As a federal appeals court in Philadelphia heard arguments on Tuesday for blocking portions of the Federal Communication Commission’s new radio incubator program from taking effect, in Washington the agency announced it would begin accepting incubation proposals. The Commission created the incubator program last August but it took several months for the Office of Management and Budget to give its required approval for the information collection requirements contained in the incubator program. With that now in hand, the FCC is cleared to move forward and begin lining up small companies, including those owned by women and minorities, who want to work with more established operators to solidify their position in the radio industry.
“The Commission adopted the incubator program to support new and diverse entrants in the broadcasting industry,” it said in a public notice. “The program is primarily designed to encourage large, experienced owners of full-service AM and FM radio stations to assist aspiring station owners that lack the financing or operational expertise needed to own and operate their own radio stations.”
As an incentive to get established broadcasters to take part in the program and potentially help a new competitor get on their feet, the FCC will give the established company a waiver to the local radio ownership limits, including the AM/FM subcap restrictions. Broadcasters will be able to use the waiver in the market where the incubator relationship is located, or in a comparably-sized metro area. The waiver can also be transferred to a new owner if the oversized cluster is sold.
Under the guidelines spelled out by the Media Bureau, companies interested in participating in the program need to file their incubation proposals for approval in order for the proposed relationship to qualify under the program. “The Bureau will approve the proposal if it finds that the proposal is designed to help a small, aspiring or struggling broadcaster gain the ability to own and operate a full-service radio station independently,” it said in the notice.
Even as the application window opens, the National Association of Black Owned Broadcasters (NABOB) and Multicultural Media, Telecom and Internet Council (MMTC) filed suit in federal appeals court last October seeking a review of the mechanism dictating how established broadcasters can use the waivers they receive as a reward for participating in the incubator program. NABOB and MMTC said the market comparability standard adopted by the FCC is “arbitrary and capricious” and the decision was “an abuse of discretion” not supported by the law.
A decision in the court case may not come for several months, however. In the meantime, here is an outline of the radio incubator program rules created by the FCC:
Eligibility: The incubator program is available for full-service AM and FM radio stations. The entity to be incubated must meet a two-pronged eligibility standard, consisting of both a numerical cap on the number of stations owned and a cap of annual revenue of $38.5 million or less. The entity to be incubated must also certify that it would not be able to purchase a radio station or continue operating its struggling station without the support that the proposed incubation relationship will provide. The prospective incubating entity must demonstrate that it has the commitment, resources, and experience needed to help the prospective incubated entity establish itself in the broadcasting industry.
New Forms: The Media Bureau is releasing updated instructions for FCC Forms 314, 315, and 301 to provide guidance for those seeking to file an incubation proposal as part of an application for an assignment, transfer of control, or new construction permit.
Required Documents: Each incubation proposal must contain four documents: a written incubation contract, a certified statement from the proposed incubated entity, a certified statement from the proposed incubating entity, and a request for temporary waiver of the Commission’s Local Radio Ownership Rule if the proposed incubation relationship would cause the incubating entity to exceed the local radio ownership limits.
Review Process: After receiving an incubation proposal, the Media Bureau will assign the proposal a docket and place the proposal on public notice. Comments, informal objections, petitions to deny, oppositions, and replies may be filed as permitted. The Bureau will review the incubation proposal and related filings to determine whether the proposed incubation relationship meets the requirements.
Reporting Requirements: After the Media Bureau approves an incubation proposal, the parties will be required to submit annual reports and other filings.
Reward Waivers: After successfully completing an approved incubation relationship, the incubating entity will be eligible to seek a waiver of the Commission’s Local Radio Ownership Rule including the AM/FM subcaps. To obtain a reward waiver, the incubating entity must file a waiver request demonstrating that the incubated entity has completed a successful incubation relationship and that the incubating entity seeks to use the waiver in the same market as the incubated station or a comparable market. Generally, the waiver request must be filed within three years of the date the incubation relationship ends.