Expanding Broadcast Ownership Opportunities Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 3957 To direct the Federal Communications Commission to take certain actions to increase diversity of ownership in the broadcasting industry, and for other purposes. IN THE HOUSE OF REPRESENTATIVES JULY 25, 2019 Mr. BUTTERFIELD (for himself, Ms. CLARKE of New York, Mr. CA´RDENAS, Mr. RUSH, Mr. VEASEY, and Mr. HASTINGS) introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, for a period to be sub- sequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To direct the Federal Communications Commission to take certain actions to increase diversity of ownership in the broadcasting industry, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Expanding Broadcast 4 Ownership Opportunities Act of 2019’’. 5 SEC. 2. FINDINGS. 6 Congress finds the following: 7 VerDate Sep 11 2014 02:43 Aug 13, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3957.IH H3957 pamtmann on DSKBFK8HB2PROD with BILLS 2 •HR 3957 IH (1) One of the main missions of the Federal 1 Communications Commission, and a compelling gov- 2 ernmental interest, is to ensure that there is a diver- 3 sity of ownership and viewpoints in the broadcasting 4 industry. 5 (2) The Commission should continue to collect 6 relevant data and conduct studies on such diversity 7 and make appropriate recommendations to Congress 8 on how to increase the number of minority- and 9 women-owned broadcast stations. 10 (3) Data from 2014 shows that, of the over 11 1,700 commercial broadcast television stations in the 12 United States, less than 6 percent are owned by 13 women, and less than 3 percent are minority-owned. 14 With respect to radio stations, women owned ap- 15 proximately 7 percent of FM broadcast radio sta- 16 tions, and minorities owned less than 3 percent of 17 such stations. 18 (4) Women and minority ownership is 5 to 10 19 times higher in other industries than in the broad- 20 casting industry. 21 (5) During the 17 years that a minority tax 22 certificate program was in place at the Commission 23 (from 1978 to 1995), the Commission issued 287 24 VerDate Sep 11 2014 02:43 Aug 13, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3957.IH H3957 pamtmann on DSKBFK8HB2PROD with BILLS 3 •HR 3957 IH certificates for radio stations and 40 certificates for 1 television stations. 2 (6) The Commission can also support minority- 3 and women-owned entrants into the broadcasting in- 4 dustry by implementing an incubator program in 5 which existing licensees assist new entrants in the 6 operation of broadcast stations. 7 SEC. 3. FCC REPORTS TO CONGRESS. 8 (a) BIENNIAL REPORT CONTAINING RECOMMENDA- 9 TIONS FOR INCREASING NUMBER OF MINORITY- AND 10 WOMEN-OWNED BROADCAST STATIONS.—Not later than 11 180 days after the date of the enactment of this Act, and 12 not less frequently than every 2 years thereafter, the Com- 13 mission shall submit to Congress a report containing rec- 14 ommendations for how to increase the total number of 15 broadcast stations that are owned or controlled by mem- 16 bers of minority groups or women, or by both members 17 of minority groups and women. 18 (b) BIENNIAL REPORT ON NUMBER OF MINORITY- 19 AND WOMEN-OWNED BROADCAST STATIONS.—Not later 20 than 180 days after the date of the enactment of this Act, 21 and not less frequently than every 2 years thereafter, the 22 Commission shall submit to Congress a report that states 23 the total number of broadcast stations that are owned or 24 controlled by members of minority groups or women, or 25 VerDate Sep 11 2014 02:43 Aug 13, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3957.IH H3957 pamtmann on DSKBFK8HB2PROD with BILLS 4 •HR 3957 IH by both members of minority groups and women, based 1 on data reported to the Commission on Form 323. 2 SEC. 4. TAX CERTIFICATE PROGRAM FOR BROADCAST STA- 3 TION TRANSACTIONS FURTHERING OWNER- 4 SHIP BY SOCIALLY DISADVANTAGED INDIVID- 5 UALS. 6 (a) REQUIREMENTS FOR ISSUANCE OF CERTIFICATE 7 BY FCC.— 8 (1) IN GENERAL.—Part I of title III of the 9 Communications Act of 1934 (47 U.S.C. 301 et 10 seq.) is amended by adding at the end the following: 11 ‘‘SEC. 344. TAX CERTIFICATE PROGRAM FOR BROADCAST 12 STATION TRANSACTIONS FURTHERING OWN- 13 ERSHIP BY SOCIALLY DISADVANTAGED INDI- 14 VIDUALS. 15 ‘‘(a) ISSUANCE OF CERTIFICATE BY COMMISSION.— 16 Upon application by a person who engages in a sale of 17 an interest in a broadcast station described in subsection 18 (b), subject to the rules adopted by the Commission under 19 subsection (c), the Commission shall issue to such person 20 a certificate stating that such sale meets the requirements 21 of this section. 22 ‘‘(b) SALES DESCRIBED.—The sales described in this 23 subsection are the following: 24 VerDate Sep 11 2014 02:43 Aug 13, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3957.IH H3957 pamtmann on DSKBFK8HB2PROD with BILLS 5 •HR 3957 IH ‘‘(1) SALE RESULTING IN OR PRESERVING OWN- 1 ERSHIP BY SOCIALLY DISADVANTAGED INDIVID- 2 UALS.—A sale of an interest in a broadcast station 3 if, immediately following the sale, the station is 4 owned by socially disadvantaged individuals (regard- 5 less of whether the station was owned by socially 6 disadvantaged individuals before the sale). 7 ‘‘(2) SALE BY INVESTOR IN STATION OWNED BY 8 SOCIALLY DISADVANTAGED INDIVIDUALS.—In the 9 case of a person who has contributed capital in ex- 10 change for an interest in a broadcast station that is 11 owned by socially disadvantaged individuals, a sale 12 by such person of some or all of such interest. 13 ‘‘(c) RULES.—The Commission shall adopt rules for 14 the issuance of a certificate under subsection (a) that pro- 15 vide for the following: 16 ‘‘(1) LIMIT ON VALUE OF SALE.—A limit on the 17 value of an interest the sale of which qualifies for 18 the issuance of such a certificate. The limit shall be 19 no lower than $10,000,000 and no higher than 20 $50,000,000. 21 ‘‘(2) MINIMUM HOLDING PERIOD.—In the case 22 of a sale described in subsection (b)(1), a minimum 23 period following the sale during which the broadcast 24 station must remain owned by socially disadvantaged 25 VerDate Sep 11 2014 02:43 Aug 13, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3957.IH H3957 pamtmann on DSKBFK8HB2PROD with BILLS 6 •HR 3957 IH individuals. The minimum period shall be no longer 1 than 3 years. 2 ‘‘(3) CUMULATIVE LIMIT ON NUMBER OR 3 VALUE OF SALES.—A limit on the total number of 4 sales or the total value of sales, or both, for which 5 a person may be issued certificates under subsection 6 (a). 7 ‘‘(4) PARTICIPATION IN STATION MANAGEMENT 8 BY SOCIALLY DISADVANTAGED INDIVIDUALS.—Re- 9 quirements for participation by socially disadvan- 10 taged individuals in the management of the broad- 11 cast station. 12 ‘‘(d) ANNUAL REPORT TO CONGRESS.—The Commis- 13 sion shall submit to Congress an annual report describing 14 the sales for which certificates have been issued under sub- 15 section (a) during the period covered by the report. 16 ‘‘(e) DEFINITIONS.—In this section: 17 ‘‘(1) OWNED BY SOCIALLY DISADVANTAGED IN- 18 DIVIDUALS.—The term ‘owned by socially disadvan- 19 taged individuals’ means, with respect to a broadcast 20 station, that— 21 ‘‘(A) such station is at least 51 percent 22 owned by one or more socially disadvantaged in- 23 dividuals, or, in the case of any publicly owned 24 broadcast station, at least 51 percent of the 25 VerDate Sep 11 2014 02:43 Aug 13, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3957.IH H3957 pamtmann on DSKBFK8HB2PROD with BILLS 7 •HR 3957 IH stock of such station is owned by one or more 1 socially disadvantaged individuals; and 2 ‘‘(B) the management and daily business 3 operations of such station are controlled by one 4 or more of such individuals. 5 ‘‘(2) SOCIALLY DISADVANTAGED INDIVIDUAL.— 6 The term ‘socially disadvantaged individual’ means a 7 woman or an individual who has been subjected to 8 racial or ethnic prejudice or cultural bias because of 9 the identity of the individual as a member of a 10 group without regard to the individual qualities of 11 the individual.’’. 12 (2) DEADLINE FOR ADOPTION OF RULES.—The 13 Commission shall adopt rules to implement section 14 344 of the Communications Act of 1934, as added 15 by paragraph (1), not later than 1 year after the 16 date of the enactment of this Act. 17 (3) REPORT TO CONGRESS ON PROGRAM EX- 18 PANSION.—Not later than 6 years after the date of 19 the enactment of this Act, the Commission shall sub- 20 mit to Congress a report regarding whether Con- 21 gress should expand section 344 of the Communica- 22 tions Act of 1934, as added by paragraph (1), be- 23 yond broadcast stations to cover other entities regu- 24 lated by the Commission. 25 VerDate Sep 11 2014 02:43 Aug 13, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H3957.IH H3957 pamtmann on DSKBFK8HB2PROD with BILLS 8 •HR 3957 IH (4) EXAMINATION AND REPORT TO CONGRESS 1 ON NEXUS BETWEEN DIVERSITY OF OWNERSHIP 2 AND DIVERSITY OF VIEWPOINT.— 3 (A) EXAMINATION.—Not later than 60 4 days after the date of the enactment of this 5 Act, the Commission shall initiate an examina- 6 tion of whether there is a nexus between diver- 7 sity of ownership or control of broadcast sta- 8 tions (including ownership or control by mem- 9 bers of minority groups or women, or by both 10 members of minority groups and women) and 11 diversity of the viewpoints expressed in the mat- 12 ter broadcast by broadcast stations. 13 (B) REPORT TO CONGRESS.—Not later 14 than 2 years after the date of the enactment of 15 this Act, the Commission shall submit to Con- 16 gress a report on the findings of the Commis- 17 sion in the examination under subparagraph 18 (A), including supporting data. 19 (b) NONRECOGNITION OF GAIN OR LOSS FOR TAX 20 PURPOSES.— 21 (1) IN GENERAL.—Subchapter O of chapter 1 22 of the Internal Revenue Code of 1986 is amended by 23 inserting after part IV the following new part: 24 VerDate Sep 11 2014 02:43 Aug 13, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H3957.IH H3957 pamtmann on DSKBFK8HB2PROD with BILLS 9 •HR 3957 IH ‘‘PART V—SALE OF INTEREST IN CERTAIN 1 BROADCAST STATIONS 2 ‘‘SEC. 1071. NONRECOGNITION OF GAIN OR LOSS FROM 3 SALE OF INTEREST IN CERTAIN BROADCAST 4 STATIONS. 5 ‘‘(a) NONRECOGNITION OF GAIN OR LOSS.—If a sale 6 of an interest in a broadcast station, within the meaning 7 of section 344 of the Communications Act of 1934, is cer- 8 tified by the Federal Communications Commission under 9 such section, such sale shall, if the taxpayer so elects, be 10 treated as an involuntary conversion of such property 11 within the meaning of section 1033. For purposes of such 12 section as made applicable by the provisions of this sec- 13 tion, stock of a corporation operating a broadcast station 14 shall be treated as property similar or related in service 15 or use to the property so converted. The part of the gain, 16 if any, on such sale to which section 1033 is not applied 17 shall nevertheless not be recognized, if the taxpayer so 18 elects, to the extent that it is applied to reduce the basis 19 for determining gain or loss on any such sale, of a char- 20 acter subject to the allowance for depreciation under sec- 21 tion 167, remaining in the hands of the taxpayer imme- 22 diately after the sale, or acquired in the same taxable year. 23 The manner and amount of such reduction shall be deter- 24 mined under regulations prescribed by the Secretary. Any 25 election made by the taxpayer under this section shall be 26 VerDate Sep 11 2014 02:43 Aug 13, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H3957.IH H3957 pamtmann on DSKBFK8HB2PROD with BILLS 10 •HR 3957 IH made by a statement to that effect in his return for the 1 taxable year in which the sale takes place, and such elec- 2 tion shall be binding for the taxable year and all subse- 3 quent taxable years. 4 ‘‘(b) MINIMUM HOLDING PERIOD; CONTINUED MAN- 5 AGEMENT.—If— 6 ‘‘(1) there is nonrecognition of gain or loss to 7 a taxpayer under this section with respect to a sale 8 of property (determined without regard to this para- 9 graph), and 10 ‘‘(2) the taxpayer ceases to fulfill any require- 11 ments of the rules adopted by the Federal Commu- 12 nications Commission under paragraph (2) or (4) of 13 section 344(c) of the Communications Act of 1934 14 (as such rules are in effect on the date of such sale), 15 there shall be no nonrecognition of gain or loss under this 16 section to the taxpayer with respect to such sale, except 17 that any gain or loss recognized by the taxpayer by reason 18 of this subsection shall be taken into account as of the 19 date on which the taxpayer so ceases to fulfill such re- 20 quirements. 21 ‘‘(c) BASIS.—For basis of property acquired on a sale 22 treated as an involuntary conversion under subsection (a), 23 see section 1033(b).’’. 24 VerDate Sep 11 2014 02:43 Aug 13, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H3957.IH H3957 pamtmann on DSKBFK8HB2PROD with BILLS 11 •HR 3957 IH (2) CLERICAL AMENDMENT.—The table of 1 parts for subchapter O of chapter 1 of the Internal 2 Revenue Code of 1986 is amended by inserting after 3 the item related to part IV the following new part: 4 ‘‘PART V—SALE OF INTEREST IN CERTAIN BROADCAST STATIONS ‘‘Section 1071. Nonrecognition of gain or loss from sale of interest in certain broadcast stations.’’. (c) EFFECTIVE DATE.—The amendments made by 5 this section shall apply with respect to sales of interests 6 in broadcast stations after the date that is 1 year after 7 the date of the enactment of this Act. 8 (d) SUNSET.—The amendments made by this section 9 shall not apply with respect to sales of interests in broad- 10 cast stations after the date that is 16 years after the date 11 of the enactment of this Act. 12 SEC. 5. INCUBATOR PROGRAM. 13 Not later than 180 days after the date of the enact- 14 ment of this Act, the Commission shall amend its Report 15 and Order in the matter of rules and policies to promote 16 new entry and ownership diversity in the broadcasting 17 services, MB Docket No. 17–289, FCC 18–114, adopted 18 on August 2, 2018, to do the following: 19 (1) Expand the incubator program provided for 20 in such Report and Order to permit a licensee to 21 provide financial support or operational support, or 22 VerDate Sep 11 2014 02:43 Aug 13, 2019 J [Text truncated for display. Full text available on Congress.gov.]