47 C.F.R. § 76.501 Cross-ownership.
(a) No cable television system (including all parties under common control) shall carry the signal of any television broadcast station if such system directly or indirectly owns, operates, controls, or has an interest in a TV broadcast station whose predicted Grade B contour, computed in accordance with § 73.684 of part 73 of this chapter, overlaps in whole or in part the service area of such system (i.e., the area within which the system is serving subscribers).
(b) [Reserved]
(c) . The provisions of paragraph (a) of this section are not effective until November 8, 1987, as to ownership interests proscribed herein if such interests were in existence on or before July 1, 1970 (e.g., if were in existence on or before July 1970), and will be applied to cause divestiture as to ownership interests proscribed herein only where the is directly or indirectly, owned, operated, controlled by, or has an interest in a non-satellite television broadcast station which places a principal community contour encompassing the entire community and there is no other commercial non-satellite television broadcast station placing a principal community contour encompassing the entire community.
(d) No cable operator shall offer satellite master antenna television service (“SMATV”), as that service is defined in § 76.5(a)(2), separate and apart from any franchised cable service in any portion of the
area served by that cable operator’s
, either directly or indirectly through an
owned, operated, controlled, or under common control with the cable operator.
(e) (1) A cable operator may directly or indirectly, through an
owned, operated, controlled by, or under common control with the cable operator, offer SMATV service within its
area if the cable operator’s SMATV system was owned, operated, controlled by or under common control with the cable operator as of October 5, 1992.
(2) A cable operator may directly or indirectly, through an
owned, operated, controlled by, or under common control with the cable operator, offer service within its
area through SMATV facilities, provided such service is offered in accordance with the terms and conditions of a cable
.
(f) The restrictions in divisions (d) and (e) of this appendix shall not apply to any cable operator in any
area in which a cable operator is subject to effective competition as determined under § 623(1) of the Communications Act.
Note 1: The word “control” as used herein is not limited to majority stock ownership, but includes actual working control in whatever manner exercised.
Note 2: In applying the provisions of this section, ownership and other interests in broadcast licensees and 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 interest and any voting stock interest amounting to 5% or more of the outstanding voting stock of a corporate broadcast 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 broadcast 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 10% or more of the outstanding voting stock of a corporate broadcast licensee or cable television system, or if any of the officers or directors of the broadcast licensee or cable television system are representatives of the investment
, 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 a broadcast 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
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% (0.1x0.25). 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 share 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 broadcast licensee or cable television system are subject to said trust.
(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.
(2) In order for a licensee or system to make the certification set forth in division (g)(1) of this note, 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 not material involvement, directly or indirectly, in the management or operation of the media activities of the partnership. The criteria which would assure adequate insulation for purposes of this certification are described in the Memorandum Opinion and Order in MM Docket No. 83-46,
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, 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 in the management or operation of the media-related businesses of the partnership.
(h) Officers and directors of a broadcast 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 broadcasting 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
of a broadcast 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 broadcast licensee or cable television system subsidiary, and a statement properly documenting this fact is submitted to the Commission. (This statement may be included on appropriate Ownership Report.) The officers and directors of a sister corporation of a broadcast 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 10%; or
(2) The sum of the interests other than those held by or through “passive investors” is equal to or exceeds 5%; or
(3) The sum of the interests computed under paragraph (i)(1) of this note plus the sum of the interests computed under paragraph (i)(2) of this note is equal to or exceeds 10%.
Note 3: In cases where record and beneficial ownership of voting stock is not identical (e.g., bank nominees holding stock as record owners for the benefit of mutual funds, brokerage houses holding stock in street names for benefit of customers, investment advisors holding stock in their own names for the benefit of clients, and insurance companies holding stock), the party having the right to determine how the stock will be voted will be considered to own it for purposes of this subpart.
Note 4: Division (a) of this section will not be applied so as to require the divestiture of ownership interests proscribed herein solely because of the transfer of such interests to heirs or legatees by will or intestacy, provided that the degree or extent of the proscribed cross-ownership is not increased by such transfer.
Note 5: In applying the provisions of divisions (d) and (e) of this appendix, control and an attributable ownership interest shall be defined by reference to the definitions contained in Notes 1 through 4, provided however, that:
(a) The single majority shareholder provisions of Note 2(b) and the limited partner insulation provisions of Note 2(g) shall not apply; and
(b) The provisions of Note 2(a) regarding five (5) percent interests shall include all voting or nonvoting stock or limited partnership equity interests of five (5) percent or more.
(Ord. passed 9-5-2001)