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CLIENT ALERT: FCC’S PROPOSED NEW OWNERSHIP REPORT WOULD SIGNIFICANTLY BUR=
DEN
COMMERCIAL BROADCASTERS AND RAISE HIGHLY SENSITIVE PRIVACY ISSUES COMMENTS DUE AT OMB SEPTEMBER 10,
2009 |
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In an effort to make m= inority and female ownership data available and more easily searchable, the Feder= al Communications Commission (FCC) in May 2009 adopted new procedures for collecting data about minority and female broadcast ownership. One of these new procedures requ= ires all commercial broadcasters to f= ile Ownership Reports between October 1 and November 1, 2009, on a newly revi= sed FCC Form 323 (Form 323). Additionally, this Form 323 will be required for all future Owners= hip Reports going forward, including biennial and post-consummation filings.<= /p> While Ownership Report= s have historically been filed with little review by the FCC, the Commission has announced that it will now conduct random compliance audits – much = like the random EEO audits which result in thousands of dollars in compliance costs and forfeitures annually. The truthfulness, accuracy and completeness of the information submitted in the Form must be certified by the individual licensee or permittee, a general partner in the licensee or permittee partnership, or an appropriate officer in the licensee or permi= ttee corporation or association. Licensees and permittees are required to exercise reasonable due diligence before certifying to the accuracy of any information that is submitted to the Commission. Lapses in information about persons that hold attributable or reportable interests in a licensee will not be acceptable and can be subj= ect to sanctions by the FCC – including revocation of a license or perm= it and fines. About one week ago, th= e Office of Management and Budget (OMB) invited comments on the revised Form 323 a= nd the regulatory burden imposed by the proposed revisions to the form. We believe that the FCC has vastly understated the regulatory bu= rdens imposed by the new form and by the new reporting procedures. The substantial volume= of additional data required to complete the new Form 323 is far broader than= in the past and poses significant compliance issues. The additional data requested wi= ll also create major privacy issues for broadcasters, who will need certain sensitive and personally identifiable information from officers, director= s, shareholders, owners, general and non-insulated limited partners, holders= of non-insulated membership interests, attributable creditors, and attributa= ble investors (holding 5% or greater voting interest), to prepare the form for filing. Moreover, given the amount of additional data requested, the sensitivity of some of the reque= sted data, and the number of redundant filings required for any broadcaster wi= th intervening holding and parent companies, we believe that the logistics of filing complete and accurate Ownership Reports by the November 1 deadline= , on the form that is only now becoming public (and has not yet secured OMB approval) will be highly problematic. Privacy Issues: · In order for a licensee to be able to file= the new Form 323, every person with a “reportable” or “attributable” interest in a licensee or its parent company(s) must have his/her own FCC Registration Number (FRN), which can only be obtained by disclosing his/her So= cial Security Number (SSN) to the FCC.&nb= sp; FRNs have been required for corporations and other business entiti= es for a number of years, but they have not previously been required for individual officers, directors, shareholders or principals. The new requirement applies not = only to previously disclosable attributable interest holders, such as officers, directors, shareholders, creditors, investors, limited and general partne= rs, but now includes other “reportable” interest holders not deemed attributable for owne= rship purposes. The name, address, race/ethnicity, and FRN of each of these persons must be reported for each station/permit with which they are associated. · To obtain an FRN, each individual must be registered with the FCC’s online “CORES” system prior to filing the new Form 323, compounding the amount of additional time and record-keeping required. Cost/Data Entry Issues: · The FCC has also eliminated filers’ ability to attach master exhibits that detail information about each inte= rest holder. As a consequence, an extraordinary amount of additional time will be required to manually enter the following information for eac= h reportable and attributable interest holder on the form for each licensee/permittee and pare= nt company(s): (1) the interest holder’s name; (2) address; (3) relationship to the licensee/permit= tee; (4) positional interest; and (5) FRN.&nb= sp; In addition, any attributable interests these parties hold in other broadcast stations, or newspapers in the same market will require the fur= ther individual manual entry of: <= span style=3D'mso-spacerun:yes'> (i) that interest holder’s = name; (ii) call sign/name of newspaper; (iii) community of license/location; (iv) Facility ID Number; (v) percentage of votes; (vi) percentage of total ass= ets (EDP); and (vii) positional interests in the other entity(s). · Manual data entry is also required for reporting spousal and family relationships in each report; simply attachi= ng the same comprehensive exhibit to each report is prohibited. · Previously, station groups could file one Ownership Report for their parent company(s) on behalf of all licensees a= nd attach an exhibit that detailed the ownership chains of all of the licens= ees and/or subsidiary holdings under that parent. Now, it appears that a separate Ownership Report for every parent company in the chain must now be filed = for each individual licensee. B= y way of example, if a holding company is the direct parent of three licensee entities, the prior reporting system would have allowed the holding compa= ny to file a single report. Ho= wever, the new system appears to require the holding company to file three separ= ate reports, one specifically associated with each of its licensee subsidiari= es. · The FCC estimates that the time required to complete each Form 323 will be 1.5 to 2.5 hours. We believe that this is grossly underestimated. Moreover, depending on the complexity of the corporate structure of a licensee, the overall time spent filing all required Ownership Reports for that licensee and its parent company(s) could require hundreds of hours including preparation, data entry, review and filing/payment. In addition, simply filing for a= nd maintaining records of all necessary FRNs will require a considerable amo= unt of additional time that the FCC did not consider in its estimate of the t= ime required to complete and file the new form. In summary, the new Fo= rm 323 significantly expands the amount of highly sensitive and personally identifiable information that must be disclosed by individuals to the fed= eral government. Moreover, the c= hanges to the design and function of Form 323 will require a substantial increas= e in human and financial resources needed to complete new form. OMB has requested comm= ents on Form 323, as follows: (a) w= hether the proposed 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 estimate; (c) ways to enhance the quality, util= ity, and clarity of the information collected; and (d) ways to minimize the bu= rden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology. Comments are due to OMB by September 10. We strongly urge you to participate in the OMB comment process to
voice urgent concern over both the increased regulatory burden created by
this new Form 323 and the required submission of sensitive and personally
identifiable information of officers, directors, shareholders, and other
attributable owners, investors, and creditors. Please contact one of = your primary attorneys in this office about this matter at your earliest convenience. August 21, = 2009 |
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This memorandum is intended only as a general discussion of these issues and should not be regarded as legal advic= e. We would be pleased to provide additional deta= ils or advice about specific situations if desired. Copyright © 2009, Lerman Senter PLLC 2000 K Stre=
et NW,
Suite 600 | Washington, DC 20006-1809 To Unsubscribe= : Unsubscribe | To Update Client Info: Update Client Info |
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