[Code of Federal Regulations]
[Title 47, Volume 2]
[Revised as of October 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 47CFR76.501]

[Page 585-588]
 
                       TITLE 47--TELECOMMUNICATION
 
        CHAPTER I--FEDERAL COMMUNICATIONS COMMISSION (CONTINUED)
 
PART 76_MULTICHANNEL VIDEO AND CABLE TELEVISION SERVICE--Table of Contents
 
                  Subpart J_Ownership of Cable Systems
 
Sec.  76.501  Cross-ownership.


    (a)-(c) [Reserved]
    (d) No cable operator shall offer satellite master antenna 
television service (``SMATV''), as that service is defined in Sec.  
76.5(a)(2), separate and apart from any franchised cable service in any 
portion of the franchise area served by that cable operator's cable 
system, either directly or indirectly through an affiliate owned, 
operated, controlled, or under common control with the cable operator.
    (e)(1) A cable operator may directly or indirectly, through an 
affiliate

[[Page 586]]

owned, operated, controlled by, or under common control with the cable 
operator, offer SMATV service within its franchise 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 
affiliate owned, operated, controlled by, or under common control with 
the cable operator, offer service within its franchise area through 
SMATV facilities, provided such service is offered in accordance with 
the terms and conditions of a cable franchise agreement.
    (f) The restrictions in paragraphs (d) and (e) of this section shall 
not apply to any cable operator in any franchise area in which a cable 
operator is subject to effective competition as determined under section 
623(l) of the Communications Act.

    Note 1 to Sec.  76.501: Actual working control, in whatever manner 
exercised, shall be deemed a cognizable interest.
    Note 2 to Sec.  76.501: In applying the provisions of this section, 
ownership and other interests in an entity or entities covered by this 
rule will be attributed to their holders and deemed cognizable pursuant 
to the following criteria:
    (a) Except as otherwise provided herein, partnership and direct 
ownership interests and any voting stock interest amounting to 5% or 
more of the outstanding voting stock of a corporation will be 
cognizable;
    (b) 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 20% or more of the outstanding voting stock of a corporation, 
or if any of the officers or directors of the corporation are 
representatives of the investment company, 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.
    (c) Attribution of ownership interests in an entity covered by this 
rule 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 company 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% (0.1 x 0.25). Under the 5% attribution benchmark, X's interest in 
``Licensee'' would be cognizable, while A's interest would not be 
cognizable.]
    (d) Voting stock interests held in trust shall be attributed to any 
person who holds or shares 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 entity covered by this rule are subject to 
said trust.
    (e) Subject to paragraph (i) of this Note, holders of non-voting 
stock shall not be attributed an interest in the issuing entity. Subject 
to paragraph (i) of this Note, holders of debt and instruments such as 
warrants, convertible debentures, options or other non-voting interests 
with rights of conversion to voting interests shall not be attributed 
unless and until conversion is effected.
    (f)(1) Subject to paragraph (i) of this Note, 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 
relevant entity so certifies. An interest in a Limited Liability Company 
(``LLC'') or Registered Limited Liability Partnership (``RLLP'') shall 
be attributed to the interest holder unless that interest holder is not 
materially involved, directly or indirectly, in the management or 
operation of the media-related activities of the partnership and the 
relevant entity so certifies.
    (2) In the case of a limited partnership, in order for an entity to 
make the certification set forth in paragraph (g)(1) of this section, 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 no material 
involvement, directly or indirectly, in the management or operation of 
the media activities of the partnership. In the case of an LLC or RLLP, 
in order for an entity to

[[Page 587]]

make the certification set forth in paragraph (g)(1) of this section, it 
must verify that the organizational document, with respect to the 
particular interest holder exempt from attribution, establishes that the 
exempt interest holder has no material involvement, directly or 
indirectly, in the management or operation of the media activities of 
the LLC or RLLP. The criteria which would assume adequate insulation for 
purposes of these certifications are described in the Memorandum Opinion 
and Order in MM Docket No. 83-46, FCC 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, or other organizational document in the case of an LLC or 
RLLP, 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, or other interest holders in the 
case of an LLC or RLLP, in the management or operation of the media 
businesses of the partnership or LLC or RLLP.
    (3) In the case of an LLC or RLLP, the entity seeking insulation 
shall certify, in addition, that the relevant state statute authorizing 
LLCs permits an LLC member to insulate itself as required by our 
criteria.
    (g) Officers and directors of an entity covered by this rule 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 media business, 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 company of a media entity, 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 media subsidiary, and a certification properly 
documenting this fact is submitted to the Commission. The officers and 
directors of a sister corporation of a media entity shall not be 
attributed with ownership of that entity by virtue of such status.
    (h) Discrete ownership interests held by the same individual or 
entity 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 20 percent; or
    (2) The sum of the interests other than those held by or through 
``passive investors'' is equal to or exceeds 5 percent; or
    (3) The sum of the interests computed under paragraph (i)(1) of this 
section plus the sum of the interests computed under paragraph (i)(2) of 
this section is equal to or exceeds 20 percent.
    (i) Notwithstanding paragraphs (e) and (f) of this Note, the holder 
of an equity or debt interest or interests in an entity covered by this 
rule shall have that interest attributed if the equity (including all 
stockholdings, whether voting or nonvoting, common or preferred, and 
partnership interests) and debt interest or interests, in the aggregate, 
exceed 33 percent of the total asset value (all equity plus all debt) of 
that entity, provided however that:
    (1) in applying the provisions of paragraph (i) of this note to 
Sec. Sec.  76.501, 76.505 and 76.905(b)(2), the holder of an equity or 
debt interest or interests in a broadcast station, cable system, SMATV 
or multiple video distribution provider subject to Sec. Sec.  76.501, 
76.505, or 76.905(b)(2) (``interest holder'') shall have that interest 
attributed if the equity (including all stockholdings, whether voting or 
nonvoting, common or preferred, and partnership interests) and debt 
interest or interests, in the aggregate, exceed 33 percent of the total 
asset value (defined as the aggregate of all equity plus all debt) of 
that entity; and
    (i) the interest holder also holds an interest in a broadcast 
station, cable system, SMATV, or multiple video distribution provider 
that operates in the same market, is subject to Sec. Sec.  76.501, 
76.505, or 76.905(b)(2) and is attributable without reference to this 
paragraph (i); or
    (ii) the interest holder supplies over fifteen percent of the total 
weekly broadcast programming hours of the station in which the interest 
is held.
    (2) For purposes of applying subparagraph (i)(1), the term 
``market'' will be defined as it is defined under the rule that is being 
applied.
    Note 3 to Sec.  76.501: 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 to Sec.  76.501: Paragraph (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 to Sec.  76.501: Certifications pursuant to this section and 
these notes shall be sent

[[Page 588]]

to the attention of the Media Bureau, Federal Communications Commission, 
445 12th Street, SW., Washington, DC 20554.
    Note 6 to Sec.  76.501: In applying paragraph (a) of Sec.  76.501, 
for purposes of paragraph note 2(i) of this section, attribution of 
ownership interests in an entity covered by this rule that are held 
indirectly by any party through one or more intervening organizations 
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. The ownership percentage for any link in the chain that exceeds 
50% shall be included. [For example, if A owns 10% of company X, which 
owns 60% of company Y, which owns 25% of ``Licensee,'' then X's interest 
in ``Licensee'' would 15% (0.6x0.25), and A's interest in ``Licensee'' 
would be 1.5% (0.1x0.6x0.25).]

[58 FR 27677, May 11, 1993, as amended at 60 FR 37834, July 24, 1995; 61 
FR 15388, Apr. 8, 1996; 64 FR 50646, Sept. 17, 1999; 64 FR 67194, Dec. 
1, 1999; 66 FR 9973, Feb. 13, 2001; 67 FR 13234, Mar. 21, 2002; 68 FR 
13237, Mar. 19, 2003]