Sec. 76.501  Cross-ownership.

    (a) No cable television system (including all parties under common 
control) shall carry the signal of any television broadcast station if 
such system directly or indirectly owns, operates, controls, or has an 
interest in a TV broadcast station whose predicted Grade B contour, 
computed in accordance with Sec. 73.684 of part 73 of this chapter, 
overlaps in whole or in part the service area of such system (i.e., the 
area within which the system is serving subscribers).
    (b) [Reserved]
    (c) Effective date. The provisions of paragraph (a) of this section 
are not effective until November 8, 1987, as to ownership interests 
proscribed herein if

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such interests were in existence on or before July 1, 1970 (e.g., if 
franchise were in existence on or before July 1970), and will be applied 
to cause divestiture as to ownership interests proscribed herein only 
where the cable system is directly or indirectly, owned, operated, 
controlled by, or has an interest in a non-satellite television 
broadcast station which places a principal community contour 
encompassing the entire community and there is no other commercial non-
satellite television broadcast station placing a principal community 
contour encompassing the entire community.
    (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 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: The word ``control'' as used herein is not limited to 
majority stock ownership, but includes actual working control in 
whatever manner exercised.

    Note 2: In applying the provisions of this section, ownership and 
other interests in broadcast licensees and cable television systems will 
be attributed to their holders and deemed cognizable pursuant to the 
following criteria:
    (a) Except as otherwise provided herein, partnership and direct 
ownership interest and any voting stock interest amounting to 5% or more 
of the outstanding voting stock of a corporate broadcast licensee or 
cable television system will be cognizable;
    (b) No minority voting stock interest will be cognizable if there is 
a single holder of more than 50% of the outstanding voting stock of the 
corporate broadcast licensee or cable television system in which the 
minority interest is held;
    (c) 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 10% or more of the outstanding voting stock of a corporate 
broadcast licensee or cable television system, or if any of the officers 
or directors of the broadcast 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.
    (d) Attribution of ownership interests in a broadcast 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 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.]
    (e) 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

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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 broadcast licensee or cable television system are subject to 
said trust.
    (f) Holders of non-voting stock shall not be attributed an interest 
in the issuing entity. 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.
    (g) (1) 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 licensee or system so certifies.
    (2) In order for a licensee or system to make the certification set 
forth in paragraph (g)(1) of this note, 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 not material 
involvement, directly or indirectly, in the management or operation of 
the media activities of the partnership. The criteria which would assure 
adequate insulation for purposes of this certification 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, 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 in the management or operation of the media-related 
businesses of the partnership.
    (h) Officers and directors of a broadcast 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 broadcasting 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 broadcast 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 broadcast licensee or cable television system 
subsidiary, and a statement properly documenting this fact is submitted 
to the Commission. [This statement may be included on appropriate 
Ownership Report.] The officers and directors of a sister corporation of 
a broadcast licensee or cable television system shall not be attributed 
with ownership of these entities by virtue of such status.
    (i) 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:
    (1) The sum of the interests held by or through ``passive 
investors'' is equal to or exceeds 10 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 
note plus the sum of the interests computed under paragraph (i)(2) of 
this note is equal to or exceeds 10 percent.

    Note 3: 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: 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: In applying the provisions of paragraphs (d) and (e) of this 
section, control and an attributable ownership interest shall be defined 
by reference to the definitions contained in Notes 1 through 4, provided 
however, that:
    (a) The single majority shareholder provisions of Note 2(b) and the 
limited partner insulation provisions of Note 2(g) shall not apply; and
    (b) The provisions of Note 2(a) regarding five (5) percent interests 
shall include all voting or nonvoting stock or limited partnership 
equity interests of five (5) percent or more.


[ 58 FR 27677 , May 11, 1993, as amended at  60 FR 37834 , July 24, 1995;  61 FR 15388 , Apr. 8, 1996]

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