Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) Implementation of Section 309(j) of the ) MM Docket No. 97-234 Communications Act -- Competitive Bidding ) for Commercial Broadcast and Instructional ) Television Fixed Service Licenses ) ) ) MEMORANDUM OPINION AND ORDER Adopted: August 4, 1999 Released: August 5, 1999 By the Commission: Commissioner Furchtgott-Roth dissenting and issuing a statement. I. INTRODUCTION AND BACKGROUND 1. In the First Report and Order in this proceeding, 13 FCC Rcd 15920 (1998) (First R&O), the Commission adopted rules and procedures to implement provisions of the Balanced Budget Act of 1997 expanding our competitive bidding authority, under Sections 309(j) and 309(l) of the Communications Act of 1934, 47 U.S.C. §§ 309(j), 309(l), to include the commercial broadcast services. In a Memorandum Opinion and Order resolving numerous petitions for reconsideration filed against the First R&O, the Commission generally upheld its previous determinations made with respect to auction rules and procedures for the various broadcast services. 2. Our recent MO&O did, however, refine the eligibility standards for the "new entrant" bidding credit, which, as adopted in the First R&O, provides a tiered credit for broadcast auction winning bidders with no, or very few, other media interests. In response to several reconsideration petitions, and to promote the clear and consistent application of the eligibility standards for the bidding credit, the MO&O: (1) amended the eligibility standards for the bidding credit to be consistent with the Commission's general broadcast attribution standards; (2) amended the eligibility standards for the credit so that a bidder's attributable interests in existing secondary broadcast stations are not counted among the bidder's other mass media interests in determining eligibility; and (3) refined the standards for determining whether a winning bidder's proposed broadcast station and the bidder's existing station(s) serve the "same area," thereby rendering the bidder ineligible for a bidding credit. See MO&O, FCC 99-74 at ¶¶ 71-79. The MO&O also provided that, in a further order in this proceeding, the Commission would consider an additional refinement to the attribution standards to be utilized in determining the eligibility of broadcast auction applicants for the new entrant bidding credit. See id. at ¶ 74. We address herein these further attribution issues. II. DISCUSSION 3. In our MO&O in this proceeding, the Commission concluded that the eligibility standards for the new entrant bidding credit should be amended to be consistent with our general broadcast attribution standards, by which we define what constitutes a "cognizable interest" in applying the broadcast multiple ownership rules. Specifically, to determine whose other media interests would be counted in establishing whether a winning bidder qualifies for a bidding credit, we determined to consider the other media interests held by the winning bidder and by any entity or individual with an attributable interest in the bidder. Similarly, the interests of the winning bidder (and of any entities or individuals with an attributable interest in the bidder) in other media of mass communications would be attributable for purposes of the new entrant bidding credit to the same extent that such other media interests are considered attributable for purposes of the broadcast multiple ownership rules. The MO&O also noted that the broadcast multiple ownership rules are the subject of a pending rulemaking and that revisions to those attribution rules could be made in the near future. For purposes of applying the general broadcast attribution rules to determine eligibility for the new entrant bidding credit in any future auction, we stated that those attribution rules would be applied as they exist at the time of the short-form filing deadline for that auction. See id. at ¶ 71. 4. As explained in detail in the MO&O, we believed that utilizing our well-established broadcast attribution rules to determine eligibility for the new entrant bidding credit in broadcast service auctions would best promote the goals of the bidding credit. Because the interests defined as attributable under our general multiple ownership attribution rules had already been judged to give their holders "a realistic potential to affect the programming decisions of licensees or other core operating functions," we concluded that such interests should also be cognizable in determining whether a bidder in a broadcast auction should be given a bidding credit as a true "new entrant." Given that the multiple ownership rules are designed to promote diversity in programming sources and viewpoints for the broadcast services, which is one of the purposes of the new entrant bidding credit, we found that the same attribution rules should be applied in both contexts. See id. at ¶ 72. 5. In addition to attributing mass media interests for purposes of the new entrant bidding credit to the same extent that such media interests are considered attributable for purposes of the broadcast multiple ownership rules, we determined in the MO&O to also consider, in a further order, whether to attribute the mass media interests of any individual or entity who holds a significant equity and/or debt interest in a broadcast auction bidder claiming new entrant status, even if such an interest is nonvoting. Specifically, we stated that this further order would consider the appropriateness of attributing the mass media interests (if any) held by very substantial investors in, or creditors of, a bidder claiming a credit as a new entrant, and, if found appropriate, the threshold at which a nonvoting equity and/or debt interest in a new entrant should be regarded as attributable. The MO&O explained that these determinations would be made based on our further review of the record in the pending broadcast attribution proceeding, which had requested detailed comment on similar equity/debt issues. See id. at ¶ 74. Following our review of this record, we now conclude that it would be appropriate to attribute the mass media interests of investors holding more than a 33% equity and/or debt interest in a broadcast auction bidder claiming new entrant status, even if such an interest is nonvoting. A. Appropriateness of Attributing Media Interests of Substantial Investors 6. We believe it is entirely appropriate to attribute the mass media interests held by very substantial investors in any broadcast auction applicant claiming a new entrant bidding credit. The Commission has had a long-standing concern that the scope of any special incentives, such as bidding credits, be properly limited to those applicants intended to benefit from the incentive. Attributing the media interests held by substantial investors in bidders claiming new entrant status would help properly limit the scope of the bidding credit to those truly new entities intended to benefit from the credit. In addition, adoption of such an attribution policy should reduce the likelihood of bidder manipulation of the eligibility standards for the bidding credit. For example, attributing the media interests held by very substantial investors would prevent a large media group owner from providing all the financing for an auction applicant that then claims new entrant status and eligibility for a substantial bidding credit. 7. Attributing the interests, whether debt or equity, of substantial investors is justified to insure that only true new entrants qualify for the bidding credit because holders of otherwise nonattributable nonvoting interests may well have "a realistic potential" to influence bidders claiming new entrant status. Legal and financial literature have noted the disappearing distinctions between equity and debt, and the Commission has recognized the complexity of distinguishing debt from equity in cases where alleged debt obligations were found to be more properly characterized as equity. Academic literature also supports focusing on debt and nonvoting stock, as well as voting stock, when examining the ability of substantial investors to influence broadcast applicants and licensees. Specifically, some recent literature in the corporate governance field has examined the role that various "constituencies" or "stakeholders" other than traditional shareholders play in business organizations and has, in particular, focused on the ability of debtholders to influence corporate decision-making. The record in the broadcast attribution proceeding additionally reflects that holders of nonvoting stock and debt interests may be able to influence broadcast licensees in a significant manner. Given this apparent ability of substantial investors and creditors to influence broadcast applicants and licensees, we believe it would be contrary to the new entrant bidding credit's diversification goals if we failed to consider the media interests held by very substantial investors in, and creditors of, auction applicants seeking new entrant status. 8. Moreover, we feel that a stricter attribution policy is warranted in determining eligibility for a special measure that confers a significant governmental benefit. Bidders qualifying for a new entrant credit will enjoy a considerable advantage in an auction vis-a-vis nonqualifying bidders. Because new entrants will receive a substantial discount on the cost of their winning bids, they will also not be required to reimburse the public for the full market value of the spectrum being awarded by competitive bidding. Due to the significant advantages being conferred on applicants claiming new entrant status, and to insure fairness to competing bidders and the public, we conclude that more carefully limiting eligibility for such status by adoption of a stricter attribution standard is appropriate. We also emphasize that our adoption herein of a stricter non-voting equity and/or debt attribution standard for application in the new entrant bidding credit context does not prejudge our resolution of any of the broader attribution issues addressed in the Attribution Further NPRM. B. Threshold at Which Media Interests of Substantial Investors Should be Attributed 9. Having decided to attribute the mass media interests of any individual or entity who holds a significant equity and/or debt interest in an auction applicant claiming new entrant status, even if such an interest is nonvoting, we must also determine at what level these interests become significant. We conclude that we should consider the attributable media interests held by an individual or entity whose interest in the bidder, aggregating both debt and equity holdings, exceeds 33% of the total asset value (equity plus debt) of the bidder. 10. Following a review of both the record in the pending broadcast attribution proceeding and the precedent provided by our long-standing broadcast cross-interest policy, we believe that setting this attribution threshold at 33% is appropriate in the new entrant context. In response to our proposal in the general broadcast attribution proceeding to adopt an "equity or debt plus" attribution approach with a 33% threshold (see supra note 7), some commenters advocated a higher threshold while others supported a lower threshold. As discussed above (see supra ¶ 4), our general attribution rules are not merely concerned with controlling relationships, but also extend to relationships that provide "a realistic potential" to influence core operating functions of licensees. Accordingly, we believe that the threshold for attributing the media interests of investors in auction applicants claiming new entrant status should be set below one of the traditional benchmarks for "control" (i.e., 50%), so as to capture more effectively relationships permitting sufficient influence over broadcast applicants. We do not, however, want to set the benchmark so low as to unduly adversely affect the ability of prospective broadcast auction applicants to obtain financing. A 33% benchmark reasonably balances these competing considerations. In adopting this threshold, we emphasize that this equity/debt standard does not preclude an individual or entity (including any existing broadcaster) from investing any amount in a prospective broadcast auction applicant. Nor does this 33% equity/debt standard require an applicant claiming new entrant status to contribute a minimum amount of equity, or otherwise affect an applicant's right to participate in a broadcast auction. Rather, this standard merely establishes that the attributable media interests (if any) of an investor who holds more than a 33% equity and/or debt interest in a broadcast auction bidder will be attributable to that bidder for determining its status as a new entrant. Thus, we feel that adoption of this 33% equity/debt standard in the new entrant context should not unduly hinder the ability of broadcast licensees generally, or broadcast auction applicants specifically, to obtain capital. 11. We also believe that a 33% threshold is appropriate for the attribution standard adopted herein because it is consistent with our long-standing benchmark applied in the context of the broadcast cross-interest policy. Because we have consistently found otherwise nonattributable interests in excess of 33% to be "meaningful" under a cross-interest policy designed to insure continued competition and diversity, we conclude that equity and/or debt interests exceeding 33% held by investors in auction applicants should similarly be regarded as meaningful for the purpose of establishing eligibility for a new entrant bidding credit intended to promote diversification of ownership of broadcast facilities. For all the reasons set forth in detail above, we hereby adopt this 33% equity/debt standard for use in determining eligibility for the new entrant bidding credit. We find good cause to make the rule amendments effective immediately upon publication in the Federal Register so that bidders in the September 28, 1999 Closed Broadcast Auction seeking a New Entrant Bidding Credit will be subject to the revised eligibility standard. III. PROCEDURAL MATTERS AND ORDERING CLAUSES 12. The Supplemental Final Regulatory Flexibility Analysis, pursuant to the Regulatory Flexibility Act, 5 U.S.C. § 604, is contained in Appendix B. 13. Accordingly, IT IS ORDERED, That pursuant to the authority in Sections 4(i) and (j), 301, 303(f), 303(g), 303(h), 303(j), 303(r), 307(c), 308(b), 309(j), 309(l) and 403 of the Communications Act of 1934, as amended, 47 U.S.C. §§ 154(i), 154(j), 301, 303(f), 303(g), 303(h), 303(j), 303(r), 307(c), 308(b), 309(j), 309(l) and 403, this Memorandum Opinion and Order IS ADOPTED, and Part 73 of the Commission's Rules ARE AMENDED as set forth in the attached Appendix C. 14. IT IS FURTHER ORDERED, That the rule amendments set forth in Appendix C WILL BECOME EFFECTIVE immediately following publication in the Federal Register and OMB approval. 15. IT IS FURTHER ORDERED, That the Commission's Office of Public Affairs, Reference Operations Division, SHALL SEND a copy of this Memorandum Opinion and Order, including the Supplemental Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration. FEDERAL COMMUNICATIONS COMMISSION Magalie Roman Salas Secretary APPENDIX A Parties Submitting Comments in Response to Attribution Further NPRM ABC, Inc. AK Media Group, Inc. Bahakel Communications BET Holdings, Inc. Blackstone Group, L.P. Boston Ventures Management, Inc. Canwest Global Communications Corporation CBS, Inc. Centennial Communications, Inc. Diversified Communications Fox Broadcasting Company Glencairn, Ltd. and WPPT, Inc. Glenwood Communications Corporation HSN, Inc. Jet Broadcasting Company, Inc. King World Productions, Inc. Knight-Ridder, Inc. Local Station Ownership Coalition McGillen, Cynthia L. and James P. Media Access Project, et al. Miller Broadcasting, Inc. Montclair Communications, Inc. National Association of Broadcasters Network Affiliated Stations Alliance Pappas Stations Partnership Paxson Communications Corporation Post-Newsweek Stations, Inc. Press Broadcasting, Inc. Saga Communications, Inc. Sinclair Broadcast Group, Inc. SJL Communications, Inc. Tele-Communications, Inc. Viacom, Inc. Waterman Broadcasting Corporation Wireless Cable Association International, Inc. Parties Submitting Reply Comments in Response to Attribution Further NPRM ABC, Inc. AK Media Group, Inc. Bahakel Communications, Ltd. BET Holdings, Inc. Blackstone Group, L.P. Clear Channel Communications, Inc. Fox Broadcasting Company GTE Service Corporation HSN, Inc. Lockwood Broadcasting, Inc. Media Access Project, et al. Mt. Mansfield Television, Inc. National Cable Television Association, Inc. Pappas Stations Partnership Qwest Broadcasting L.L.C. Retlaw Enterprises, Inc. SJL Communications, Inc. Tele-Communications, Inc. Tribune Broadcasting Company Viacom, Inc. Westwind Communications, L.L.C. Wireless Cable Association International, Inc. APPENDIX B SUPPLEMENTAL FINAL REGULATORY FLEXIBILITY ANALYSIS As required by the Regulatory Flexibility Act (RFA), 5 U.S.C. § 603, a Final Regulatory Flexibility Analysis (FRFA) was incorporated in Appendix B of the First R&O in this proceeding. In addition, a Supplemental Final Regulatory Flexibility Analysis (First Supplemental FRFA) was incorporated in Appendix B of the MO&O in this proceeding that resolved various petitions for reconsideration filed against the First R&O. The Commission's Supplemental Final Regulatory Flexibility Analysis (Second Supplemental FRFA) in this Memorandum Opinion and Order reflects revised or additional information to that contained in the FRFA and First Supplemental FRFA. This Second Supplemental FRFA is thus limited to issues addressed in the attached Memorandum Opinion and Order. This Second Supplemental FRFA conforms to the RFA, as amended by the Contract with America Advancement Act of 1996. A. Need For and Objectives of Action: In the First R&O in this proceeding, the Commission adopted rules and procedures to implement provisions of the Balanced Budget Act of 1997 expanding its competitive bidding authority, under Sections 309(j) and 309(l) of the Communications Act of 1934, 47 U.S.C. §§ 309(j), 309(l), to include, inter alia, the commercial broadcast services. In a recent MO&O resolving numerous petitions for reconsideration filed against the First R&O, the Commission generally upheld its previous determinations made with respect to auction rules and procedures for the various broadcast services. That MO&O did, however, refine the eligibility standards for the "new entrant" bidding credit, which, as adopted in the First R&O, provides a tiered credit for broadcast auction bidders with no, or very few, other media interests. In particular, the Commission concluded in its previous MO&O that the eligibility standards for the new entrant bidding credit should be amended to be consistent with the general broadcast attribution standards, by which the Commission defines what constitutes an attributable interest in applying the broadcast multiple ownership rules. In addition to attributing mass media interests for purposes of the new entrant bidding credit to the same extent that such media interests are considered attributable for purposes of the broadcast multiple ownership rules, the Commission determined in that MO&O to also consider, in a further order, whether to attribute the mass media interests of any individual or entity who holds a significant equity and/or debt interest in a broadcast auction bidder claiming new entrant status, even if such an interest is nonvoting. The attached Memorandum Opinion and Order does in fact determine to attribute the mass media interests of investors holding more than a 33% equity and/or debt interest in a broadcast auction bidder claiming new entrant status, even if such an interest is nonvoting. B. Significant Issues Raised by Public in Response to Final Regulatory Flexibility Analysis: No petitions or comments were received in response to the FRFA or the First Supplemental FRFA. Small business-related issues were raised indirectly by some parties filing petitions for reconsideration against the First R&O. These issues were addressed in detail in the previous MO&O and the First Supplemental FRFA. C. Description and Estimate of tbe Number of Small Entities Involved: In the FRFA and First Supplemental FRFA, the Commission utilized the definition of "small business" promulated by the Small Business Administration (SBA), even though, as discussed in detail in the FRFA, we tentatively believed that the SBA's definition of "small business" overstated the number of radio and television broadcast stations that were small businesses and was not particularly suitable for our purposes. No petitions or comments were received concerning the Commission's use of the SBA's small business definition for purposes of the FRFA and First Supplemental FRFA, and we will therefore continue to employ such definition for this Second Supplemental FRFA. As we are utilizing the same definition of small business for this Second Supplemental FRFA, the description and number of small entities affected by the rule change adopted in this Memorandum Opinion and Order should be the same as the entities described in both the FRFA and First Supplemental FRFA, and include, specifically, commercial broadcast stations (television, low power television, television translator, AM, FM and FM translator stations). D. Description of Projected Reporting, Recordkeeping and Other Compliance Requirements: The First R&O adopted a number of rules that included reporting, recordkeeping and compliance requirements. These requirements were described in detail in the FRFA, and, as discussed in the First Supplemental FRFA, generally remained unchanged by the rule amendments adopted in the previous MO&O. The rule change adopted in this Memorandum Opinion and Order does not include any additional or different reporting or recordkeeping requirements, but only affects the standards for qualifying for the new entrant bidding credit. E. Steps Taken to Minimize Significant Economic Impact on Small Entities, and Significant Alternatives Considered: The FRFA and First Supplemental FRFA described in considerable detail the steps taken in the First R&O and in the previous MO&O to minimize significant economic impact on small entities and the alternatives considered. The rule amendment adopted in this Memorandum Opinion and Order further refines the eligibility standards for the new entrant bidding credit. The Commission believes that attributing the mass media interests (if any) held by very substantial investors in bidders claiming new entrant status will help properly limit the scope of the bidding credit to those truly new entities intended to benefit from the credit (and who are likely to be small businesses). In addition, adoption of this attribution policy should reduce the likelihood of bidder manipulation of the eligibility standards for the bidding credit. The Commission also believes that setting this attribution benchmark at 33% reasonably balances its interest in capturing investor relationships that provide a realistic potential to influence the core operating functions of broadcast auction applicants, and the needs of prospective auction applicants (including small businesses) to obtain financing. This 33% equity/debt attribution standard does not preclude an individual or entity (including any existing broadcaster) from investing any amount in a prospective broadcast auction applicant. Nor does this 33% equity/debt standard require an applicant claiming new entrant status to contribute a minimum amount of equity, or otherwise affect an applicant's right to participate in a broadcast auction. Because this standard only establishes that the attributable media interests (if any) of an investor who holds more than a 33% equity and/or debt interest in a broadcast auction bidder will be attributable to that bidder for determining its status as a new entrant, the Commission concludes that adoption of the 33% equity/debt standard should not unduly hinder the ability of broadcast licensees generally, or broadcast auction applicants specifically, to obtain capital. F. Report to Congress: The Commission will send a copy of this Memorandum Opinion and Order, including this Second Supplemental FRFA, in a report to be sent to Congress pursuant to the Small Business Regulatory Enforcement Fairness Act of 1996. See 5 U.S.C. § 801(a)(1)(A). In addition, the Commission will send a copy of the Memorandum Opinion and Order, including the Second Supplemental FRFA, to the Chief Counsel for Advocacy of the Small Business Administration. A copy of the Memorandum Opinion and Order and Second Supplemental FRFA (or summaries thereof) will also be published in the Federal Register. See 5 U.S.C. § 604(b). APPENDIX C Part 73 of Chapter 1 of Title 47 of the Code of Federal Regulations is amended as follows: PART 73 - RADIO BROADCAST SERVICES 1. The authority citation for part 73 continues to read as follows: Authority: 47 U.S.C. 154, 303, 334, and 336. 2. Section 73.5008 is amended by revising paragraph (c) to read as follows: § 73.5008 Definitions applicable for designated entity provisions. * * * * * (c) An attributable interest in a winning bidder or in a medium of mass communications shall be determined in accordance with § 73.3555 and Note 2. In addition, the attributable mass media interests, if any, held by an individual or entity with an equity and/or debt interest(s) in a winning bidder shall be attributed to that winning bidder for purposes of determining its eligibility for the new entrant bidding credit, if the equity (including all stockholdings, whether voting or nonvoting, common or preferred) and debt interest or interests, in the aggregate, exceed thirty-three (33) percent of the total asset value (defined as the aggregate of all equity plus all debt) of the winning bidder. DISSENTING STATEMENT OF COMMISSIONER HAROLD FURCHTGOTT-ROTH In the Matter of Implementation of Section 309(j) of the Communications Act -- Competitive Bidding for Commercial Broadcast and Instructional Television Fixed Service Licenses, MM Docket No. 97-234. In this Memorandum Opinion & Order, the Commission considers "additional refinement[s]," supra at para. 2, to the traditional broadcast attribution standards for purposes of the designated entity bidding credit in auctions. While I am pleased to see the Commission on its way toward final implementation of the mandates of the 1997 Budget Act, which requires competitive bidding for most licenses, I do not support the "refinements" to the attribution rules adopted today. My first concern with these new rules is that they are overly-regulatory, complex, and difficult to administer. In this item, the Commission breaks from its previous rules by counting pure debt instruments -- in addition to equity interests -- in deciding whether a company's particular interests are attributable. I would not count debt for attribution purposes. When one ventures into the area of pure debt, held by any kind of investor, including purely institutional investors, one encounters an administrative hornets' nest. Almost all companies have some debt, and small companies tend to have debt held by banks, typically commercial loans or notes. Should such interests really be considered relevant for purposes of deciding who truly owns and operates a broadcast entity? For example, if Citicorp holds more than 33% of the debt for one or more companies, then its interest in each company will be attributable under these rules. But Citicorp certainly does not consider itself a broadcasting company, nor does it, in all likelihood, have any interest in the day-to-day operational decisions made at its investor companies. Moreover, Citicorp, as any large institutional investor, does not with certainty know the precise percentage, at a particular point in time, that it holds of a company's debt. What Citicorp knows is that it has issued a million dollar corporate loan to a company; that the company has a $500,000 line of credit with the bank of which various amounts are exercised at any given time; and that the company has a cash account with Citicorp whose balance ranges from $50,000 to $500,000. So, how much debt does Citicorp hold at any given time? That depends on whether one measures gross or net debt. What percentage of a company's debt does Citicorp hold? Citicorp cannot possibly know because it does not know what debt the company has with other institutions or individuals. As a practical matter, debt is a concept that is nigh impossible to measure with reliable precision, even if there is support for the theory in academic literature. For these reasons, I disagree with the decision to extend attribution rules into the area of pure debt. This decision makes an already complicated regulatory scheme even more complicated, increasing the administrative burden on those who must live under it, not to mention those here at the Commission who must administer it. My other concern with the rules adopted today is that I am not persuaded that they are adequately supported by the record. Specifically, the selection of the 33% benchmark -- with respect to both debt and equity -- appears to lack the requisite record basis. Cf. Motor Vehicles Manufacturer's Ass'n v. State Farm Mutual Automobile Ins. Co., 463 U.S. 29, 42 (1983) (administrative agencies must "examine the relevant data and articulate a satisfactory explanation for its action, including a 'rational connection between the facts found and the choice made'") (citation omitted); ATT v. FCC, 832 F.2d 1285, 1291 (D.C. Cir. 1987) (requiring that "conclusions reached [by an agency]have a rational connection to the facts found"). There is no record evidence of 33% being either less or more appropriate than, say, 25%, on the one hand, or 51%, on the other. Although the item asserts that "[t]he record in the broadcast attribution proceeding . . . reflects that holders of nonvoting stock and debt interests may be able to influence broadcast licensees in a significant manner," supra at para. 7, that does not mean, absent evidence to support the assertion, that this is true. Nor, more importantly, does it mean that 33% is the right place at which to draw the line for purposes of establishing significant influence. How large does a holding have to be before its possessor may be able to exert significant influence? There is little to no record evidence to guide this decision, just speculation and guesswork. Thus, as a matter of administrative law, the rules are difficult to defend against a charge of arbitrariness and/or lack of record support. Finally, and on the merits, I suspect that these rules will harm "designated entities" more than they will help them. By dint of regulation, we have created incentives to cap investments in designated entities from any one source at 33%. Thus, these regulations artificially limit the amount of capital available to start-ups from a particular source, potentially forcing entrepreneurs to go to multiple sources for funding when, in a freer market, they might not have had to do so. The item counters by arguing that the rules do not prohibit investment over 33%, it just makes investment over such limits attributable to the investor. See supra at para. 10. Becoming snared in the web of this Commission's broadcast ownership rules, however, is a powerful incentive for investors to stay well under the cap. Cf. Lutheran Church v. FCC, 141 F.3d 344, 353 (D.C. Cir. 1998) ("No rational firm . . . welcomes a government audit."). In effect, the benchmark will function as a "safe harbor." Thus, while the rules, to be sure, do not prohibit investments over 33%, they certainly deter them. And that is not good for small or new businesses seeking capital. I realize that this "artificial cap" criticism applies to any percentage limitation that would be selected, but I think that we could at least have set the number higher so as to mitigate these unintended consequences. In sum, because I disagree with the decision to extend attribution rules into the uncharted area of debt interests, and because I am not persuaded that the selection of the 33% benchmark is supported by facts found on the basis of the record, I must respectfully dissent.