Broadcast Law Blog

Leaving the Air to Run For Office - What to Do With The Broadcaster Who Becomes a Candidate

David Oxenford — Thu, 04 Feb 2010 10:24:54 -0500

As we enter the 2010 election season, questions are beginning to arise about broadcast station on-air employees who decide to run for political office, and what a station needs to do about such employees to avoid issues under the FCC political broadcasting rules. For instance, in Arizona, talk show host (and former Congressman) JD Hayworth recently left his radio program and announced that he was planning to contest John McCain's reelection by challenging him in the Republican primary. On a local level throughout the country, on-air station employees are deciding to throw their hats into the political ring. And, whether that ring is a Federal office like the one that Mr. Hayworth is seeking, or a state or local elective position, whether it be Governor or member of the Board of Education or Water Commission, an announcer-candidate can mean equal time obligations under Section 315 of the Communications Act and under FCC rules for a broadcast station.

We wrote about this issue last election cycle,here, and the rules have not changed. Once a candidate becomes "legally qualified" (i.e. he or she has established their right to a place on the ballot by filing the necessary papers), equal opportunities rights are available to the opposing candidates. What this means is that, if the on-air broadcaster who is running for political office stays on the air, any opposing candidate can come to the station and demand equal opportunities within seven days of the date on which the on-air announcer/candidate was on the air, and the opponent would be entitled to the same amount of time in which they can broadcast a political message, to be run in the same general time period as the station employee/candidate was on the air. So if your meteorologist decides to run for the city council, and he appears on the 6 o'clock news for 3 minutes each night doing the weather, an opposing city council candidate can get up to 21 minutes of time (3 minutes for each of the last 7 days), and that opposing candidate does not need to read the weather, but can do a full political message. So what is a station to do when an on-air employee decides to run for office?

In some cases, stations do nothing, and no one seems to mind. I've known broadcasters who appeared on-air every day, particularly in small towns, while they were serving as mayor or on the city council, and no opposing candidate ever bothered to ask for equal opportunities - either because they did not know the rules, or because they would have received bad publicity forcing the on-air employee/candidate out of his job during the election season. Even in national races, that calculus often seems to be the case. As we wrote here and here, in the last Presidential campaign, we had candidates appearing on Saturday Night Live or on Law and Order (candidate Fred Thompson), and no opposing candidate asked for equal time. The jokes and negative stories that would have no doubt followed from such a claim (can you imagine what a target for jokes a candidate would become if they claimed equal opportunities to deliver a stale campaign message because Sarah Palin or Barack Obama appeared on SNL and triggered equal opportunities?) simply weren't worth the few minutes that the candidate would have received.

But sometimes candidates do insist on their rights, especially less well-known candidates who may not have any other way to get their message out. Thus, many stations play it safe and don't allow a candidate to continue to stay on the air once they become legally qualified (and sometimes even before they are legally qualified to even avoid the appearance of unfairness). But there are other alternatives that can be pursued that lie between taking the risk of having to meet equal opportunities claims and taking the employee off the air. These include:

Obtaining waivers from the opponents of the station employee, allowing the employee to continue to do his job, perhaps with conditions such as forbidding any discussions of the political race
Allowing the candidate to continue to broadcast in exchange for a negotiated amount of air time for the opponents

Another alternative is to give the on-air employee/candidate other duties that don't trigger equal opportunities. If the candidate's voice or likeness does not appear on-air, then there is no equal opportunities right. Right now, the political rules do not apply to Internet appearances, so website work is an alternative. Also, a move to a sister station with a service area that does not reach the district in which the candidate is running is another alternative.

Finally, as we are still in the primary elections in most states (save Illinois where primaries were held earlier this week), remember that equal opportunities only applies to the opponents of the candidates. In the primary, the opponents are only those candidates who are running for the nomination of the same party. Thus, if your on-air employee is running in the Republican primary, you only need to worry about his or her Republican opponents for equal time purposes. The Democrats don't get equal time until the nominees of each party have been selected.

We'll write more about equal opportunities in the coming weeks. For more information now, check out the Davis Wright Tremaine Political Broadcasting Guide, here.

FCC Proposes National Test of EAS - Emergency Alert System; Comments on Proposed Rules due March 1

Brendan Holland — Tue, 02 Feb 2010 22:17:19 -0500

The FCC has proposed amending its rules governing the Emergency Alert System (EAS) in order to test and improve the effectiveness of the system. In particular, the Commission has proposed that all EAS participants be required to join in a nationwide test -- to be scheduled by the FCC in consultation with the Federal Emergency Management Agency (FEMA) -- to ensure that the system will function properly to inform the public in the event of a national crisis. The FCC proposes to implement the national test on a yearly basis and seeks comment on the specific language of the proposed rule. A copy of the Commission's Notice of Proposed Rule Making (NPRM) was recently published in the Federal Register establishing the deadline for Comments on the proposed rules as March 1, 2010, with Reply Comments due on or before March 30, 2010.

In issuing its NPRM, available here, the Commission acknowledged the shortcomings of the current rules and its belief that a national test -- and the data gathered from such a test -- is critical to ensuring consistency and reliability in a system that has actually never been used to deliver a national Presidential alert. Under the current system, an EAS message is initiated, which is then passed via specially encoded messages to a broadcast-based transmission network, and then on to broadcast stations, cable operators, and other EAS participants in a daisy-chain distribution to the final end users, i.e., the public who is listening, watching, or reading, on radio, television, cable, or other services. This daisy-chain structure leaves the system, in the Commission's estimation, vulnerable to a significant failure if the message distribution is severed or delayed at any one point. By proposing an annual national test, the Commission seeks to test the system in an organized, controlled manner, gather data from the EAS participants, and apply what is learned. Under the Commission's proposed rule, the annual test would replace one of the required monthly tests and participants would have at least two months advance notice of the nationwide test. EAS participants would be required to log the test results of the test and provide information on the results to the Commission's Public Safety and Homeland Security Bureau within 30 days of the test. The Commission seeks input on the proposed rule, including whether once a year is sufficient, and what the costs would be attendant to the testing and reporting.

The NPRM suggests that the following test-related diagnostic information would be provided by the EAS participants for each alert received from each message source monitored at the time of the national test: (1) whether they received the alert message during the designated test; (2) whether they retransmitted the alert; and (3) if they were not able to receive and/or transmit the alert, their ‘best effort’ diagnostic analysis regarding the cause or causes for such failure. In addition, the Commission would require participants to provide information regarding the station, date and time of the message and relay, information on the source of the message, and make and model number of they EAS equipment that they utilized. The Commission proposes to make the information publicly available, but seeks input on whether it would be more appropriate to limit availability to other authorized governmental agencies.

The final issue the NPRM raises is the fact that different encoder/decoder manufacturers may program their devices to receive and transmit emergency alert notices differently, which could impact the proper relay of an emergency message. The Commission seeks input on the issue and what costs would be involved or options available to ensure that a legitimate emergency alert notification is passed along the network.

The Commission has stated that it intends to "move quickly to adopt any and all necessary rule changes to ensure that the Commission and other federal, state, local, and non-governmental EAS stakeholders have the necessary diagnostic tools to evaluate EAS performance and readiness nationwide." So interested parties should similarly act with alacrity to get comments in by March 1st (or reply comments by March 30th) to inform the Commission's rule making process. Comments can be submitted in paper or through the FCC's Electronic Comment Filing System.

TV Stations - Remember to Publicize the Location of Children's Television Programming Reports or Face FCC Fine

David Oxenford — Tue, 02 Feb 2010 21:30:30 -0500

In two just released cases, the FCC fined television stations $8000 each for failing to publicize the location of their Children's Television Programming Reports for an entire license renewal period (the cases can be found here and here). The FCC found that any remedial steps taken by the licensees after they discovered their failures at renewal time did not excuse the failure to comply during the license term. The Commission, in the orders, cites a survey that found "virtually all of the stations in the sample complied with the requirement to publicize the existence and location of the stations' Children's Television Programming Reports", thus dismissing arguments that the rules were vague and unclear as they do not spell out how much publicity must be given to the location of these reports. Based on these decisions, it's obvious that not all stations in fact got the message.

These cases remind all television broadcasters that they do in fact have obligations to publicize the location of their children's television reports and the contact person at their stations for information and comments about programming directed to children. For more information on a television station's Children's Television obligations (or, as many broadcasters know them, the Kid-vid rules) under the Communications Act and the FCC rules, including the periodic notice that should be given by television stations, check out the Davis Wright Tremaine Quarterly Reminder, the most recent of which can be found here.

$8000 FCC Fine for Noncommercial Station Not Making Public Inspection File Available Upon Request

David Oxenford — Mon, 01 Feb 2010 23:04:48 -0500

In a decision just released, the FCC fined a noncommercial FM station $8000 for failing to make its public inspection file available when it was requested. The FCC made clear that past cases where a noncommercial station was given only an admonition for similar violations were no longer good law, finding that the public file was an important part of the station's obligations to the public and the failure to make it available was a serious violation. This case should serve as a warning to all stations, commercial and noncommercial, that they need to have people at the station at all times who know where the public file is located, and that all visitors who request access to the file need to be given such access.

This case was perhaps a bit more egregious than most, as the visitor who requested access to the fine was known to the station, as the person was employed by a college that had tried unsuccessfully to buy the station. After its request to purchase the station was turned down, the prospective buyer had allegedly filed a number of pleadings at the FCC trying to force the licensee to sell the station. When the person appeared at the station to request access to the public file, the person was first told to return another day. After protesting that was illegal, an official of the College which is the station licensee, arrived at the scene and told the visitor that he had to leave, and could only view the public file after having made a prior appointment with the college's attorney. When reached by phone, the attorney allegedly told the visitor to leave the premises or he would be arrested. Only when he returned another day, after being initially turned down yet again, was the visitor eventually able to persuade the station employees that refusal to give him access to the file was illegal. When he was finally able to gain access to the file, he stated that he found it to be incomplete.

Obviously, this kind of action should never occur at any station - commercial or noncommercial. The public file is to be made available to visitors immediately upon request. Thus, station employees need to be trained as to where the file is located, and know that anyone can review it, without harassment or questioning as to their motivation for doing so.

The case is also important in the language about the importance of the public file. Most broadcasters would probably say that it is exceedingly rare that anyone ever visits the public file, and when someone does, it is usually either a student in a local broadcast journalism program making the inspection as a class project or it is someone who is not looking for information about the station, but instead already has formed an opinion about station operations and is looking for a "gotcha" - finding a shortcoming that can be reported to the FCC in an attempt to seek some sort of sanctions. Many have complained that the burden of maintaining the public file far outweighs the minimal benefit that those few legitimate visitors to a station may derive from its maintenance.

Because of these perceptions, some have suggested that the public file obligations be reduced or eliminated. However, in recent years, the FCC seems to be moving in the opposite direction, making the requirements more stringent. See, for example, the requirements of FCC Form 355 which has been adopted but not yet become effective for television broadcasters. This case seems to indicate that the Commission is not backing away from its enforcement of public file rules, so broadcasters need to take their obligations seriously.

FCC Gives Digital FM Radio a Power Boost

Brendan Holland — Fri, 29 Jan 2010 18:33:51 -0500

This afternoon the Commission released an Order authorizing FM radio stations to increase power on their hybrid digital radio operations. This power increase is a welcome boost to HD radio operations and was eagerly awaited by many FM stations broadcasting in digital. In a nutshell, the rule change allows stations to increase from the current maximum permissible level of one percent of authorized analog effective radiated power (ERP) to a maximum of ten percent of authorized analog ERP. In raising the power permitted for digital radio operations, the Commission acknowledged that the current digital power levels are insufficient to replicate stations' analog coverage and that indoor and portable coverage are particularly diminished. Building on proposals advocated by National Public Radio (NPR) and iBiquity, the Commission has provided for an immediate voluntary 6 dB increase in Digital ERP (except for super-powered FM stations, as discussed below). In addition, stations will be allowed to seek authority for increases over 6 dB up to a maximum of 10 dB using an informal application process.

Once the Order becomes effective, eligible FM stations may commence operations with FM digital operating power up to -14 dBc (that is, up to a 6 dB increase), consistent with the existing IBOC notification procedures. Stations availing themselves of the voluntary power increase must notify the FCC electronically of the increased digital power within 10 days of commencement using the Digital Notification form via the Commission's Consolidated Database System (CDBS). The exception to this is super-powered FM stations, which, regardless of their class, are limited to the higher of either the currently permitted -20 dBc level or 10 dB below the maximum analog power that would be authorized for the particular class of station, as adjusted for the station's antenna height above average terrain. The Audio Division's web site contains an FM Super-Powered Maximum Digital ERP Calculator available here to assist super-powered stations with determining the maximum permissible Digital ERP. Licensees of super-powered FM stations must file an application, in the form of an informal request, for any increase in the station's FM Digital ERP.

For power increases over 6 dB, licensees will be required to submit an application to the FCC, in the form of an informal request, for any increase in FM Digital ERP beyond 6 dB. Licensees wishing to operate with an FM Digital ERP in excess of -14 dBc must make a calculation and determine the station's max permissible Digital ERP as detailed in paragraphs 17 through 20 in the Order, available he re.

The revised rules will become effect 30 days after publication in the Federal Register, which will likely occur within a couple of weeks. There is a chance that the effective date of the new rules could be pushed back if the administrative review regarding the collection of data isn't completed before then, but that is not expected to be an issue here. In any event, the Commission's Order states that stations can seek to commence operations with increased HD power of up to -14 dBc before the effective date of the new rules by filing a request for Special Temporary Authority (STA). So digital FM stations that are itching to increase their power ASAP should start working on a request for STA seeking to utilize increased power.

Finally, two additional notes, both dealing with the potential for interference. First, today's Order solidly rejected the suggestion by some commenters that Low Power FM (LPFM) stations were more likely to be affected by full power stations operating with increased FM Digital power and thus should be afforded greater protection from the blanket increase in Digital ERP. Although the Commission in the past has seemed to be leaning towards affording LPFM stations greater protections (as we've discussed in previous posts), today's Order firmly states that "Analog LPFM... stations are secondary services, and as such, are not currently entitled to protection from existing full-service analog FM stations." In rejecting the notion of special protections for LPFMs, the Commission stated that it viewed the protections sought by the commenters as a potentially "dramatic change in LPFM licensing rules and the relationship between LPFM and full-service stations." In sum, "Licensees will not be required to take into account nearby LPFM stations in calculating permissible digital power levels in excess of -14 dBc."

Second, the Order adopts an explicit digital FM into analog FM interference resolution procedure for full-service FM stations. If a full-service analog FM station is receiving verifiable listener complaints of interference within its protected contour from a digital FM station operating with a Digital ERP in excess of -20 dBc, the licensee of the affected analog FM station should contact the licensee of the digital station and the stations must work cooperatively to confirm the interference and to attempt to eliminate it using voluntary tiered FM Digital ERP reductions. If the stations fail to reach an agreement on how to remediate the interference, then the affected analog FM station may file an interference complaint with the FCC's Media Bureau. In order to file such a complaint, the affected analog FM station must have at least six reports of ongoing (not just transitory) objectionable interference and submit a map showing the location of the interference and details about the nature and extent of the problems.

The Commission's Order notes that although there are approximately 1,500 radio stations operating in digital in the country today, notifications of new digital operations has been in decline for the past two years, meaning fewer stations have been commencing digital operations. It will be interesting to see whether the increased power levels now permitted for digital radio will breath new life into HD FM radio operations.

Tim Tebow's Super Bowl Ad - Any Real FCC Legal Controversy Here?

David Oxenford — Thu, 28 Jan 2010 10:23:15 -0500

Reading the trade press and the blogs, one would think that the Tim Tebow ad that will reportedly air during the Super Bowl presented novel, controversial legal issues. In fact, while we haven't seen the ad, from what we've read, there do not seem to be significant legal issues - most particularly ones that arise from an FCC perspective. The word is that this ad is pro-life, telling his mother's story of why she decided to have her child after a medical recommendation that she not, and how that child grew up to be a famous quarterback. Where are the FCC legal issues? Even were this ad to explicitly address a "controversial issue of public importance", like the abortion debate, and even were stations running the ad not willing to take ads from pro-choice groups (and there is no indication that this sort of rejection of opposing viewpoints has occurred), as the debates earlier this year on the airwaves and over cable channels made clear, there is no longer any Fairness Doctrine enforced by the FCC. Thus, there is no FCC requirement for stations having to give equal time to competing sides of any particular issue (even when the Fairness Doctrine existed, there was never an obligation for strict equal time - a broadcast station just needed to, in some manner, present both sides of an issue)

At most, were the ad to advocate some specific Federal action, there might trigger an FCC obligation for stations that carry the ad to place a note in their public file about the ad and the amount paid to run it (see our post here), but otherwise the issue seems to be a tempest in a teapot. Since the abolition of the Fairness Doctrine, broadcasters have been assumed to be able to exercise their own editorial discretion to decide what serves their audience and what doesn't. In the vast majority of cases, no one bats an eye. But combine celebrity, the Super Bowl and a reference to a political hot-button issue, and you have a media controversy - even though there is no legal one. So, unless the ad has some content that no one seems to be contemplating, the folks at the FCC should be able to relax and simply watch the game (assuming no clothing malfunctions or similar unexpected events - which we will leave to another post on another day...)

Remember "Super Bowl", the "Olympics" and "March Madness" Are Trademarked Terms - Don't Use Them In Advertising Without Permission

David Oxenford — Tue, 26 Jan 2010 21:23:49 -0500

With the Super Bowl and the Winter Olympics less than 2 weeks away, and March Madness not far behind, we once again need to remind our readers that all three are trademarked terms, meaning that their use, particularly for commercial purposes, is limited. We've wrote here last year about the use of the term "Super Bowl" in commercials, and about the use of "Olympics" two years ago (here). Our warning then bears repeating now - the trademarked terms should not be used in commercial messages except by authorized advertisers. These advertisers have paid big bucks to be able to say that they are an Olympic sponsor, or that they are having a Super Bowl sale. The holders of these trademarks enforce them rigorously (so that they can get the big bucks from the official advertisers), so don't risk their use without official permission. See our Super Bowl post from last year for details on how to refer to these events without running afoul of trademark limitations.

As we wrote last year, this does not prevent all use of these terms. News reports about the events can still be given. DJs can still chat about who is going to win the Super Bowl, or about the latest judging controversy in Ice Dancing at the Winter Olympics. But don't try to commercially exploit these terms (e.g. saying that you are "Springfield's March Madness station") unless you have really paid for the rights to use the trademarked term. Be careful, as a cute promotional idea can end up costing your station far more than you intended.

Note - 1/29/10 - We have had many questions since we first posted this entry, including the question as to whether the words "Super Bowl", "Olympics" and March Madness" are really "copyrighted" so they can't be used in local commercials. While we hate to be too legal about it, but the issue discussed above is one of trademark, not copyright law. Copyright covers creative works - movies, books, songs, etc. - while trademark covers the commercial use of words or symbols to represent a product or service, which is what the use of these words are - the identification of the particular events.

What is the Impact on Broadcasters of Supreme Court Decision that Corporations Can Buy Political Ads? More Money, More Ad Challenges and the Return of the Zapple Doctrine

David Oxenford — Fri, 22 Jan 2010 09:40:49 -0500

The Supreme Court Decision in Citizens United v. Federal Election Commission, freeing corporations to use their corporate funds to take explicit positions on political campaigns, has been mostly analyzed by broadcast trade publications as a good thing - creating one more class of potential buyers for broadcaster's advertising time during the political season - which seems to almost be nonstop in these days of intense partisan battles in Washington and in the statehouses throughout the country. What has not been addressed are the potential legal issues that this "third party" money may pose for broadcasters during the course of political campaigns. Not only will an influx of money from non-candidate groups require that broadcasters review the contents of more commercials to determine if the claims that they make are true, but it may also give rise to the return of the Zapple doctrine, one of the few remnants of the Fairness Doctrine never specifically repudiated by the FCC, but one which has not been actually applied in over a quarter of a century. Public file obligations triggered by these ads also can not be overlooked.

First, the need for broadcasters to vet the truth of allegations made in political ads sponsored by non-candidate advertisers. As we have written before(see our post here), the political broadcasting rules enforced by the FCC allow broadcasters to run ads sponsored by the candidates themselves without fear of any liability for the claims made in those ads. In fact, the Communications Act forbids a station from censoring a candidate ad. Because the station cannot censor the candidate ad (except in the exceptionally rare situation where the airing of the ad might violate a Federal felony statute), the broadcaster has no liability for the contents of the ad. So candidates can say whatever they want about each other - they can even lie through their teeth - and the broadcaster need not fear any liability for defamation based on the contents of those ads. This is not so for ads run by third parties - like PACs, Right to Life groups, labor unions, unincorporated associations like MoveOn.org and, after the Citizens United case, corporations.

Stations are not required to accept third party ads and, even where these ads address a candidate, the station has full rights to accept or reject the ads based on the ad's content (perhaps subject to Zapple discussed below). However, because the station can choose whether or not to run the ad, the station can also be held liable for the content of those ads. While the standard for liability under the rules of defamation are very high for public figures such as a political candidate, there still can be liability if the station runs an ad with "malice", meaning that they either know that the content of the ad is false, or run it with reckless disregard of the truth of the claims made (where those claims later prove to be false). That malice standard is what forces stations to become political researchers - tasked with determining if there is a reasonable basis for a claim made in an ad so that the candidate being attacked cannot later come back against the station and accuse the station of recklessly running a false ad. We've written before (here and here) about the typical scenario that arises - a third party group buys an attack ad against a political candidate, the candidate or his or her lawyer sends the station a letter saying that claims made in the attack ad are false and the station will be liable if the station continues to run the ad. At that point, the station has an obligation to investigate the truth of the statements made in the ad. If the station just continues to run the ad with no investigation, and the ad proves to be false and the candidate that is attacked can prove injury, the station can be held liable. How much investigation is necessary? That is a question that cannot be answered in a few paragraphs on this blog. But suffice it to say that stations need to be prepared to call their attorneys and discuss the issue with their owners in making these assessments - as each station may have a different tolerance for risk, and a different willingness to allow questionable third party ads to run.

The other potential issue that this decision may bring to the fore is the status of the Zapple Doctrine. Section 315 of the Communications Act imposes the Equal Opportunities doctrine (otherwise known as "Equal Time") on stations, which the FCC has interpreted to mean that stations need to treat all candidates running for the same office in the same way - allowing them to buy equal amounts of advertising time on a station, and giving them equal amounts of free time on a station if the candidate appears outside of an exempt program (e.g. news or news interview programs, or on-the-spot coverage of a news event, including most debates). But the Equal Opportunities Doctrine applies only to candidates and their appearances on stations (or "uses", in the language of the FCC). What about the purchase of time by third party groups, which are technically not subject to the Equal Time rule? Well, more than 30 years ago, the FCC adopted the Zapple Doctrine, or "quasi-equal opportunities" as an outgrowth of the Fairness Doctrine. The Zapple case, as we wrote here and here, held that where supporters of a candidate are allowed to buy time on a station, supporters of the opposing candidate should also be allowed to buy roughly equivalent amounts of time. While the remainder of the Fairness Doctrine has been declared by the FCC or by the Courts to be unconstitutional over the last 25 years, Zapple has never been officially overturned. When the Swift Boat documentary was about to be run on some television stations during the Kerry-Bush campaign, the Kerry campaign invoked Zapple in claiming that all stations that ran that documentary would need to air equal amounts of time from pro-Kerry groups. While that matter was settled before the FCC ruled, some FCC officials have from time to time implied that they would have invoked Zapple had it gone to a decision. With an influx of corporate money into political campaigns, Zapple issues are more likely to find their way to the FCC in coming elections.

Finally, the Citizens United case did not upset the record-keeping and disclosure requirements of the Bipartisan Campaign Reform Act ("BCRA"). BCRA imposed many such obligations on broadcasters. Thus, the sale of time to corporate groups, just like the sale of time to any other third-party group, requires a full public file disclose when such purchases are made to address a Federal issue or election. We wrote about those obligations here and here. Essentially, all the same information about the purchase that would be kept for a candidate buy must be kept for a third-party buy - including the class of spots purchased, the schedule run, the price paid, and the identity of the purchaser. Even advertising buys dealing with state and local elections require an identification of the buyer and its principal officers or directors.

Thus, while more money may flow into broadcast stations as a result of the Citizens United decision, that money may come with some additional headaches for broadcasters. All of these issues and more are addressed in the Davis Wright Tremaine Political Broadcasting Guide, available here.

FCC Initiates Inquiry Into the Future of Media, Seeks Comments by March 8

Brendan Holland — Thu, 21 Jan 2010 12:49:25 -0500

The FCC today launched a proceeding on the Future of Media in the digital age and put out a call for comments on a variety of issues. The goal of the Future of Media project, in the Commission's own words, is to produce a report to provide "a clear, precise assessment of the current media landscape, analyze policy options and, as appropriate, make policy recommendations to the FCC, other government entities, and other parties." The effort is being spearheaded by Steven Waldman, a former journalist and Internet entrepreneur, who is serving as a senior advisor to FCC Chairman Genachowski, as we wrote earlier. According to the Public Notice issued today, the FCC's initiative seeks to respond to the rapid technological changes in the media marketplace, financial turmoil in the traditional media, and questions about the role that traditional media will play in the future. While the FCC intends to draw from its ongoing proceedings regarding media ownership, universal broadband, children's issues, etc., to gather info for its report, it also intends to draw on studies, comments, workshops and hearings, interviews, and outside research.

To that end, the Public Notice seeks comment on a wide variety of issues in order to build a record for its final report, which will be issued later this year. The current state and future of traditional journalism is one of the issues the FCC has raised, but is not the sole focus of the project. Among the topics the FCC has identified for discussion and comment are: the state of TV, radio, newspaper, and Internet news and information services; the effectiveness and nature of public interest obligations in a digital era; the role of public media and private sector foundations; and many others. Not unlike the Broadband project that has consummed the Commission in recent months, by this Future of Media project, the FCC is seeking to tackle many big picture items. In doing so, it is starting at the very beginning by asking questions as broad as: "What are the information needs of citizens and communities and are those needs being met?" In all, today's Public Notice contains 42 detailed questions covering six pages, which inquire about business models and financial trends; the information needs of communities and citizens; commercial media (broadcast TV, Radio, Cable, and Satellite); noncommercial and public media; Internet and mobile platforms and applications; and print media.

Given the enormous scope of the project, its nascent stage, and the continually evolving nature of the media and technology landscape it is impossible to know what recommendations the Commission might ultimately make. But any parties interested in informing the Commission's conclusions and future recommendations should consider participating in the proceeding. The deadline for comments is March 8th, and interested parties can submit comments electronically through ECFS, or via the new Web site established for the project, which the FCC hopes will serve as an arena for public discussion on the future of media and any public policy recommendations. The Future of Media web site also contains a blog to provide additional information about the project on an ongoing basis.

Tower Lights Out for Even One Day? - Pay A Fine, Says the FCC

David Oxenford — Wed, 20 Jan 2010 22:46:57 -0500

In a recent decision, the FCC's Enforcement Bureau ruled that a tower owner should pay a fine for a single day where the required tower lights were not operational, and where no required monitoring of the tower to discover such outage was taking place. On top of the penalty for the non-working lights, the FCC also fined the owner for the failure to report a change in ownership of the tower. The total fine in the case was $4000 (reduced from an initial fine of $13,000 because of the tower owner's past record of compliance).

As with any FCC fine, while the fine was for one day of tower light outage, there was more to the story. The FCC inspected the tower after receiving a complaint stating that the lights were out on a day that was almost a month before the inspection - indicating that the outage may have been in place for far longer than the one day revealed by the FCC inspection. The tower owner admitted that the person who was supposed to conduct the required daily inspection of the tower lights had moved from the area in which the tower was located, and the owner did not know exactly when that occurred. The owner did not get someone new to do the inspection until after the FCC inspection. And the tower had no automatic monitoring system to determine if the lights were in fact operational. With these admissions, it seemed clear that there was the potential that there had been a problem for a long time, so perhaps the fine was not unexpected, even though the lights were fixed within hours of the FCC report of the problem, as the issue was a simple one that the tower owner blamed on a careless repair person who had recently visited the site.

In addition, the original complaint indicated that the complainant could not reach the owner listed on the tower registration to notify them of the outage. After the FCC inspection, it became clear that this was because the ownership had changed, and the FCC had not been notified. Had the FCC tower registration information been timely updated when the ownership change occurred, the fine for the unreported change in ownership would not have been issued, and the fine for the light outage might also have been avoided if the owner had been able to respond to the private party's notification instead of having to wait for the FCC to get involved.

As we have written before, the FCC takes tower issues very seriously, because of the potential threat to safety posed by improperly lit towers. Tower owners need to take this issue very seriously themselves, not only because of the threat of FCC fines, but because of the potential exposure to civil liability should there be an aeronautical accident when the lights are out. If there are lighting problems, they need to be fixed immediately. If they cannot, the FAA needs to be notified so that it can alert airmen to the potential hazard. So inspect those towers regularly, and make sure that issues are promptly reported and corrected when they arise.

You Know Those Interim ASCAP and BMI Royalties? - They May Be More Interim Than You Think

David Oxenford — Tue, 19 Jan 2010 20:38:53 -0500

At the end of 2009, we wrote about the interim royalties agreed to by both ASCAP and BMI, agreeing to reduce the amount of royalties paid by commercial radio stations by 7% until final royalties were agreed to by these Performing Rights Organizations and broadcast groups (principally the Radio Music Licensing Committee), either through negotiations or by litigation. While many had assumed that these reduced rates would stay in place until the final royalties were set, we have now learned that, in fact, these are but "provisional rates" to be in place only until interim royalties are set by the Courts which supervise the royalty-setting process. Recently, the PROs and the RMLC filed motions with the courts that oversee the ASCAP and BMI antitrust decrees under which these organizations have operated for half a century, stating that they have not been able to agree to either final or interim royalties, and thus need the Court to set interim royalties until a final royalty is determined.

The interim royalty process does allow the presentation of evidence and argument by the parties to the Court as to what the appropriate royalty should be until the final royalty-setting process runs its course. There is a legal presumption that, in the absence of some compelling evidence otherwise, the rates that were previously in place would continue while final royalties are litigated. Whether the Courts will look back to the royalties paid by radio owners in 2009, or whether the provisional royalties that were set in these end-of-the-year agreements will have any effect on the interim royalties remains to be seen. But don't count on the interim 7% reductions being in place for long, as the Court should set the interim royalties relatively quickly, probably later this year. And once these interim royalties are set, the more difficult issue will face the PROs and RMLC - reaching a deal or litigating over the final royalties that will be paid by radio broadcasters for the public performance of musical compositions. Given the inability of the parties to reach any agreement on interim royalties after a year of discussions, it may well be quite some time before final royalties are set - at which time there will be a "true up" back to January 1 of this year. So broadcasters need to watch these developments carefully, and to not count any discounts as final until the final royalties are established.

Broadcast Station Reminder: FCC Ownership Reports due Feb. 1 for Noncommercial Stations in Select States

Brendan Holland — Fri, 15 Jan 2010 11:08:56 -0500

A reminder that by February 1 noncommercial radio stations in Arkansas, Louisiana, Mississippi, New Jersey, and New York, and noncommercial television stations in Kansas, Nebraska, and Oklahoma must prepare and file electronically a biennial Ownership Report with the Federal Communications Commission (FCC) using the current noncommercial FCC Form 323-E.

Please note, this filing date applies only to noncommercial radio and TV stations in the states listed above. The FCC has revised its rules regarding the reporting of ownership interests for commercial broadcast stations, and has revised the commercial Ownership Report – Form 323. Although commercial broadcast stations will file on a unified reporting deadline, by Order released late December 2009, the FCC has suspended indefinitely the filing of biennial Ownership Reports for commercial broadcast stations as we've posted previously. The Commission is taking additional time to address certain issues raised by petitioners and to revise the new form further. Once the FCC re-releases the form, stations will have 90 days to file the report, so stations should watch this space or the FCC's releases for future news about the return of the Ownership Report for commercial stations.

Noncommercial stations, on the other hand, continue to follow the previous rules filing biennial Ownership Reports on FCC Form 323-E, which has not been revised. The FCC is conducting a rule making proceeding to change, potentially, some of the ownership reporting rules for noncommercial licensees, but meanwhile, noncommercial broadcast stations continue to follow the existing rules. Accordingly, as Feb. 1, 2010, marks the two-year anniversary of the filing of a biennial Ownership Report for noncommercial stations in the above-referenced services and states, those stations must now file a biennial Ownership Report to update their ownership information or affirm the information currently on file. More information about this filing deadline can be found in our recent client advisory, available here.

Broadcast Station Reminder: EEO Public File Reports and Form 397 EEO Mid-Term Reports due by Feb. 1st for Stations in Select States

Brendan Holland — Fri, 15 Jan 2010 10:49:03 -0500

February 1st marks the deadline for two FCC EEO requirements. First, by February 1st, radio and television stations located in Arkansas, Kansas, Louisiana, Mississippi, Nebraska, New Jersey, New York and Oklahoma must prepare their Annual EEO Public File Reports. Specifically, stations or Station Employment Units (SEUs) in those states with five or more full time employees (30 hours or more per week) must: (1) prepare their Annual EEO Public File Report; (2) place it in the public inspection file of each station comprising the SEU; and (3) post the Report on the Web site, if any station in the SEU has a Web site, all by Feb. 1. The Annual EEO Public File Report summarizes the hiring and EEO activities conducted by the station or SEU during the past 12 months. The Report provides information about the full time job positions filled in the last year, the recruitment sources used to fill those positions, and the outreach activities that the station or SEU performed during the year. In preparing their Annual Reports, stations are encouraged to carefully review their EEO activities and take the time to organize their records. Stations should have appropriate documentation to back up each of the recruitment sources used for each job opening, as well as for each outreach activity. This annual report is also a good time for the station or employment unit to assess the success of its outreach and the efficacy of its recruitment sources, and to make any adjustments necessary to improve EEO compliance in the coming year. A copy of our longer EEO primer can be found here.

Second, in addition to preparing the Annual EEO Public File Report, by February 1 television stations in Kansas, Nebraska, and Oklahoma , as well as larger radio stations in New Jersey and New York (i.e., those with eleven or more full-time employees) must prepare and file electronically with the Commission an FCC Form 397 Mid-Term EEO Report. The Form 397 provides the FCC with copies of the SEU's two most recent Annual EEO Public File Reports, and is an important part of both the station’s compliance with the EEO rules and the Commission’s monitoring procedures. While normally the Annual Report is simply prepared and placed in the station's public file and on the website, at the mid-point of the license term stations must actually provide the FCC with copies of its two most recent Reports. More information about both of these February 1 filing deadlines can be found in our recent client advisory available here.

FCC Proposes National Test of EAS - Emergency Alert System; Comments on Proposed Rules due March 1

Brendan Holland — Fri, 15 Jan 2010 10:40:14 -0500

You've arrived here as the result of a broken link.

The full article regarding the proposed revisions to the Emergency Alert System (EAS) posted on February 2, 2010 can be found here.

We apologize for the inconvenience, and thank you for reading.

David Oxenford Conducts Webinar for Kansas Association of Broadcasters on FCC Political Broadcasting Rules

David Oxenford — Thu, 14 Jan 2010 21:40:37 -0500

David Oxenford today conducted a webinar for the Kansas Association of Broadcasters on the rules for political advertising. In addition to the elections for the US House of Representatives, Kansas has a race to fill a vacant US Senate seat, as well as elections for Governor and a whole host of state and local offices. With an August primary and the November general election, the 2010 election season could be a busy one in the state. David's presentation covered reasonable access, equal opportunities, lowest unit rates, FCC paperwork obligations and the other related issues that govern how broadcasters need to treat political candidates and other political advertisers. The slides from David's presentation are available here. Broadcasters should also refer to Davis Wright Tremaine's Political Broadcasting Guide for information about preparing for the upcoming campaign, and spotting legal issues that may arise during the election season.

FCC Permits Noncommercial Stations to Raise Funds For Haitian Relief - The Limits of Third Party Fundraising By NCE Stations

David Oxenford — Wed, 13 Jan 2010 22:57:00 -0500

The earthquake in Haiti has caused many to look for ways to help - including broadcasters. While many broadcasters are already pitching in to do their part to aide relief efforts, noncommercial broadcasters are, in some cases, limited in what they can do. Noncommercial stations cannot raise funds, even for other noncommercial groups, if that fundraising "substantially alters or suspends regular programming" of the station. Under these rules, NCE ("Noncommercial educational) stations are thus forbidden to hold a telethon or other pledge drive that suspends normal programming where the proceeds would go to a third party - even a nonprofit third party group. Thus, recognizing the magnitude of the tragedy in Haiti, the FCC has agreed to grant liberal waivers of these policies, issuing a public notice announcing that NCE stations wishing to conduct such efforts can simply file an electronic request, by email, with certain supervisors in the Media Bureau's Audio and Video divisions, setting out the nature of the programming, its length, and the beneficiary.

We obviously applaud the FCC's rapid response on this issue. But we note that it is interesting that the Public Notice states that applicants for one of these waivers also must state whether the special fund-raising effort is part of the station's normal fundraising, or if it is a separate program. The public notice does not mention that noncommercial stations can make fundraising appeals for third parties under the current FCC policies, as long as those appeals do not suspend or interfere with normal station programming. It would seem to me that such appeals would permit a DJ on an NCE station, in a normal programming break, to urge listeners to contribute to the Red Cross or some other charity, or for a regularly scheduled talk show on a station to feature a discussion of the situation in Haiti and of how people can assist with disaster relief, without needing any specific approval of the FCC. The key to whether a waiver of the FCC policies is necessary is whether there is a substantial alteration or suspension of the normal programming of the station.

In many ways, the whole rule against third-party fundraising for nonprofit groups seems to be a relic of another era. When first adopted, the FCC had very strict rules on promotions or even acknowledgments of any business or entity that provided anything of value to the noncommercial station in exchange for on-air mentions. With a recognition that noncommercial stations did need to raise funds to survive, through "enhanced underwriting" and other changes, many of those restrictions have eased over the last 30 years. The prohibition against doing promotional announcements for other noncommercial entities has been totally lifted - so that NCE stations can essentially run sponsored promos for the activities of other nonprofit entities. Why, if you can promote the activities of another nonprofit on the air, even in exchange for consideration from the nonprofit, a NCE station cannot also fund raise for that same nonprofit entity seems a mystery.

Last year, on the FCC's periodic announcement of matters circulating among the Commissioners for consideration, there was a notation of a proposal to change the policies on NCE stations fundraising for third party organizations. As I represent many NCE stations, I made some inquiry among other lawyers who represent noncommercial entities, and no one really seemed to know where that proposal for change originated, or what it entailed. One hopes that the FCC does liberalize these rules so that, whether in the event of disasters like that in Haiti, or to simply promote the good works of other charitable organizations in its service area, NCE stations can freely serve the public and promote these activities without the need for prior FCC approval.

Update - The NAB has prepared PSAs for stations to use to promote Haiti relief efforts. See their press release here, with links to the PSAs.

Broadcaster Calendar for 2010 - Important Regulatory Dates to Remember

David Oxenford — Wed, 13 Jan 2010 18:43:30 -0500

Each year poses a new set of regulatory deadlines, and to help you remember all of those deadlines, the Davis Wright Tremaine Broadcast Group has prepared a calendar setting out the dates that broadcasters need to remember in 2010. The calendar can be found here, and sets out FCC imposed deadlines for, among other things, Ownership Report filings (for noncommercial stations for now, until the status of the Form 323 for commercial stations is resolved), for quarterly issues programs lists, for EEO public file and Mid-Term reports, and for children's TV reports. The calendar also provides reminders about the dates of SoundExchange filings and payment obligations, and for the political windows during which lowest unit rates apply for the Federal elections to be held in 2010 (for the House of Representatives in all states, and for the Senate in over a third of the states). Lots of dates to remember - so check out the DWT Broadcasters Calendar.

Reminder: Many Webcasters Have to Make Annual Election of SoundExchange Royalty Rates and Minimum Fee Payments By January 31, 2010

David Oxenford — Sun, 10 Jan 2010 15:55:47 -0500

Many Webcasters who have elected the the royalty rates set by many of the settlement agreements entered into pursuant to the Webcasters Settlement Act must file an election notice with SoundExchange by January 31 to continue to be covered by those settlement agreements. These agreements were entered into by groups of webcasters and SoundExchange, and allow the webcasters to pay royalties at rates lower than those rates set by the Copyright Royalty Board for 2006-2010. January 31 is an important date even for those webcasters who are covered by agreements that don't demand an annual election, as most Internet radio operators must make annual minimum fee payments by January 31. SoundExchange does not send out reminders of these obligations, so Internet Radio operators must remember to make these filings on their own. The original election forms filed under settlement agreements signed by the NAB and by Sirius XM cover the entire settlement period from 2006-2015, so no election form must be filed each year, though minimum fee payments must still be made. Note that certain small broadcasters, who need not meet SoundExchange recordkeeping obligations, do need to file an election to certify that they still meet the standards necessary to count as a small broadcaster. The WSA settlement agreements that cover Pureplay webcasters, Small Commercial webcasters, Noncommercial Educational webcasters and other noncommercial webcasters all are entered into on a year-by-year basis. Thus, to continue to be covered, parties currently governed by these agreements need to file a Notice of Election to again be covered by these agreements by January 31 (though note that the SoundExchange website provides for filings by February 1, presumably as January 31 is a Sunday).

The election forms are available on the SoundExchange website, though they are not easy to find. The forms that must accompany the annual minimum fees are also on the SoundExchange website. Note that in some cases there are forms that cover both webcasters who paying under a particular settlement, as well as under the special provisions for small entities that are covered by these same agreements (e.g. Small Pureplay webcasters file a different form than other Pureplay Webcasters even though both are governed by the same agreement. Similarly Small Broadcasters file a form different than other broadcasters, though both are covered by the same agreement). These forms can be found at the links below. Click on the name of the category of webcasters for a link to our article that summarizes the particular settlement, the minimum fees required, and the qualifications for small webcasters under that deal (if there is such a provision):

Broadcasters minimum fee form - here.
Small broadcasters election form - here. Minimum fee payment form - here.
Pureplay webcaster election form - here. Minimum fee payment form - here.
Small pureplay election form - here. Minimum fee payment form - here.
Small commercial webcaster election form - here. Minimum fee payment form - here.
Microcaster election form - here. Minimum fee payment form - here.
Noncommercial educational webcaster election form - here. Minimum fee payment form - here.
Other noncommercial webcaster election form - here. Minimum fee payment form - here.
Noncommercial microcasters election form - here. Minimum fee payment form - here.
Satellite radio (for their webcasting operations - a deal that may also fit other commercial webcasters who are not covered by other agreements) minimum fee payment form - here.

Note that there is no specific form for NPR affiliates covered under the NPR settlement, as an organization set up by the Corporation for Public Broadcasting handles all payments and SoundExchange filings. Other companies providing Internet radio services need to pay attention to these dates - and file the necessary papers and make the required payments by the upcoming deadline.

Update - 1/15/10 - After posting this entry, I learned that SoundExchange has in fact been sending reminder notices about minimum fees to webcasters who have previously paid royalties. This obviously does not help new services, or other services that may have overlooked their obligations in 2009, but it does show that SoundExchange is developing the infrastructure of other performing rights organizations to better keep in contact with their "customers." Note that these notices came by regular mail several weeks ago, so some may have overlooked or forgotten about them. And, as with most other filing obligations, the failure to receive a reminder is not an excuse to miss the filing deadlines described above. So pay attention to these obligations.

Looking Into the Crystal Ball - What Can Broadcasters Expect from Washington in 2010?

David Oxenford — Thu, 07 Jan 2010 20:00:21 -0500

Another year is upon us, and it’s time for predictions as to what Washington may have in store for broadcasters in 2010. Each year, when we look at what might be coming, we are amazed at the number of issues that could affect the industry – often issues that are the same year to year as final decisions are often hard to come by in Washington with the interplay between the FCC and other government agencies, the courts and Congress. This year, as usual, we see a whole list of issues, many of which remain from prior years. But this year is different, as we have had a list topped by issues such as the suggestion that television spectrum be reallotted for wireless uses and the radio performance royalty, that could fundamentally affect the broadcast business. The new administration at the FCC is only beginning to get down to business, having filling most of the decision-making positions at the Commission. Thus far, its attention has been focused on broadband, working diligently to complete a report to Congress on plans for implementation of a national broadband plan, a report that is required to be issued in February. But, from what little we have seen from the new Commission and its employees, there seems to be a willingness to reexamine many of the fundamental tenants of broadcasting. And Congress is not shy about offering its own opinions on how to make broadcasting "better." This willingness to reexamine some of the most fundamental tenets of broadcasting should make this a most interesting, and potentially frightening, year. Some of the issues to likely be facing television, radio and the broadcasting industry generally are set out below.

Television Issues.

In the television world, at this time last year, we were discussing the end of the digital television transition, and expressing the concern of broadcasters about the FCC’s White Spaces decision allowing unlicensed wireless devices into the television spectrum. While the White Spaces process still has not been finalized, that concern over the encroachment on the TV spectrum has taken a back seat to a far more fundamental issue of whether to repurpose large chunks of the television spectrum (if not the entire spectrum) for wireless users, while compressing television into an even smaller part of what’s left of the television band – if not migrating it altogether to multichannel providers like cable or satellite, with subscription fees for the poorest citizens being paid for from spectrum auction receipts. This proposal, while floated for years in academic circles, has in the last three months become one that is being legitimately debated in Washington, and one that television broadcasters have to take seriously, no matter how absurd it may seem at first glance. Who would have thought that just six month after the completion of the digital transition, when so much time and effort was expended to make sure that homes that receive free over-the-air television would not be adversely impacted by the digital transition, we could now be talking about abolishing free over-the-air television entirely? This cannot happen overnight, and it is a process sure to be resisted as broadcasters seek to protect their ability to roll out new digital multicast channels and their mobile platforms. But it is a real proposal which, if implemented, could fundamentally change the face of the television industry. Watch for this debate to continue this year.

Spectrum conflicts with radio will also be on the table. There have been proposals for the reallotment of TV Channel 6, and perhaps even Channel 5, to radio uses. Particularly given the issues that many major market television stations had with the digital conversion of VHF stations, and the demand by more and more entities for radio spectrum, this proposal has already been advanced for public comment by the FCC in several proceedings, and could theoretically be ripe for action. More likely is further consideration, as there are many issues that would need to be resolved – like who would pay for the few remaining TV stations on these channels to move elsewhere on the TV band, plus questions of how the spectrum, if reallocated to radio use, would be divided. More on that below in the radio discussion.

The FCC will also have to complete the digital transition of TV translators and LPTV stations, which were not bound by the June 2009 DTV conversion deadline. The FCC will need to set a digital conversion deadline – a conversion that many translator and low power licensees are not looking forward to paying for, but which may be necessary to preserve their over-the-air viewership as the analog tuner becomes an historical relic. This transition may also bring to the fore questions about the use of LPTV stations on Channel 6 for quasi-radio stations broadcasting audio that can be received on 87.7 or 87.9 on most radio receivers as analog television audio signals are just below the bottom of the FM dial. This use of channel 6 stations for Fm broadcasting would disappear if LPTV stations go digital, and thus there may be resistance to the transition from that element of the LPTV community.

Another carryover issue from 2009 is the status of the SHVERA extension, authorizing DirecTV and DISH Networks to rebroadcast local broadcast television signals to satellite TV subscribers in their markets. That authorization expired at the end of 2009, and has been extended by Congress, but only until March. While everyone seems to agree that a further extension is appropriate, many parties are trying to load up the bill with all sorts of goodies from the wish lists of various industries – everything from a mandatory extension of local-into-local service into every television market (as urged by TV interests), to changes in must-carry and retransmission consent schemes and rules on the importation of distant network affiliates (sought by various multichannel video providers), to issues about allowing the carriage of in-state TV stations in markets with counties that currently receive their television service from stations in adjoining states. These and other issues will need to be resolved before a more permanent extension can be granted.

Radio Issues

The most fundamental issue for radio broadcasters is the potential for the broadcast performance royalty – which would require that radio stations pay not only the composers for the use of music on the radio (which they currently do through ASCAP, BMI and SESAC payments), but also to pay performers (and the record companies, as the copyright holders in these performances) for the use of their recordings on the air. Radio has never paid such royalties, though digital cousins of radio – satellite radio, Internet radio and cable radio – have paid these royalties for the last decade. While broadcaster representatives have thus far been able to beat back attempts impose this performance royalty for the use of sound recordings, both the House and Senate Judiciary Committees passed forms of this legislation in 2009, and proponents of the royalty will be pushing for a vote on these bills this year. With the potential for a crippling new cost to be imposed on radio if these royalties are adopted and imposed on top of the royalties already paid to ASCAP, BMI and SESAC (which are themselves in negotiation for new royalty rates as old rate agreements expired at the end of 2009), music radio could be dealt a severe blow if the proposal was to be adopted in this time of decreasing revenue. While the new NAB President has seemingly taken a somewhat more conciliatory tone in dealing with this issue (no more claims that the royalty will only be discussed at knifepoint), it is difficult to see where the revenue to pay such royalties would come from. But it will be an issue that will be fought hard this coming year.

The digital transition in radio will also need to be addressed. While many stations are already operating with digital over-the air streams of programming, the Commission is still faced with resolving proposals for increased power for HD Radio operations (In-Band On Channel or IBOC digital radio), which some broadcasters have opposed as holding the potential for adjacent channel interference. While a compromise proposal to allow for IBOC power increases has been offered to the Commission, it has not yet been adopted. Watch for action on that front soon.

LPFM stations may become more common this year, as legislation to remove a ban on those stations causing third-adjacent channel interference to full-power FM stations may well be removed by Congress this year. A bill to do so has passed the House, and will likely be considered soon in the Senate. The House Bill did protect some full power stations from real cases of interference, and certain existing services like existing translators and stations proving reading services for the blind. But the bill must also be addressed by the Senate, and we will have to see what will be in the final legislation.

The related issues of the relationship between LPFM stations and other FM users also remain to be resolved at the FCC. A new LPFM window has been held up by issues on how to process the thousands of FM translator stations that remain pending from the 2003 translator window. Similarly, issues remain to be resolved on whether LPFM stations, which were authorized as secondary services, should be able to be protected from increases in power or other facility changes by full-power stations. Perhaps the removal of third-adjacent channel protections will alleviate some of the conflicts, but others are bound to remain.

The proposals discussed above to recapture some of the television spectrum, including Channel 6 and possibly Channel 5, and to use that spectrum for new radio stations, may provide a further outlet for LPFM stations to remove some of the conflict with translators and full-power stations. Proposals are already pending to immediately allow LPFM stations on 87.5, 87.7 and 87.9 – all parts of channel 6 that can be heard on most FM radio receivers. But a longer term solution could result from this reallocation, giving LPFM stations places to operate without restricting FM upgrades or endangering FM translators. Others have even suggested that some or all AM stations could be moved onto these channels. This is likely to be a long-term project, but one that may get further serious consideration this year.

Finally, the FCC under Interim Chairman Copps, suggested rules that could limit the ability of FM stations to change city of license to move toward larger communities, undoing some of the flexibility accorded to stations in recent years to change city of license to reach larger audiences. Action on this proceeding might be forthcoming, or will perhaps be rolled into the localism proceeding discussed below.

Issues for Both Radio and Television

The FCC’s Localism proceeding remains on the table, proposing a whole host of requirements to assure that broadcasters are serving their communities and the “public interest”. While comments have been filed and the proceeding ready for resolution for over two years, there are so many controversial issues raised by the proposals that coming to any resolution will not be easy. Some proposals seem to be dead – like that for a fully manned main studio during all hours of operation, located in the station’s city of license, as regulators realize the costs that such a requirement would impose, and the likely impact that the requirement would have on new entrants and on the 24 hour operations of some stations. Yet requirements for some form of mandatory ascertainment of community needs, plus some enhanced disclosure of public interest programming, seem more likely. Some of the proposals rumored to be on the table include requiring that broadcasters be judged by whether they perform certain tasks set out on a menu of options by which they would demonstrate their service of the public interest. One would hope that any set of menu options would be broad enough to recognize all the diverse ways that broadcasters serve their communities, and not so restrictive as to make every station meet the public interest in the same cookie-cutter way, and thus eliminating diversity in approaches that has allowed the broadcast industry to flourish.

The difficulty with localism issues is illustrated by the Commission’s rules, adopted over two years ago, requiring TV stations to document in minute detail their public interest programming on Form 355. This rule has never become effective, as the form has never been approved by the Office of Management and Budget as being in compliance with the Paperwork Reduction Act. As this form required so much new information, for no appreciable purpose, it seems unlikely that it could survive such a review. Broadcasters argued that the information required to be documented would require the hiring of new staff whose only role would be to fill out this form. In an era of declining revenues for broadcasters, hiring a person to deal with these issues would, of necessity, require cutbacks in other areas, possibly compromising service to the public.

While that would seem to be an issue, in recent hearings on the FCC multiple ownership rules, which will come up for a full review in 2010, certain public interest group representatives suggested that gathering detailed information about a station’s public service should be seen as a cost of doing business, and that owners who did not want to shoulder this burden should simply get out of the business. With views such as that being advanced in the multiple ownership proceeding, questions of how to modify the Commission’s ownership rules will not be easily resolved. The FCC’s 2007 modest relaxation of the broadcast-newspaper cross ownership rules has never been fully implemented, causing us to wonder if the restrictions may well outlive the newspaper itself. Broadcasters, especially small market TV operators, have also been looking for the ability to combine operations under more flexible rules – an issue to be examined by the FCC in this upcoming 2010 proceeding (though don’t expect any final resolution this year).

The troubles of the newspaper industry, and of some broadcast stations, in funding their news operations, has given the FCC and the FTC pause, with both agencies conducting reviews of how the government may be able to facilitate good journalism in the 21^st century. The FCC has gone so far as to appoint a Special Advisor to the Chairman to look at the issues of how the media should best serve their local audiences and how to assure that service is forthcoming to local communities. One wonders what the government can do to mandate what are essentially business decisions. But some fear that any review of content issues, whether it be in the guise of community service or localism or some other form could be a backdoor way to bring back the Fairness Doctrine, which many conservative pundits have predicted. Certainly, many of these proposal would face constitutional and practical problems in implementation. Yet these will be matters which broadcasters will need to continue to monitor.

In the advertising world, the FCC will be resolving its embedded advertising and product placement proceeding, where some “public interest” groups have advocated a total ban on such advertising, while others have suggested immediate sponsorship identification, through a crawl or superimposed caption, of any product for which consideration has been paid for its inclusion. The related issue of video news releases – whether stations have to identify on-air anything given them at no charge (e.g. a script, video footage, etc.) before its inclusion into a news report – will also likely be resolved. Some have also suggested that the Commission may be planning some adjustments to its payola rules, though what those changes would be, and how they would improve on the current rules, is hard to fathom. We’ve also written about the FTC’s recent actions on sponsorship identification (especially for the new media) and celebrity endorsements, obligations that are only now being fully implemented.

There is also real concern that the Congressional committees which oversee the FCC may well push proposals for content regulations. Issues on limits on prescription drug advertising have been raised both independently and as part of the health care debate. Proposals on restrictions on violent programming and on advertising directed to children are also possible, especially in connection with ads for food considered unhealthy (however that may be defined). Congress also seems poised to pass a law regulating loud commercials – mandating that the volume on commercials be kept the same as that in programming, no matter how hard (and in some cases subjective) that may be to assure in reality.

Protecting children from violent or other potentially harmful content has also been the subject of both FCC and FTC proceedings, which may spur further actions this year. Indecency issues will also continue to be litigated in the Courts, as both the Janet Jackson clothing malfunction and the Golden Globes fleeting expletive cases are considered after their remand by the Supreme Court. The constitutional issues left unresolved by the Supreme Court may well be considered by the Courts of Appeals rehearing these cases, though an ultimate decision on the constitutional issues are probably several years down the road when these cases finally make their way back to the Supreme Court (so look for indecency on our list of issues next year).

And 2010 will be a big political broadcasting year. While the political broadcasting rules have for the most part remained unchanged for almost two decades, there are aspects of the rules that need to be addressed as the technology has changed since the current rules were adopted. The FCC has a long-outstanding proceeding to decide how on-line sales of broadcast inventory by various advertising clearinghouses and aggregators affect a station’s lowest unit rate. It’s interesting that the proceeding itself has outlasted most of the companies that were offering the on-line sales of broadcast inventory. Also, as both radio and TV are now multicasters in the digital world, the FCC has not yet addressed how reasonable access and other political rules apply to multicasting. Are a station's multiple streams each considered a separate “station” for reasonable access purposes, or can a station decide that candidates can be accommodated on one or more streams and kept off of others. While this may not be a big issue in this election as most multicast audiences are small, the issue will no doubt grow in significance in future elections.

Copyright issues could also impact the broadcast industry this year. We discussed the performance royalty above. But both radio and television have outstanding issues on their ASCAP and BMI royalties that could lead to rate court proceedings to decide what should be paid to composers for the use of their music. And TV broadcasters have brought a suit against SESAC to try to bring it under the antitrust laws, a suit that radio broadcasters may well consider joining at some point in the future,

Conclusion

Just a cursory look at the broadcast issues to be dealt with by Washington this year is enough to give any broadcaster pause about the future. And these are just some of the issues that could impact broadcasters. Broadband rollout, network neutrality, and regulation of wireless and wired carriers can fundamentally affect the competitive landscape for the media in general. And there are a whole host of other regulatory issues that we have not addressed here, including some that we have no idea are on the agenda but which are nevertheless bound to arise. In an industry rapidly adapting to new media competition and changes in the economy, broadcasters cannot afford to face the heavy hand of government regulation. Broadcasters need the freedom to adapt to marketplace changes and to address the new realities of the advertising supported media. One can only hope that Washington recognizes these new realities and regulates with a realistic hand, not one based on the realities of a totally different time and place. Stayed tuned to these pages to see what develops in this new year.

Copyright Royalty Board Sets Comment Date on Internet Radio Minimum Fee Settlement

David Oxenford — Wed, 06 Jan 2010 01:58:15 -0500

Last year’s Court of Appeals decision on Internet radio royalties for 2006-2010 remanded one issue to the Copyright Royalty Board for further consideration – the issue of the minimum annual fee to be paid by each webcaster. The Copyright Royalty Judges (“CRJs”) had decided on a $500 per channel minimum fee – a fee that created much concern in the Internet radio community as there was no clear delineation of what a channel was. For services, like Pandora, where there is a unique stream created for each listener, by some definitions there could be an almost infinite number of channels all subject to the $500 minimum fee. Following the CRB's initial decision, a number of the larger webcasters and SoundExchange entered into a settlement capping the minimum fee obligation at $50,000 per webcaster per year. Thus, services with more than 100 channels would only pay a minimum fee of $50,000 at the beginning of each year. However, this settlement was never extended to all webcasters - it applied only to those webcasters who signed the deal. Following the Court remand, SoundExchange and DiMA (the Digital Media Association which represents many webcasters), submitted the 2007 settlement to the CRB to be codified into the rules that govern webcasters generally. Just before Christmas, the CRJs asked for comments on that settlement. Comments are due by January 22.

In many cases, this settlement has been superseded by subsequent events – namely the settlements with webcasters that were entered into in February and then later in the summer under the provisions of the Webcaster Settlement Acts. Settlements with broadcasters, pureplay webcasters, small commercial webcasters and various noncommercial groups all set their own minimum fees (and, for the most part, cover the periods through 2015), and thus this proceeding is largely irrelevant to these webcasters. If this settlement is approved, the only remaining question before the CRJs on the remand of the 2006-2010 proceeding will be the minimum fee for some noncommercial groups that did not enter into any settlement, as this agreement on minimum fees applies only to commercial webcasters.

It is interesting to note that these minimum fees will finally be set in 2010 – the last year of the current license term, and will establish minimum fees that are due in January of each year (though these fees will no doubt be set after the last January in the term). The whole issue will have to be revisited for the 2011-2015 period in the proceeding that is currently underway to set the royalties for that period. Stay tuned for more information about that proceeding, which should be decided later in 2010.