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The Deal: FCC Tries to Spark Foreign Capital Infusion Into Stations

The policy change would make it easier to get the commission to act on investments that exceed the 25% threshold. Establishing a mechanism for approving the requests as part of the normal course of commission business would lead to prompt action whereas waiver requests tend to be set aside, sometimes for years.

Wheeler hasn't publicly said whether he'll support removing the cap but agency observers believe Clyburn wouldn't have teed up the proceeding without an indication of support from him while his nomination was pending.

the push to lift the cap is being pitched as a way to bring more investment to capital-starved stations in small markets. In comments to the FCC, the National Association of Media Brokers said the change could aid acquirers trying to finance purchases of smaller broadcast properties, an always challenging proposition made even more difficult by the post-recession marketplace. The brokers group said many companies that once funded acquisitions by new owners have exited the business. "Thus, while there remains a high inventory of stations that are available for purchase, and there is always a large number of individuals who are interested in becoming buyers, the lack of available capital is the primary issue that discourages new entrants into broadcast ownership."

But Paul Gallant, telecom and media analyst for Guggenheim Securities, said the stations most likely to receive foreign investment are those in big cities with large ethnic populations. He said that many overseas channels have been looking for a way to get a foothold on U.S. pay TV channel lineups. Buying into local TV stations can make that happen because TV stations are entitled to mandatory carriage on their local cable systems. "Cable companies don't want to add more channels but, for instance, a Korean language programmer could 'must-carry' their way onto a cable system."

Gallant predicted that broadcast chains Nexstar Broadcasting Group (NXST - Get Report), LIN Television (LIN) and Gray Television (GTN) could be big beneficiaries of foreign investment. Those station groups don't have the size to match the lower financing costs of more aggressive acquirers such as Sinclair Broadcast Group (SBGI) and Gannett (GCI) and an influx of investors would give them the cash to keep pace.
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