our remedy and focused those concerns
in shaping the EDP rule.  For example, except in cases involving a same-market media entity or major program
supplier, as defined herein, the single majority shareholder exemption and exemptions for nonvoting stock,
preferred stock, corporate debt and other corporate liabilities will continue to apply as they do now.  Moreover,
the EDP rule will not apply to a program supplier's investment in a licensee or station unless the program
supplier provides over 15 percent of that station's total weekly broadcast hours.  Thus, a program supplier may
invest without limit in the nonvoting stock, preferred stock or debt of a licensee to which it does not provide
the requisite level of programming without having its interest attributed.

     42.  Furthermore, same-market or other relationships not within the defined EDP triggering
relationships described herein will continue to be non-attributable.  For example, an investor that is not a major
program supplier and that is not a same-market media entity (i.e., it does not have an attributable interest in
a station, newspaper, or cable system in a given market) can continue to hold more than 33 percent of the total
nonvoting assets of two stations or more in that same market without either interest being attributable.  
 
     43.  The targeted approach embodied in the EDP rule reflects our current judgment as to the
appropriate balance between our goal of maximizing the precision of the attribution rules by attributing all
interests that are of concern, and only those interests, and our equally significant goals of not unduly disrupting
capital flow and of affording ease of administrative processing and reasonable certainty to regulatees in
planning their transactions.  In this regard, some commenters have urged us to retain our current approach or
implement a new case-by-case approach, considering the combined impact of multiple business and financial
relationships in a particular transaction.  Viacom, for example, argued for attribution criteria that would require
the Commission to examine, on a case-by-case basis, whether an interest holder is contractually precluded from
participation in programming, personnel, or budget decisions.  

     44.  However, we believe that the bright-line EDP test is superior to a case-by-case approach.  The
EDP rule will provide more regulatory certainty than a case-by-case approach that requires review of contract
language.  Thus, the EDP rule will permit planning of financial transactions, would also ease application
processing, and would minimize regulatory costs.  While an ad hoc approach might be more tailored than the
EDP rule, it also might lead to complicated interpretation and processing difficulties and would likely add
uncertainty to resolution of attribution cases.  Of course, we retain discretion to review individual cases that
present unusual issues on a case-by-case basis where it would serve the public interest to conduct such a
review.  Such cases might occur, for example, when there is substantial evidence that the combined interests
held are so extensive that they raise an issue of significant influence such that the Commission's multiple
ownership rules should be implicated, notwithstanding the fact that these combined interests do not come within
the parameters of the EDP rule.  We do not intend by this reservation of discretion to resurrect the cross-
interest policy, elsewhere eliminated in this Report and Order.  Rather, we merely emphasize our obligation
under the Communications Act to apply the public interest standard and, as necessary, to scrutinize
extraordinary or unanticipated circumstances that may arise.  
           
     45.  In the Attribution Further Notice, we invited comment on the impact of a 33 percent EDP
threshold on small business entities, particularly on whether there would be a disproportionate impact on small
or minority entities.  While some parties have argued that adoption of an equity/debt plus proposal would
deter capital flow to broadcasting generally and might curb investment in smaller, minority, or UHF stations,
in particular, or in digital television, others have argued strongly that this is not the case.  We have no reason
to believe that the EDP rule would unduly deter investment.  The equity/debt plus proposal does not preclude
investment by any entity; rather, it limits  nonattributable investment levels for entities that have the potential
to influence licensees.  Moreover, the limit does not apply to all entities that might invest or help fund the
transition to digital television or otherwise invest in licensees.  Additionally, to help assure that our actions
today do not unduly impede capital flow to broadcasting, we have raised the passive investor benchmark.  As
discussed above, we believe that because of the nature of passive investors, we may raise that benchmark
consistent with our goal of maximizing the precision of the attribution rules.  In addition, we will consider
individual rule waivers in particular cases where substantial evidence is presented that the conversion to digital
television would otherwise be unduly impeded or that a waiver would significantly expedite DTV
implementation in that particular case.

     46.  While we have invited comment on those issues, it is nonetheless our view that promoting our goal
of ensuring adequate funding for the transition to digital television is better accomplished through our
ownership rather than our attribution rules.  The attribution rules are designed to attribute entities that wield
significant influence on core operations of the licensee.  It is the ownership rules that limit investment based
on our core policies of diversity and competition.  Arguments with respect to whether additional investment
should be permitted have been made in the context of our companion multiple ownership proceedings.  We
believe that the attribution rules should function as precisely as possible to identify influential interests and that
relaxation of ownership limits, if warranted, should be accomplished directly through revision of the multiple
ownership rules, not indirectly through manipulation of what is considered "ownership."  

     47.  Triggering Relationships.  As we proposed in the Attribution Further Notice, the EDP approach
will focus directly on those relationships that may trigger situations in which there is significant incentive and
ability for the otherwise nonattributable interest holder to exert influence over the core operations of the
licensee.  The approach of focusing on specified triggering relationships would extend the Commission's current
recognition that the category or nature of the interest holder is important to whether an interest should be
attributed.  For example, under the current broadcast attribution rules, passive investors are subject to a higher
voting stock attribution benchmark, since these parties are subject to fiduciary and other restraints on their
exercise of influence over licensees and are, by their nature, principally concerned with investment returns
rather than direct influence over the licensee.  The two relationships that will trigger the rule, major program
supplier and same-market media entity, are relationships that afford the interest holder the incentive and means
to exert influence over the licensee.

     48.  In adopting the EDP rule, we affirm our tentative conclusion in the Attribution Further Notice
that there is the potential for certain substantial investors or creditors to exert significant influence over key
licensee decisions, even though they do not hold a direct voting interest or may only have a minority voting
interest in a corporation with a single majority shareholder, which may undermine the diversity of voices we
seek to promote.  They may, through their contractual rights and their ongoing right to communicate freely with
the licensee, exert as much, if not more, influence or control over some corporate decisions as voting equity
holders whose interests are attributable.

     49.  This conclusion is strongly supported by the record.  For example, in its Comments in response
to the Attribution Notice, AFLAC Broadcast Group, Inc. ("AFLAC"), arguing for elimination of the single-
majority shareholder attribution exemption, cited evidence that "in most cases which are structured to take
advantage of the single majority shareholder exemption, it is not a 'plain vanilla' stock deal.  It is often a
complex deal in which the stock ownership is only the 'tip of the iceberg' of the various business relationships
between the two parties."  AFLAC noted that there also may be nonvoting investments, options to convert
to voting stock, affiliation agreements, and contracts granting approval rights over certain major decisions of
the licensee.  AFLAC argued that the interest holder had effective influence or control under these
circumstances, and its interest should be attributable.

     50.  Viacom, which also supported the EDP rule, but urged a more restrictive version, as discussed
above, pointed out that the Commission, in crafting the blanket attribution exemption for non-voting shares,
did not contemplate that the non-voting shareholder and the licensee would enter into contractual arrangements
requiring or predicated on the de facto active participation of the non-voting stockholder in the licensee's
operations.  Viacom cited Commission cases in which the networks (or those with ownership interests in a
network):

          held equity and/or debt interests constituting or exceeding one-third of the capitalization of the
     broadcast stations at issue.  Yet, solely for purposes of avoiding attribution, the investors in
     each case financed the stations, not in exchange for corresponding voting rights that might
     trigger the Commission's attribution threshold, but, instead, in exchange for contractual rights
     -- through corollary written or unwritten agreements -- that permitted them the right among
     other things to participate in the programming and/or related core functions of the licensee. 
     Indeed, by heavily financing television stations in return for nothing less than a quid pro quo
     for an affiliation, networks have been permitted to significantly extend their ownership and
     influence in television stations beyond their declared owned and operated (O&O) stations.

     51.  Same-Market Media Entities.  As we noted in the Attribution Further Notice, same-market
broadcasters and certain other same-market media entities may raise particular concerns because of our goal
of protecting local diversity and competition.  Firms with existing local media interests may have an incentive
and means to use financing or contractual arrangements to obtain a degree of horizontal integration within a
particular local market that should be subject to local multiple ownership limitations.  Indeed, the Commission's
cross-interest policy reflected its concern for competition and diversity where an entity has an attributable
interest in one media outlet and a "meaningful relationship" with another media outlet serving substantially the
same area.  Accordingly, we will include same-market media entities as one of the relationships that will
trigger application of the EDP rule.  

     52.  As discussed above,  42, supra to trigger application of the EDP rule to same-market media
entities, the interest held in the non-EDP media entity in the same market must be attributable without reference
to the EDP rule; the holding of a non-attributable interest in one station or entity in a market does not trigger
application of the EDP rule where an EDP level, but otherwise non-attributable, interest is acquired.  Thus,
under this prong of the EDP rule, a nonvoting interest in 34 percent of the total assets of two stations in the
same market will not result in attribution of either station.  This is because the EDP rule is only triggered when
the entity acquiring the second interest also holds an interest in a same-market media entity that is attributable
under the current attribution rules other than the EDP rule.  We follow case law in the cross-interest policy
context in this regard.  As discussed below, that policy is implicated in situations where a party holds an
attributable interest in one media outlet and has a "meaningful relationship" with another  media outlet serving
"substantially the same area.  As we proposed, we will include same-market radio and television broadcasters
as well as cable operators and newspapers in the category of same-market media entities subject to the
equity/debt plus attribution standard.  Cable operators and newspapers are subject to cross-ownership rules
and have also been subject to the cross-interest policy.  There is, accordingly, good reason to include them in
the EDP rule.

     53.  For purposes of applying this prong of the EDP rule to radio stations, newspapers, and cable
operators, as proposed in the Attribution Further Notice, we will define the "same market" by reference to the
definition of the market used in the underlying multiple ownership rule that is implicated.  As noted by
Knight-Ridder, such an approach will help avoid confusion among the regulated entities in applying the EDP
rule.  With respect to television stations, as we also noted in the Attribution Further Notice, the definition
of what is the same market for purposes of applying the EDP attribution standard is resolved in the companion
television local ownership proceeding.

     54.  Program suppliers.  In the Attribution Further Notice, we invited comment on whether we should
include program suppliers under the "equity/debt plus" attribution test to address our concern and that of some
commenters that program suppliers such as networks could use nonattributable interests to exert influence over
critical station decisions, including programming and affiliation choices.  We cited recent transactions involving
program suppliers where it appeared that nonattributable investors could be granted rights over licensee
decisions that might afford them significant influence over the licensee.  We invited comment as to whether we
should encompass radio and television time brokerage agreements or LMAs under the proposed "equity/debt
plus" attribution approach, if we specify program suppliers as a triggering category.

     55.  We will include major program suppliers in the EDP rule.  We will define the "major program
suppliers" that are subject to this new attribution standard to include entities that provide more than 15 percent
of a station's total weekly broadcast programming hours.  We believe that the 15 percent standard should apply
to all providers of programming to stations, including those that provide programming pursuant to inter-market
LMAs.  As noted above, the EDP rule would apply only to the major program supplier's investments in a
station to which it supplies the requisite amount of programming.  In addition, where a person or entity has an
attributable interest in a major program supplier, that person or entity will be deemed to be a major program
supplier for purposes of applying the EDP rule.

     56.  We have decided to define a major program supplier subject to the EDP rule as all programming
entities that supply over 15 percent of a station's weekly programming for the following reasons.  We agree
with those commenters that argue that not every program provider can exert sufficient influence such that its
otherwise non-attributable financial interests in a licensee should potentially be subject to attribution.  We note
the views of commenters that the major networks should be subject to the EDP rule and those that argue for
including providers of substantial amounts of programming to a station.  Those entities that provide substantial
quantities of programming to a licensee are, we believe, in a strong position to exert significant influence over
that licensee, particularly when the programming connection is coupled with the requisite financial investment,
such that the EDP rule should be triggered.  We believe that the 15 percent standard accomplishes these goals,
as it would encompass those entities providing substantial quantities of programming that also have the
requisite investment in the station and would exclude those entities that provide only small amounts of
programming and that therefore do not have potential to exert significant influence over licensees.  Moreover,
it is a standard that we have experience in applying, as it is the standard currently used in determining whether
an intra-market radio LMA is per se attributable, and it is the standard that will be used in determining whether
an intra-market TV LMA is per se attributable.  Under our new rule, an intra-market LMA is per se
attributable if it involves more than 15 percent of a station's programming.  In contrast, an inter-market LMA
is attributable, under the EDP rule, only if it involves more than 15 percent of a station's programming and if
the LMA is accompanied by a financial investment that is above the 33 percent investment threshold. It would
sweep too broadly to attribute inter-market LMAs that are unaccompanied by the requisite financial investment. 
The substantial investment provides additional incentive and ability for influence or control. Finally, it is a clear
and administratively simple standard to apply, promoting our goal of making the EDP rule a bright-line test.

     57.  Fox, in arguing that we should not adopt an EDP rule for program suppliers, argued that we have
failed to identify a sufficient rationale for treating non-controlling equity or debt interests held by program
suppliers more restrictively than other kinds of business relationships that may confer influence, such as those
with lenders.  According to Fox, lenders may have substantial influence over station operations, particularly
when the borrower is in default, and most network affiliation agreements requiring in-pattern clearance would
be attributable if "influence" is the test of attribution.  We disagree.  A clear rationale exists for not
attributing network affiliation agreements not accompanied by the requisite investment or debt agreements not
involving program suppliers or same-market broadcasters.  We do not attribute all network affiliation
agreements because, absent a substantial equity or other investment that may create accompanying obligations,
the affiliate is free to negotiate with the network for particular terms.  With respect to lenders, such as banks,
our experience indicates that their motivation is return on their investment, and that they do not have the same
incentive as the networks to influence the programming or other core operational choices of the licensee.     

     58.  While some commenters strongly argued that applying the EDP rule to program suppliers would
curb investment in broadcast stations and possibly hurt weaker UHF stations and might deter investment that
would facilitate the conversion to DTV, they do not provide empirical evidence to support this argument.  We
also note that the rule does not preclude investment, but merely provides that investments over a certain level
will be deemed presumptively attributable.  Networks are therefore free to invest in their affiliates, subject of
course to the applicable multiple ownership rules.  Moreover, the EDP rule does not attribute investments, even
those by networks in their affiliates, which fall below the 33 percent threshold.  Thus, a major program supplier
may have an investment that is equivalent to 32 percent of the total assets of a station to which it supplies
programming in excess of the 15 percent standard.  This would comply with all EDP limits and the interests
would not be attributable.  In addition, the EDP rule does not affect investments by entities other than major
program suppliers or same-market media entities.  Accordingly, we believe that the EDP rule will not curb
investment, deter new entry, or curb the conversion to DTV. 

     59.  We have decided to focus the program supplier prong of the EDP rule on major program suppliers,
which as defined herein would include the major broadcast networks, for a number of reasons.  Several recent
cases triggering concerns with respect to substantial nonattributable investments have involved the major
broadcast networks.  Additionally, network affiliates have underscored our concerns in this area and
supported applying the EDP rule to these networks.  In response to the Attribution Notice, network affiliates
have expressed concerns that the current attribution exemptions have allowed the broadcast networks to extend
their nationwide reach by structuring nonattributable deals in which the networks effectively exert significant
influence, if not control, over licensees.  According to NASA, which, in its Comments in response to the
Attribution Further Notice, supported adoption of the equity or debt proposal and its application to networks,
the combination of less-than-controlling interests and network affiliation potentially gives a network undue
influence over a licensee's programming and other operations in a number of ways:  (1) less-than-controlling
interests create fiduciary obligations on the majority owner that might require the owner to favor the network;
(2) long-term affiliation agreements which are a quid pro quo for their investments confer influence on
networks; (3) affiliation agreements can contain terms that include significant financial disincentives to carry
local programming or other provisions that inhibit an affiliate's flexibility to carry non-network programming
at times the networks provide programming; and (4) the affiliate's willingness to accept those terms is likely
to be influenced by any financial interests the network holds in the affiliate.  According to NASA, "[g]iven
the effects of network ownership and the use of investments to gain affiliations, less-than-controlling network
ownership of a station is functionally equivalent to an attributable ownership interest.  In many cases, because
of the dependency of affiliates, the network may have significantly more influence than a typical attributable
owner."  NASA also noted that the networks have every reason to exploit the attribution exemptions because
they are approaching their national ownership limits.

     60.  We have decided not to sweep so broadly as to include all entities from which a licensee obtains
programming but only to include those entities that provide more than 15 percent of a station's weekly total
programming.  We believe, based on the record, that this percentage will not include most syndicators, which
apparently provide less than 15 percent of a station's total weekly programming.  We have not been presented
evidence that smaller program suppliers and syndicators that do not provide substantial quantities of
programming to stations have the potential to wield significant influence such that their investment should be
attributed.  For example, King, in arguing for application of the EDP rule to networks, argued that there is no
evidence that syndicators have engaged in the kinds of arrangements and transactions that gave rise to the
proposal and no reason to believe that the nature of the contractual arrangements between a syndicator and a
station are likely to confer on the syndicator the realistic potential to significantly influence programming or
other core operations of the station.  Under these circumstances, there appears to be no real need to impose
constraints on investments by these syndicators and by new networks that do not provide the triggering amount
of programming.  If it appears that problems arise in these areas, we can later broaden the EDP rule.

     61.  Investment Thresholds. Under the EDP rule, where the creditor or equity interest holder is a same-
market broadcaster or major program supplier, as defined herein, in addition to applying the existing attribution
criteria, we would attribute any financial interest or investment in a station or other media outlet where it
exceeds 33 percent of the total assets (debt plus voting, non-voting and preferred stock) of the licensee.  We
intend to aggregate the equity and debt interests of such an investor (including both non-voting stock in
whatever form it is held and voting stock) in a licensee or other media outlet for purposes of applying the
investment threshold.  Thus, when the investor's total investment in the licensee or other media outlet,
aggregating all debt and equity interests, exceeds a specified threshold percentage of all investment in the
licensee (the sum of all equity plus debt), that investment would be attributable.  In aggregating the different
classes of investment, equity and debt, we intend to use total assets (debt plus voting, non-voting, and preferred
stock) as a base.  We will not apply the percentage threshold separately to debt and to equity interests
because this could lead to distortions in applying the EDP rule, depending on the percentage of total assets that
each class of interests comprises.  For example, were we to apply the percentage thresholds separately, a
company with only 10 percent of its capital from debt would be attributable to a creditor providing only 3.4
percent of  the company's total assets, while any equity holder providing 32 percent of the total capital would
be nonattributable. 
  
     62.  The FCC has recognized that holding voting stock in sufficient quantities confers the ability to
exert influence or control over the licensee.  Our decision to expand our focus beyond voting stock to nonvoting
stock and debt is buttressed by academic literature.  Nonvoting stock and debt may now be used to control
or influence a licensee in a significant manner, especially when coupled with another meaningful relationship
or when held by someone that has the incentive to influence the station or media entity.  There is an incentive
for licensees and other entities that face regulatory constraints on their acquisition of voting stock and other
currently attributable interests (e.g., networks that face the 35 percent national reach cap) to seek to combine
currently non-attributable investments with contractual rights in such a manner so as to gain significant
influence, and we believe that the current attribution exemptions have afforded such entities the ability to do
so.  Accordingly, the EDP rule examines not only the investment in voting stock but also nonvoting equity and
debt in order to limit the ability of such entities to circumvent the attribution rules. 

     63.  We have decided to set the threshold at 33 percent, as proposed in the Attribution Further
Notice.  Some commenters have advocated a higher threshold, while others have advocated a lower threshold. 
ABC stated that a 50% threshold, rather than 33%, more realistically identifies the type and level of interest
that conveys a realistic potential to control the core operations of a licensee.  Paxson argued for a 25%
benchmark, but only for the 4 major networks.  MAP advocated a 20 percent benchmark.  Viacom agreed with
33% in cases where the investor is contractually restricted from influencing budget, hiring and programming
decisions, but argues for a 10% benchmark when contractual safeguards are not present. Viacom believes that
an investment of even 10% of the capitalization of a station, particularly if coupled with the ability to influence
station operations, carries as much influence as a 10% voting stake.  CBS stated that the threshold should be
set no lower than 33% to avoid prohibiting relationships the Commission has already deemed permissible. 
 

     64.    We believe that a 50 percent threshold would be inappropriately high.  Our goal is not merely
to attribute interests with the potential to control but also those with a realistic potential to exert significant
influence.  On the other hand, the suggested thresholds of 25 percent or 10 percent seem too low.  In setting
the threshold for attribution of these newly attributable interests, we want to be cautious not to set the limit so
low as to unduly disrupt capital flow to broadcasting.  In addition, we believe that the threshold for attribution
of nonvoting interests should be substantially higher than the attribution level for voting interests, which give
the holder a ready means to influence the company.  The proposed 33% threshold seems to be an appropriate
and reasonable attribution threshold.  We note that we have discretion to exercise our judgment in setting a
percentage threshold in this regard and to draw an appropriate line, a challenging yet inevitable task for
government agencies.  We have employed a 33 percent benchmark applied in the context of the cross-interest
policy, and that particular benchmark does not appear to have had a disruptive effect.  In Cleveland
Television, the Commission held that a one-third non-voting preferred stock interest by a broadcaster in another
station in the same market conferred "insufficient incidents of contingent control" to violate the multiple
ownership rules or the cross-interest policy, and that the holders, by virtue of ownership of the non-voting
preferred stock interest would not retain the means to directly or indirectly control the station.  More recently,
we have applied Cleveland Television's 33 percent threshold in Roy M. Speer, where we limited the non-
attributable equity holdings of a same-market television licensee in another local television station to 33
percent.  We will use this threshold in applying the EDP rule but note that we could adjust the threshold later,
if warranted.

     65.  We recognize that the attributable status of a certain investment could change, based, for example,
on a change in the firm's assets, resulting in the investor's interests dropping below the 33 percent threshold,
or vice versa.  We will require parties to maintain compliance with the attribution criteria as any such
changes occur.  Where sudden, unforeseeable changes take place, however, we will afford parties a reasonable
time, generally one year, to come into compliance with any ownership restrictions made applicable as a result
of the change in attributable status.  Finally, we note that we have conditioned a number of recent cases that
have raised similar concerns on the outcome of this proceeding.  We intend to issue separate orders, as
necessary, to apply the EDP rule to any cases that have been conditioned on the outcome of this proceeding. 

C.  Time Brokerage Agreements or LMAs 

1.  Background

     66.  An LMA or time brokerage agreement is a type of contract that generally involves the sale by a
licensee of discrete blocks of time to a broker that then supplies the programming to fill that time and sells the
commercial spot announcements to support the programming.  Currently, we do not attribute television
LMAs, and, accordingly, these relationships are not subject to our multiple ownership rules.  In the radio
context, however, time brokerage of another radio station in the same market for more than fifteen percent of
the brokered station's weekly broadcast hours results in attribution of the brokered station to the brokering
licensee for purposes of applying our multiple ownership rules.  

     67.  In the Attribution Further Notice, we incorporated the tentative proposal, initially set forth in the
Local Ownership Further Notice, to attribute television LMAs based on the same principles that currently
apply to radio LMAs.  Thus, time brokerage of another television station in the same market for more than
fifteen percent of the brokered station's weekly broadcast hours would be attributable and would count toward
the brokering licensee's national and local ownership limits.  We specifically proposed to count attributed
television LMAs in applying our other ownership rules, including, for example, the broadcast-newspaper cross-
ownership rule, the broadcast-cable cross-ownership rule, and the one-to-a-market rule (or radio-television
cross-ownership rule).  

2.  Comments

     68.  Most commenters addressing this issue supported our proposal to attribute television LMAs based
on the same principles that currently apply to radio LMAs.  For example, ABC contended that the
justification presented by the Commission in the radio LMA rule -- i.e., that attribution of radio LMAs is
necessary to prevent the use of time brokerage to circumvent the local ownership rules -- supports adoption
of a parallel attribution rule for television LMAs.  Bahakel contended that the current non-attributable status
of LMAs undercuts the local market ownership limits, while BET argued that the Commission's proposal
addresses the dual problems of evasion of the station ownership limits through the use of LMAs and the
potential undue concentration of programming control among a few group television owners.  

     69.  Many parties agreed with our tentative conclusion that television LMAs should be attributable
because they confer significant influence over the programming of the brokered party's station.  MAP
contended that television LMAs, like radio LMAs, result in a diminution of voices and viewpoint diversity. 
Retlaw declared that television LMAs should be recognized as conferring a degree of control and influence that
warrants attribution, and that holding otherwise would be "completely and inexplicably inconsistent" with the
Commission's earlier findings with regard to radio.  

     70.  MAP also argued that the contention that LMAs may rescue struggling stations is irrelevant for
the purposes of the ownership rules.  Since the recent market for the purchase of stations has been strong, it
argued, it is likely that in many LMA situations the licensee could have found another buyer, thereby
maintaining the same number of voices.  Further, according to MAP, the importance of tight, effective
attribution of same-market LMAs is magnified in light of the recent and ongoing relaxation of broadcast
ownership rules.  MAP argued that, because these struggling stations many times present the best, most
affordable avenue for entry by minority and female owners, allowing licensees to enter into LMAs works
against the Commission's "longstanding goals of promoting equal opportunity in broadcasting." 

     71.  Viacom suggested a variation of our proposal to attribute television LMAs.  Viacom advocated
that an LMA be defined as a right, evidenced by a formal contract or de facto actions, of one broadcaster to
direct or participate in the programming decisions of another broadcaster with respect to more than 15 percent
of that broadcaster's total weekly broadcast hours, "averaged over a rolling six months."  Viacom argued that
television broadcasters that hold 10 percent or more of a station's capitalization and that broker that station
pursuant to an LMA should be attributed ownership of the station, even if the brokered station may be in a
different market than the brokering station.  For two stations that operate in the same market, Viacom
advocated a per se rule that the mere existence of an intra-market LMA (at the 15 percent threshold, as
specified in Viacom's definition of LMA) would suffice to create a cognizable interest in the brokered station,
"regardless of the fact of or level of financial investment."

     72.  DOJ noted that, under the antitrust laws, LMAs are quite similar, in their effect on competition,
to station ownership.  It stated that, in situations where the brokering station controls the sale and pricing
of a significant portion of the licensee station's advertising inventory, it is likely to consider the licensee station
to be "owned" by the brokering stations for purposes of its merger analysis.  Accordingly, DOJ views it as
appropriate to attribute television LMAs for purposes of applying local television ownership restrictions. 

     73.  Some caveats were sounded by commenters that otherwise were generally in favor of adopting a
television LMA attribution rule.  For example, SJL Communications, Inc. ("SJL") argued that attributing LMA
arrangements, without concurrently allowing television duopolies, would deprive the public of the significant
benefits that LMAs can provide and would violate Congressional intent.  In addition, NTIA argued that the
FCC is not in a position to promulgate a firm LMA attribution rule at this time because it lacks basic,
systematic evidence about the prevalence of television LMAs and their effect on the marketplace.  NTIA
argued that although applying the radio rule to television LMAs would be an acceptable first step toward
promulgating a "firm LMA attribution rule," the radio and television markets are "likely to be sufficiently
different" so that grafting the 15 percent radio rule onto the television marketplace should only be an interim
measure.  NTIA recommended that the Commission conduct a thorough survey of television LMAs as a prelude
to establishing a final rule.

     74.  Commenters opposed to attributing LMAs generally did not disagree that LMAs confer significant
influence over the programming of the brokering party's station, but either denied that LMAs can have negative
competitive or diversity effects or argued that their public interest benefits outweigh these other
considerations.  For example, Pappas and Paxson both emphasized that Congress, in the 1996 Act, praised
the public interest benefits of LMAs, and stated that the Commission has long recognized that LMAs result
in significant public benefits.  Paxson asserted that its participation in a number of radio and television
LMAs has advanced the Commission's twin regulatory goals of providing new service (with attendant diversity
and competition) and minority ownership.

     75.  Applicability to other ownership rules.  Both BET and MAP favored attributing LMAs for
purposes of the national audience reach cap.  BET argued that attributing television LMAs would subject
them to the FCC's ownership rules, thus preventing further television station ownership concentration and
stopping attempts to bypass national and local ownership restrictions through LMAs.  MAP maintained that
LMAs could allow holders to violate the intent of the national ownership caps by combining outright ownership
and LMAs to reach over 35 percent of the national audience.

     76.  Paxson, however, argued that neither radio nor television LMAs should be considered attributable
for purposes of Commission ownership restrictions other than the duopoly rules.  According to Paxson, the
Commission has never treated LMAs as attributable interests for purposes other than the duopoly rules, and
there is no evidence that such treatment has created abuses or adversely affected competition and diversity. 
In the absence of such evidence, Paxson argued that expanding the attributable status beyond the duopoly rules
is unnecessary and would disserve the public interest.

     77.  Different attribution percentage.  Knight-Ridder advocated setting a higher threshold (25 percent
of a station's programming) for attribution of television LMAs, arguing that television viewers today have more
channels and programming services to choose from than ever  before.  Knight-Ridder contended therefore that
a 25 percent programming attribution threshold for television LMAs would fully protect local diversity and
competition, while encouraging innovative and successful combinations between local television stations and
other programmers in the community (such as newspapers) that would otherwise be impossible.

     78.  Paxson argued that television stations should not be attributed based on the same standard as radio
LMAs because radio stations generally are programmed entirely on a local basis, whereas many television
stations rely on substantial amounts of network and syndicated programming, which would result in the 15
percent standard being "artificially low."  To more closely parallel the radio LMA attribution standards, Paxson
advocated that any television attribution standards should be based on the amount of "locally produced," i.e.,
excluding network and syndicated, programming provided by the broker.

     79.  Responses to Public Notice.  As noted above, we issued a Public Notice requesting all parties to
all existing television LMAs, or time brokerage agreements, to provide certain factual information regarding
the terms and characteristics of these agreements.  We requested this information to supplement the record
in this attribution proceeding and in other rulemaking proceedings currently pending before us that relate to
the treatment of television LMAs and ownership rules.

     80.  Specifically, we requested information as to the number of outstanding television LMA contracts;
the terms of the LMA contracts, including the origination date, duration and renewal options; the market
characteristics of the brokering and brokered station, such as the Nielsen rankings and market shares of the
broadcast stations, and whether the contracting parties reside in the same, adjacent or non-adjacent markets;
the nature of the programming aired on the leased broadcast time, including affiliations; the degree of overlap
between brokered and brokering stations; and any other relevant information, including any public interest
benefits or efficiencies resulting from LMAs that the parties wish to bring to our attention.

     81.  Of the 114 LMAs, or time brokerage agreements, reported, there are 74 in which the brokering
and brokered stations are located in the same market, nine in which the two stations are in adjacent markets,
and 28 in which the brokering and brokered stations are located in non-adjacent markets.  In addition, three of
the reported LMAs are located in Puerto Rico.  Although most of the brokering stations are affiliated with one
of the top four networks (ABC, CBS, FOX and NBC), the brokered stations tend to be affiliated with either
UPN or WB or are unaffiliated or have yet to come on the air.

     82.  The responses received to the questionnaire also provide information supporting our view that
LMAs accord the broker significant influence that warrants attribution.   First, the LMA, or time brokerage
agreement, typically brokered most, if not all, of the brokered station's broadcast time.  The percent of time
brokered with both same-market and out-of-market LMA stations averaged 90 percent or greater.  Second,
LMA contracts tended to have extended maturities, which are renewable in the majority of cases.  Same-market
LMA contracts averaged seven years in duration, and ranged from one to 21 years, while out-of-market LMA
contracts averaged somewhat less at five years, with a range from two to ten years.  In addition, a significant
number of LMA agreements contained options to purchase the station.
  
     83.  Decision.  We will adopt a new rule to per se attribute television LMAs, or time brokerage of
another television station in the same market, for more than fifteen percent of the brokered station's broadcast
hours per week and to count such LMAs toward the brokering licensee's local ownership limits.  We have
determined in the TV National Ownership Order that we will not count same-market LMAs towards the
brokering licensee's national ownership limits, as that would constitute double-counting these LMAs.  We
will count inter-market time brokerage agreements where they come under the EDP rule for purposes of the
national ownership limits.  We believe that the rationale for attributing LMAs set forth in the Radio Ownership
Order, -- i.e., to prevent the use of time brokerage agreements to circumvent our ownership limits -- applies
equally to same-market television LMAs.  We will determine whether an LMA involves a "same market"
station based upon the revised duopoly rule's standards.  Thus, if the brokered station is in the same DMA as
the brokering station, the LMA is "same market" for purposes of determining compliance with the ownership
rules.  If the LMA is found to be a same-market LMA, we will then apply the other multiple ownership rules
to see if they are implicated.

     84.  We note that in the Radio Ownership Order, the Commission voiced its concern that substantial
time brokerage arrangements among stations serving the same market, combined with the increased common
ownership permitted by the revised local rules, could undermine broadcast competition and diversity.  The
Commission therefore decided to preclude that possibility by attributing local time brokerage arrangements,
at least until it had some experience with the effect of that new regulatory approach in broadcast markets. 
We are convinced that the radio LMA attribution rule adopted in that Order has operated successfully to ensure
that the goals set forth in the radio ownership rules are not undermined by the existence of unattributed
influence over radio stations in the same market.  We believe that a similar approach is warranted concerning
television LMAs.
 
     85.  In the Attribution Further Notice, we reiterated our belief that the attribution rules must function
effectively and accurately to identify all interests that are relevant to the underlying purposes of the multiple
ownership rules and that should therefore be counted in applying those rules.  Now, based on our experience
with attribution of radio LMAs and the record in this proceeding, we conclude that a stand-alone, or per se,
rule that attributes a same-market television LMA, or time brokerage of a television station in the same market,
for more than 15 percent of the brokered station's weekly broadcast hours is necessary to accomplish this
goal. 
 
     86.  We will count attributed television LMAs toward all applicable broadcast ownership rules, which
include the duopoly rule and the one-to-a-market, or radio-television cross-ownership rule.  We have
determined in the TV National Ownership Order that we will not count same-market LMAs towards the
brokering licensee's national ownership limits, as that would constitute double-counting these LMAs.  We will
count inter-market time brokerage agreements attributable under EDP because they are accompanied by the
requisite financial investment for purposes of the national ownership limits.  Attribution is based on influence
or control that should be considered cognizable and defines what we mean by ownership.  Indeed, with the
exception of radio LMAs, an exception which we eliminate today,  90 infra, our other current attribution rules
apply across the board to all the relevant ownership limits.  There is no reasonable basis for treating television
LMAs any differently.  

     87.  The record in this proceeding supports our decisions to attribute television LMAs and to count
attributed radio LMAs toward all applicable radio ownership limits.  Our analysis, above, of the information
submitted by parties to television LMAs in response to our Public Notice indicates that television LMAs, or
time brokerage agreements, may give the brokering station influence over the programming of the brokered
station such as should be recognized as an attributable relationship.  Moreover, we agree with most
commenters, representing a variety of interests ranging from ABC to the public interest group MAP, that
television LMAs, like radio LMAs, permit a degree of influence and control that warrants ownership
attribution.  We find it particularly noteworthy that commenters that opposed attributing television LMAs
did not disagree that such LMAs confer substantial influence over brokered stations.  Instead, these commenters
argued that LMAs are beneficial and provide diversity benefits, an issue relevant to the question of how much
common ownership should be permitted, consistent with our competition and diversity goals, rather than the
cognizability of the interest.  This issue is being considered in the TV Local Ownership and TV National
Ownership proceedings.  

     88.  We also note that, under the EDP rule, above, we will attribute an inter-market time brokerage
agreement or LMA (or any other program supply arrangement) that brokers more than 15 percent of a station's
programming (i.e., a program supplier, as defined above) when held in combination with more than 33 percent
of the total assets (debt plus voting, non-voting and preferred stock) of a station.  Prior to the EDP rule, an
inter-market LMA would not have been attributed regardless of the level of non-voting equity and debt interests
held by the brokering station.  With the exception of the EDP rule, we will not attribute television time
brokerage agreements between stations in different markets.  We disagree with Pappas, which asserted that our
proposal to treat television LMAs as cognizable interests must also apply to television network affiliation
agreements and argued that, for attribution purposes, there is little substantive difference between an LMA and
a network affiliation agreement, in that both involve the provision of television programming and the sale of
television advertising time.

     89.  In the Radio Rules Order, the Commission stated that time brokerage agreements involving radio
stations licensed to different markets "raise little public interest concern;  indeed they can be difficult to
distinguish from network affiliation agreements, of which the Commission has long approved."  Both LMAs
and network affiliation agreements clearly confer some level of influence over the programming and commercial
time of a licensee.  Neither, however, taken alone, constitutes an attributable interest.  It is the combination of
ownership of a local competing media interest and programming and direct operational influence via a
substantial same-market LMA that raises our concern and drives our decision to attribute such LMAs under
our multiple ownership rules.  This concern does not arise where there is no such combination of interests, as
for example, network affiliation contracts or out-of-market LMAs unaccompanied by substantial investment
in the programmed station.  It is only when an out-of-market LMA provides more than 15 percent of a station's
programming, in addition to holding an investment of more than 33 percent of total assets of the station, that
we deem the level of influence sufficient to warrant attribution.  Under those circumstances, as discussed
more fully in Section III.B. hereof, where substantial investment in the licensee is combined with provision of
substantial quantities of programming, we believe that the level of influence is sufficient to warrant attribution
regardless of the fact that the programming provider is not a media entity in the same market.  And, as we have
noted, where the program supply agreement takes the form of a network affiliation agreement, the network, like
the out-of-market LMA broker, will have its interest in its affiliate attributed if it invests in the affiliate above
the EDP threshold.

     90.  Modify radio rules.  In our Attribution Further Notice, we stated that if we adopt our proposal
for attributing television LMAs, we would also consider similarly modifying the radio LMA rules (47 C.F.R.
 73.3555(a)(3)), because radio LMAs are currently considered only for purposes of applying the radio
duopoly rule (47 C.F.R.  73.3555(a)(1)), and invited comment on how the radio LMA attribution rules should
be modified in this regard.  Paxson, the only commenter to address this issue, generally argued against
attributing radio or television LMAs for purposes of ownership restrictions other than the duopoly rules. 
We have decided to adopt our proposal to attribute same-market radio LMAs for purposes of applying our
other multiple ownership rules that are applicable to radio stations, including, for example, the daily newspaper
cross-ownership rule, and the one-to-a-market (or radio-television cross-ownership) rule.  The other
attribution rules apply across the board, and there is no reason not to apply attribution of radio LMAs
consistently to all applicable radio ownership rules.  Accordingly, we will modify our radio LMA attribution
rules to reflect this change.

     91.  Grandfather Newly Attributable Radio LMAs.  We are unaware of whether and to what extent
there may be existing intra-market radio LMAs that would violate the newspaper-radio cross ownership rule
or the one-to-a-market rule (or radio-television cross-ownership rule).  Accordingly, we intend to review the
issue of grandfathering in any such existing cases on a case-by-case basis so that we can take account of any
equities and particular factual circumstances that inform such cases.  We invite any holder of a radio LMA that
now finds itself in violation of the radio-television cross-ownership rule or the newspaper-radio cross-ownership
rule to bring that case to our attention and seek a ruling on the issue of grandfathering.  The new rules will
apply to all cases arising after their effective date.

     92.  Requirement to File TV LMAs.  In our Attribution Further Notice, we incorporated from the TV
Local Ownership Further Notice the tentative proposal that attributable television LMAs be filed with the
Commission in addition to being kept at the stations involved in an LMA.  In the Radio Ownership Order,
the Commission required that all radio time brokerage contracts be placed in the public inspection files of the
stations involved, and that local time brokerage agreements be filed with the Commission within 30 days of
execution.  The Commission noted that these requirements would impose only a minimal burden on licensees
but would permit it and others to monitor time brokerage agreements to ensure that licensees retain control of
their stations and adhere to the Communications Act, Commission Rules and policies and the antitrust laws. 
We believe that these same reasons are valid today with respect to television time brokerage agreements.

     93.  DOJ supported our proposal for a notification and filing requirement for television LMAs. 
According to DOJ, the fact that television LMAs (unlike similar arrangements in the radio industry) historically
have not been subject to any type of reporting requirement has had the practical effect of limiting scrutiny of
such arrangements by either the Commission or antitrust authorities.  DOJ urged the Commission to adopt
some form of reporting requirement for television LMAs that will allow meaningful review and monitoring of
these arrangements by the Commission, and, where appropriate, by antitrust enforcement authorities through
a review of materials provided by the Commission. 

     94. We will require stations involved in television time brokerage agreements (inter-market as well as
intra-market agreements) to keep copies of those agreements in their local public inspection files, with
confidential or proprietary information redacted where appropriate, and require the licensee that is the
brokering station to file with the Commission, within 30 days of execution of such agreement, a redacted copy
of any time brokerage agreements that would result in the arrangement being attributed in determining the
brokering licensee's compliance with the multiple ownership rules.  We will amend our rules accordingly. 
We note that these provisions impose an affirmative obligation on licensees to determine, in the first instance,
whether a particular LMA is attributable (either under the per se rule or the EDP rule), and to file the
agreement with the Commission if it is.
  
     95.  Programming responsibility safeguards.  In our Attribution Further Notice, we emphasized, as
we did in our radio ownership proceeding, "that the licensee is ultimately responsible for all programming
aired on its station, regardless of its source," and invited comment on what, if any, specific safeguards we
should adopt with respect to television LMAs to ensure a brokered station's ability to exercise its programming
responsibility.  We believe that attribution of same-market television LMAs, along with our new filing
requirements, will subject LMAs arrangements to sufficient scrutiny by competitors, the public and the
Commission, that brokering stations will have strong incentives to avoid unauthorized acquisition of control
of the brokered station.  We remind all parties to LMAs that, as we noted in the Radio Ownership Order, "our
rules require the licensee to maintain control over station management and ultimate programming decisions,
regardless of any time brokerage agreements that may exist."  

     96.  Simulcasting.  In our Attribution Further Notice, we stated that we would resolve the issue, raised
in the Local Ownership Further Notice, as to whether the program duplication or simulcasting limits that
apply to commonly owned or time brokered radio stations should apply to television LMAs.  No commenters
addressed this particular question, although some argue generally that LMAs result in duplicative
programming.  Other commenters disagree, pointing out that, from the perspective of a time broker, time
brokerage agreements pay off through the ability to attract additional, new audiences to the brokered station. 
A duplication of programming would not attract additional audiences, but would merely divide the audience
currently enjoyed by the time broker's owned station with the audience of the brokered station.

     97.   With respect to radio broadcasting, "simulcasting," or program duplication, refers to the
simultaneous broadcasting of a particular program over co-owned stations serving the same market, or the
broadcasting of a particular program by one station within 24 hours before or after the identical program is
broadcast over the other station.  In the Radio Ownership Order, the Commission limited simulcasting on
commonly owned stations in the same service serving substantially the same area to 25 percent of the broadcast
schedule, stating that it saw no benefit to the public from permitting commonly owned same-service stations
in the same market to substantially duplicate programming.  The Commission reasoned that the limited amount
of available radio spectrum could be used more efficiently by other parties to serve competition and diversity
goals, and that substantial same-service simulcasting would not aid economically disadvantaged stations
because the audience for the programming in question would be shared by two or more stations.  

     98.  At this time, we will not apply simulcasting limits to television LMAs.  We are not aware that
broadcasters involved in television LMAs are simulcasting their programming to any significant extent. 
Moreover, we believe such simulcasting is unlikely to occur because it would most likely work to the
disadvantage of the stations engaged in the LMA.  We note that television coverage differs from radio, in that
there are fewer television stations per market, and those stations cover a larger market area than do radio
stations.  We assume that if television stations commonly operated under an LMA in the same market
simulcast programming, they would split the audience for that programming between themselves, losing the
audience for alternative programming to other television stations in that market.  Because stations' advertising
revenues are generally based on audience share, revenue and basic profits would be negatively affected by such
practices.  There consequently appears to be a significant market disincentive against simulcasting in the
context of same-market television LMAs.  To the extent that simulcasting occurs, it may reflect the owner's
(or broker') attempt to maximize the audience reach within the DMA.  As indicated above, we received no
comments specifically addressing this question, nor have we seen any evidence that the concerns with respect
to simulcasting by commonly owned or time brokered radio stations apply to television stations operating under
LMAs.  Should we find evidence to the contrary at a future date, we may, of course, revisit this decision.

     99.  Grandfather Existing LMAs.  In our Attribution Further Notice, we stated that if we decided to
attribute television LMAs as we proposed in this proceeding, we intended to resolve the issues of
grandfathering, renewability and transferability of existing TV LMAs in the separate TV Local Ownership
proceeding so that we could evaluate the extent to which grandfathering might be needed based on the nature
of the local ownership rules we adopt.  These issues are outside the scope of this proceeding, and, as we
noted in the Attribution Further Notice, will be resolved in the TV Local Ownership Order.

D.  Cross-Interest Policy

1.  Background

     100.  Overview.  The cross-interest policy has been applied to preclude individuals or entities from
holding an attributable interest in one media property (broadcast station, newspaper, cable system) and having
a "meaningful" albeit nonattributable interest in another media entity  serving "substantially the same area." 
This policy originally developed as a supplement to the  multiple ownership "duopoly" rule which prohibited
the common ownership, operation, or control of two stations in the same broadcast service serving substantially
the same area.  Ownership, operation or control as contemplated by this rule was originally defined as actual
control or ownership of 50 percent or more of the stock of a licensee.  Since this definition did not encompass
minority stock ownership, positional interests (such as officers and directors), and limited partnership interests,
the cross-interest policy was developed to address the competitiveness and diversity concerns created when a
single entity held these types of otherwise permissible interests in two (or more) competing outlets in the same
market.  In essence, the cross-interest policy filled gaps in our attribution criteria that had become apparent
through our case-by-case application of the ownership rules.

     101.  Through case-by-case adjudication, the following relationships came to be viewed as constituting
"meaningful" interests subject to the cross-interest policy: key employees, joint ventures, nonattributable equity
interests, consulting positions, time brokerage arrangements, and advertising agency representative
relationships.   The cross-interest policy did not prohibit these interests outright, but required an ad hoc
determination regarding whether the nonattributable interests at issue in each case would be permitted.

     102.  In 1989, after a comprehensive review to assess the continuing need for the cross-interest policy, 
the Commission issued a Policy Statement limiting the scope of the cross-interest policy so that it would no
longer apply to consulting positions, time brokerage arrangements and advertising agency representative
relationships.  The Commission decided that it no longer needed to apply the cross interest policy to those
relationships because: (1) the need for the policy had decreased based on new attribution provisions that had
superseded it; (2) the costs to the public and the Commission of administering the policy were difficult to justify
given the reduced need for continued oversight of these relationships; (3) growth of media outlets had undercut
the notion that any single individual or entity could skew competition through the cross-interests at issue; and
(4) alternative safeguards, such as antitrust laws, fiduciary duties and private contract rights were available
to curb anti-competitive conduct.
  
     103.  Current Aspects of the Cross-Interest Policy.  After the Policy Statement, three aspects of the
cross-interest policy remain in effect: 

                    (1)  Key employee relationships.  The cross-interest policy has generally prohibited an
          individual who serves as a key employee, such as general manager, program director, or sales
          manager, of one station from having an attributable ownership interest in or serving as a key
          employee of another station in the same community or market.  The application of the cross-
          interest policy in these situations is premised on the potential impairment to competition and
          diversity and the apparent conflict of interest arising from the ability of key employees to
          implement policies to protect their substantial equity interest in the other station.

                    (2)  Nonattributable equity interests.  The cross-interest policy has also typically proscribed
          an individual who has an attributable interest in one media outlet from holding a substantial
          nonattributable equity interest in another media outlet in the same market.  The
          Commission's concern with these relationships has been that the individual could use the
          attributable interest in one media outlet to protect the financial stake in the other media outlet,
          thus impairing arm's length competition.  (Two or more separate non-attributable interests in
          a market are not proscribed by this policy, as neither gives rise to the potential to influence
          station operations that would concern us.)

                    (3)  Joint venture arrangements.  The cross-interest policy has prevented two local broadcast
          licensees from entering into joint associations to buy or build a new broadcast station, cable
          television system, or daily newspaper, in the same market.  These joint ventures have triggered
          cross-interest scrutiny because the successful operation of the joint venture was thought to
          require a cooperative relationship between otherwise competing stations, and this would
          impair competition in the local market.  

     104.  Prior Notices.  In the Cross-Interest Notice, we asked for comments as to whether we should
retain our cross-interest policy in these three areas -- key employees, non-attributable equity interests, and joint
ventures.  We also invited comment as to whether we should amend the attribution rules to incorporate the key
employee portion of the cross-interest policy.  We sought further comment on whether retention of the
remaining named components of the cross-interest policy was necessary to prevent anticompetitive practices,
whether alternative deterrent mechanisms exist to assure competition and diversity, and whether continued
regulation of relationships not specifically addressed by the Commission's attribution rules is necessary.  We
also questioned whether regulatory oversight of one or more of these interests should be limited to geographic
markets with relatively few media outlets.  Five comments and reply comments were filed in response to the
Cross-Interest Notice.  The majority of commenters urged the Commission to eliminate the cross-interest
policy as it applies to all of these relationships.  One commenter, CFA/TRAC, urged the Commission to
retain the policy.  In the Attribution Notice, we sought to update the record with respect to retention of the
cross-interest policy in light of changes in the multiple ownership rules and additional changes we were
proposing to the attribution rules.  In the Attribution Further Notice, we sought additional comment as to the
effect on our cross-interest policy of our proposed equity/debt plus approach, which would apply to cases
raising concerns of competition and diversity normally reflected in the cross-interest policy.  We also sought
comment on whether the equity/debt plus approach would be preferable to a case-by-case approach, which is
used to administer the cross-interest policy.  We specifically noted that the bright line approach could provide
certainty and minimize regulatory costs.

2.  Comments

     105.  Most commenting parties expressly discussing this issue favored eliminating at least portions,
if not all of the cross-interest policy.  ALTV, Capital Cities/ABC, CBS, CCA, Fox, FOE, M/C, and Group
W urged complete elimination of the policy.  According to Capital Cities/ABC, the concerns about blunting
competitive incentives that are the historical underpinning of the policy can be safeguarded in the context of
antitrust enforcement.  Capital Cities/ABC also argued that the administrative burdens and uncertainty of ad
hoc decision making that impede the ability of broadcasters to raise capital outweigh the Commission's
concerns where the FCC itself has determined that the interests in question lack the potential for influence
sufficient to justify attribution.

     106.  According to CBS, as well as others, retention of the policy is unjustifiable in light of the
growth of media outlets, the development of the attribution and ownership rules, other regulatory restrictions
and legal remedies, the unnecessary burdens on media transactions, and the overall uncertainty which the policy
imposes.  They argued that these detriments are not counterbalanced by any benefits.  Since the Commission
has adopted clear attribution rules based on its judgment as to which interests hold sufficient potential to
influence or control a media property's operation to warrant regulatory restriction, CBS stated that there is no
reason to retain a separate ambiguous policy to regulate the same kinds of interests.  CBS added that although
it does not support adoption of the equity/debt plus standard, it would be preferable to the "amorphous" cross-
interest policy.  Knight-Ridder agreed that the equity or debt plus approach would be preferable to retaining
the cross-interest policy.  Finally, Cook Inlet urged the Commission not to apply the cross-interest policy
where refraining from applying the policy would enable a disadvantaged enterprise to benefit from training or
expertise offered by another broadcast licensee.

     107.  A few commenters either opposed elimination of the cross-interest policy, or urged the
Commission not to change the rules.  CFA/TRAC supported retaining the current cross-interest policy. 
NABOB urged retention of the existing attribution rules, but did not specifically mention the cross-interest
policy.  Finally, TCI stated that it favors the present case-by-case approach. 

     108.  Key Employees.  Most commenters who addressed this aspect of the policy supported eliminating
the cross-interest policy as it applies to key employees.  ALTV, CBS, NAB, and Capital Cities/ABC
contended that key employees, particularly in smaller corporations, are frequently also officers, directors, or
cognizable shareholders and, therefore, are regulated by the current attribution rules.  Moreover, CBS
contended that to the extent that key employees are not restricted by the attribution rules, they are obligated
to act in the best interests of their employer and to avoid potential conflicts of interest.  According to CBS,
internal conflict of interest policies and common law fiduciary duty and contract remedies ensure this.  CBS
and FOE maintained that licensees have the incentive to police potential employee conflicts of interest, given
the competitive marketplace in which they operate.

     109.  CFA/TRAC and London Bridge Broadcasting, Inc., on the other hand, urged the Commission
to retain the cross-interest policy as it applies to key employees, contending that the influence of key employees
on station operations is akin to that of station owners, and therefore they should be treated similarly for
purposes of attribution.  These parties questioned the efficacy of the conflict of interest policies and other
remedies in deterring abuse.

     110.  Nonattributable Equity Interests. Most commenters urged the Commission to stop applying the
cross-interest policy to nonattributable equity interests, questioning the continued need for cross-interest review
in light of the amended attribution provisions of the multiple ownership rules.  They argued that any residual
concerns not covered by the Commission's ownership rules can be deterred by the competitive marketplace as
well as remedies provided by private contracts, federal and state antitrust laws, and fiduciary duties and that
the ad hoc nature of the cross-interest policy imposes administrative burdens and creates uncertainty, impeding
the ability of broadcasters to raise capital.  According to CalPERS, this uncertainty imposes administrative
burdens on investors and impedes the ability of broadcasters to attract equity investment capital because this
policy can be invoked to prohibit a seemingly permissible transaction.  In contrast, CFA/TRAC urged the
Commission to retain the cross-interest policy as it applies to nonattributable equity interests, arguing that this
policy continues to serve an important role and that the uncertainty produced by ad hoc application of the
policy is not as great as other commenters indicate.

     111.  Joint Ventures.  Most commenters urged the Commission to eliminate cross-interest review of
joint ventures.  In support of this position, the commenters argued that cross-interest regulation of joint ventures
has been largely displaced by the current attribution rules.  They maintained that where the interests involved
are not attributable, such interests lack the requisite potential for influence to warrant regulatory scrutiny. 
These parties also asserted that the marketplace is sufficiently competitive to deter abuse in this area, and that
the antitrust laws provide an additional safeguard.  Only CFA/TRAC disagreed.  It argued that continued
regulation of joint ventures pursuant to the cross-interest policy is necessary, especially given the Commission's
relaxation of the multiple ownership rules.  CFA/TRAC questioned whether joint venturers will compete
vigorously at all times, and argued that "advertising and promotion practices, sales territories and audience
selection -- not to mention cross-interest -- can complement the interests of joint venturers."

3.  Decision

     112.  We will eliminate the above noted remaining components of the cross interest policy.  Our goals
in initiating this proceeding include maximizing the clarity of the attribution rules, providing reasonable
certainty and predictability to parties to allow transactions to be planned, and easing application processing. 
As discussed above, commenters have argued that the vagueness and uncertainty imposed by the ad hoc
application of the cross-interest policy have chilled investment.  As CalPERS argues, this uncertainty impedes
the ability of broadcasters to enter into transactions because the policy can be invoked to prohibit a seemingly
permissible transaction.

     113.  Today, we have revised the attribution rules to adopt the EDP rule, a bright line test, which we
believe will increase regulatory certainty and reduce regulatory costs.  In adopting that rule, we will reach those
situations involving formerly nonattributable interests that raised the most concern with respect to issues of
competition and diversity, some of which were previously addressed in administering the cross-interest policy. 
We agree with commenters who argue that adoption of the EDP rule, as well as the existence of the other
attribution rules, provides additional grounds for elimination of the cross-interest policy.

     114.  We note that the EDP rule directly covers concerns treated under the non-attributable interests
prong of the cross-interest policy, as it would attribute a substantial nonattributable interest by a media entity
in a second media outlet in the same market.  We recognize, however,  that the EDP rule does not cover all the
areas encompassed by the cross-interest policy.  It would not cover key employees, for example.  We
nonetheless believe, as commenters have pointed out, that internal conflict of interest policies, common law
fiduciary duty, and contract remedies provide adequate substitutes for our administration of the policy with
respect to key employees.  In addition, many key employees are also officers and directors and are thus
already covered by the attribution rules.  In any event, we believe that the very small risk of harm to
competition by a key employee in an instance not covered by any of these other regulations and remedies is
greatly outweighed by the benefits of minimizing our case-by-case approach to transactions and applying bright
line tests, such as the EDP test and our other attribution rules.

     115.  With respect to joint ventures, we believe that application of a cross-interest policy is
unwarranted.  The ownership and attribution rules define the level of combined ownership that is permissible
in the local market.  Many joint ventures are already covered by the attribution/ownership rules, and they may
also be covered to some extent by the EDP rule.  Accordingly, a joint venture between two licensees in a market
to acquire additional broadcast entities in the same market may be subject to the radio-television cross-
ownership rule or the relevant duopoly rule.  As CBS contended, to continue to regulate these interests under
a separate policy when many are covered by the attribution rules is redundant.  In addition, according to CBS,
the ad hoc application of the cross-interest policy has "clouded the future of potential joint ventures with
uncertainty" regarding their eventual approval by the Commission.  We agree  that the cross-interest policy
as applied to joint ventures is largely subsumed by the application of the current multiple ownership rules.  To
the extent that the cross-interest policy is not so subsumed, we believe that it should be eliminated.  We have
made a judgment to limit combined local ownership to certain degrees, as delineated in our local ownership
rules.  Accordingly, it makes no sense to have a routine additional layer of case-by-case review for those joint
ventures that fully comply with those rules.  In these cases, the burdens of case-by-case review are not justified
for transactions that already comply with the multiple ownership rules.  Furthermore, as other commenters
noted, the application of the antitrust laws should prevent or remedy any abuses of joint venture relationships
not already subject to the multiple ownership rules.

     116.  In sum, we believe that the regulatory costs and the chilling effects of the cross-interest policy
and the benefits of applying a clear and discernable standard outweigh any risks of potential abuses in
eliminating the policy.  Moreover, many remaining aspects of the cross-interest policy are subsumed under our
attribution rules, as revised herein.   Of course, as stated above,  44, supra, we retain the discretion to review
individual cases that present unusual issues on a case-by-case basis where it would serve the public interest
to conduct such a review.

E.  Joint Sales Agreements (JSAs)

     117.  Background.  In the Attribution Notice, we requested comment on whether, through multiple
cooperative arrangements or contractual agreements, broadcasters could so merge their operations as to
implicate our diversity and competition concerns.  We noted, however, that we did not intend to reopen our
earlier decisions permitting joint sales practices in radio and television.  These decisions had allowed joint sales
agreements ("JSAs") (i.e., agreements for the joint sales of broadcast commercial time), subject to compliance
with the antitrust laws.

     118.  After issuing the Attribution Notice, the staff was presented with cases involving joint sales
agreements that raised diversity and competition concerns. These cases raised questions as to whether non-
ownership mechanisms such as JSAs that might convey influence or control over advertising shares should be
considered attributable under certain circumstances.  Accordingly, in the Attribution Further Notice we invited
additional comments on the potential effects of JSAs among same-market broadcasters on diversity and
competition.  We also sought comment on whether we should attribute JSAs among licensees in the same
market, including both radio and television licensees, irrespective of whether they are accompanied by the
holding of debt or equity.  In addition, we sought general information concerning the typical contractual terms
of JSAs.

     119.  Comments.  Most commenters opposed attributing JSAs.  Paxson argued that JSAs, even if
coupled with debt or equity interests, should not be considered attributable interests.  Paxson noted that the
Conference Report on the 1996 Act "praised" the public interest benefits of JSAs, as well as LMAs and other
cooperative arrangements.  According to Paxson, JSAs affect only a limited aspect of station operations,
namely sales, and hence JSAs do not raise concerns equivalent to those associated with LMAs.  In particular,
Paxson argued, JSAs do not implicate the diversity concerns that underlie the Commission's ownership rules. 
To the extent that JSAs may raise competitive concerns, Paxson argued that such concerns can be addressed
by antitrust review by the Department of Justice.

     120.  Diversified also opposed making same-market JSAs attributable under any circumstances, even
if the parties have other relationships which relate to the debt or equity of the station in question.  Diversified
cited the cooperative benefits of JSAs, in terms of advertising sales and other matters, that do not require
stations to give up their independence.  Diversified also argued that the Commission has not presented evidence
demonstrating that licensees are losing ultimate control over their stations through JSAs.  According to
Diversified, changing Commission policy now to regulate JSAs more strictly is unwarranted, especially in light
of Congressional deregulation of the telecommunications industry and increasing competition from other video
operators within the video marketplace.

     121.  BET and DOJ argued that JSAs should be attributable.  DOJ specifically focused on JSAs
between same-market radio stations.  According to BET and DOJ, control over spot sales by one station affords
significant power over the other, and non-attribution of JSAs would allow entities to bypass restrictions on
national and local ownership and increase consolidation in the TV market.  BET contended that such
consolidation would adversely affect competition by increasing barriers for new entrants.  DOJ further
contended that since radio JSAs place pricing and output decisions for the affected stations under the control
of a single firm, competitive rivalry between those stations is eliminated, just as it would be in a merger. 
According to DOJ, the competitive concerns that arise from increased concentration in a market, therefore, are
directly implicated by radio JSAs.  DOJ also recommended that the Commission adopt rules requiring the
disclosure of radio JSAs to the Commission to enable monitoring of these arrangements by the Commission
and antitrust enforcement authorities.

     122.  Decision.  We will not attribute JSAs.  Based on the record in this proceeding, we do not believe
that agreements which meet our definition of JSAs convey a degree of influence or control over station
programming or core operations such that they should be attributed.  We define JSAs as contracts that affect
primarily the sales of advertising time, as distinguished from LMAs, which may affect programming,
personnel, advertising, physical facilities, and other core operations of stations.  We note that in our DTV Fifth
Report and Order, we stated that we would look with favor upon joint business arrangements among
broadcasters that would help them make the most productive and efficient uses of their channels to help
facilitate the transition to digital technology.  JSAs may be one such joint business arrangement.  We
recognize the significant competitive concerns about same-market radio JSAs raised by DOJ, but we also note
that the factors considered by DOJ and the Commission in analyzing business arrangements may differ in some
respects.  Although both DOJ and the Commission are concerned about the competitive consequences of
business agreements such as JSAs, our concerns are not identical.  DOJ's comments explicitly recognize that
in addition to competition issues, the Commission is also concerned with issues of diversity and reducing
unnecessary administrative burdens.  Some JSAs may actually help promote diversity by enabling smaller
stations to stay on the air.  Furthermore, to reduce administrative burdens, we will not require the routine filing
of JSAs with the Commission.
     
     123.  Accordingly, after weighing competition, diversity, and administrative concerns, we decline to
impose new rules attributing JSAs as long as they deal primarily with the sale of advertising time and do not
contain terms that affect programming or other core operations of the stations such that they are, in fact,
substantively equivalent to LMAs.  We will retain our current policies concerning JSAs.  Furthermore,
in the absence of specific evidence of widespread abuse of JSAs by broadcasters, we also decline to adopt the
general disclosure and reporting requirement for radio JSAs recommended by DOJ in its comments.  We will,
however, require broadcasters who have entered into JSAs to place such agreements in their public inspection
files, with confidential or proprietary information redacted where appropriate.  This requirement will
facilitate monitoring of JSAs by the public, competitors and regulatory agencies.  We do, however, retain
discretion, in any event, to review cases involving radio or television JSAs on a case by case basis in the public
interest, where it appears that such JSAs do pose competition or other concerns.  Finally, we emphasize that
all JSAs are of course still subject to antitrust laws and independent antitrust review by the Department of
Justice.

F.  Partnership Interests

     124.  Background.  Under the Commission's current attribution rules governing partnership interests,
general partners and non-insulated limited partnership interests are attributable, regardless of the amount or
percentage of equity held.  An exception from attribution applies only to those limited partners who meet the
Commission's insulation criteria and certify that they are not materially involved in the management or
operations of the partnership's media interests. 
 
     125.  The Attribution Notice asked for comment on whether the insulation criteria remain effective and
specifically whether the insulation criteria needed to be tightened or relaxed to meet the needs of certain new
types of business entities.  For example, widely-held limited partnerships, and in particular business
development companies, may be required by federal and state statutes to grant voting rights to limited partners
in such matters as the selection and removal of general partners.  However, the insulation criteria require that
such voting rights be restricted, except under certain circumstances, in order to support a presumption of
partner non-involvement in the management of the partnership.  The Attribution Notice inquired whether the
insulation criterion should be relaxed to remove this potential conflict with state law, or whether equity
benchmarks combined with a more limited relaxation of the insulation criteria should be applied to these
widely-held limited partnerships.  We noted that commenters in response to the Capital Formation Notice had
argued that allowing specific voting rights would not compromise our attribution rules since:  (1) the remaining
insulation criteria are sufficient to prevent material involvement of a partnership member in media operations;
and (2) the dispersed interests in a widely-held limited partnership would preclude member involvement in
management and operations.  

     126.  In addition, the Attribution Notice asked whether an equity benchmark, such as 5 percent, should
be used to establish attribution with respect to all "widely-held" limited partnerships, and if so, how should the
Commission define widely-held limited partnerships, and what factors could be used to guarantee that these
entities remain widely-held.  More generally, the Attribution Notice asked whether an equity benchmark, under
which investments below the threshold would be exempted from the insulation criteria and would be held non-
attributable, should be applied to all partnership forms, widely-held or not.  In this latter case, the Attribution
Notice asked whether we should set the equity benchmarks for partnership interests along lines similar to those
used for voting corporate equity interests.  We stated, however, that, based on the record thus far, we were not
inclined to apply an equity benchmark to limited partnerships but would instead retain the insulation criteria,
and that parties that disagreed must provide us with more data and analysis to demonstrate that our earlier
decision to apply the insulation criteria is no longer justified.  We also asked for information on the financial
and legal structures of limited partnerships to enable us to determine whether there is a uniform equity level
below which we need not be concerned with the application of the insulation criteria.

     127.  Comments. No commenters favored adding to the current list of insulation criteria.  M/C asked
the Commission to clarify: (1) that when the limited partnership is the licensee, or holds a controlling interest
in the licensee, then an insulated limited partner may not serve as an employee or contractor, or perform
broadcast-related services to the licensee, but that it is not precluded from providing such general services as
"banking, insurance, legal and accounting services, real estate management, and the like"; (2) that no insulation
restrictions apply to a limited partner if the limited partnership holds a noncontrolling interest in the licensee;
(3) that no insulation restrictions apply to officers and directors of the limited partner when the limited partner
is an entity, rather than a natural person; and (4) that an insulated limited partner may vote to remove a general
partner for cause.

     128.  Commenters such as CalPERS, FOE and ALTV argued that the insulation criteria should be
modified to avoid conflicts with state law.  M/C suggested using RULPA (Revised Uniform Limited
Partnership Act) standards or applicable state law requirements in place of the current criteria.  Capital
Cities/ABC argued that the insulation criteria should be replaced with a simple pledge by the interest holder
of non-involvement.  Capital Cities/ABC also inquired whether insulation of a network's limited partnership
interests precluded an affiliation agreement with the broadcaster.  Finally, Fox argued that the insulation
criteria should be eliminated, and equity benchmarks substituted in their place.
       
     129.  On the issue of equity benchmarks for limited partnerships, CalPERs maintained that the
participation and influence of a 5 percent interest holder in a limited partnership is essentially indistinguishable
from that of such an interest holder in a corporation and should be treated under identical attribution rules. 
CalPERS also argued that business development companies should not be treated separately, and stated that
it is unclear how to define a widely-held limited partnership.  Freeman urged the Commission to adopt a 20
percent equity benchmark for limited partners in investment partnerships, and to retain insulation criteria for
partners that exceed the benchmark level.  Freeman argued that the insulation criteria are designed for smaller
"operating" partnerships, rather than for large "investment" partnerships whose limited partners are mostly
institutional investors and that some type of passive investor approach should be adopted to encourage
investments from this latter form of limited partnership.  Finally, M/C also favored using an equity
benchmark approach, if a control standard is not adopted.

     130. Decision. We see no reason to revise our previous decision to treat limited partnership interests
as distinct from corporate voting equity interests, and therefore elect not to adopt equity benchmarks for
limited partnership interests.  As we stated in the Attribution Further Reconsideration, "[t]he partners in a
limited partnership, through contractual arrangements, largely have the power themselves to determine the
rights of the limited partners."  Therefore, the insulation criteria adopted by the Commission serve to identify
those situations within which it is safe to assume that a limited partner cannot be "materially involved" in the
media management and operations of the partnership.  As we also stated therein, the powers of a limited
liability holder to exert influence or control are not necessarily proportional to their equity investment in the
limited partnership, since the extent of these powers can be modified by the contractual arrangements of the
limited partnership.  In the Attribution Notice, we stated our disinclination to change our approach of
applying insulation criteria in favor of an equity benchmark, and we have not been provided sufficient evidence
to revise that view and to indicate that these original reasons for declining to adopt an equity benchmark for
limited partnerships are no longer valid.

     131. We also see no need at this time to add to, relax, or otherwise revise our limited partnership
insulation criteria.  Some commenters suggested that the insulation criteria should be modified to eliminate
conflicts with state law, or that RULPA or other relevant standards should be used in their place.  However,
in our Attribution Reconsideration, the Commission decided for several reasons to abandon the use of RULPA,
combined with a no material involvement standard, as a standard for judging whether limited partners were
exempt from attribution.  First, we judged the joint use of these two disparate standards for determining
limited partner exemptions from attribution to be unnecessarily complicated.  Second, we noted that there was
a lack of uniform interpretation of the RULPA provisions, and that the scope of permissible limited partner
activities was not statutorily set by RULPA, but rather was determined by the limited partnership agreement
itself.  Third, we determined that reliance on the RULPA provisions did not provide sufficient assurance that
limited partners would not significantly influence or control partnership affairs.  We are convinced that these
conclusions remain valid today, and therefore we see no reason to revise our insulation criterion in favor of a
RULPA standard.  We also feel that similar considerations apply to state laws that regulate limited partnership
activities, since these statutes may vary significantly from state to state, and may fail to provide sufficient
assurance that the limited partner will lack the ability to significantly influence or control the partnership's
media activities.
  
     132.  We will not create exceptions for widely-held limited partnerships, such as Business Development
Companies, from the current insulation criteria applicable to limited partnerships or otherwise revise those
insulation criteria.  The essential character of these new business forms for determining attributable interests
is the contractual flexibility they allow in setting up and managing the association.  Therefore, we believe that
the insulation criteria are needed for these business forms to insure "lack of material involvement" on the part
of investors.  This would imply that in some limited number of cases, interests may not be insulated because
of state laws that require investor rights that conflict with the insulation criterion.  However, commenters have
not provided sufficient evidence concerning the number or importance of such instances that would compel the
Commission to create special exemptions for these specialized business forms.  Since these entities are allowed
greater contractual flexibility under state law than are limited partnerships, we believe that greater caution is
warranted in dealing with these novel forms.  Further, we have not been presented with evidence to demonstrate
that the current insulation criteria are no longer valid or effective in achieving their goals.  

     133.  A number of commenters have asked us to clarify certain issues with respect to the scope or other
aspects of the insulation criteria.  We do not believe that this is the proper forum for declaratory rulings as to
the scope of the insulation criteria.  Indeed, the questions raised by commenters as to the application of the
criteria to specific activities are best resolved by the Commission on a case-by-case basis based on the facts
of the case.  In addition, some of the proposed clarifications would, in effect, amount to a relaxation of the
criteria.  For example, Capital Cities/ABC asked the Commission to confirm that an insulated limited partner's
interest in a licensee does not preclude the interest holder from also holding an affiliation agreement with the
licensee.  However, a contractual arrangement to provide programming would be inconsistent with the
insulation criterion that "the limited partner may not perform any services for the partnership materially relating
to its media activities," and therefore would not allow insulation of the limited partner's interest.  As
discussed above, we decline to relax the insulation criteria.  Moreover, we believe that the insulation criteria
have worked effectively in the past, and that there is no need for further clarification on a general basis in this
Report and Order.  Any issues that may arise as to the application of the criteria to particular transactions will
be resolved on a case-by-case basis.  

G. LLCs and Other Hybrid Business Forms

     134.  Background. In the Attribution Notice, we sought comment as to how we should treat, for
attribution purposes, the equity interest of a member in a limited liability company or LLC, a then relatively
new form of business association regulated by state law, or in other new business forms, such as Registered
Limited Liability Partnerships ("RLLPs").  LLCs are, in general, unincorporated associations that possess
attributes of both corporations and partnerships.  The specific attributes of LLCs may vary, since their form
is regulated by state statutes.  LLCs are, however, generally intended to afford limited liability to members,
similar to that afforded by the corporate structure, while also affording the management flexibility and flow-
through tax advantages of a partnership, without many of the organizational restrictions placed on corporations
or limited partnerships.  Depending on the requirements of the applicable state statute, LLCs afford their
members broad flexibility in organizing the management structure and permit members to actively participate
in the management of the entity without losing limited liability.  Thus, with some variation depending on the
applicable statute, LLCs may be organized with centralized management authority residing in one or a few
managers (who may or may not be members) or decentralized management by members.  

     135.  In the Attribution Notice, we tentatively proposed to treat LLCs and RLLPs like limited
partnerships and adopted that proposal as an interim processing policy.  Thus, membership in an LLC or RLLP
would be attributed unless the applicant certifies that the member is not materially involved, directly or
indirectly, in the management or operation of the media-related activities of the LLC or RLLP.  We proposed
that such certification should be based on our limited partnership insulation criteria and invited comment on
whether those insulation criteria developed with respect to limited partnerships are sufficient to insulate
members of LLCs and RLLPs or whether other criteria would be more effective.  We also tentatively
concluded that we were not prepared to adopt an equity benchmark for non-insulated LLC interests, but we
invited comment on that conclusion.  In addition, we invited comment on whether, if we adopt the certification
approach, we should, either routinely or on a case-by-case basis, require parties to file copies of the
organizational filings and/or operating agreements with the Commission when an application is filed. 
Finally, we asked whether we should differentiate our treatment of LLCs based on whether their management
form is centralized or decentralized.

     136.  Comments.  Capital Cities/ABC, FOE, and M/C argued that the Commission should treat LLCs
under the current limited partnership attribution rules, since an LLC form of business association is pursued
mostly for its tax and liability advantages.  Capital Cities/ABC did urge the Commission to relax the
insulation criterion that requires the non-involvement of equity holders in the management and operations of
the media-related interests of the partnership or association, and rather to allow limited partners to certify in
writing that they have not and will not attempt to exercise any influence over the core operations of a broadcast
station.  FOE argued that the insulation criterion should approximate the Revised Uniform Limited
Partnership Act ("RULPA") rules for limited partnerships, under which limited partners can consult with or
advise the general partner, attend a partners' meeting, and vote with respect to major financial decisions of the
partnership without losing limited liability.  Finally, M/C suggested that an LLC be allowed to insulate their
interests by incorporating the insulation criteria directly in their governing documents, and that non-insulated
LLC interests should be judged by an equity benchmark based on a "control" test.

     137.  Tribune suggested that the Commission should differentiate LLCs organized as corporations from
those organized as partnerships, and apply the corporate attribution rules and the partnership attribution rules,
respectively, to these different organizations, which would correspond to the differentiation made by the IRS
in treating LLCs for tax purposes.  In contrast, Fox argued that all LLCs should be treated as corporations
and only those investors who are part of the "control group" should be held attributable, or alternatively, at a
minimum the corporate form of an LLC should be treated under voting equity attribution rules.  In addition,
Qwest argued that the single-majority shareholder rule should be available for LLCs, in those cases where one
owner holds over 50 percent of the ownership rights.  Fox also argued that programming agreements between
program suppliers and LLCs should not be attributable.  Finally, CalPERS argued that a uniform equity
benchmark should be applicable to all organizational forms.  

     138.  Decision. We adopt our tentative conclusion in the Attribution Notice to treat LLCs and other
new business forms including RLLPs under the same attribution rules that currently apply to limited
partnerships.  The insulation criteria that currently apply to limited partnerships would apply without
modification to these new business forms.  Therefore, LLC or RLLP owners would be treated as attributable
unless the owner can certify their lack of direct or indirect involvement in the management and operations of
the media-related activities of the LLC or RLLP based on existing insulation criteria.  We will not distinguish
among LLCs based on whether they adopt a more centralized or decentralized form.  

     139.  We believe that this decision is justified for the reasons discussed in the Attribution Notice, which
are supported by the record. State laws grant more liberal organizational powers to LLCs and RLLPs than to
limited partnership forms.  Thus, equity holders can retain their limited liability even though they participate
in the management of the entity.  Under these circumstances, we believe that it is important to apply the
insulation criteria to assure that those equity holders that purport to be insulated from management are in fact
so insulated.  In addition, even when an LLC adopts a "corporate form" of organization, there is still sufficient
discretion afforded by state law so that the owners of the enterprise may retain some level of operational control
on their own part.  The organizational restrictions applicable to corporations do not necessarily apply.  The
Commission could also apply a control test to determine attribution, or require these companies to incorporate
insulation criteria directly into their governing documents.  However, these case-by-case solutions would reduce
regulatory certainty and delay processing of applications.  We also believe that using equity benchmarks would
be inappropriate for reasons similar to those discussed above in terms of limited partnerships.  In addition, we
have been applying the interim processing policy, it has worked well and effectively, and we see no reason to
change it.  

     140.  We agree with those commenters who argued that business associations, such as LLCs, are
similar to partnership forms in terms of organizational flexibility, and we will treat them comparably for
attribution purposes.  Indeed, the greater flexibility in governance granted such entities under state law, to elect
either a "corporate form" or a "partnership form" of governance, underscores the need for caution in our
approach to the attribution of new business forms.  The current insulation criteria serve to directly address our
concerns over the influence of an interest holder.  Creating specialized attribution standards for new business
forms as they arise will serve only to complicate the attribution rules, without better addressing our core
concerns over the potential influence exerted by the owners of a particular entity, however organized. 

     141.  To reduce paperwork burdens, we will not routinely require the filing of organizational
documents for LLCs.  However, to remain consistent with our treatment of limited partnerships and insulation
criteria, we will require the same "non-involvement" statement for LLC members who are attempting to insulate
themselves from attribution that we require for limited partners who are attempting to insulate themselves.  We
will also require LLC members who submit the foregoing statement to submit a statement that the relevant state
statute authorizing LLCs permits an LLC member to insulate itself/himself in the manner required by our
criteria, since our experience shows that state laws vary considerably with respect to the obligations and
responsibilities of LLC members.  This policy will help us to avoid any potential confidentiality concerns,
referred to in the Attribution Notice, that may arise if we require filing of organizational documents.

H.  Cable/MDS Cross-Ownership Attribution

     142.  Background.  The Attribution Further Notice considered changes to the cable/Multipoint
Distribution Service ("MDS") cross-ownership attribution rule.  Section 21.912 of the Rules, which
implements Section 613(a) of the Communications Act, generally prohibits a cable operator from obtaining
an MDS authorization if any portion of the MDS protected service area overlaps with the franchise area
actually served by the cable operator's cable system.  In addition, Section 21.912(b) prevents a cable operator
from leasing MDS capacity if its franchise area being served overlaps with the MDS protected service area. 
For purposes of this rule, the attribution standard used to determine what entities constitute a "cable operator"
or an MDS licensee, is generally defined by the Notes to  76.501.  In sum, we presently consider a cable
operator to have an attributable interest in an MDS licensee if the cable operator holds five percent or more
of the stock in that licensee, regardless of whether such stock is voting or non-voting.  We also attribute all
officer and director positions and general partnership interests.  However, unlike the broadcast attribution
standard, our current cable/MDS standard contains no single majority shareholder exception, and attributes
limited partnership interests of five percent or greater, notwithstanding insulation.

     143.  As we recognized in the Attribution Further Notice, the strictness of the existing attribution
standard severely limits investment opportunities that would advance our goals of strengthening wireless cable
and providing meaningful competition to cable operators.  We also saw no reason to have different attribution
criteria for broadcasting and MDS, and reiterated our previous observation that the broadcast attribution
criteria could be used for the purpose of determining attribution in the context of cable/MDS cross-
ownership.  Thus, in the Attribution Further Notice, we invited comment on whether we should apply
broadcast attribution criteria, as modified by this proceeding, in determining cognizable interests in MDS
licensees and cable systems.  In addition, we sought comment as to whether we should add an equity/debt plus
attribution rule where the competing entity's holding exceeds 33 percent or some other benchmark.  We further
stated our belief that these proposed modifications of our attribution rules would increase the potential for
investment and further diversity, while preventing cable from warehousing its potential competition.

     144.  Comments.  The Wireless Cable Association International, Inc. ("Wireless Association") and
two finance companies, Blackstone Group L.P. ("Blackstone") and Boston Ventures Management, Inc.
("Boston Ventures"), filed comments on the cable/MDS cross-ownership attribution issues in this proceeding. 
Reply comments were filed by the Wireless Association, Blackstone, the National Cable Television Association
("NCTA") and GTE Service Corporation ("GTE").

     145.  All of the commenting parties, except GTE, agreed that the existing attribution rules for
cable/MDS cross-interests are overly restrictive and that the less restrictive broadcast attribution rules should
apply.  Generally supporting our proposal to apply the modified broadcast attribution criteria, the commenters
contended that the current attribution rules should be relaxed because they have severely restricted investment
for the development of both the MDS and the cable industries.  In particular, Blackstone maintained that,
if given the choice between two investment opportunities, investors are more likely to choose an established
industry, like cable, over a fledgling industry, such as MDS.  As a result, the capital available to the newer
industry is thereby diminished.  Blackstone further asserted that, by prohibiting investments essential to the
development of both industries, the current attribution rules also harm passive investors, such as investment
companies and their clients, who would not be involved in the day-to-day activities of the cable or MDS
companies.

     146.  The Wireless Association, moreover, agreed with our assessment that there is no reason to have
different attribution criteria for broadcasting and MDS.  In addition, it stated that the cable/MDS cross-
ownership rule was adopted not to preserve diversity of broadcast programming, but to prevent cable operators
from precluding competition by warehousing MDS spectrum.  As for our current cable/MDS attribution
rules, the Wireless Association maintained that attributing small equity interests and insulated limited
partnership interests chills investment in the wireless cable industry by institutional investors or venture capital
firms that have already invested or would like to invest in the cable industry.

     147.  Notwithstanding their general support, the Wireless Association and Boston Ventures opposed
our proposed 33 percent EDP provision.  According to the Wireless Association, the Commission "should
not put any sort of artificial cap on simultaneous investment in cable and wireless cable industries absent any
indicia that the investor holds voting control."  The Wireless Association and Boston Ventures recommended,
moreover, that the modified broadcast attribution criteria, with the exception of the 33 percent "equity or debt
plus" provision, likewise be applied to the cable/MDS and cable/ITFS cross-leasing rules.  Boston Ventures
asserted that relaxation of the attribution rules in this way will give investors additional flexibility to structure
their cable and wireless cable investments, reduce transactional costs involved in obtaining waivers, and thereby
provide additional capital to the cable and wireless cable industries.  In addition, the Wireless Association
pointed out that the cable/ITFS cross-leasing rule, 47 C.F.R.  74.931(h) and (i), is not followed by a
supplemental note defining the ownership attribution standard applicable to that rule.  Given this absence, the
Wireless Association suggested that we include a supplemental note stating that the attribution standard
applicable to cable/MDS cross-ownership also applies to the cross-leasing rules.

     148.  In their reply comments, the Wireless Association and Blackstone essentially reaffirmed the
statements made in their respective comments.  In order to allow greater investment, Blackstone also lent its
support to Boston Ventures' proposal that we adopt even less restrictive attribution rules that track those used
for CMRS spectrum aggregation limits.  The Wireless Association, on the other hand, focused on our
proposed 33 percent EDP provision.  According to the Wireless Association, the existing cable/MDS
attribution rules chill investment in the wireless cable industry, and this problem would not be alleviated by the
33% (or any other) equity or debt "cap" where the investor does not hold voting control.  The Wireless
Association asserted that we recently recognized this problem when we established cable/LMDS cross-
ownership rules, which include no restrictions on debt.  Since wireless cable operators will be competing
directly with LMDS operators for outside investment, the Wireless Association claims it would be unfair to
impose a debt limitation on cable/MDS cross-ownership that would place the wireless cable industry at a
disadvantage.  It noted that no commenter expressed support for applying an EDP test to the cable/MDS
cross-ownership rule.  Further, the Wireless Association contended that the main issue being debated regarding
the EDP test (the influence of program providers, especially of networks over their affiliates) has no relevance
to the cable/MDS cross-ownership rule, which was adopted to prevent the warehousing of spectrum by cable
operators.  Lastly, the Wireless Association addressed ABC's suggestion that there should be a presumption
of attribution for an investment or equity stake over 50%.  To the extent that this would also apply to
cable/MDS cross-ownership, the Wireless Association opposed ABC's proposal, stating that the record does
not indicate a basis for imposing any "equity or debt plus" test at all.

     149.  In addition, Boston Ventures recommended that we generally permit investments in voting stock
within the limits used to regulate CMRS spectrum aggregation.  This means that  voting stock and other
nonpassive investments that exceed 10 percent, but that are not greater than 20 percent, should be considered
nonattributable.  Boston Ventures further stated that, as a safeguard, we could require a party to demonstrate
that diversity and competition will not be harmed by the proposed investment in cases where the overlap is more
than de minimis.  Then, if experience shows this policy has not harmed competition or diversity, we could
simply consider any investment under 20 percent as nonattributable.

     150.  NCTA generally supported relaxing the existing cable/MDS attribution rules and, in particular,
supported the increased ownership thresholds, non-voting stock exemptions and exemptions for certain limited
partnerships that were proposed in the Attribution Further Notice.  However, like the Wireless Association
and Boston Ventures, NCTA opposed the proposed 33 percent EDP provision.  NCTA maintained that the
underlying cable/MDS cross-ownership rule is unnecessary because cable operators have no incentive to
warehouse MDS spectrum when they face so much competition from other video programmers.  NCTA,
along with the Wireless Association and Boston Ventures, urged us to amend, or request Congress to amend,
the substance of other MDS, cable, and ITFS cross-ownership and cross-leasing restrictions.

     151.  As the only party opposing any modification to the cable/MDS attribution rules,  GTE argued
that a dominant wireline carrier would have an unfair competitive advantage if the rules were modified. 
First, such a carrier "could use its existing headend facilities for MDS transmission, resulting in possible cross-
subsidization of wireline cable and the MDS wireless offering that could increase the costs underlying the
franchise area's regulated cable television rates."  Another means by which a dominant wireline carrier could
gain an unfair competitive advantage, GTE argued, involves our recent approval of Basic Trading Area
("BTA") rights for MDS licensees.  According to GTE, a BTA will sometimes represent an area larger than
a dominant wireline cable operator's franchise area.  If the dominant wireline cable operator had an economic
interest in some of the MDS channels within the BTA, then a non-affiliated MDS operator would find it harder
to compete.  GTE also asserted that the dominant wireline operator could use the incentive of the larger BTA
area to subsidize its wireline cable operation and insulate itself from competitive pressures.  Still another
competitive consideration, GTE maintained, concerns a dominant wireline cable operator's potential ability "to
`triple dip' by gaining economic benefit from its programming ownership, its wireline cable delivery operation,
and the wireless MDS delivery operation within a BTA market area."  Lastly, GTE also discussed issues
concerning the substance of cable/MDS cross-ownership, as distinguished from how to attribute ownership. 
Those matters, however, are beyond the scope of the Attribution Further Notice.

     152.  Decision.  After reviewing all of the comments submitted on our proposals to relax the
cable/MDS attribution rules, we are persuaded that the broadcast attribution criteria, as modified by this
proceeding, should be applied in determining what  interests in MDS licensees and cable systems are
cognizable.  We continue to see no reason, and none has been suggested by any of the commenters, that would
warrant different attribution criteria for broadcasting and MDS.  As we have discussed here and in the
Attribution Further Notice, investment opportunities critical to the development of MDS as a competitive
service to cable have been severely limited by the current attribution standard.  Therefore, continued
application of the current cable/MDS attribution standard would frustrate our goals of strengthening wireless
cable, providing meaningful competition to cable operators and benefitting the public interest by offering
consumers more choice in their selection of video programming providers.  In view of these considerations and
the record before us, we conclude that the public interest would be better served if the modified broadcast
attribution criteria were employed for the purpose of determining attribution in the context of cable/MDS cross-
ownership.  Such modification of our existing attribution standard will increase investment possibilities without
adversely affecting competition.  Thus, we believe this attribution standard will identify ownership interests
with the potential to exert significant influence on a licensee's management and operations, and the cross-
ownership provision by its very nature will address the concern that common ownership of different
multichannel video programming distributors may reduce competition and limit diversity.  We are persuaded,
moreover, that relaxing our current attribution standard will have genuine meaning for institutional investors
who, though not involved in the day-to-day activities of either cable or MDS companies, have been precluded
from making investments in MDS due to pre-existing or anticipated investments in cable.

     153.  We are not persuaded by GTE's arguments that the proposed modifications to our attribution rule
will give dominant wireline carriers an unfair competitive advantage.  As we have already determined, the
modified, less restrictive broadcast attribution criteria, coupled with the adoption of an EDP standard, will
enable the MDS industry to avail itself of increased investment opportunities.  This will help, rather than
hinder, wireless cable's efforts to become a stronger, more viable competitor to cable, while safeguarding
against the anticompetitive concerns which the cable/MDS cross-interest rules were designed to prevent.  Since
we remain convinced that shareholders with a 5 percent or greater ownership interest may well be able to exert
significant influence on a licensee's management and operations, we reject Boston Ventures' proposal that we
adopt even less restrictive attribution rules that track those used for CMRS spectrum aggregation limits. 

     154.  The Wireless Association also fails to persuade us that it would be unfair to impose a debt
limitation on cable/MDS cross-ownership when no such limitation has been placed on cable/LMDS cross-
ownership. We consider it significant that, unlike our recently adopted cable/LMDS cross-ownership rules, the
cable/MDS cross-ownership rule implements a statutory prohibition, Section 613(a) of the Act.  Therefore,
in revisiting our cable/MDS attribution standard, we must consider both the rule and the statutory implications. 
As we tentatively concluded in the Attribution Further Notice, the potential exists:

          for certain substantial investors or creditors to have the ability to exert significant influence
     over key licensee decisions through their contract rights, even though they are not granted a
     direct voting interest or may only have a minority voting interest in a corporation with a single
     majority shareholder, which may undermine the diversity of voices we seek to promote.  They
     may, through their contractual rights and their ongoing right to communicate freely with the
     licensee, exert as much or more influence or control over some corporate decisions as voting
     equity holders whose interests are attributable.  
That tentative conclusion has been affirmed here, and we believe applies with equal force to our competitive
concerns underlying cable/MDS cross-ownership.  We have also determined that our broadcast attribution rules
will be triggered when the aggregated debt and equity interests in a licensee exceed a 33 percent benchmark. 
Our EDP broadcast attribution provision is intended to address our concerns that multiple nonattributable
interests could be combined to exert influence over licensees such that they should be attributable.  Based on
the same reasons, we likewise regard the 33 percent EDP provision as an appropriate addition to the modified
cable/MDS attribution standard. Furthermore, by adopting the 33 percent EDP provision for cable/MDS
attribution, we believe that we are acting in a manner consistent with the statutory directive by furthering
congressional intent to promote competition among video providers.

     155.  Accordingly, we will adopt the broadcast attribution criteria, as modified in this proceeding, for
determining cognizable interests in MDS licensees and cable systems. The modified attribution criteria will also
apply to the cable/MDS and cable/ITFS cross-leasing rules.  A supplemental note will follow those cross-
leasing rules and state that the attribution standard applicable to cable/MDS cross-ownership also applies to
them.  In addition, given the considerations discussed above, and for the same reasons we are adopting the 33
percent EDP provision for the broadcast attribution standard, we will adopt the 33 percent EDP provision as
part of the cable/MDS attribution standard.  A description of the resulting changes to our existing cable/MDS
attribution standard follows.

     156.  In assessing cable/MDS attribution, we will distinguish passive investors from non-passive
investors, applying the voting stock attribution benchmark applicable to each.  As a preliminary matter, the
definition of "passive investors" will be identical to that used in the context of broadcast attribution, and thus
limited to bank trust departments, insurance companies and mutual funds. Passive investors will be subject to
the same 20 percent voting stock benchmark as we adopt today for broadcast passive investors.  With regard
to a non-passive voting equity benchmark, we have already determined that shareholders with a five percent
or greater ownership interest still have the ability to wield significant influence on the management and
operations of the firms in which they invest.  Therefore, we will continue to apply our five percent benchmark
to determine the attributable interests of non-passive investors. We believe that employing a more liberal voting
stock benchmark for passive investors than that used for non-passive investors will provide the MDS industry
with increased access to much needed investment capital, while maintaining the Commission's ability to apply
its ownership rules to influential interests.

     157.  Though positions such as officers and directors will remain attributable interests, we will further
relax the current cable/MDS standard by exempting from attribution minority stockholdings in corporations
with a single majority shareholder and non-voting stock, to the extent permitted by the other rule changes made
in this proceeding.  However, here as in broadcasting, we will carefully scrutinize cases to ensure that
nonattributable minority or non-voting shareholders are not able to exert greater influence than what their
attribution status should allow. 

     158.  We further note that adoption of the EDP attribution rule for cable/MDS will limit, under certain
circumstances, the availability of the single majority shareholder and non-voting stock exemptions from
attribution.  Under the EDP rule as adopted for cable/MDS attribution, where a cable franchise area and an 
MDS  protected service area overlap, we will consider an  investor (including a cable operator or MDS
licensee) that has already invested in either the cable operator or MDS licensee, to have an attributable interest
in the other entity if that interest exceeds 33 percent of the total assets of that entity.  Thus, when the investor's
total investment in the other entity, aggregating all debt and equity interests, exceeds 33 percent of all
investment in that entity (the sum of all equity plus debt), attribution will be triggered.  We will use total assets
as a base in aggregating the different classes of investment, equity and debt, and will presume that nonvoting
stock should be treated as equity.  We will set the threshold at 33 percent for the cable/MDS EDP rule
because we see no reason to have a different benchmark than that which will be used for the broadcast EDP
rule.

     159.  We will also modify the existing cable/MDS attribution standard with respect to partnership
interests and new business forms, such as LLCs and RLLPs, consistent with our treatment of such entities in
the broadcast context.  First, we will continue to hold all partnership interests attributable, regardless of the
extent of their equity interests, unless they satisfy the insulation requirements.  However, we will not attribute
sufficiently insulated limited partnership interests when the limited partner certifies that it is not materially
involved, directly or indirectly, in the management or operation of the partnership's cable or wireless cable
activities.   Nor will we adopt voting equity benchmarks for limited partnership interests.  A limited
partnership interest will not be attributable if the limited partner meets the Commission's insulation criteria and
makes the requisite certification.  Second, consistent with our earlier findings, we will subject widely-held
limited partnerships, such as Business Development Companies, to the same set of attribution rules as limited
partnerships.  We will also treat LLCs and other new business forms, including RLLPs, under the same
attribution rules that currently apply to limited partnerships. We believe that these changes, which generally
relax our existing cable/MDS attribution standard and make them consistent with the broadcast attribution
rules, will afford increased opportunities for investment in the wireless cable and cable industries.

I.  Broadcast-Cable Cross-Ownership Attribution Rules

     160.  In the Attribution Further Notice, we stated that we would address, in this proceeding, the
attribution criteria applicable to the broadcast-cable cross-ownership rule, Section 76.501(a) of the
Commission's Rules.  While we recognized that the attribution standards used in a number of other cable
rules were implicitly or explicitly based on Section 76.501 of the Commission's Rules, we stated that we were
considering establishing a separate proceeding to modify the attribution criteria for the other cable multiple
ownership rules. 

     161.  Accordingly, we will modify the attribution criteria applicable to the cable/broadcast
cross-ownership rule to conform to the new broadcast attribution criteria adopted in this Report and Order. 
In this manner, all the broadcast attribution criteria will remain consistent.  When we revised the
cross-ownership attribution rules in 1984, we stated that there did not seem to be a justification for separate
benchmarks as applicable to cable systems.  We did not receive comments in this proceeding to justify treating
the cable/broadcast cross-ownership attribution rules differently from the other broadcast attribution rules at
issue in this proceeding.  We reiterate that the attribution revisions made herein apply only to the
cable/broadcast and the cable/MDS cross-ownership rules (and cable/ITFS cross-leasing rules) and that
revisions to the other cable attribution rules will be addressed CS Docket No. 98-82.  We also note that
because these cross-ownership rules apply where the entities at issue are in the same market, these entities will
always be subject to the EDP rule assuming that the requisite financial interest is held.
                                                                                                                        Transition Issues

     162.      Background.  In the Attribution Notice, we stated our concern that any action taken in this
proceeding not disrupt existing financial arrangements, and accordingly invited comment as to whether we
should grandfather existing situations or allow a transition period for licensees to come into compliance with
the multiple ownership rules if we adopted more restrictive attribution rules.  As we stated in the Attribution
Further Notice, commenters who addressed this issue in response to the Attribution Notice overwhelmingly
urged the Commission to grandfather existing interests indefinitely if it adopted more restrictive attribution
rules because of the disruptive effect and the unfairness to the parties of mandatory divestiture.

     163.  In light of significant changes in the multiple ownership rules mandated by the 1996 Act, we
sought additional comment on these issues, particularly on the option of a transition period, in the Attribution
Further Notice.  We stated that the impact of attributing previously nonattributable interests after a transition
period and following a relaxation of the multiple ownership rules, could be far less onerous than if the
attribution rules were changed without such a relaxation of the multiple ownership rules.  We tentatively
concluded that any grandfathering should apply only to the current holder, and that if the joint holdings were
later sold, the ownership grandfathering would not transfer to the assignee or transferee.  Further, we tentatively
concluded that any interests acquired on or after December 15, 1994, the date of adoption of the Attribution
Notice in this proceeding, should be subject to the final rules adopted in the Report and Order in this
proceeding.

     164.  Comments.  ABC supported the Commission's proposed grandfathering rule, i.e., that those
interests acquired before December 15, 1994 should not be subject to new attribution rules, as long as they are
not assigned or transferred.  Tribune urged the Commission to grandfather any interests made attributable
in cases conditioned on the outcome of this proceeding if the underlying application for Commission consent
was filed before the Attribution Notice was adopted in this proceeding, i.e.. December 15, 1994.  Viacom
suggested that the Commission should order that all transactions made subject to the new attribution rules
should be brought into compliance within a reasonable time (such as 18 months) of the release date of the order
adopting the new attribution rules.

     165.  Paxson argued that existing station combinations that do not conform to the new rules adopted
in this proceeding should be grandfathered and allowed to be sold in combination without the need for
additional showings.  Further, Paxson stated that if waivers of the new rules are granted, successful applicants
should be permitted to sell the affected stations in combination and should not be forced to split them up. 
Common ownership permitted by waivers should be grandfathered upon sales of the stations.  According to
Paxson, if the Commission does not accord full grandfathering to existing LMAs and JSAs under new
attribution standards, termination of existing business relationships would penalize entities that reasonably
relied on an existing regulatory scheme in taking risks to provide expanded service in the public interest.

     166.  In this same vein, Pappas and Qwest believed that it would be inequitable and constitute a grave
injustice to force licensees under a new, radically different guideline to somehow restructure their financial
arrangements or potentially lose their station.  Therefore, to the extent the Commission revises its attribution
rules to prohibit existing financial arrangements which were entered into in reliance upon the Commission's
longstanding policies, according to these commenters, they argue that the Commission should grandfather all
financial arrangements that were entered into prior to November 5, 1996, when the Attribution Further Notice
was adopted.

     167.  BET opposed grandfathering existing relationships, arguing that the proposed attribution rule
changes should not greatly disrupt existing financial and operational arrangements in light of relaxation of the
ownership rules.  Instead, BET proposed the use of predictable waivers based on market concentration and size,
where the waiver would not increase market consolidation. In addition, BET urged the Commission to adopt
a 24-month transition period for relationships that would be affected by a rule change.  

     168.  Decision.  We conclude that any interests acquired on or after November 5, 1996, the date of
adoption of the Attribution Further Notice in this proceeding, should be subject to the rules adopted in this
Report and Order.  We believe this cutoff date is reasonable and appropriate.  We proposed the new EDP rule
in the Attribution Further Notice, and it was therefore then that parties were on notice of the proposed new rule
and that any interests acquired on or after that date could be subject to any rule changes.  Thus, we believe that
the November 5, 1996 grandfathering date is more reasonable than the earlier grandfathering date we
proposed. Accordingly, any interests (other than radio LMAs) newly attributable pursuant to this Report and
Order that would result in violations of the ownership rules, will be grandfathered if the triggering interest was
acquired before November 5, 1996.  Except in the case of TV and radio LMAs, such grandfathering will be
permanent until such time as the grandfathered interest is assigned or transferred.

     169.  In this Report and Order, we have decided to count attributable radio LMAs for purposes of
applying all applicable multiple ownership rules, including the one-to-a-market rule and the radio-newspaper
cross-ownership rule, not just the radio duopoly rules.  As discussed above, we will treat grandfathering of
radio LMAs on case-by-case basis.  The issue of grandfathering television LMAs is resolved in the television
local ownership proceeding.

     170.  We will apply the November 5, 1996 grandfathering date to interests, newly attributable under
our EDP rule, that would result in new violations of the multiple ownership rules.  Such grandfathering will
be permanent so long as the interest is not transferred or renewed.  Thus, if an inter-market LMA triggers the
EDP rule, grandfathering will be for the term of the LMA, since the LMA cannot be renewed.  Grandfathering
will apply only to the current holder of the attributable interest.  If the grandfathered interest is later assigned
or transferred, the grandfathering will not transfer to the assignee or transferee.  New owners cannot
demonstrate the same equitable considerations that prompt us to grandfather existing owners whose current
interests are now unavoidably placed in violation of the multiple ownership rules based on adoption of the EDP
rule.  Such new owners will be given a year to come into compliance with the multiple ownership rules.

     171.  For non-grandfathered interests that are now attributable, i.e., those acquired on or after
November 5, 1996, and which must be divested to comply with our multiple ownership rules, we believe that
a twelve-month period should be sufficient for parties to identify buyers.  Accordingly, parties holding such
non-grandfathered interests must come into compliance, filing an appropriate application if necessary, within
12 months of the date of adoption of this Report and Order.

     172.  We note that grandfathering treatment of television LMAs that result in violations of the multiple
ownership rules varies depending on whether they are intra-market LMAs that are attributable under the per
se LMA attribution rule or inter-market LMAs that are attributable under the EDP rule because they are
accompanied by a financial investment that exceeds the 33 percent threshold.  For intra-market LMAs, the
grandfathering period is as discussed in the TV Local Ownership Report and Order.  Grandfathering for
interests newly attributable under the EDP rule is permanent, and, accordingly, for inter-market LMAs
attributable under EDP, grandfathering will last for the length of the LMA term since no renewal or transfer
is permitted.
  
     173.  Different considerations apply to these two kinds of LMAs.  As discussed fully above,  89,
supra, intra-market LMAs are attributed because they affect the local market.  Inter-market LMAs are
attributed only under the EDP rule as program supply contracts accompanied by a substantial financial
investment.  There is no reason to exempt inter-market LMAs from the grandfathering treatment accorded to
other program supply contracts newly attributable under the EDP rule because they are accompanied by a
financial investment that exceeds the EDP threshold.  Indeed, like these other program suppliers, and unlike
the holder of an intra-market LMA, the holder of an inter-market LMA can simply come into compliance by
adjusting its financial investment so that the EDP threshold is not exceeded.
   
K. Ownership Report,  Form 323

     174.  We intend to modify the Ownership Report form, Form 323, to reflect the addition of the EDP
rule, as well as the other attribution changes adopted in this Report and Order.  We direct the Mass Media
Bureau to make the necessary modifications to the form to reflect these changes.  Further, the Mass Media
Bureau is delegated authority to revise the Ownership Report rule, Section 73.3615, to reflect the addition of
the EDP rule, as well as the other attribution changes adopted in this Report and Order.  Thereafter, we will
issue a public notice with the revised Ownership Report Form and Ownership Report rule to reflect and
incorporate these changes.

 IV.  Administrative Matters

     175. Paperwork Reduction Act of 1995 Analysis.  This R&O contains either new or modified
information collections. Therefore, the Commission, as part of its continuing effort to reduce paperwork
burdens, invites the general public and the Office of Management and Budget ("OMB") to comment on the
information collections contained in this R&O as required by the Paperwork Reduction Act of 1995, Pub. L.
No. 104-13.  Public and agency comments are due 60 days from date of publication of this R&O in the Federal
Register.  Comments should address: (a) whether the new or modified collection of information is necessary
for the proper performance of the functions of the Commission, including whether the information shall have
practical utility; (b) the accuracy of the Commission's burden estimates; (c) ways to enhance the quality, utility,
and clarity of the information collected; and (d) ways to minimize the burden of the collection of information
on the respondents, including the use of automated collection techniques or other forms of information
technology.  In addition to filing comments with the Secretary, a copy of any comments on the information
collections contained herein should be submitted to Judy Boley, Federal Communications Commission, Room
1-C1804, 445 12th Street S.W., Washington, DC 20554, or via the Internet to jboley@fcc.gov and to Timothy
Fain, OMB Desk Officer, 10236 NEOB, 725 - 17th Street, N.W., Washington, DC 20503, or via the Internet
to fain_al.eop.gov. 

     176.  For additional information concerning the information collections contained in this R&O contact
Judy Boley at 202-418-0217.

     177.  Pursuant to the Regulatory Flexibility Act of 1980, as amended, 5 U.S.C.  601 et seq., the
Commission's Final Regulatory Flexibility Analysis in this Report and Order is attached as Appendix B.

Ordering Clauses 

     178.  Accordingly, IT IS ORDERED that, pursuant to Sections 4(i) & (j), 303(r), 307, 308 and 309
of the Communications Act of 1934 as amended, 47 U.S.C.  154(i), (j) 303(r), 307, 308, and 309, Part 73
of the Commission's Rules is amended as set forth in Appendix A,  below.

     179.  IT IS FURTHER ORDERED that, pursuant to the Contract with America Advancement Act
of 1996, the rule amendments set forth in Appendix A SHALL BE EFFECTIVE sixty days after publication
in the Federal Register.

     180.  IT IS FURTHER ORDERED that the Commission's Office of Public Affairs, Reference
Operations Division, SHALL SEND a copy of this Report and Order in MM Docket Nos. 94-150, 92-51, and
87-154, including the Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small
Business Administration.
     
     181.  IT IS FURTHER ORDERED that the new or modified paperwork requirements contained in this
Report and Order (which are subject to approval by the Office of Management and Budget) will go into effect
upon OMB approval.

     182.  IT IS FURTHER ORDERED that this proceeding is hereby terminated.

     183.  For additional information concerning this proceeding, contact Mania K. Baghdadi, Mass Media
Bureau, Policy and Rules Division, (202) 418-2120; or Jane Gross, Mass Media Bureau, Policy and Rules
Division, Legal Branch, (202) 418-2130; or Berry Wilson, Mass Media Bureau, Policy and Rules Division,
Policy Analysis Branch, (202) 418-2170.

                              FEDERAL COMMUNICATIONS COMMISSION  



                              Magalie Roman Salas
                              Secretary                            Appendix A
                           Rule Changes

Parts 21, 73, 74 and 76 of Title 47 of the Code of Federal Regulations are amended to read as follows:

PART 21 - DOMESTIC PUBLIC FIXED RADIO SERVICES

1.  The authority citation for Part 21 continues to read as follows:

Authority:  Secs. 1, 2, 4, 201-205, 208, 215, 218, 303, 307, 313, 403, 404, 410, 602, 48 Stat. as amended,
1064, 1066, 1070-1073, 1076, 1077, 1080, 1082, 1083, 1087, 1094, 1098, 1102;  47 U.S.C. 151, 154,
201-205, 208, 215, 218, 303, 307, 313, 314, 403, 404, 602;  47 U.S.C. 552, 554.

2. Section 21.912 is amended by revising the title to add at the end of the title "and MDS/cable cross-
ownership" and by revising Note 1 as follows:  

 21.912  Cable television company eligibility requirements and MDS/cable cross-ownership.

* * * * *

Note 1:  In applying the provisions of this section, ownership and other interests in MDS licensees or cable
television systems will be attributed to their holders and deemed cognizable pursuant to the following criteria:

     (a) Except as otherwise provided herein, partnership and direct ownership interests and any voting
stock interest amounting to 5% or more of the outstanding voting stock of a corporate MDS licensee or cable
television system will be cognizable;

     (b) No minority voting stock interest will be cognizable if there is a single holder of more than 50%
of the outstanding voting stock of the corporate MDS licensee or cable television system in which the minority
interest is held;

     (c) Investment companies, as defined in 15 U.S.C. 80a-3, insurance companies and banks holding stock
through their trust departments in trust accounts will be considered to have a cognizable interest only if they
hold 20% or more of the outstanding voting stock of a corporate MDS licensee or cable television system, or
if any of the officers or directors of the MDS licensee or cable television system are representatives of the
investment company, insurance company or bank concerned.  Holdings by a bank or insurance company will
be aggregated if the bank or insurance company has any right to determine how the stock will be voted. 
Holdings by investment companies will be aggregated if under common management.

     (d) Attribution of ownership interests in an MDS licensee or cable television system that are held
indirectly by any party through one or more intervening corporations will be determined by successive
multiplication of the ownership percentages for each link in the vertical ownership chain and application of the
relevant attribution benchmark to the resulting product, except that wherever the ownership percentage for any
link in the chain exceeds 50%, it shall not be included for purposes of this multiplication.  [For example, if A
owns 10% of company X, which owns 60% of company Y, which owns 25% of "Licensee," then X's interest
in "Licensee" would be 25% (the same as Y's interest since X's interest in Y exceeds 50%), and A's interest in
"Licensee" would be 2.5% (0.1 x 0.25).  Under the 5% attribution benchmark, X's interest in "Licensee" would
be cognizable, while A's interest  would not be cognizable.]

     (e) Voting stock interests held in trust shall be attributed to any person who holds or shares the power
to vote such stock, to any person who has the sole  power to sell such stock, and to any person who has the
right to revoke the trust at will or to replace the trustee at will.  If the trustee has a familial, personal or
extra-trust business relationship to the grantor or the beneficiary, the grantor or beneficiary, as appropriate,
will be attributed with the stock interests held in trust.  An otherwise qualified trust will be ineffective to
insulate the grantor or beneficiary from attribution with the trust's assets unless all voting stock interests held
by the grantor or beneficiary in the relevant MDS licensee or cable television system are subject to said trust.

     (f) Subject to paragraph (j) of this Note, holders of non-voting stock shall not be attributed an interest
in the issuing entity.  Subject to paragraph (j) of this Note, holders of debt and instruments such as warrants,
convertible debentures, options or other non-voting interests with rights of conversion to voting interests shall
not be attributed unless and until conversion is effected.

     (g)(1) A limited partnership interest shall be attributed to a limited partner unless that partner is not
materially involved, directly or indirectly, in the management or operation of the MDS or cable television
activities of the partnership and the licensee or system so certifies.  An interest in a Limited Liability Company
("LLC") or Registered Limited Liability Partnership ("RLLP") shall be attributed to the interest holder unless
that interest holder is not materially involved, directly or indirectly, in the management or operation of the MDS
or cable television activities of the partnership and the licensee or system so certifies.

     (2) In order for a licensee or system that is a limited partnership to make the certification set forth in
paragraph (g)(1) of this section, it must verify that the partnership agreement or certificate of limited
partnership, with respect to the particular limited partner exempt from attribution, establishes that the exempt
limited partner has no material involvement, directly or indirectly, in the management or operation of the MDS
or cable television activities of the partnership.  In order for a licensee or system that is an LLC or RLLP to
make the certification set forth in paragraph (g)(2) of this section, it must verify that the organizational
document, with respect to the particular interest holder exempt from attribution, establishes that the exempt
interest holder has no material involvement, directly or indirectly, in the management or operation of the MDS
or cable television activities of the LLC or RLLP.  The criteria which would assume adequate insulation for
purposes of this certification are described in the Memorandum Opinion and Order in MM Docket No. 83-46,
FCC 85-252 (released June 24, 1985), as modified on reconsideration in the Memorandum Opinion and Order
in MM Docket No. 83-46, FCC 86-410 (released November 28, 1986).  Irrespective of the terms of the
certificate of limited partnership or partnership agreement, or other organizational document in the case of an
LLC or RLLP, however, no such certification shall be made if the individual or entity making the certification
has actual knowledge of any material involvement of the limited partners, or other interest holders in the case
of an LLC or RLLP, in the management or operation of the MDS or cable television businesses of the
partnership or LLC or RLLP.

     (h) Officers and directors of an MDS licensee or cable television system are considered to have a
cognizable interest in the entity with which they are so associated.  If any such entity engages in businesses in
addition to its primary business of MDS or cable television service, it may request the Commission to waive
attribution for any officer or director whose duties and responsibilities are wholly unrelated to its primary
business.  The officers and directors of a parent company of an MDS licensee or cable television system, with
an attributable interest in any such subsidiary entity, shall be deemed to have a cognizable interest in the
subsidiary unless the duties and responsibilities of the officer or director involved are wholly unrelated to the
MDS licensee or cable television system subsidiary, and a statement properly documenting this fact is
submitted to the Commission.  [This statement may be included on the Licensee Qualification Report.]  The
officers and directors of a sister corporation of an MDS licensee or cable television system shall not be
attributed with ownership of these entities by virtue of such status.

     (i) Discrete ownership interests will be aggregated in determining whether or not an interest is
cognizable under this section.  An individual or entity will be deemed to have a cognizable investment if:
     (1) The sum of the interests held by or through "passive investors" is equal to or exceeds 20 percent;
or
     (2) The sum of the interests other than those held by or through "passive investors" is equal to or
exceeds 5 percent; or
     (3) The sum of the interests computed under paragraph (i)(1) of this section plus the sum of the
interests computed under paragraph (i)(2) of this section is equal to or exceeds 20 percent.

     (j) Notwithstanding paragraphs (b), (f), and (g) of this Note, the holder of an equity or debt interest
or interests in an MDS licensee or cable television system subject to the MDS/cable cross-ownership rule
("interest holder") shall have that interest attributed if: 
     (1) the equity (including all stockholdings, whether voting or nonvoting, common or preferred) and debt
interest or interests, in the aggregate, exceed 33 percent of the total asset value (all equity plus all debt) of that
MDS licensee or cable television system; and
     (2) the interest holder also holds an interest in an MDS licensee or cable television system that is
attributable under paragraphs of this Note other than this paragraph (j) and which operates in any portion of
the franchise area served by that cable operator's cable system.  

     (k) The term "area served by a cable system" means any area actually passed by the cable operator's
cable system and which can be connected for a standard connection fee.

     (l) As used in this section "cable operator" shall have the same definition as in  76.5.

* * * * *

PART 73 - BROADCAST RADIO SERVICES

1.  The authority citation for Part 73 continues to read as follows:

Authority:  47 U.S.C. 154, 303, 334 and 336.

2. Section 73.3555 is amended by removing paragraphs (a)(3) and (a)(4)(iii), renumbering paragraph (a)(4)
to read as paragraph (a)(3), revising the first sentence of Note 2(b) to add at the beginning of the sentence
"Subject to paragraph (j) of this Note," by revising Notes 2(c), 2(f), 2(g), and 2(i) as follows, and by adding
Notes 2(j) and 2(k): 

 73.3555 Multiple Ownership.

* * * * *

Note 2 * ** 

     (b) * * * 

     (c) Investment companies, as defined in 15 U.S.C. 80a-3, insurance companies and banks holding stock
through their trust departments in trust accounts will be considered to have a cognizable interest only if they
hold 20% or more of the outstanding voting stock of a corporate broadcast licensee, cable television system
or daily newspaper, or if any of the officers or directors of the broadcast licensee, cable television system or
daily newspaper are representatives of the investment company, insurance company or bank concerned.  * *
*

* * * * *  

     (f) Subject to paragraph (j) of this Note, holders of non-voting stock shall not be attributed an interest
in the issuing entity.  Subject to paragraph (j) of this Note, holders of debt and instruments such as warrants,
convertible debentures, options or other non-voting interests with rights of conversion to voting interests shall
not be attributed unless and until conversion is effected.

     (g)(1) A limited partnership interest shall be attributed to a limited partner unless that partner is not
materially involved, directly or indirectly, in the management or operation of the media-related activities of the
partnership and the licensee or system so certifies.  An interest in a Limited Liability Company ("LLC") or
Registered Limited Liability Partnership ("RLLP") shall be attributed to the interest holder unless that interest
holder is not materially involved, directly or indirectly, in the management or operation of the media-related
activities of the partnership and the licensee or system so certifies.

     (2) In order for a licensee or system that is a limited partnership to make the certification set forth in
paragraph (g)(1) of this section, it must verify that the partnership agreement or certificate of limited
partnership, with respect to the particular limited partner exempt from attribution, establishes that the exempt
limited partner has no material involvement, directly or indirectly, in the management or operation of the media
activities of the partnership.  In order for a licensee or system that is an LLC or RLLP to make the certification
set forth in paragraph (g)(1) of this section, it must verify that the organizational document, with respect to the
particular interest holder exempt from attribution, establishes that the exempt interest holder has no material
involvement, directly or indirectly, in the management or operation of the media activities of the LLC or RLLP. 
The criteria which would assume adequate insulation for purposes of this certification are described in the
Memorandum Opinion and Order in MM Docket No. 83-46, FCC 85-252 (released June 24, 1985), as
modified on reconsideration in the Memorandum Opinion and Order in MM Docket No. 83-46, FCC 86-410
(released November 28, 1986).  Irrespective of the terms of the certificate of limited partnership or partnership
agreement, or other organizational document in the case of an LLC or RLLP, however, no such certification
shall be made if the individual or entity making the certification has actual knowledge of any material
involvement of the limited partners, or other interest holders in the case of an LLC or RLLP, in the management
or operation of the media-related businesses of the partnership or LLC or RLLP.

(3) In the case of an LLC or RLLP, the licensee or system seeking insulation shall certify, in addition, that the 
relevant state statute authorizing LLCs permits an LLC member to insulate itself as required by our criteria.

* * * * *

     (i) Discrete ownership interests will be aggregated in determining whether or not an interest is
cognizable under this section.  An individual or entity will be deemed to have a cognizable investment if:

     (1) The sum of the interests held by or through "passive investors" is equal to or exceeds 20 percent; 
or

     (2) The sum of the interests other than those held by or through "passive investors" is equal to or
exceeds 5 percent;  or

     (3) The sum of the interests computed under paragraph (i)(1) of this section plus the sum of the
interests computed under paragraph (i)(2) of this section is equal to or exceeds 20 percent.

      (j) Notwithstanding paragraphs (b), (f), and (g) of this Note, the holder of an equity or debt interest
or interests in a broadcast licensee, cable television system, daily newspaper, or other media outlet subject to
the broadcast multiple ownership or cross-ownership rules ("interest holder") shall have that interest attributed
if: 
     (1) the equity (including all stockholdings, whether voting or nonvoting, common or preferred) and debt
interest or interests, in the aggregate, exceed 33 percent of the total asset value, defined as the aggregate of all
equity plus all debt, of that media outlet; and
     (2) (i) the interest holder also holds an interest in a broadcast licensee, cable television system,
newspaper, or other media outlet operating in the same market that is subject to the broadcast multiple
ownership or cross-ownership rules and is attributable under paragraphs of this Note other than this paragraph
(j); or 
           (ii) the interest holder supplies over fifteen percent of the total weekly broadcast programming
hours of the station in which the interest is held.
For purposes of applying this paragraph, the term, "market," will be defined as it is defined under the specific
multiple or cross-ownership rule that is being applied, except that for television stations, the term "market,"
will be defined by reference to the definition contained in the television duopoly rule contained in paragraph
(b) of this section.

     (k)  "Time brokerage" is the sale by a licensee of discrete blocks of time to a "broker" that supplies the
programming to fill that time and sells the commercial spot announcements in it.
     (1)  Where the principal community contours (predicted or measured 5 mV/m groundwave contour for
AM stations computed in accordance with  73.183 or  73.186 and predicted 3.16 mV/m contour for FM
stations computed in accordance with  73.313) of two radio stations overlap and a party (including all parties
under common control) with an attributable ownership interest in one such station brokers more than 15 percent
of the broadcast time per week of the other such station, that party shall be treated as if it has an interest in the
brokered station subject to the limitations set forth in paragraphs (a), (c), and (d) of this section.  This
limitation shall apply regardless of the source of the brokered programming supplied by the party to the
brokered station.
     (2)  Where two television stations are both licensed to the same market, as defined in the television
duopoly rule contained in paragraph (b) of this section, and a party (including all parties under common
control) with an attributable ownership interest in one such station brokers more than 15 percent of the
broadcast time per week of the other such station, that party shall be treated as if it has an interest in the
brokered station subject to the limitations set forth in paragraphs (b), (c), (d) and (e) of this section.  This
limitation shall apply regardless of the source of the brokered programming supplied by the party to the
brokered station.
     (3) Every time brokerage agreement of the type described in this Note shall be undertaken only
pursuant to a signed written agreement that shall contain a certification by the licensee or permittee of the
brokered station verifying that it maintains ultimate control over the station's facilities, including specifically
control over station finances, personnel and programming, and by the brokering station that the agreement
complies with the provisions of paragraphs (b) through (d) of this section if the brokering station is a television
station or with paragraphs  (a), (c), and (d) if the brokering station is a radio station.

* * * * *

3. Section 73.3526 is amended by revising paragraph (e)(14) to read as follows, and by adding (e)(16) as
follows:

 73.3526 Local public inspection file of commercial stations.

* * * * *

     (e) * * *

     (14) For commercial radio and television stations, a copy of every agreement or contract involving time
brokerage of the licensee's station or of another station by the licensee, whether the agreement involves stations
in the same markets or in differing markets, with confidential or proprietary information redacted where
appropriate.  These records shall be retained as long as the contract or agreement is in force.

     (16) Radio and television joint sales agreements.  For commercial radio and commercial television
stations, a copy of agreement for the joint sale of advertising time involving the station, whether the agreement
involves stations in the same markets or in differing markets, with confidential or proprietary information
redacted where appropriate.

* * * * * 

4. Section 73.3613 is amended by revising paragraphs (d) and (e) to read as follows:

 73.3613 Filing of contracts.

* * * * *

(d) Time brokerage agreements:  Time brokerage agreements involving radio stations, where the licensee
(including all parties under common control) is the brokering entity, there is a principal community contour
overlap (predicted or measured 5 mV/m groundwave for AM stations and predicted 3.16 mV/m for FM
stations) overlap with the brokered station, and more than 15 percent of the time of the brokered station, on a
weekly basis, is brokered by that licensee; time brokerage agreements involving television stations where
licensee (including all parties under common control) is the brokering entity, the brokering and brokered
stations are both licensed to the same market as defined in the television duopoly rule contained in Section
73.3555(b), and more than 15 percent of the time of the brokered station, on a weekly basis, is brokered by that
licensee; time brokerage agreements involving radio or television stations that would be attributable to the
licensee under Section 73.3555 Note 2(j).  Confidential or proprietary information may be redacted where
appropriate but such information shall be made available for inspection upon request by the FCC.

(e) The following contracts, agreements or understandings need not be filed but shall be kept at the station and
made available for inspection upon request by the FCC: contracts relating to the joint sale of broadcast
advertising time that do not constitute time brokerage agreements pursuant to Section 73.3555 Note 2(k);
subchannel leasing agreements for Subsidiary Communications Authorization operation; franchise/leasing
agreements for operation of telecommunications services on the TV vertical blanking interval and in the visual
signal; time sales contracts with the same sponsor for 4 or more hours per day, except where the length of the
events (such as athletic contests, musical programs and special events) broadcast pursuant to the contract is
not under control of the station; and contracts with chief operators.

* * * * *

PART 74 - EXPERIMENTAL RADIO, AUXILIARY, SPECIAL BROADCAST AND OTHER PROGRAM
DISTRIBUTIONAL SERVICES

1.  The authority citation for Part 74 continues to read as follows:

 Authority:  47 U.S.C. 154, 303, 307, and 554.

2. Section 74.931 is amended by adding Note 1 at the end of 74.931(i) as follows:

Note 1: In applying the provisions of paragraphs (h) and (i) of this section, an attributable ownership interest
shall be defined by reference to the Notes contained in  21.912.

* * * * *

PART 76--MULTICHANNEL VIDEO AND CABLE TELEVISION SERVICE

1.  The authority citation for Part 76 continues to read as follows:

Authority:  47 U.S.C. 151, 152, 153, 154, 301, 302, 303,  303a, 307, 308, 309, 312, 315, 317, 325, 503, 521,
522, 531, 532, 534, 535, 536, 537, 543, 544, 544a, 545, 548, 549, 552, 554, 556, 558, 560, 561, 571, 572,
573.

2. Section 76.501 is amended by adding Note 6 as follows:

 76.501 Cross-ownership.

* * * * *

Note 6:  In applying the provisions of paragraph (a) of this Section, Notes 1 through 4 shall apply, provided
however that:

     (a) The attribution benchmark for passive investors in paragraph (c) of Note 2 shall be 20 percent and
the benchmarks in paragraph (i)(1) and (i)(3) of Note 2 shall be 20 percent;
     (b) An interest holder in a Limited Liability Company or Registered Limited Liability Partnership shall
be subject to the provisions of paragraph (g) of Note 2 in determining whether its interest is attributable; and 
     (c) Notwithstanding paragraphs (b), (f), and (g) of Note 2, the holder of an equity or debt interest or
interests in a broadcast licensee or cable television system ("interest holder") shall have that interest attributed
if: 
     (1) the equity (including all stockholdings, whether voting or nonvoting, common or preferred) and debt
interest or interests, in the aggregate, exceed 33 percent of the total asset value (defined as the aggregate of all
equity plus all debt) of that media outlet; and
     (2) (i) the interest holder also holds an interest in another broadcast licensee or cable television system
which operates in the same market and is attributable without reference to this paragraph (c); or 
           (ii) the interest holder supplies over fifteen percent of the total weekly broadcast programming
hours of the station in which the interest is held.
                            APPENDIX B

              Final Regulatory Flexibility Analysis

     As required by the Regulatory Flexibility Act (RFA), an Initial Regulatory Flexibility Analysis
(IRFA) was incorporated in the Further Notice of Proposed Rule Making in MM Docket Nos. 94-150, 92-51,
& 87-154, 11 FCC Rcd 19895 (1996) ("Attribution Further Notice").   The Commission sought written
public comment on the proposals in the Attribution Further Notice, including comment on the IRFA.  The
comments received are discussed below.  This Final Regulatory Flexibility Analysis (FRFA) conforms to the
RFA. 

I.  Need For, and Objectives of the Report and Order:

     The attribution rules seek to identify those interests in or relationships to licensees or media entities
that confer on their holders a degree of influence or control such that the holders have a realistic potential to
affect the programming decisions of licensees or other core operating functions.  The attribution rules are used
to implement the Commission's broadcast multiple ownership rules.  Our goals in this proceeding are to
maximize the precision of the attribution rules, avoid disruption in the flow of capital to broadcasting, afford
clarity and certainty to regulatees, ease application processing, and provide for the reporting of all the
information we need in order to make our public interest finding with respect to broadcast applications.  While
our focus is on the issues of influence or control, at the same time, we must tailor the attribution rules to permit
arrangements in which a particular ownership or positional interest involves minimal risk of influence, in order
to avoid unduly restricting the means by which investment capital may be made available to the broadcast
industry.  The rules adopted meet these goals.

II.  Summary of Significant Issues Raised by the Public in Response to the IRFA:

     One comment, filed specifically in response to the IRFA contained in the Second Further Notice of
Proposed Rulemaking in MM Dockets 91-221 and 87-8, FCC 96-438 (released November 7, 1996), addressed
an issue relevant to all the Commission's proceedings dealing with the mass media multiple ownership rules. 
This comment, filed by the Media Access Project, the Center for Media Education, the Minority Media and
Telecommunications Council, the United Church of Christ, Office of Communications ("MAP"), addressed
the Commission's characterization of certain radio and television stations as "small entities."  

     Specifically MAP argues that the Commission overstated the number of small entities that will be
affected by changes to the ownership rules.  According to MAP, the Commission acknowledged that
Commission estimates may overstate the number of small entities since the revenue figures on which they are
based do not include or aggregate revenues from non-television or non-radio affiliated companies.  MAP also
argued that the Commission's estimates do not take into consideration licensees with 10, 20, 30 or more
broadcast stations, or those licensees that have entered into LMAs.  Instead, the Commission's estimates look
at the revenues of each station, individually, to determine if it qualifies as a small business.  MAP argued that
under this approach, individual broadcast properties of Fortune 500 companies might be defined as small
businesses.  

     Furthermore, MAP argued that changing the Commission's multiple ownership rules will harm small
broadcasters in numerous ways.  First, it will put small broadcasters at a competitive disadvantage with larger
stations that can offer advertisers lower rates and/or greater exposure.  Second, it will drive up the costs of
stations, eliminating the ability of small broadcasters (especially female and minority broadcasters and potential
new entrants) to purchase stations.  In addition, according to MAP, small advertisers will be disadvantaged if
a broadcaster owns several broadcast stations in a market, since a broadcaster could drive up advertising rates
as a condition of access to those stations.    

     Other commenters did not specifically respond to the IRFA, but did address small business issues. 
TCI, Pappas, Qwest, and BET opposed the equity/debt plus rule, believing that it would preclude important
sources of investments by same-market broadcasters and networks, and that it would therefore be particularly
detrimental to small and minority broadcasters.        

     Viacom, in contrast, stated that the equity/debt plus rule would not jeopardize the availability of capital
to broadcasters.  It further asserted that any potential impact could be offset by increasing the passive-investor
benchmark to 33 percent under its own proposal.

III.  Description and Estimate of the Number of Small Entities To Which Rules Will Apply:

           1. Definition of a "Small Business"

     Under the RFA, small entities may include small organizations, small businesses, and small
governmental jurisdictions.  5 U.S.C.  601(6).  The RFA, 5 U.S.C.  601(3), generally defines the term "small
business" as having the same meaning as the term "small business concern" under the Small Business Act, 15
U.S.C.  632.  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 Small Business
Administration ("SBA").  According to the SBA's regulations, entities engaged in television broadcasting
Standard Industrial Classification ("SIC") Code 4833 -- Television Broadcasting Stations, may have a
maximum of $10.5 million in annual receipts in order to qualify as a small business concern.  Similarly,
entities engaged in radio broadcasting, SIC Code 4832 -- Radio Broadcasting Stations, have a maximum of
$5 million in annual receipts to qualify as a small business concern.   13 C.F.R.  121.101 et.seq.  This
standard also applies in determining whether an entity is a small business for purposes of the RFA.

     Pursuant to 5 U.S.C.  601(3), the statutory definition of a small business applies "unless an agency
after consultation with the Office of Advocacy of the SBA 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."  While we tentatively believe that the foregoing definition
of "small business" greatly overstates the number of radio and television broadcast stations that are small
businesses and is not suitable for purposes of determining the impact of the new rules on small television and
radio stations, we did not propose an alternative definition in the IRFA.  Accordingly, for purposes of this
Report and Order, we utilize the SBA's definition in determining the number of small businesses to which the
rules apply, but we reserve the right to adopt a more suitable definition of "small business" as applied to radio
and television broadcast stations and to consider further the issue of the number of small entities that are radio
and television broadcasters in the future.  Further, in this FRFA, we will identify the different classes of small
radio and television stations that may be impacted by the rules adopted in this Report and Order.
     
       2.  Issues in Applying the Definition of a "Small Business"

     As discussed below, we could not precisely apply the foregoing definition of "small business" in
developing our estimates of the number of small entities to which the rules will apply.  Our estimates reflect
our best judgments based on the data available to us. 

     An element of the definition of "small business" is that the entity not be dominant in its field of
operation.  We were unable at this time to define or quantify the criteria that would establish whether a specific
television or radio station is dominant in its field of operation.  Accordingly, the following estimates of small
businesses to which the new rules will apply do not exclude any television or radio station from the definition
of a small business on this basis and are therefore overinclusive to that extent.  An additional element of the
definition of "small business" is that the entity must be independently owned and operated.  We attempted to
factor in this element by looking at revenue statistics for owners of television stations.  However, as discussed
further below, we could not fully apply this criterion, and our estimates of small businesses to which the rules
may apply may be overinclusive to this extent.  The SBA's general size standards are developed taking into
account these two statutory criteria.  This does not preclude us from taking these factors into account in making
our estimates of the numbers of small entities. 
     
          With respect to applying the revenue cap, the SBA has defined "annual receipts" specifically in 13
C.F.R  121.104, and its calculations include an averaging process.  We do not currently require submission
of financial data from licensees that we could use in applying the SBA's definition of a small business.  Thus,
for purposes of estimating the number of small entities to which the rules apply, we are limited to considering
the revenue data that are publicly available, and the revenue data on which we rely may not correspond
completely with the SBA definition of annual receipts.

     Under SBA criteria for determining annual receipts, if a concern has acquired an affiliate or been
acquired as an affiliate during the applicable averaging period for determining annual receipts, the annual
receipts in determining size status include the receipts of both firms.  13 C.F.R.  121.104(d)(1).  The SBA
defines affiliation in 13 C.F.R.  121.103.  In this context, the SBA's definition of affiliate is analogous to our
attribution rules.  Generally, under the SBA's definition, concerns are affiliates of each other when one 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).  The SBA considers factors such as ownership, management, previous
relationships with or ties to another concern, and contractual relationships, in determining whether affiliation
exists.  13 C.F.R.  121.103(a)(2).  Instead of making an independent determination of whether radio and
television stations were affiliated based on SBA's definitions, we relied on the data bases available to us to
provide us with that information.

       3.  Estimates Based on Census Data 
     
     The rules amended by this Report and Order will apply to full service television and radio licensees
and permittees, potential licensees and permittees, cable services or systems, MDS and ITFS, and newspapers. 

   
     Radio and Television Stations

     The rules adopted in this Report and Order will apply to full service television and radio stations. The
Small Business Administration defines a television broadcasting station that has no more than $10.5 million
in annual receipts as a small business.  Television broadcasting stations consist of establishments primarily
engaged in broadcasting visual programs by television to the public, except cable and other pay television
services.  Included in this industry are commercial, religious, educational, and other television stations. 
Also included are establishments primarily engaged in television broadcasting and which produce taped
television program materials.  Separate establishments primarily engaged in producing taped television
program materials are classified under another SIC number.  
   
     There were 1,509 television stations operating in the nation in 1992.  That number has remained
fairly constant as indicated by the approximately 1,594 operating television broadcasting stations in the nation
as of June 1999.  For 1992 the number of television stations that produced less than $10.0 million in
revenue was 1,155 establishments.  

     The rule changes will also affect radio stations.  The SBA defines a radio broadcasting station that has
no more than $5 million in annual receipts as a small business.  A radio broadcasting station is an
establishment primarily engaged in broadcasting aural programs by radio to the public.  Included in this
industry are commercial, religious, educational, and other radio stations.  Radio broadcasting stations which
primarily are engaged in radio broadcasting and which produce radio program materials are similarly
included.  However, radio stations which are separate establishments and are primarily engaged in producing
radio program material are classified under another SIC number.  The 1992 Census indicates that 96 percent
(5,861 of 6,127) of radio station establishments produced less than $5 million in revenue in 1992.  Official
Commission records indicate that 11,334 individual radio stations were operating in 1992.  As of June 1999,
official Commission records indicate that 12,560 radio stations are currently operating.

     Thus, the rule changes will affect approximately 1,594 television stations, approximately 1,227 of
which are considered small businesses.  Additionally, the rule changes will affect 12,560 radio stations,
approximately 12,057 of which are small businesses.  These estimates may overstate the number of small
entities since the revenue figures on which they are based do not include or aggregate revenues from non-
television or non-radio affiliated companies.

     Cable Services or Systems

     SBA has developed a definition of small entities for cable and other pay television services (SIC 4841),
which includes all such companies generating $11 million or less in revenue annually. This definition includes
cable systems operators, closed circuit television services, direct broadcast satellite services, multipoint
distribution systems, satellite master antenna systems and subscription television services. According to the
Census Bureau data from 1992, there were 1,788 total cable and other pay television services, and 1,423 had
less than $11 million in revenue.

     The Commission has developed its own definition of a small cable company for the purposes of rate
regulation.  Under the Commission's rules, a "small cable company," is one serving fewer than 400,000
subscribers nationwide.  Based on our most recent information, we estimate that there were 1439 cable
operators that qualified as small cable companies at the end of 1995.  Since then, some of those companies
may have grown to serve over 400,000 subscribers, and others may have been involved in transactions that
caused them to be combined with other cable operators.  Consequently, we estimate that there are fewer than
1439 small entity cable system operators that may be affected by the decisions and rules proposed in this
Report and Order.  The Commission's rules also define a "small system," for the purposes of cable rate
regulation, as a cable system with 15,000 or fewer subscribers.  We do not request nor do we collect
information concerning cable systems serving 15,000 or fewer subscribers and thus are unable to estimate at
this time the number of small cable systems nationwide.

     The Communications Act also contains a definition of a small cable system operator, which is "a cable
operator that, directly or through an affiliate, serves in the aggregate fewer than 1 percent of all subscribers
in the United States and is not affiliated with any entity or entities whose gross annual revenues in the aggregate
exceed $250,000,000."  Section 76.1403(b) of the Commissions' rules defines a small cable system operator
as one which serves in the aggregate fewer than 617,000 subscribers, and whose total annual revenues, when
combined with the total annual revenues of all of its affiliates, do not exceed $250 million in the aggregate. 
Based on available data, we find that the number of cable operators serving 617,000 subscribers or less totals
1450.  Although it seems certain that some of these cable system operators are affiliated with entities whose
gross annual revenues exceed $250,000,000, we are unable at this time to estimate with greater precision the
number of cable system operators that would qualify as small cable operators under the definition in the
Communications Act.
     
     MDS and ITFS

     Other pay television services are also classified under Standard Industrial Classification (SIC) 4841,
which includes cable systems operators, closed circuit television services, direct broadcast satellite services
(DBS), multipoint distribution systems (MDS), satellite master antenna systems (SMATV), and subscription
television services.
     
     The Commission refined the definition of "small entity" for the auction of MDS as an entity that
together with its affiliates has average gross annual revenues that are not more than $40 million for the
preceding three calendar years.  This definition of a small entity in the context of the Commission's Report
and Order concerning MDS auctions that has been approved by the SBA.  

     The Commission completed its MDS auction in March 1996 for authorizations in 493 basic trading
areas ("BTAs").  Of 67 winning bidders, 61 qualified as small entities.  Five bidders indicated that they were
minority-owned and four winners indicated that they were women-owned businesses.  MDS is an especially
competitive service, with approximately 1573 previously authorized and proposed MDS facilities as of 1996.
Information available to us indicates that no MDS facility generates revenue in excess of $11 million annually. 
We tentatively conclude that for purposes of this IRFA, there are approximately 1634 small MDS providers
as defined by the SBA and the Commission's auction rules.  

     Newspapers

     Some of the rule changes may also apply to daily newspapers that hold or seek to acquire an interest
in a broadcast station that would be treated as attributable under the rules.  A newspaper is an establishment
that is primarily engaged in publishing newspapers, or in publishing and printing newspapers.  The SBA
defines a newspaper that has 500 or fewer employees as a small business.  Based on data from the U.S.
Census Bureau, there are a total of approximately 6,715 newspapers, and 6,578 of those meet the SBA's size
definition.  However, we recognize that some of these newspapers may not be independently owned and
operated and, therefore, would not be considered a "small business concern" under the Small Business Act. 
We are unable to estimate at this time how many newspapers are affiliated with larger entities.  Moreover, the
rule changes would apply only to daily newspapers, and we are unable to estimate how many newspapers that
meet the SBA's size definition are daily newspapers.  Consequently, we estimate that there are fewer than 6,578
newspapers that may be affected by the rule changes in this Report and Order.  
      
IV.  Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements:

     The Report and Order imposes compliance with the amended attribution rules set forth in the Report
and Order.  Compliance will require licensees to file with the Commission amended Ownership Report Forms
(FCC Form 323) to reflect interests attributable under the amended attribution rules.  Compliance will also
require licensees that have entered into Joint Sales Agreements (JSAs) to place such agreements in their public
inspection files with confidential or proprietary information redacted where appropriate.  In addition, pursuant
to the new rules, certain television time brokerage agreements will be required to be filed with the Commission
where they are intra-market agreements or are inter-market agreements that come under the equity/debt plus
attribution standard adopted by the Report and Order.  Finally, compliance may require some licensees whose
ownership interests under the amended attribution rules violate the multiple ownership rules, to divest the
prohibited interests within the time periods specified in the Report and Order. 

V.  Steps Taken to Minimize Significant Economic Impact on Small Entities, and Significant Alternatives
Considered:

     The Report and Order retains the current 5 percent active voting stock attribution benchmark.  We
believe that our original decision to set a 5 percent benchmark to capture influential interests remains valid and
will not unduly restrict capital availability.  Further, we note that our concerns over capital availability that
originally prompted the proposal to increase the active voting stock benchmark have eased somewhat,
particularly in light of the increasing strength shown by the communications sector and financial markets in
general over the past several years.  This increase in capital spending occurred within the context of our current
attribution rules, and therefore provides us with strong evidence of the continued availability of capital in the
communications industry.  And, to the extent that there are still concerns about not impeding capital flow to
broadcasting, we believe that they will be adequately addressed since the Report and Order increases the
passive investor benchmark.   

     The Report and Order increases the voting stock benchmark from 10 percent to 20 percent for passive
investors.  We believe that increasing the passive investor benchmark to 20 percent will give broadcasters
increased access to investment capital, while preserving the Commission's ability to effectively enforce its
ownership rules.  This decision takes into account the special nature of the passive investor category, in terms
of the legal and fiduciary requirements that constrain passive investors' involvement in the management and
operational affairs of the firms in which they invest.  In addition, passive investors have become an increasingly
important source of investment capital to the corporate sector.  Finally, the Commission recognizes that the
pace of technological change within broadcasting, particularly the transition to DTV, might require access to
such new sources of investment capital.
      
     Further, we note that the record strongly supports an increase in the passive investor benchmark and
supports our belief that such an increase will help assure that the attribution changes adopted herein will
reinforce the trends in broadcast investment and growth in passive investment levels noted above, particularly
at a time when television broadcasters are undertaking the conversion to digital television.  We believe that
increasing the passive investor benchmark is a relatively safe way to increase capital flows into broadcasting,
without compromising the ability of our attribution rules to capture influential interests.  The Report and Order
retains the current definition of "passive investors," which is limited to bank trust departments, insurance
companies and mutual funds.

     The Report and Order does not eliminate the single majority shareholder or nonvoting stock
exemptions, but, rather, to address the concerns that we raised in the Attribution Notice and Attribution
Further Notice, we will adopt our equity and/or debt plus ("EDP") attribution proposal, as a new rule that
would function in addition to the other attribution rules.  Under this new EDP rule, where the investor is either
(1) a "major program supplier," as defined herein to include all programming entities (including networks and
time brokers) that supply over 15 percent of a station's total weekly broadcast programming hours, or (2) a
same-market media entity subject to the broadcast multiple ownership rules (including broadcasters, cable
operators, and newspapers), its interest in a licensee will be attributed if that interest exceeds 33 percent of the
total asset value (equity plus debt) of the licensee.  The Report and Order refers to total asset value as "total
assets."  In the case of a major program supplier, the investment will be attributable only if the investment is
in a licensee to which the requisite triggering amount of programming is provided.  

     The targeted approach embodied in the EDP rule reflects our current judgment as to the appropriate
balance between our goal of maximizing the precision of the attribution rules by attributing all interests that
are of concern, and only those interests, and our equally significant goals of not unduly disrupting capital flow
and of affording ease of administrative processing and reasonable certainty to regulatees in planning their
transactions.  The bright-line EDP test will provide more regulatory certainty than a case-by-case approach
that requires review of contract language.  Thus, the EDP rule will permit planning of financial transactions,
would also ease application processing, and would minimize regulatory costs.

     In the Attribution Further Notice, we invited comment on the impact of a 33 percent EDP threshold
on small business entities, particularly on whether there would be a disproportionate impact on small or
minority entities.  While some parties have argued that adoption of an equity/debt plus proposal would deter
capital flow to broadcasting generally and, in particular, for digital television, others have argued strongly that
this is not the case.  We have no basis to conclude or reason to believe that the EDP rule would unduly deter
investment.  The equity/debt plus proposal does not preclude investment by any entity; rather, it caps
nonattributable investment levels for entities that have the potential to influence licensees.  The limit does not
apply to all entities that might invest or help fund the transition to digital television or otherwise invest in
licensees.  Additionally, to help assure that our actions today do not unduly impede capital flow to
broadcasting, we have raised the passive investor benchmark.  As discussed above, we believe that because
of the nature of passive investors, we may raise that benchmark consistent with our goal of maximizing the
precision of the attribution rules.  In addition, we will consider individual rule waivers in particular cases where
compelling evidence is presented that the conversion to digital television would otherwise be unduly impeded
or that a waiver would significantly expedite DTV implementation in that particular case.  

     While some commenters strongly argued that applying the EDP rule to program suppliers would curb
investment in broadcast stations and possibly hurt weaker UHF stations and might deter investment that would
facilitate the conversion to DTV, they do not provide empirical evidence to support this argument.  We also
note that the rule does not preclude investment, but merely provides that investments over a certain level will
be deemed presumptively attributable.  Networks are therefore free to invest in their affiliates, subject of course
to the applicable multiple ownership rules.  Moreover, the EDP rule does not attribute investments, even those
by networks in their affiliates, which fall below the 33 percent threshold.  Thus, a major program supplier may
hold 32 percent of the total assets of a station to which it supplies programming in excess of the 15 percent
standard.  This would comply with all EDP limits and the interests would not be attributable.  In addition, the
EDP rule does not affect investments by entities other than major program suppliers or same-market media
entities.  Under these circumstances, we believe that the EDP rule will not curb investment, deter new entry,
or curb the conversion to DTV.

     The Report and Order also adopts a new rule to attribute television LMAs, or time brokerage of
another television station in the same market, for more than fifteen percent of the brokered station's broadcast
hours per week and to count such LMAs toward the brokering licensee's local ownership limits.  We believe
that the rationale for attributing LMAs set forth in the Radio Ownership Order, -- i.e., to prevent the use of
time brokerage agreements to circumvent our ownership limits -- applies equally to same-market television
LMAs.
          
     The record in this proceeding supports our decisions to attribute television LMAs and to count
attributed radio LMAs toward all applicable radio ownership limits.  We agree with most commenters,
representing a variety of interests ranging from ABC to the public interest group MAP, that television LMAs,
like radio LMAs, represent a degree of influence and control that warrants ownership attribution and that, to
decide otherwise, based on the precedent of the attribution of radio LMAs, would be inconsistent. 

     We will require stations involved in television time brokerage agreements (inter-market as well as intra-
market agreements) to keep copies of those agreements in their local public inspection files, with confidential
or proprietary information redacted where appropriate, and to file, with the Commission, within 30 days of
execution, a copy of any local time brokerage agreements that would result in the arrangement being counted
in determining the brokering licensee's compliance with the multiple ownership rules.  We note that these
provisions impose an affirmative obligation on licensees to determine, in the first instance, whether a particular
LMA is attributable (either under the per se rule or the EDP rule), and to file the agreement with the
Commission if it is.   

     The Report and Order also eliminates the cross interest policy.  Our goals in initiating this proceeding
include maximizing the clarity of the attribution rules, providing reasonable certainty and predictability to
parties to allow transactions to be planned, and easing application processing.  Commenters have argued that
the vagueness and uncertainty imposed by the ad hoc application of the cross-interest policy have chilled
investment.  As CalPERS argues, this uncertainty impedes the ability of broadcasters to enter into transactions
because the policy can be invoked to prohibit a seemingly permissible transaction.

     We note that the EDP rule directly covers concerns treated under the non-attributable interests prong
of the cross-interest policy.  In adopting that rule, we will reach those situations involving formerly
nonattributable interests that raised the most concern with respect to issues of competition and diversity, some
of which were previously addressed in administering the cross-interest policy.  We recognize, however,  that
the EDP rule does not cover all the areas encompassed by the cross-interest policy.  It would not cover key
employees, for example.  We nonetheless believe, as commenters have pointed out, that internal conflict of
interest policies and common law fiduciary duty and contract remedies provide adequate substitutes for our
administration of the policy with respect to key employees.  In addition, many key employees are also officers
and directors and thus already covered by the attribution rules.  In any event, we believe that the very small
risk of harm to competition by a key employee in an instance not covered by any of these other regulations and
remedies is greatly outweighed by the benefits of minimizing our case-by-case approach to transactions and
applying bright line tests, such as the EDP test and our other attribution rules.

     With respect to joint ventures, we believe that application of a cross-interest policy is unwarranted. 
The ownership and attribution rules define the level of combined ownership that is permissible in the local
market.  We recognize that the cross-interest policy as applied to joint ventures is mostly, if not completely,
subsumed by the application of the current multiple ownership rules.  To the extent that it is not so subsumed,
we believe that it should be eliminated.  We agree that the burdens of case-by-case review are not justified for
transactions that already comply with the multiple ownership rules. Furthermore, as other commenters noted,
the application of the antitrust laws should prevent or remedy any abuses of joint venture relationships not
already subject to the multiple ownership rules.  

     The Report and Order declines to attribute JSAs.  Based on the record in this proceeding, we do not
believe that agreements which meet our definition of JSAs convey a degree of influence or control over station
programming or core operations such that they should be fully attributed.  We define JSAs as contracts that
affect primarily the sales of advertising time, as distinguished from LMAs, which may affect programming,
personnel, physical facilities, and core operations of stations.  We note that in our DTV Fifth Report and
Order, we stated that we would  look with favor upon joint business arrangements among broadcasters that
would help them make the most productive and efficient uses of their channels to help facilitate the transition
to digital technology.  JSAs may be one such joint business arrangement.  Although both DOJ and the
Commission are concerned about the competitive consequences of business agreements such as JSAs, our
concerns are not necessarily identical.  DOJ's comments explicitly recognize that in addition to competition
issues, the Commission is also concerned with issues of diversity and reducing unnecessary administrative
burdens. 

     Accordingly, upon considering and weighing competition, diversity, and administrative concerns, we
decline to impose new rules attributing JSAs as long as they are truly JSAs that deal with the sale of advertising
time and do not contain terms that affect programming or other core operations of the stations such that they
are, in fact, substantively equivalent to LMAs.  We will retain our current policies concerning JSAs. 
Furthermore, in the absence of specific evidence of widespread abuse of JSAs by broadcasters, we also decline
to adopt the general disclosure and reporting requirement for radio JSAs recommended by DOJ in its
comments.  We will, however, require broadcasters who have entered into JSAs to place such agreements in
their public inspection files, pursuant to 47 C.F.R. Sections 73.3526 and 73.3613(e) of the Commission's
Rules, with confidential or proprietary information redacted where appropriate.  This requirement will facilitate
monitoring of JSAs by the public, competitors and regulatory agencies.  We do, however, retain discretion, in
all events, to review cases involving radio or television JSAs on a case-by-case basis in the public interest,
where it appears that such JSAs do pose competition, diversity, or administrative concerns.  Finally, we
emphasize that all JSAs are of course still subject to antitrust laws and independent antitrust review by the
Department of Justice.

     We see no reason to revise our previous decision to treat limited partnership interests as distinct from
corporate voting equity interests, and therefore elect not to adopt equity benchmarks for limited partnership
interests.  As we stated in the Attribution Further Reconsideration, "[t]he partners in a limited partnership,
through contractual arrangements, largely have the power themselves to determine the rights of the limited
partners."  Therefore, the insulation criteria adopted by the Commission serve to identify those situations within
which it is safe to assume that a limited partner cannot be "materially involved" in the media management and
operations of the partnership.  As we also stated therein, the powers of a limited liability holder to exert
influence or control are not proportional to their equity investment in the limited partnership, since the extent
of these powers can be modified by the contractual arrangements of the limited partnership.  In the Attribution
Notice, we stated our disinclination to change our approach of applying insulation criteria in favor of an equity
benchmark, and we have not been provided sufficient evidence to revise that view and to indicate that these
original reasons for declining to adopt an equity benchmark for limited partnerships are no longer valid.

     We also see no need at this time to add to, relax, or otherwise revise our limited partnership insulation
criteria.  Some commenters suggested that the insulation criteria should be modified to eliminate conflicts with
state law, or that RULPA or other relevant standards should be used in their place.  However, in our
Attribution Reconsideration, the Commission decided for several reasons to abandon the use of RULPA,
combined with a no material involvement standard, as a standard for judging whether limited partners were
exempt from attribution.  First, we judged the joint use of these two disparate standards for determining
limited partner exemptions from attribution to be unnecessarily complicated.  Second, we noted that there was
a lack of uniform interpretation of the RULPA provisions, and that the scope of permissible limited partner
activities was not statutorily set by RULPA, but rather was determined by the limited partnership agreement
itself.  Third, we determined that reliance on the RULPA provisions did not provide sufficient assurance that
limited partners would not significantly influence or control partnership affairs.  We are convinced that these
conclusions remain valid today, and therefore we see no reason to revise our insulation criterion in the direction
of a RULPA standard.  We also feel that similar considerations apply to state laws that regulate limited
partnership activities, since these statutes may vary significantly from state to state, and may fail to provide
sufficient assurance that the limited partner will lack the ability to significantly influence or control the
partnership's media activities.

      We will not create exceptions for widely-held limited partnerships, such as Business Development
Companies, from the current insulation criteria applicable to limited partnerships or otherwise revise those
insulation criteria.  The essential character of these new business forms for determining attributable interests
is the contractual flexibility they allow in setting up and managing the association.  Therefore, we believe that
the insulation criteria are needed for these business forms to insure the "lack of material involvement" on the
part of investors.  This would imply that in some limited number of cases, interests may not be insulated
because of state laws that require investor rights that conflict with the insulation criterion.  However,
commenters have not provided sufficient evidence concerning the number or importance of such instances that
would compel the Commission to create specialized exemptions for these specialized business forms.  Since
these entities are allowed greater contractual flexibility under state law than are limited partnerships, we believe
that greater caution is warranted in dealing with these novel forms.  Further, we have not been presented with
evidence to demonstrate that the current insulation criteria are no longer valid or effective in achieving their
goals.  
     
     We adopt our tentative conclusion in the Attribution Notice to treat LLCs and other new business
forms including RLLPs under the same attribution rules that currently apply to limited partnerships.  The
insulation criteria that currently apply to limited partnerships would apply without modification to these new
business forms.  Therefore, LLC or RLLP owners would be treated as attributable unless the owner can certify
their lack of direct or indirect involvement in the management and operations of the media-related activities of
the LLC or RLLP.  We will not distinguish among LLCs based on whether they adopt a more centralized or
decentralized form.
  
     We believe that this decision is justified for the reasons discussed in the Attribution Notice, which were
also supported in the record and fully discussed in the Report and Order. In addition, we have been applying
the interim processing policy, and it has worked well and effectively, and we see no reason to change it.  

     We will not routinely require the filing of organizational documents for LLCs.  However, to remain
consistent with our treatment of limited partnerships and insulation criteria, we will require the same "non-
involvement" statement for LLC members who are attempting to insulate themselves.  We will also require
LLC members who submit the foregoing statement to submit a statement that the relevant state enabling statute
authorizing LLCs permits an LLC member to insulate itself/himself in the manner required by our criteria,
since our experience shows that state laws vary considerably with respect to the obligations and responsibilities
of LLC members.  This policy will help us to avoid any potential confidentiality concerns, referred to in the
Attribution Notice, that may arise if we require filing of organizational documents.   

     After reviewing all of the comments submitted on our proposals to relax the cable/MDS attribution
rules, we are persuaded that the broadcast attribution criteria, as modified by this proceeding, should be applied
in determining cognizable interests in MDS licensees and cable systems.  We continue to see no reason, and
none has been suggested by any of the commenters, to warrant different attribution criteria for broadcasting
and MDS.  As we have discussed here and in the Attribution Further Notice, investment opportunities critical
to the development of MDS as a competitive service to cable have been severely limited by the current
attribution standard.  Therefore, continued application of the current cable/MDS attribution standard would
frustrate our goals of strengthening wireless cable, providing meaningful competition to cable operators and
benefitting the public interest by offering consumers more choice in their selection of video programming
providers.  In view of these considerations and the record before us, we conclude that the public interest would
be better served if the modified broadcast attribution criteria were employed for the purpose of determining
attribution in the context of cable/MDS cross-ownership.  Such modification of our existing attribution
standard will increase investment possibilities and further diversity, while preventing cable from warehousing
its potential competition.  We are persuaded, moreover, that relaxation of our current attribution standard will
have genuine meaning for institutional investors who, though not involved in the day-to-day activities of either
cable or MDS companies, have been precluded from making investments in MDS due to pre-existing or desired
investments in cable.

     We are not persuaded, however, by GTE's arguments that the proposed modifications to our attribution
rule will give dominant wireline carriers an unfair competitive advantage.  As we have already determined, the
modified, less restrictive broadcast attribution criteria, coupled with the adoption of our proposed 33 percent
"equity or debt plus" provision, will enable the MDS industry to avail itself of increased investment
opportunities.  This will help, rather than hinder, wireless cable's efforts to become a stronger, more viable
competitor to cable, while safeguarding against the anticompetitive and warehousing concerns which the
cable/MDS cross-interest rules were designed to prevent.  For these same reasons, we reject Boston Ventures'
proposal that we adopt even less restrictive attribution rules that track those used for CMRS spectrum
aggregation limits. 

     The Report and Order also adopts a 33 percent equity or debt provision as an appropriate addition
to the modified cable/MDS attribution standard. Furthermore, by adopting the 33 percent "equity or debt plus"
provision for cable/MDS attribution, we believe that we are acting in a manner consistent with the statutory
directive, as well as furthering congressional intent to promote competition and prevent warehousing by cable
operators.  Accordingly, we will adopt the broadcast attribution criteria, as modified in this proceeding, for
determining cognizable interests in MDS licensees and cable systems. The modified attribution criteria will also
apply to the cable/MDS and cable/ITFS cross-leasing rules.

     The Report and Order adopts grandfathering and transition measures for interests that become newly
attributable pursuant to the new rules adopted.  Grandfathering and transition measures for TV LMAs are
discussed in the TV Local Ownership Order.

       We intend to modify the Ownership Report form, Form 323, to reflect the addition of the EDP rule,
as well as the other attribution changes adopted in this Report and Order.  

VI.  Report to Congress

     The Commission shall send a copy of the Report and Order in MM Docket Nos. 94-150, 92-51, and
87-154, including this FRFA, in a report to be sent to Congress pursuant to the Small Business Regulatory
Enforcement Fairness Act of 1996, see 5 U.S.C.  801(a)(1)(A).  In addition, the Commission shall send a copy
of the Report and Order in MM Docket Nos. 94-150, 92-51, and 87-154, including FRFA, to the Chief
Counsel for Advocacy of the Small Business Administration.  A copy of the Report and Order in MM Docket
Nos. 94-150, 92-51, and 87-154 and FRFA (or summaries thereof) will also be published in the Federal
Register.  See 5 U.S.C.  604(b).                            Appendix C

                             Comments


ABC, Inc.
AK Media Group, Inc.
Bahakel Communications
Bet Holdings, Inc.
Blackstone Group L.P.
Boston Ventures Management, Inc. 
Canwest Global Communications Corporation
CBS, Inc.
Centennial Communications, Inc.
Diversified Communications
Fox Broadcasting Company
Glencairn, Ltd. and WPPT, Inc.
Glenwood Communications Corporation
HSN, Inc.
Jet Broadcasting Company, Inc.
King World Productions, Inc.
Knight-Ridder, Inc.
Local Station Ownership Coalition
McGillen, Cynthia L. and James P.
Media Access Project
Miller Broadcasting, Inc.
Montclair Communications, Inc.
National Association of Broadcasters
Network Affiliated Stations Alliance
Pappas Stations Partnership
Paxon Communications Corporation
Post-Newsweek Stations, Inc.
Press Broadcasting, Inc.
Saga Communications, Inc.
Sinclair Broadcast Group, Inc.
SJL Communications, Inc.
Tele-Communications, Inc.
The Project on Media Ownership
Viacom, Inc.
Waterman Broadcasting Corporation
Wireless Cable Association International, Inc.                          Reply Comments

ABC, Inc.
AK Media Group, Inc.
Bahakel Communications, Ltd.
Bet Holdings, Inc.
Blackstone Group, L.P.
Clear Channel Communications, Inc.
Fox Broadcasting Company
GTE Service Corporation
HSN, Inc.
Lockwood Broadcasting, Inc.
Media Access Project
Mt. Mansfield Television, Inc.
National Cable Television Association, Inc.
Pappas Stations Partnership
Qwest Broadcasting L.L.C.
Retlaw Enterprises, Inc.
SJL Communications, Inc.
Tele-communications, Inc.
Tribune Broadcasting Company
Viacom, Inc.
Westwind Communications, L.L.C.
Wireless Cable Association International, Inc.
  August 5, 1999
  
                    SEPARATE STATEMENT OF
                CHAIRMAN WILLIAM E. KENNARD
                   AUGUST 5, 1999 MEETING
  
       Today, we are bringing to a close proceedings that have been pending since 1991.  
  These rule changes are long overdue.  For far too long it's been a case of administration by
  waiver, not by rule.  Parties have presented us with a variety of business arrangements and
  combinations, and we have not been able to set a bright line test as to what's permitted and
  what's not, and so the problem just keeps getting worse.
  
       Today we are cleaning up our rules and providing the certainty that the market
  needs.
  
       But more than that, we are adopting commonsense rules that recognize the
  dramatic changes that the media marketplace has undergone since our broadcast
  ownership rules were adopted 30 years ago. Back then, there were three broadcast
  networks; cable was still a novelty; and interactive TV meant yelling at your kids to turn it
  down. Now, cable systems serve almost 65 million TV households; other multi-channel
  video programmers -- such as Direct Broadcast Satellite -- offer hundreds of channels to
  viewers; since 1970, the number of radio and television stations has increased by more
  than 85 percent; and people are watching everything from hip-replacement surgery to the
  local weather on their PC's linked to the Internet. As we cross over into the next
  millennium, we are clearly entering a new media age.
  
       In such an age, we need to provide broadcasters with flexibility to seize
  opportunities and compete in this increasingly dynamic media marketplace. These items
  will not only help them compete with the growing number of alternative media. They will
  also help preserve free local broadcast service.  It is this localism that makes broadcasters
  so special.  That is why we are taking steps, for example, to allow a television licensee to
  buy another station in the same market, as long as the market will continue to be served by
  at least eight independently-owned television stations and at least one of the merging
  stations is not one of the top four stations in the market.  It is also why we will waive the
  rule in situations involving financially-troubled and unbuilt stations.  In these cases,
  allowing a small station to combine with another station in the market -- and take
  advantage of shared costs and operating efficiencies -- will increase competition and outlet
  diversity in the local market and at times keep a station on the air that otherwise would go
  dark.  For these same reasons, we are also relaxing our radio-television cross-ownership
  rule.
  
       This is not, however, the time to completely deregulate broadcast ownership. Our
  ownership rules have always reflected core values of competition, diversity, and localism.
  The changes we are making today are tailored to grant broadcasters more flexibility while
  at the same time ensuring that consolidation will only occur in markets where these core
  values will not be undermined.  Our action today thus strikes an appropriate balance, by
  relaxing the rules but maintaining a diversity floor.
            
              We are also taking steps to better identify broadcasters' real ownership interests in
  media properties, which will make our ownership rules more meaningful and easier to
  apply.  Our new "equity/debt plus" attribution rule, for example, will ensure that our rules
  take account of the ways that debt instruments can be a source of influence over a
  licensee.  And by making LMA's attributable, our rules will prevent the use of time
  brokerage agreements to circumvent our ownership limits.
  
       Many existing LMA's will meet our new television duopoly rules.  But as to the
  others, we do not wish to upset established business relationships entered into before we
  made clear our proposal to attribute LMA's.  We are, therefore, providing significant
  grandfathering relief for those LMA's entered into before November 1996, and we are
  allowing those entered into after that date two years to comply with our new rules.  We
  are also providing significant grandfathering relief to parties holding conditional waivers of
  our radio-television cross ownership rule or with a pending application for such a waiver. 
  These steps reflect our concern that parties' established business interests not be unduly
  upset, and a balance between the need to maintain a diversity floor in local markets and
  the recognition that in some cases LMA's have enhanced competition and outlet diversity
  in local markets.
  
       That being said, I think we need to consider more broadly the role of LMAs in
  broadcasting.  While they have no doubt produced some benefit, they represent a kind of
  artifice.  I believe we need to consider whether the benefits of LMAs could be attained
  through other arrangements, such as actual joint ownership, that do not raise questions
  concerning the responsibility and accountability of the actual licensee of a station.
  
       It may well be that as a result of our action today, most of these problems will fade
  away because LMAs will be converted into duopolies.  But I will be watching what
  happens in this regard, because I'm concerned about the degree of control that is conferred
  by an LMA.
  
       In sum, our actions today will provide broadcasters with the certainty they need to
  make rational business judgments in the marketplace. These items recognize the
  competitive realities of the new media age while honoring our nation's oldest values. For
  these reasons, I am pleased to bring these long-pending proceedings to a conclusion.
    
                                                                  August 5, 1999
  
  
                              
                     Separate Statement
                             of
                  Commissioner Susan Ness
  
  
  
  
       Re:  Review of the Commission's Regulations Governing Television Broadcasting, MM
       Docket No. 91-221; Television Satellite Stations Review of Policy and Rules, MM
       Docket No. 87-8; Review of the Commission's Regulations Governing Attribution
       of Broadcast and Cable/MDS Interests, MM Docket No. 94-150; Review of the
       Commission's Regulations and Policies Affecting Investment in the Broadcast
       Industry, MM Docket No. 92-51; Reexamination of the Commission's Cross-
       Interest Policy, MM Docket No. 87-154; Broadcast Television National
       Ownership Rules, MM Docket No. 96-222.  
  
       I welcome today's long-overdue revision and clarification of the Commission's
  broadcast ownership and attribution rules.  The decision today takes its direction largely
  from the Telecommunications Act of 1996, in which Congress decided to allow
  significantly increased concentration of ownership in the broadcast marketplace.  It also
  takes into account recent, dramatic changes in the communications marketplace, as well as
  insights gained from experience with our previous rules.  The result is a forward-looking
  regime that provides increased flexibility and clarity, while still avoiding the dangers of
  undue concentration of ownership of vital sources of news and information.
  
       The media landscape has changed enormously since I joined the Commission in
  1994.  There was the Telecommunications Act of 1996 -- which set the stage for
  significant consolidation of ownership, especially in radio.  There is the now-significant
  presence of DBS, which was just being launched a few years ago but now has over 10
  million subscribers.  There is the continued growth of cable, with system "clustering"
  rapidly replacing the crazy quilt ownership patterns of the last twenty years in major
  metropolitan areas.  The financial interest and syndication and prime time access rules are
  gone.  TV broadcasters are beginning their conversion to digital broadcasting.  The
  Internet is experiencing explosive growth.  
  
       These and other changes make it timely (at best!) for us to conclude our long-
  pending ownership and attribution proceedings.  
  
       I believe our rules and policies must be based on the present and future
  characteristics of broadcasting, not our perceptions of the medium as it existed 50 or even
  five years ago.  At the same time, broadcasting remains a distinctly special service -- with
  unique privileges and unique responsibilities.  
  
       Broadcasting continues to be the primary source of news and information for the
  American public.  It is free and ubiquitous.  No preexisting hookup or bottleneck provider
  stands between speaker and listener.  Diversity of media ownership is fundamental to the
  preservation of  our democratic values.  The public benefits greatly from "diverse and
  antagonistic" voices in the broadcast marketplace.  The special characteristics of
  broadcasting have been recognized by Congress, the courts, and this Commission.
  
       It wasn't so long ago that broadcasters were limited to owning no more than 12
  AM, 12 FM, and 12 TV stations, nationwide, with no more than two AM, two FM, and
  one TV station in any market.  Yet today, some radio groups encompass several hundred
  stations, with as many as eight in a single market, and perhaps a TV station and an LMA
  as well.
  
       I have long felt that our rules were susceptible to "gaming."  We have been too
  willing to permit through the back door what we would not countenance through the
  front.   We have been too willing to grant conditional waivers while we dithered about
  what the rules should be.  As a consequence, we have penalized those who most diligently
  followed the letter and spirit of our rules, and rewarded those who "pushed the envelope"
  most aggressively.  
  
       Today's decision should put us on a more defensible and sustainable course. 
  Greater clarity in the rules -- and less subjectivity -- will promote fairness among market
  participants.  It will also provide greater certainty to investors.  And it should lead to more
  expeditious decisions by the Commission. 
  
       I am pleased that we are eliminating the worst anomalies of the old regime.  Who
  can explain why LMAs are considered attributable interests when they involve radio
  stations, but not when they involve TV?  Many LMAs have produced demonstrable
  programming and other public interest benefits for their communities.  Others have not.  I
  welcome our decision to attribute LMAs, as well as our decision to grandfather those that
  were entered into before November 5, 1996 - the date when all parties were clearly on
  notice of our intention to move in this direction.  Those that meet our going-forward rules
  may continue, and we are giving those that are grandfathered generous relief. 
  
       I have previously raised concerns about the potential for an investor with a 49
  percent ownership interest to exert "influence" over the affairs of a broadcast licensee,
  even in a corporation with a single majority shareholder.  I support the compromise we
  have reached to adopt an "equity/debt plus" concept of attribution that limits the single
  majority shareholder exemption in situations involving a major program supplier or same-
  market media entity.  These are the entities whose incentive to influence a broadcaster
  weighs most heavily in favor of attribution.  Our targeted approach embodied in the
  "equity/debt plus" concept balances our competing concerns of maximizing the precision
  of our attribution rules, avoiding undue disruption of the flow of capital, and establishing a
  bright-line test that affords certainty to those planning transactions.
  
       There are a few narrow areas where I would have preferred to go a different way
  from the majority, for reasons that have less to do with ownership concentration than with
  concerns about fundamental fairness.  I believe that we have been too lenient in
  grandfathering situations that were previously allowed under conditional waivers --
  waivers that were supposed to expire at the outcome of these proceedings.  We started
  down the conditional waiver path because of a desire temporarily to accommodate major
  acquisitions, permitting them to close without awaiting a resolution of our broadcast
  ownership dockets.  Everyone recognized when the conditional waivers were granted that
  the licensee would have to conform to the new rules, with six months to divest any
  nonconforming properties.  
  
       This accommodation became an albatross around our necks.  And now we are
  perpetuating the waivers, creating a special class of broadcasters who, for as long as they
  own the stations, can own more properties in a market than their competitors.  This isn't
  fair.  It isn't good precedent.  And it undermines our credibility in considering future
  conditional waiver requests in other contexts.
  
       I also would have preferred a somewhat different result with respect to our revised
  one-to-a-market rule.  In determining compliance with the voice test, I would count only
  independent radio and TV voices in the market.  These are the media encompassed by this
  cross-service rule, and I believe it makes most sense to compare the number of radio and
  TV voices held jointly in a market only to the number of independent radio and TV voices
  remaining in that market.  Today's item goes further, however, and also considers as
  voices daily newspapers and cable TV.  I disagree with the inclusion of these media in the
  voice count.  
  
       Once we include newspapers and cable, it becomes difficult if not impossible to
  validly distinguish them from other media that arguably serve as a source of competition
  and diversity in the market, such as MDS, the Internet, cable overbuilds, and OVS
  systems.  Rather than make arbitrary decisions on whether to include these media as
  "voices," it would be far simpler and administratively easier to count only radio and TV
  and, if necessary, to adjust the voice count accordingly.  However, as the decision was
  made to include newspapers and cable, I do agree with the decision to limit those
  newspapers counted to those published and widely circulated in the market.  I also agree
  that, if we must count cable, it should count as only one voice.      
  
       But, despite these misgivings -- as well as a more generalized concern that we have
  not adequately analyzed the cumulative effect of all the changes that have occurred as a
  result of the 1996 Act -- I support these orders as a compromise that I believe will provide
  a much stronger foundation for the future.  As Senators Hollings and Dorgan observed in
  a letter to Chairman Kennard, "It is imperative . . . that the Commission remain mindful of
  the careful balancing struck in [the Telecommunications Act] between updating the rules
  to reflect changes in the marketplace and maintaining the robust diversity of voices,
  localism, and competition in the broadcast industry that was evident at the time of
  enactment."  I believe that we have done so.   
       STATEMENT OF COMMISSIONER HAROLD W. FURCHTGOTT-ROTH
            DISSENTING IN PART AND CONCURRING IN PART
  
  In the Matter of the Commission's Regulations Governing Attribution of Broadcast and
  Cable/MDS Interests, MM Docket No. 94-150; Review of the Commission's Regulations
  and Policies Affecting Investment in the Broadcast Industry, MM Docket No. 92-51;
  Reexamination of the Commission's Cross-Interest Policy, MM Docket No. 87-154.
  
       I support the Commission's decision in the matter of Reexamination of the
  Commission's Cross-Interest Policy to repeal the cross-interest rules.  I thus join in Part
  III.D of this Report & Order.  I disagree, however, with the decisions reached in the
  matter of the Commission's Regulations Governing Attribution of Broadcast and
  Cable/MDS Interests and in the Review of the Commission's Regulations and Policies
  Affecting Investment in the Broadcast Industry. I thus dissent from the rest of the item.  I
  do so for the reasons expressed below.
  
       The biggest problem with our attribution rules -- these new ones included -- is that
  it is next to impossible to say what sorts of counting rules one should fashion for
  broadcast interests if one is unable coherently to articulate the need for counting interests. 
  In other words, the purpose of the broadcast ownership rules must be clearly identified
  before one can know how to craft implementing regulations, such as attribution standards. 
  For instance, if one were concerned with antitrust matters (assuming authority to do so),
  notions of "control" might be tied to market power and the ability to discipline markets. 
  If, on the other hand, one were concerned with programming content (assuming this were
  constitutional, which it is presumptively not), notions of "control" would go to the ability
  to buy or sell programming to stations.  This is not to say that we should not aim to
  harmonize our various attribution rules to the greatest extent possible, but that without a
  clear sense of why to count, it is hard to know how to count.
  
       As I argue in the broadcast ownership rulemaking, the Commission has not
  answered this threshold question -- the purpose of the ownership rules -- with the rigor
  and clarity necessary to the task.  See Dissenting Statement of Commissioner Harold W.
  Furchtgott-Roth, In the Matter of Review of the Commission's Regulations Governing
  Television Broadcasting, MM Docket No. 91-221; and in the Matter of Television
  Satellite Stations Review of Policy and Rules, MM Docket No. 87-8.  Not only is the
  legitimacy of the broadcast ownership rules themselves thus diminished, but corollary rules
  such as the attribution rules suffer from the same frailty.  I, of course, would not have
  structural ownership regulation, and thus do not see the need for attribution rules.  But if
  there are going to be structural rules, their purpose should be clearly defined so that
  meaningful attribution rules can be crafted.
  
       I also disagree with the very premise of the Attribution Further Notice issued in
  this proceeding: namely, that the relaxation of ownership limits in the Telecommunications
  Act of 1996 required reexamination of broadcast attribution standards.  See 11 FCC Rcd
  19895 (1996).  Nothing in the text of the statutory mandates revising ownership limits
  suggests that the changes should have any impact whatsoever upon the attribution rules. 
  Presumably Congress was aware of the existing attribution regulations when it passed the
  ownership changes and knew that the new limits would work in conjunction with those
  regulations.  This is not to say that the Commission cannot change the attribution rules if
  necessary , it can, but that the deregulation of ownership has no necessary connection to
  changing the attribution standards -- unless, of course, one is looking for ways to counter,
  limit, or mitigate the effects of Congress' decision to deregulate ownership.  
  
       Although the items disclaims any intent to tighten the attribution rules in the wake
  of the 1996 Act, see supra at para. 35, these rules are not simply more precise than the old
  ones.  They work to capture more interests than the old rules, thus making more
  properties attributable for ownership purposes.  If it were precision that the Commission
  sought to achieve, we would just have simplified the structure of the existing rules.  But,
  unfortunately, we did not do so. Instead,  this Commission has once again tightened
  underlying or related rules in order to avoid as much deregulation as Congress intended. 
  
       In this regard, the Commission is much like Penelope in Homer's Odyssey. 
  Waiting for Odysseus to return from war, but pressed by the chiefs of her land to marry
  again, she invents stratagems to put them off.  She says she cannot remarry until she
  finishes needlepointing a pall for the hero Laertes.  All day long, she works on her web,
  but at night she unpicks each and every stitch by torchlight.  Looking outwardly somewhat
  deregulatory in the broadcast local ownership proceeding, the Commission undoes here
  much of the relief it provided there.
  
       On the merits of the attribution decision, I do not think that we should extend
  attribution rules into the area of pure debt instruments, as does this Report & Order.  I
  would not count debt for attribution purposes.  When one ventures into the area of pure
  debt, one encounters an administrative hornets' nest.  Almost all companies have some
  debt and, given the variety of instruments and agreements, this debt fluctuates in terms of
  value and sometimes, if transferrable, even in terms of possession.   As a practical matter,
  debt is a concept that is nigh impossible to measure with reliable precision, even if there is
  support for the theory in academic literature.  For these reasons, I disagree with the
  decision to extend attribution rules into the area of pure debt.  
  
       I also believe that the EDP test itself is misguided.  Instead of clarifying or perhaps
  even simplifying current broadcast attribution standards, this Report & Order heaps yet
  another regulatory board on top of the existing gangplank of attribution rules.  Now, in
  addition to wading through existing attribution rules, regulatees and their lawyers must
  also apply the EDP test to determine whether the interests that they have just ascertained
  are not attributable under the old rules are nonetheless attributable under the EDP rule. 
  Yet, in order to know whether the EDP rule even applies, the entity, if a potential "major
  program supplier," must assess the percentage of program supplied to a particular station
  at some particular point in time.  Like debt, this is in all likelihood an ever-changing
  number, difficult to pin down and costly to ascertain.  And if a potential "same market
  media entity," the company must ask whether any other of its interests are attributable
  such that it might be a "media entity," bringing it full circle to the original attribution rules;
  the daisy chain effect of these regulations regarding attribution is, apparently, limitless. 
  Then, after figuring out whether one falls under the subject headers of the EDP rule, major
  program supplier and same market media entity, one must then apply the operative
  sections of the rule, no mean task.
  
       Finally, absent a drastic simplification of existing attribution rules, I would have
  retained the single majority shareholder attribution exemption in full.  The certainty this
  rule gives against the backdrop of the existing rules affords at least some relief and clarity
  to certain entities, in terms of understanding and assessing the attributable nature of their
  interests, and should be preserved.
  
                      *    *    *
  
       Stepping back to survey the newly-designed landscape of attribution rules, I am
  reminded of Justice Frankfurter's description of a gerry-mandered voting district as "an
  uncouth twenty-eight-sided figure."  Gomillion v. Lightfoot, 364 U.S. 339, 340 (1960). 
  These attribution rules are as many, if not more-sided.  I regret that, instead of taking this
  opportunity to simplify the attribution rules, the Commission has only further complicated
  them by extending the existing rules to encompass pure debt interests; by adoption of the
  EDP test; and by limitation of the single majority shareholder exemption.
                                                 August 5, 1999
  
                   SEPARATE STATEMENT OF
               COMMISSIONER MICHAEL K. POWELL
  
  
  Re:  Review of the Commission's Regulations Governing Television Broadcasting (MM
  Docket No. 91-221); and Television Satellite Stations Review of Policy and Rules (MM
  Docket No. 87-8) 
  
  Review of the Commission's Regulations Governing Attribution of Broadcast and
  Cable/MDS Interests (MM Docket No. 94-150); Review of the Commission's Regulations
  and Policies Affecting Investment in the Broadcast Industry; (MM Docket No. 92-51);
  and Reexamination of the Commission's Cross-Interest Policy  (MM Docket No. 87-154).
  
       Today  I vote in favor of these orders revising the Commission's rules governing
  local broadcast ownership.  I write separately to give greater context  to my vote. 
  
       I believe that the actions we take today are both constitutional and consistent with
  the explicit intent of Congress to promote diversity and competition in the media
  marketplace.  Section 257(b) of the 1996 Act explicitly instructs the Commission to
  "promote the policies and purposes of this Act favoring diversity of media voices." 
  47 U.S.C. Section 257(b).  Thus, as we review our ownership rules, it is clearly the intent
  of Congress that we consider the implications of our rules on diversity.
  
       I agree that diversity is very hard to define, and is at some level a visceral concept. 
  Accordingly, we should be cautious in over-invoking it as a justification for imposing or
  intruding on constitutionally protected activities.  Yet, not all worthy policy goals, not all
  important government interests, and indeed, not all compelling government interests, can
  be quantified or measured with precision.  I do not believe the Constitution boxes out all
  subjective judgment in government actions.  Yes, diversity is hard to define, but not more
  so than obscenity, privacy, or interstate commerce, areas in which the law allows
  government activity.  What is important, is that such rules be balanced and well-reasoned. 
  Moreover, where rules involve some degree of subjective balancing, they should be
  reviewed frequently to ensure they remain on keel, given changing conditions in the
  market.  This is what I feel the Commission has failed to do over the years.  But the
  Commission takes an important step forward today, and it should continue to review these
  rules at periodic intervals, as Congress instructed. 47 U.S.C. Section 202(h).
  
       In all of the discussion about diversity and localism, I believe we lose sight of
  something that is unique about broadcasting, something that I believe is a substantial
  public benefit and something that is not so easily entangled in the web of concern about
  content infringement.  It is the fact that broadcasting is free.
  
  There are substantial public benefits that flow from the free broadcasting business model. 
  It provides access by all of our citizens to news, entertainment, and information, regardless
  of their socio-economic class.  It provides valuable information to citizens in natural
  disasters who cannot access their phones or cable systems because of downed lines or loss
  of power.  It lets people in a mobile society stay connected to the outside world, as well as
  individuals in remote areas.
  
       But, this free business model is quite unique and, thus, some special consideration
  of the challenges to it is warranted.  For example, as a medium it competes against other
  media that have access to subscription revenue in addition to advertising dollars. 
  Broadcasters cannot as easily repackage programming or recoup costs of purchasing high
  quality programming.  And they have significantly less distribution capacity than most of
  their competitors.  Therefore, it is important to ensure our rules do not unduly constrain
  broadcast business competitiveness and viability. 
  
       Additionally, the public value of having a diverse free medium also warrants some
  government attention to undue concentration.  If a single media group were to monopolize
  a market, advertising rates would likely increase as would the desire for advertisers to
  place advertisements with the concentrated media group.  Because advertising dollars are
  not infinite, it would mean other stations would suffer the effects of less advertising
  revenue, which is the lifeblood of a station's viability.  Should such a station be crippled or
  fail, the public would have lost a source of programming.  This could happen irrespective
  of how highly the public might value the station, since they cannot express their preference
  by paying higher rates to sustain the station.  For this reason, we are justified in giving
  some consideration to the structure of the market for free broadcasting.
  
       Finally, I would be remiss if I did not briefly express a few of my concerns.   In the
  items adopted today the Commission does not grandfather LMAs that were entered into
  after November 1996, the date of the Further Notice of  Proposed Rulemaking in these
  proceedings.  I would have preferred to grandfather LMAs entered into after November
  1996. The Commission's delay in bringing these proceedings to a close since 1996 has
  forced broadcasters to make business decisions regarding LMAs for over three years
  without knowing what the rules would be.  As a result, I believe the equities lie in favor of
  grandfathering these arrangements.
  
       I also would have preferred to count additional media in the voice counts.  For
  example, where cable is subject to effective competition as a result of a cable overbuild,  I
  would argue that there are two voices for cable in that market.  I would not have required
  involuntary bankruptcy to access the failed station waiver.  I do not believe that there is
  any real threat of a broadcaster's entering into bankruptcy voluntarily to gain the benefits
  of this waiver provision.
  
       Rules, however, are by their very nature both under- and over-inclusive.  The rules
  we adopt today are not all right, and not all wrong.  But they reflect what good public
  policy often must be, a balanced compromise of conflicting values and judgments. And I
  believe that with the Orders adopted today, the Commission takes an extremely important
  step toward aligning our rules with the current realities of the electronic media market
  programming market.                                                  August 5, 1999
  
  
            STATEMENT OF COMMISSIONER GLORIA TRISTANI
                      ON BROADCAST OWNERSHIP
  
In the Matters of:  Review of the Commission's Regulations Governing Television
Broadcasting (MM Docket No. 91-221), Television Satellite Stations Review of Policy
and Rules (MM Docket No. 87-8), Broadcast Television National Ownership Rules (MM
Docket No. 96-222), Review of the Commission's Regulations Governing Attribution of
Broadcast and Cable/MDS Interests (MM Docket No. 94-150), Review of the
Commission's Regulations and Policies Affecting Investment in the Broadcast Industry
(MM Docket No. 92-51), and Reexamination of the Commission's Cross-Interest Policy
                  (MM Docket No. 87-154).
  
  
       I had two goals for these proceedings:  (1) to eliminate the fictions and subterfuges
  that have plagued our broadcast ownership rules; and (2) to strike the appropriate balance
  between the potential public interest benefits and the potential harms of increased
  consolidation.  For the most part, as discussed below, I believe we have hit the mark.
  
       Eliminating Fictions
  
       One of the disturbing characteristics of our broadcast ownership rules was the gap
  between the rules as they were written and the rules as they were enforced.  For instance,
  duopolies were strictly prohibited under the rules, but station owners were able to use the
  LMA artifice to control the programming decisions of a second station in the market
  without that station being attributable.  Similarly, our one-to-a-market rule was effectively
  eviscerated by a Commission waiver process that became, in practice, a rubber stamp.
  
       Today's decisions largely put an end to these and other fictions.  LMAs are now
  attributable.  The one-to-a-market waiver process will be tightened.  Debt is now
  recognized as a factor that can bestow influence.  Eliminating these fictions often has
  meant relaxing the underlying substantive rule involved.  But I would much rather relax
  the underlying rule to reflect reality than to keep a rule on the books that is meaningless. 
  Today's decisions should not only promote respect for the Commission's rules and
  processes, but should also help level the playing field between Washington insiders and
  those outside the beltway who still believe that our rules mean what they say.
  
       As for LMAs in particular, although the subterfuge is over and they are now
  attributable, this Order does not outlaw them.  Nevertheless, I hope and expect that there
  will be few, if any, new LMAs, since their regulatory raison d'etre has been eliminated and
  the duopoly rule has been relaxed.  I do not believe it is appropriate for control of a
  station's programming to be divorced from control of a station's license.  The licensee is
  the one responsible for programming its station to serve the local community; that
  responsibility should not be delegated to a third party.  The sharp drop in new radio LMAs
  after the Commission found them attributable gives me every reason to expect that
  television LMAs will suffer the same fate.  If this proves incorrect, I would revisit the
  LMA issue.      
  
       One rule change that is expessly intended to bring our rules in line with reality is
  the narrowing of the duopoly rule to permit common ownership of television stations in
  different DMAs, regardless of contour overlap.  According to the Order, DMAs "are a
  better measure of actual television viewing patterns" than a signal contour test, "and thus
  serve as a good measure of the economic marketplace in which broadcasters, program
  suppliers and advertisers buy and sell their services and products."  I could not agree
  more.  Indeed, I have made this very point on several occasions in the context of our local
  radio ownership rules, which still rely exclusively on signal contours to define the relevant
  "market."  I look forward to changing our radio ownership rules to reflect reality as we
  have done for our television rules.
  
       Unfortunately, there is one fiction that the Commission chose to retain:  the single
  majority shareholder rule.  Under this rule, as long as a single shareholder owns more than
  50% of a licensee's voting stock, no other interests are attributable.  That means, for
  example, that someone could own 49.9% of the voting stock, own the studio and
  transmission facilities, and provide all of the station's debt, and still be deemed unable to
  exert significant influence over that station's decision-making.  I realize that the scope of
  the single majority shareholder rule has been narrowed somewhat by the adoption of the
  equity/debt plus rule, but the EDP rule only applies to programming suppliers and same-
  market media entities.  The attribution rules, however, should identify any relationship that
  permits an entity to exert significant influence over another.  If, for policy reasons, we
  wish to permit certain entities to obtain ownership interests notwithstanding their ability to
  influence the licensee, we should do so directly and not through the fiction of claiming that
  such influence does not exist.  I therefore dissent from that part of the Attribution Report
  and Order.
  
       Finding the Public Interest
  
       This has been a difficult decision to reach.  Making decisions about diversity is
  never easy.  In the end, I did not agree to relax our broadcast ownership rules because I
  believe we have "enough" diversity or because the growth in new media outlets means that
  diversity is no longer a concern, but because I believe that the diversity benefits of the
  relaxed ownership rules we adopt today outweigh the potential harms.  Let me explain this
  apparent paradox.
  
       For those of us who care about diversity, the easy answer would have been to
  insist on a maximum number of independent owners -- the Commission's traditional proxy
  for maximizing the number of different "voices" in a community.  And generally, I still
  believe that this proxy is a good one.  Those television licensees who can stand alone and
  provide a real local voice should be required to do so.  As the Order notes, it is at the local
  level that our diversity concerns are most acute.  But I became convinced through the
  course of this proceeding that separate ownership -- at least in the full-power television
  context -- does not necessarily translate into a meaningful local "voice."  That is, if a
  licensee's low market share does not give it the resources to originate any local
  programming, such as news or public affairs, the community may have an additional
  owner but no meaningful additional voice.  
  
       In those cases in which a licensee is unlikely to contribute to local diversity, I
  believe the public interest may be better served by permitting that station to combine with
  a stronger station in the market.  With the efficiencies of consolidation, for instance, the
  weaker station may be able to change from running only infomercials and reruns, or simply
  passing through a satellite-delivered signal, to a station that is able to provide local news. 
  Or maybe the stronger station will use the weaker station as some broadcast networks use
  their cable channels -- as a forum for more in-depth news pieces or to stay with breaking
  stories rather than returning to the network feed.  Either way, it is not clear to me that the
  public is better off with a separate owner with no local content than with a duopoly that
  permits one owner to provide more and better local content.
  
       But make no mistake:  this is not an exact science.  We could have drawn the line
  in a different place, and there may be situations in which a viable local voice is removed
  from the marketplace under the new rules.  Overall, however, I believe that we have
  struck the appropriate balance and that the new rules will do more good than ill for
  meaningful local diversity and for serving the public interest.