§ 27.1202   Cable/BRS cross-ownership.

   (a) Initial or modified authorizations for BRS stations may not be granted
   to a cable operator if a portion of the BRS station's protected services
   area is within the portion of the franchise area actually served by the
   cable operator's cable system and the cable operator will be using the BRS
   station as a multichannel video programming distributor (as defined in
   § 76.64(d) of this chapter). No cable operator may acquire such authorization
   either directly, or indirectly through an affiliate owned, operated, or
   controlled by or under common control with a cable operator if the cable
   operator  will use the BRS station as a multichannel video programming
   distributor.

   (b) No licensee of a station in this service may lease transmission time or
   capacity to a cable operator either directly, or indirectly through an
   affiliate owned, operated, controlled by, or under common control with a
   cable operator, if a portion of the BRS station's protected services area is
   within  the portion of the franchise area actually served by the cable
   operator's cable system the cable operator will use the BRS station as a
   multichannel video programming distributor.

   (c) Applications for new stations, station modifications, assignments or
   transfers of control by cable operators of BRS stations shall include a
   showing that no portion of the GSA of the BRS station is within the portion
   of the franchise area actually served by the cable operator's cable system,
   or of any entity indirectly affiliated, owned, operated, controlled by, or
   under common control with the cable operator. Alternatively, the cable
   operator may certify that it will not use the BRS station to distribute
   multichannel video programming.

   (d)  In  applying  the provisions of this section, ownership and other
   interests in BRS licensees or cable television systems will be attributed to
   their holders and deemed cognizable pursuant to the following criteria:

   (1) 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 corporate BRS licensee or cable television
   system will be cognizable;

   (2) 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 corporate BRS licensee or cable
   television  system,  or if any of the officers or directors of the BRS
   licensee or cable television system 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.

   (3) Attribution of ownership interests in a BRS licensee or cable television
   system 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 purposes of paragraph (d)(9) of this section, attribution of ownership
   interests  in  a BRS licensee or cable television system 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, and the ownership percentage
   for any link in the chain that exceeds 50% shall be included for purposes of
   this multiplication. For example, except for purposes of paragraph (d)(9) of
   this section, 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 because X's interest in Y exceeds 50%), and A's
   interest in “Licensee” would be 2.5% (0.1 × 0.25). Under the 5% attribution
   benchmark,  X's  interest in “Licensee” would be cognizable, while A's
   interest would not be cognizable. For purposes of paragraph (d)(9) of this
   section,  X's interest in “Licensee” would be 15% (0.6 × 0.25) and A's
   interest in “Licensee” would be 1.5% (0.1 × 0.6 × 0.25). Neither interest
   would be attributed under paragraph (d)(9) of this section.

   (4) 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 BRS licensee or cable
   television system are subject to said trust.

   (5) Subject to paragraph (d)(9) of this section, holders of non-voting stock
   shall  not be attributed an interest in the issuing entity. Subject to
   paragraph (d)(9) of this section, 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.

   (6)(i) 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 BRS or cable television
   activities of the partnership and the licensee or system 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 BRS or cable television
   activities of the partnership and the licensee or system so certifies.

   (ii) For a licensee or system that is a limited partnership to make the
   certification set forth in paragraph (d)(6)(i) 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 BRS or cable
   television activities of the partnership. For a licensee or system that is
   an LLC or RLLP to make the certification set forth in paragraph (d)(6)(i) 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 BRS or cable television
   activities of the LLC or RLLP. 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 BRS or cable television businesses of the partnership or
   LLC or RLLP.

   (iii)  In  the  case of an LLC or RLLP, the licensee or system seeking
   installation shall certify, in addition, that the relevant state statute
   authorizing LLCs permits an LLC member to insulate itself as required by our
   criteria.

   (7) Officers and directors of a BRS licensee or cable television system 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 business of BRS or cable television service, 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 BRS licensee or cable television
   system, 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 BRS licensee or cable television system subsidiary, and a
   statement properly documenting this fact is submitted to the Commission. The
   officers and directors of a sister corporation of a BRS licensee or cable
   television system shall not be attributed with ownership of these entities
   by virtue of such status.

   (8) Discrete ownership interests 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:

   (i) The sum of the interests held by or through “passive investors” is equal
   to or exceeds 20 percent; or

   (ii) The sum of the interests other than those held by or through “passive
   investors” is equal to or exceeds 5 percent; or

   (iii) The sum of the interests computed under paragraph (d)(8)(i) of this
   section plus the sum of the interests computed under paragraph (d)(8)(ii) of
   this section equal to or exceeds 20 percent.

   (9) Notwithstanding paragraphs (d)(5) and (d)(6) of this section, the holder
   of  an equity or debt interest or interests in a BRS licensee or cable
   television system subject to the BRS/cable cross-ownership rule (“interest
   holder”) shall have that interest attributed if:

   (i) The equity (including all stockholdings, whether voting or nonvoting,
   common or preferred) and debt interest or interests, in the aggregate,
   exceed 33 percent of the total asset value (all equity plus all debt) of
   that BRS licensee or cable television system; and

   (ii) The interest holder also holds an interest in a BRS licensee or cable
   television system that is attributable under this section (other than this
   paragraph) and which operates in any portion of the franchise area served by
   that cable operator's cable system.

   (10) The term “area served by a cable system” means any area actually passed
   by  the cable operator's cable system and which can be connected for a
   standard connection fee.

   (11) As used in this section “cable operator” shall have the same definition
   as in § 76.5 of this chapter.

   (e) The Commission will entertain requests to waive the restrictions in
   paragraph (a) of this section where necessary to ensure that all significant
   portions  of  the franchise area are able to obtain multichannel video
   service.

   (f) The provisions of paragraphs (a) through (e) of this section will not
   apply to one BRS channel used to provide locally-produced programming to
   cable headends. Locally-produced programming is programming produced in or
   near the cable operator's franchise area and not broadcast on a television
   station available within that franchise area. A cable operator will be
   permitted one BRS channel for this purpose, and no more than one BRS channel
   may  be  used by a cable television company or its affiliate or lessor
   pursuant to this paragraph. The licensee for a cable operator providing
   local programming pursuant to a lease must include in a notice filed with
   the Wireless Telecommunications Bureau a cover letter explicitly identifying
   itself or its lessees as a local cable operator and stating that the lease
   was executed to facilitate the provision of local programming. The first
   application  or the first lease notification in an area filed with the
   Commission will be entitled to the exemption. The limitations on one BRS
   channel per party and per area include any cable/BRS operations or cable/EBS
   operations. The cable operator must demonstrate in its BRS application that
   the proposed local programming will be provided within one year from the
   date its application is granted. Local programming service pursuant to a
   lease must be provided within one year of the date of the lease or one year
   of grant of the licensee's application for the leased channel, whichever is
   later. If a BRS license for these purposes is granted and the programming is
   subsequently discontinued, the license will be automatically forfeited the
   day after local programming service is discontinued.

   (g) Applications filed by cable television companies, or affiliates, for BRS
   channels prior to February 8, 1990, will not be subject to the prohibitions
   of this section. Applications filed on February 8, 1990, or thereafter will
   be returned. Lease arrangements between cable and BRS entities for which a
   lease or a firm agreement was signed prior to February 8, 1990, will also
   not be subject to the prohibitions of this section. Leases between cable
   television companies, or affiliates, and BRS station licensees, conditional
   licensees, or applicants executed on February 8, 1990, or thereafter, are
   invalid.

   (1) Applications filed by cable operators, or affiliates, for BRS channels
   prior to February 8, 1990, will not be subject to the prohibitions of this
   section. Except as provided in paragraph (g)(2)of this section, applications
   filed  on  February  8,  1990,  or  thereafter will be returned. Lease
   arrangements between cable and BRS entities for which a lease or a firm
   agreement was signed prior to February 8, 1990, will also not be subject to
   the prohibitions of this section. Except as provided in paragraph (g)(2) of
   this section, leases between cable operators, or affiliates, and BRS/EBS
   station licensees, conditional licensees, or applicants executed on or
   before February 8, 1990, or thereafter are invalid.

   (2) Applications filed by cable operators, or affiliates for BRS channels
   after February 8, 1990, and prior to October 5, 1992, will not be subject to
   the prohibition of this section, if, pursuant to the then existing overbuild
   or rural exceptions, the applications were allowed under the then existing
   cable/BRS cross-ownership prohibitions. Lease arrangements between cable
   operators and BRS entities for which a lease or firm agreement was signed
   after February 8, 1990, and prior to October 5, 1992, will not be subject to
   the prohibitions of this section, if, pursuant to the then existing rural
   and overbuild exceptions, the lease arrangements were allowed.

   (3) The limitations on cable television ownership in this section do 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.

   [ 69 FR 72034 , Dec. 10, 2004, as amended at  71 FR 35190 , June 19, 2006]

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