United States: Non-US Citizens Entering US Radio Station Ownership

Last Updated: June 25 2018
Article by Womble Bond Dickinson

WASHINGTON, D.C.—A late 2016 decision by the United States Federal Communications Commission, which is the federal agency charged with regulating the nation's radio and television broadcast stations, opened the doors to expanded non-US citizen ownership of US radio stations. Not surprisingly, international broadcasters and investors may be looking to take advantage of this opportunity.

Here are the latest developments from Washington:

In February 2017, Australians Richard and Sharon Burns received FCC approval to acquire 100% indirect ownership of 29 US broadcast licenses (seven AM stations, eight FM stations, 13 FM translators and 1 UHF translator). The couple previously owned a 20% interest in the broadcast group. The stations in questions primarily are in Alaska and the Texarkana, Arkansas/Texas region. The Burnses utilized a limited liability company, Frontier Media, to facilitate the transactions.

Then, in May of this year, the FCC approved an ownership change for Spanish-language FM stations KQMX in Lost Hills, Calif. and KRPH in Morristown, Ariz. In this transaction, two Mexican businessmen who previously owned a minority share acquired 100% of the parent company, Grupo Multimedia.

The FCC noted in the Grupo Multimedia ruling that the new ownership group, which has extensive experience in the broadcasting world, would help the struggling stations remain on the air, thus ensuring that Spanish-speaking residents in these communities would continue to have local radio programming.

In addition, several petitions from would-be non-US citizen owners are pending with the FCC. For example, a group of Italian owners is seeking permission to buy four Florida radio stations owned by Zoo Communications.

Also, an ownership group consisting of Polish and British citizens is seeking to buy WRGR(FM) in Tupper Lake, N.Y. In the FCC petition seeking approval, the prospective owners note that they have resided in the United States since 2015 and "would not implicate any national security or other threat to the United States, given that '[their home] countries are among our most steadfast allies and share many of our cultural traditions.'"

The FCC still keeps non-US owners on a relatively short string, despite the recent non-US citizen ownership policy changes. For example, a non-US media group must receive not only prior FCC approval but also approvals from relevant US Executive Branch agencies with expertise on issues related to national security, law enforcement, foreign policy, and trade policy.

So does the nationality of the non-US owners matter to the FCC? Absolutely. Owners from a close ally, such as Australia or Mexico, may be much less problematic than those from countries perceived to be at possibly at odds with US security or national interests.

China, in particular, is an unknown for US broadcast station ownership.

TV and radio law attorney John Garziglia with Womble Bond Dickinson in Washington, DC notes that "Chinese investors may be keenly interested in the US marketplace, and not just as a way to make money," Garziglia observes that "based upon Chinese investments in US entertainment venues such as movie theater chains, Chinese investors may be looking for 'prestige' opportunities, and the prospect of buying US television or radio stations may be that type of high-profile investment."

But will the FCC allow Chinese investors to buy majority stakes in US broadcasters? Womble Bond Dickinson wireless law attorneys Carri Bennet and Erin Fitzgerald note that the FCC already is considering a measure that would bar federal Universal Service Funds from being spent to buy Chinese-made communications equipment, due to supposed risks to national security. Bennet and Fitzgerald, on behalf of firm client the Rural Wireless Association, recently filed an ex parte letter with the FCC in opposition to the proposal, noting that the proposed Chinese communications equipment ban wouldn't improve national security and would unfairly penalize small, rural carriers, who depend on Chinese equipment.

Wealthy Middle Eastern nations, such as Saudi Arabia and Qatar, are pumping billions of dollars into brand-building efforts to increase their presence on the world stage. For example, Qatar will host the 2022 FIFA World Cup, while Saudi Arabia announced its ambitious Saudi Vision 2030 strategic plan to make their nation "the hub connecting three continents." Buying into the US television or radio market seemingly might also be a good fit for private entities in these prosperous countries looking to enhance global visibility.

It is currently unknown whether an ownership bid from broadcasters or investors one of these nations would be viewed in the same light by the FCC and US government as one from a Western democracy? One thing is for certain. With the recent US policy changes on non-US citizen ownership in US television and radio stations, the number of non-US owners seeking to buy American broadcasting properties only will only grow in the foreseeable future.


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