Opinion ID: 658298
Heading Depth: 3
Heading Rank: 1

Heading: Financial Incentives

Text: 30 The Commission asserts that stations perform better when managed by those with the most direct financial interest in the venture. See Second Remand Order, 8 F.C.C.Rec. at 1676 p 15. The Commission has not defined exactly what it means by financial interest. However the term is [304 U.S.App.D.C. 108] defined, though, the integration policy does not serve this goal. 31 For instance, in calculating integration credit, the Commission does not take the ownership interests of limited partners into account if all the limited partners are sufficiently insulated from influence over the partnership's affairs. Anax Broadcasting, Inc., 87 F.C.C.2d 483 (1981). When an applicant is organized as a corporation rather than a partnership, the same is true for the interests of nonvoting shareholders. Accordingly, an applicant can get full integration credit even though the general partner or voting shareholder has only a small percentage of the total equity in the firm, the rest of which is held by people who will have nothing to do with the station. For example, a firm has received full integration credit where the sole general partner held only 10% of the firm's equity, for which he had paid $10. Independent Masters, Ltd., 104 F.C.C.2d 178, 187-92 (Rev.Bd.1986); see also Religious Broadcasting Network, 3 F.C.C.Rec. at 4103 p 61 (awarding dispositive integration credit where station's proposed Director of Public Affairs held 14.3% of corporate applicant's voting stock but only 0.84% of its total equity). See generally WHW Enterprises, Inc., 89 F.C.C.2d 799, 816-17 p 26 (Rev.Bd.1982) (noting that voting share, not equity ownership or capital contribution, is focus of integration criterion). Because the Commission's method of measuring ownership focuses on voting power rather than profit share, the Commission does not insist that the proposed owner-managers stand to gain much if the station is especially profitable. 6 32 Other Commission views further obliterate the purported link to financial incentive. Full integration credit is also available to nonprofit corporations, with the corporate directors being treated as owners despite their lack of any equity stake in the venture. Reginald A. Fessenden Educational Fund, Inc., 100 F.C.C.2d 440 (Rev.Bd.1985); Roanoke Christian Broadcasting, Inc., 92 F.C.C.2d 1477 (Rev.Bd.1983). And, confronted with a broadcasting subsidiary of a national mutual insurance company owned by 2.5 million policyholders, the Commission has treated the subsidiary's officers as its owners for purposes of the integration preference. Farragut Television Corp., 8 F.C.C.2d 279, 282 pp 8-9 (1967). 33 In short, whatever the benefits of ensuring that day-to-day management decisions are made by people whose money is directly on the line, the integration policy does not achieve them.