ATTACHMENT C ELIGIBILITY FOR NEW ENTRANT BIDDING CREDIT; OWNERSHIP DISCLOSURE REQUIREMENTS; CONSORTIA AND JOINT BIDDING ARRANGEMENTS ELIGIBILITY FOR NEW ENTRANT BIDDING CREDIT A. General Eligibility Criteria To fulfill its obligations under Section 309(j) and further its long-standing commitment to the diversification of broadcast facility ownership, the Commission adopted a tiered New Entrant Bidding Credit for auction applicants with no, or very few other media interests. (1) Determination of Eligibility for Bidding Credit For purposes of determining which entities qualify for a New Entrant Bidding Credit, the following information should be considered: the interests of the bidder, and of any individuals or entities with an attributable interest in the bidder, in other media of mass communications at the time of the short-form application filing deadline. The interests held by the bidder, and by any individual or entity with an attributable interest in the bidder, in other media of mass communications shall be considered when determining a bidder's eligibility for the New Entrant Bidding Credit. Under traditional broadcast attribution rules, those entities or individuals with an attributable interest in a bidder include: all officers and directors of a corporate bidder; any owner of 5% or more of the voting stock of a corporate bidder; all partners and limited partners of a partnership bidder, unless the limited partners are sufficiently insulated; and all members of a limited liability company, unless insulated. In cases where a bidder’s spouse or close family member holds other media interests, such interests are not automatically attributable to the bidder. The Commission decides attribution issues in this context based on certain factors traditionally considered relevant. Bidders should note that the mass media attribution rules were recently revised. Bidders are also reminded that, by Memorandum Opinion and Order released August 5, 1999, the Commission further refined the eligibility standards for the New Entrant Bidding Credit, judging it appropriate to attribute the media interests held by very substantial investors in, or creditors of, a bidder claiming new entrant status. Specifically, the attributable mass media interests held by an individual or entity with an equity and/or debt interest in a bidder shall be attributed to that bidder for purposes of determining its eligibility for the New Entrant Bidding Credit, if the equity and debt interests, in the aggregate, exceed 33% of the total asset value of the bidder, even if such an interest is non-voting. Generally, media interests will 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. However, attributable interests held by a winning bidder in existing low power television, television translator or FM translator facilities will not be counted among the bidders' other mass media interests in determining its eligibility for a New Entrant Bidding Credit. A medium of mass communications is defined in 47 C.F.R § 73.5008 (b). The bidder's attributable interests shall be determined as of the short form (FCC Form 175) filing deadline. Bidders intending to divest a media interest or make any other ownership changes, such as resignation of positional interests, in order to avoid attribution for purposes of qualifying for the New Entrant Bidding Credit must have consummated such divestment transactions or have completed such ownership changes by no later than the short-form filing deadline. (2) Application Showing Applicants are required to file supporting documentation as Exhibits A and C to their FCC Form 175 short-form applications to establish that they satisfy the eligibility requirements to qualify for a New Entrant Bidding Credit. In addition, in those cases where a New Entrant Bidding Credit is being sought, a certification under penalty of perjury must be set forth in Exhibit C attesting to the eligibility of the bidder for the level of Credit claimed. B. Bidding Credits Applicants that qualify for the New Entrant Bidding Credit, as set forth in 47 C.F.R. § 73.5007, are eligible for a bidding credit that represents the amount by which a bidder's winning bids are discounted. The size of a New Entrant Bidding Credit depends on the number of ownership interests in other media of mass communications that are attributable to the bidder-entity and its attributable interest-holders: ? A 35 percent bidding credit will be given to a winning bidder if it, and/or any individual or entity with an attributable interest in the winning bidder, has no attributable interest in any other media of mass communications, as defined in 47 C.F.R. § 73.5008; and, ? A 25 percent bidding credit will be given to a winning bidder if it, and/or any individual or entity with an attributable interest in the winning bidder, has an attributable interest in no more than three mass media facilities, as defined in 47 C.F.R. § 73.5008; and, ? No bidding credit will be given if any of the commonly owned mass media facilities serve the same area as the proposed broadcast station, as defined in 47 C.F.R. § 73.5007, or if the winning bidder, and/or any individual or entity with an attributable interest in the winning bidder, have attributable interests in more than three mass media facilities. Bidding credits are not cumulative; qualifying applicants receive either the 25 percent or the 35 percent bidding credit, but not both. Attributable interests are defined in 47 C.F.R. § 73.3555 and Note 2 of that section. Bidders should note that unjust enrichment provisions apply to a winning bidder that utilizes a bidding credit and subsequently seeks to assign or transfer control its license or construction permit to an entity not qualifying for the same level of bidding credit. OWNERSHIP DISCLOSURE REQUIREMENTS All applicants must comply with the uniform Part 1 ownership disclosure standards and provide information set forth in Sections 1.2105 and 1.2112 of the Commission’s rules. Specifically, in completing Form 175, applicants will be required to file in Exhibit A, a full and complete statement of the ownership of the bidding entity. The ownership disclosure standards for the short form are set forth in Section 1.2112 of the Commission’s rules. Bidders should note that, under Section 1.2112 (a)(4), the short form must list, inter alia, the names, addresses and citizenship of any party holding options permitting the acquisition of a ten percent or greater equity interest in the application, as well as the amount and percentage held. Applicants owned by minorities or women, as defined in 47 C.F.R. § 1.2110(b)(2), may attach an exhibit (Exhibit D) regarding this status. This applicant status information is collected for statistical purposes only and assists the Commission in monitoring the participation of "designated entities" in its auctions. Applicants wishing to submit additional information may do so in Exhibit E -Miscellaneous Information – to the FCC Form 175. CONSORTIA AND JOINT BIDDING ARRANGEMENTS Applicants will be required to identify on their short-form applications any parties with whom they have entered into any consortium arrangements, joint ventures, partnerships or other agreements or understandings which relate in any way to the competitive bidding process. See 47 C.F.R. §§ 1.2105(a)(2)(viii); 1.2105(c)(1). Applicants will also be required to certify on their short form applications that they have not entered into any explicit or implicit agreements, arrangements or understandings of any kind with any parties, other than those identified, regarding the amount of their bids, bidding strategies, or the particular construction permits on which they will or will not bid. See 47 C.F.R. § 1.2105(a)(2)(ix). In cases where such consortia or joint bidding arrangement are contemplated, applicants must submit an Exhibit B to the FCC Form 175. See 47 C.F.R. § 73.3555 Note 2. See Clarification of Commission Policies Regarding Spousal Attribution, 7 FCC Rcd 1920 (1992). See Review of the Commission’s Regulations Governing Attribution of Broadcast and Cable/MDS Interests, MM Docket No. 94-150, FCC 99-207 (rel. August 6, 1999) (prior history omitted). 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, 64 Fed. Reg. 44856 (August 18, 1999). See 47 C.F. R. § 73.5008. Further, any bidder asserting new entrant status must have de facto as well as de jure control of the entity claiming the bidding credit. 47 C.F.R. § 73.5007. Typically, de jure control is evidenced by ownership of at least 50.1 percent of an entity's voting stock or equivalent level of interest in cases where the bidder is not a corporate entity. De facto control is determined on a case-by-case basis. Memorandum Opinion and Order on Reconsideration at 75. The fact that, on the short form filing deadline, a bidder has a pending or granted application to assign or transfer control of a media interest shall not be sufficient to avoid attribution. Bidders must have consummated the transaction by the short form filing deadline to avoid attribution. See 47 C.F.R. § 1.2105. Section 73.5007 of the Commission’s rules was most recently revised pursuant to the Memorandum Opinion and Order on Reconsideration. The revised version of the rule became effective on July 6, 1999. See 47 C.F.R. § 73.5007( c ). Section 73.5002 of the broadcast competitive bidding procedural rules specifies the bidding procedures, certification requirements, and anti-collusion rules applicable to applications for commercial broadcast services that are subject to auction. Subsection (b) of that rule requires the timely submission of short-form applications along with all required certifications, information and exhibits pursuant to the provisions of 47 C.F.R. § 1.2105(a). Section 1.2105, in turn, requires the disclosure on the short-form of applicant ownership information as set forth in Section 1.2112.