Has the FCC Opened “Pandora’s Box”?  On September 30, 2016, the FCC adopted an order designed to liberalize and streamline the foreign ownership review process for broadcast licensees (the “Broadcast Liberalization Order”).  Previously, the Commission issued an Order (2013) clarifying that the 25% foreign investment mark served only as a trigger requiring the FCC to review applications on a case-by-case basis, not an automatic bar to such investment.  Foreign investment in broadcast licensees above 25% required prior express consent, based on an evaluation of public interest and national security considerations.

The new rules were principally an outgrowth of a petition filed by Pandora which sought FCC approval, in connection with its acquisition of a radio station, for foreign ownership of greater than 25%. Pandora did not file such a petition because its foreign ownership exceeded that percentage, but instead because, based on the FCC methodology in use at the time, Pandora could not prove that it was in compliance.  While these new rules may allow more US investment by non-US companies, the rules for the most part are geared to making it easier for public companies to deal with assessing their foreign stock ownership.  The Broadcast Liberalization Order adopted several specific proposals as follows:

* A broadcast licensee may file a petition to seek approval for up to and including 100% aggregate foreign ownership of its controlling U.S. parent entity;

* A broadcast licensee filing a petition seeking approval for a proposed controlling (but less than 100%) interest may also request advanced approval to increase its equity and/or voting interests up to 100% at some future time without filing a new petition;

*     Similarly, a broadcast licensee can seek advance approval in its petition to allow a foreign investor named in the petition to increase its non-controlling equity and/or voting interests at some future time up to and including 49.99%;

* Broadcast licensees must use the broadcast attribution and insulation criteria to determine U.S. and foreign interests that must be disclosed in a petition; and

* Specific approval is required only for foreign individuals or entities with a greater than 5% ownership interest (or 10% for certain institutional investors).