Holy Cow! Another Darn Ownership Report?
November 1, 2011
By Gregg Skall, Womble Carlyle Sandridge & Rice LLP
No matter how many FCC warnings are issued, counsel reminders e-mailed, or announcements published in the "trades," there are always some broadcasters who miss the filing deadlines for regular reporting requirements at the FCC. December 1st, 2011 presents another such opportunity for oversight, the second filing of the new, labor-intensive, biennial ownership report for commercial broadcasters. Remember that this date applies to ALL commercial broadcasters, regardless of your state or the anniversary date of your renewal application. . (Noncoms still file a separate Form 323-E on their renewal anniversaries.)
Actually, it is understandable why some may overlook this filing requirement, even with all the reminders and notices. This is only the second time commercial broadcasters have been faced with the new uniform, nationwide filing date. Many of them, familiar with the staggered state-by-state filing dates that had been standard FCC operating procedure, still have those rolling deadlines on their regulatory calendars. Beginning with the 2009 report, the ownership report filing date was normalized on a nationwide, uniform filing date.
Making matters more confusing, though, the form was not ready for public consumption on time, and the Commission delayed the 2009 filing date numerous times. The actual and final 2009 filing date did not occur until July 2010, so now, a biennial report, that had to be dated as of two years ago, but filed only a little over a one year ago, must now be filed again to cover a two year period. With that history, that sounds as convoluted as Captain Jack Sparrow's explanation of how he lost the Black Pearl (apologies if you're not a Pirates of the Caribbean fan), it is not so difficult to understand why broadcasters could be confused about why another biennial ownership report is now due again on December 1st. Nevertheless, it is!
Mercifully, this time it will be a little easier. Remember, the 2009 report was a brand new Form 323; every single character had to be reentered with a new keystroke and it covered a considerable amount of information that had never before been reported. This time, however, all the data from the 2009 (filed July 2010) report can be copied into the new 2011 report and then edits and changes can be made.
So, while it may be somewhat easier, the Commission has already issued a list of the most common filing errors, and it would be worthwhile for every broadcaster to take note.
The first relates to the FCC registration number. Beginning with the 2009 report, every individual and entity identified in the report must have obtained and reported an FCC registration number ("FRN"), or alternatively, a "special use" FRN. The Commission reports that filers are often entering incorrect FRNs. Therefore, all FRN boxes should be carefully reviewed to assure they reflect the correct FRN and that it corresponds to the name entered. If multiple FRNs were applied for at the same time, different family member FRNs, for instance, might be only a digit or a few digits different.
Also, if any person or entity did use a special use FRN for the 2009 report, do not obtain another new special use FRN this time. The same special use FRN must be used again for the 2011 report. Obtaining another will result in an inaccurate form 323, the individual or entity now having two special use FRNs (and no real FRN). The FCC concern is that its statistical reports on diversity in media also will be inaccurate.
Choosing the wrong respondent on the CDBS pre-fill page was also a problem the Commission seeks to avoid in this round. Because of the extensive additional entity filing requirements added on to those that existed prior to the new 2009 biennial report form, there was some confusion in the pre-fill and responders defaulted to the "licensee" box when filling out forms for other entities. Only choose "licensee" when filing for the licensee itself. Now that separate forms need to be filed for more of the other entities with ownership interests in the licensee, the box titled "Entity with an Attributable Interest" should be used for those reports.
Note also that if you use the same CDBS account for these attributable interest entities, you have to change the licensee information for the CDBS account prior to initiating a parent entity's 323, since that's the only way to get the prefilled respondent correct. Then remember to change it back again before filing anything else for the licensee. The alternative is to open an entirely new CDBS ac count for each such attributable interest entity, an even more cumbersome and labor intensive task.
When completing the parties' names and details in Section 2-b item 3, always use the first box for the respondent filer. The listing type for that first entity should always be respondent, not other interest holder or any other type of party.
Even though it's there in black and white, many individuals fail to provide the correct gender/ethnicity/race/citizenship information for all individuals. However, legal entities that are not individuals cannot have a gender/ethnicity/race/citizenship and therefore should be designated N/A.
Another common mistake is providing incorrect voting interests. Except for joint ownership situations, each form submission should not exceed 100%. Also, this year, the form will not accept any fractional interest, and therefore all listings must be in whole numbers. Therefore, each listing must be rounded to the nearest whole number.
Joint owners should not be listed on the same line; list them separately and with their corresponding gender/ethnicity/race/citizenship information. Then select "other" for each joint owner and for type and enter "Joint Ownership" in the blank field.
Similarly, where trustees are involved, each should be listed separately with the corresponding gender/ethnicity/race/citizenship information relating to that trustee.
If a mistake has been made that requires that an error be corrected, do not correct it with a new report. Filing a new report distorts the Commission's database because it appears as two correct reports, rather than only one with an amendment. If a correction needs to be made after the report has been filed, an amendment can be filed electronically and noted in the pre-form.
All-in-all, despite the ability to copy from the 2009 report, the 323 form is still quite complicated and represents a significant departure from the previous biennial forms seasoned broadcasters were used to filing. Be sure to read all of the instructions or have experienced communications counsel guide you through the process. Failure to file a report can result in serious complications with your renewal application, as necessary appropriate certifications in the renewal application form cannot be made. With one month to go before the filing deadline, extra care now can save a lot of future headaches.
This column is provided for general information purposes only and should not be relied upon as legal advice pertaining to any specific factual situation. Legal decisions should be made only after proper consultation with a legal professional of your choosing.