Broadcast Law Blog

Strong Interest in FCC Auction for New FM Construction Permits

Brendan Holland — Thu, 09 Feb 2012 21:29:51 -0500

The FCC today released its further Public Notice in connection with FCC Auction No. 93, which offers for sale 119 construction permits for new FM radio stations in various communities across the country. Further details about the auction can be found in our earlier post here as well as on the Commission's auction page here. In all, 145 applicants filed the necessary short-form application expressing an interest in participating in the auction, although two of the applications were outright rejected as unacceptable. Even though there are fewer permits available in this auction than in last year's Auction No. 91 (119 rather than last year's 144), interest in the auction appears to be strong as nearly the same number of applications were filed for this year's auction as for the last. Of the 145 applications filed, 111 were listed as "complete" and 32 were designated as "incomplete", meaning that the FCC is requesting more information from those folks. Those applicants will need to amend their applications prior to 6 PM ET on February 22nd in order to be eligible to participate in the auction.

The next step in the auction process is for applicants to make an upfront payment by wire transfer to the FCC's bank before 6 PM East Coast Time on Wednesday, February 22nd. Only those applicants whose short-form applications are accepted as "complete" and have ponied up enough money to cover the minimum opening bid for at least one of the permits they have specified an interest in on their forms will actually be qualified to bid in the auction, which will begin on March 27th. As always, the FCC advises applicants to make their wire transfer early to make sure that it is properly received rather than waiting for the last day. Approximately two weeks before the start of the auction, the FCC will issue a subsequent public notice listing the qualified bidders and the amount of money they have put on deposit with the Commission. The FCC will also conduct a Mock Auction on March 23rd so that applicants can familiarize themselves with the auction software and bidding process in advance of the actual auction on March 27th. today's Public Notice also notes that the prohibition on communicating with competing applicants is now in effect. So applicants are prohibited from talking to other applicants about bids, bidding strategies, post-market structure, etc., unless they've indicated that the bidders have entered into a joint bidding agreement.

Constitutionality of Copyright Royalty Board Argued Before the US Court of Appeals - How Will It Affect Future Music Royalty Rate-Setting?

David Oxenford — Thu, 09 Feb 2012 19:47:23 -0500

The Copyright Royalty Board makes many important decisions, yet for the last several years, there has been a cloud over its operations, as there have been questions as to whether its members were constitutionally appointed (see our articles here, here and here). Well, the question is before the Courts again – this time squarely in front of the US Court of Appeals for the District of Columbia – a Court one step below the Supreme Court. The Copyright Royalty Board sets the royalty rates to be paid by Internet radio stations for the public performance of sound recordings, and in doing so, they have made some controversial decisions over the last few years. They also set royalties for other digital non-interactive music services, including Sirius XM, music services that come with cable and satellite television services, and background music services. The Board also oversees the distribution of funds that are collected for the retransmission of distant television signals by cable systems. It also sets the rates under Section 115 of the Copyright Act for the reproductions of musical compositions made by record companies when producing musical recordings or downloads, by digital music companies in connection with on-demand music services, and by wireless carriers in selling ringtones.

The case before the Court involves a seemingly small matter – the appeal of Intercollegiate Broadcasting Services from the CRB decision setting default rates for Internet radio services that are not covered by one of the many Webcaster Settlement Act agreements (about which we wrote here and here). IBS essentially is objecting to the fact that the Board would not lower the annual minimum royalty fee paid by some of IBS’ smaller members below $500. But, in connection with its appeal, IBS raised the issue of the constitutionality of the appointment of the Judges, and the Court this week heard an oral argument on the issue – mentioning the rate questions only in passing while concentrating on the constitutionality of the appointment of the Judges.

The constitutional issue is a complex one, involving the Appointments Clause of the Constitution, i.e. who can appoint government officials. “Principal Officers” of the United States have to be appointed by the President, while inferior officers can be appointed by the head of an executive department. Without going into the depths of the constitutional issues under consideration, there was much debate about whether the Copyright Royalty Judges (“CRJs”), who are appointed by the Librarian of Congress, are principal or inferior officers. And there was even some discussion of whether the Librarian is a head of an executive department, as the Library of Congress is theoretically part of the Congress – the legislative not the executive branch of government.

The argument also spent a significant amount of time discussing what would happen if the Court decided that the CRJ’s were in fact unconstitutionally appointed. As the Chief Judge asked, if the Court was to decide that the Judge’s appointment was unconstitutional, what would be the “least bad” remedy that they could order. In other words, they were looking to see what remedy they could order that was least disruptive to Copyright law. The discussion offered all sorts of alternatives – from ones where the Court could just decide that a very limited section of the law was unconstitutional and strike just those sections (e.g., the sections forbidding the Librarian from removing the Judges except for cause, or the section limiting the Copyright Office’s review of any final CRJ decision to an advisory one for future cases, not a binding review of the present case – attempts to make the Judges into inferior officers who could properly be appointed by someone other than the President), to the possibility that the CRJs appointment could simply be voided, leaving to Congress the question of what to do next. There did not seem to be any debate as to whether prior decisions of the CRJs, that were no longer under appeal, would remain binding on the parties to which they apply (e.g. rates already set would remain in place and binding).

One interesting aspect of the argument on potential remedies what the argument of counsel for SoundExchange who contended that any decision that the Court makes should be as limited as possible, as a decision overturning the CRB system would create “chaos” as the statutory royalty is crucial to the effective functioning of the webcasting marketplace. This is interesting as SoundExchange, in CRB proceedings, always contends that the royalty is something that is forced on them and their members, and not something that they believe is necessary.

Look for a decision on this case in the next few months, which may help to once and for all resolve the question of the constitutionality of the CRB. Given that the CRJs are currently considering new royalties for satellite radio and new rates under Section 115, this is an important decision that could have important ramifications for many segments of the digital music industry and for Copyright law more generally.

Three $10,000 FCC Broadcast Fines, All Involving the Public File, Show Differences in Enforcement

David Oxenford — Tue, 07 Feb 2012 22:17:47 -0500

In the last few days, the FCC proposed three fines - all involving violations of the public inspection file rule, and all amounting to $10,000. But the facts of the three cases are radically different, and one wonders about why all ended up with the same fine. But more importantly, the cases again raise the issue of why the penalty for public file violations is so high in relation to other fines for what would seemingly be more important issues - ones involving interference to other stations and, potentially, public safety. We've raised the question before as to whether public file violations, which have a $10,000 base fine adopted in the FCC's Forfeiture Policy Statement (which includes a schedule of base fines for various different types of violations), is really appropriate given the lower fines for what would seem to be more crucial issues - like stations operating in some way that is technically different than they are licensed, or where they don't have operating EAS systems that can pass along crucial emergency information - offenses with lower suggested fines. Looking at the facts in each of this week's cases show that, even among public file offenses, the fine may be the same, yet the offenses seem very different.

In one case, an FCC inspection discovered an AM/FM combination operating with a tower with some of its required lights that did not work, an EAS system that wasn't working and which had not been working apparently for years, an FM station that was operating overpower, and a single public file for the two stations, one that was lacking any Quarterly Issues Programs lists. With all of these violations over 2 stations, the FCC could have fined these stations as much as $42,000, but the FCC reduced the fine to $10,000 based on the licensee's demonstrated inability to pay the higher fine. But more interesting for this analysis was the comparative cost of each of the violations. Under the FCC's analysis, the public file violation was worth $10,000, while the base fine for the EAS violation was only $8000, and the fine for the tower lights was the same as that for the missing documents in the public file. The overpower operation drew only a $4000 fine. Why is a public file violation, which probably no one ever asked to see, a violation with a penalty as severe as those for matters that could affect public safety - tower lights and EAS? And why is it more than double the fine for overpower operation, which could cause interference - an issue as the heart of the FCC's reason for being?

Two other pure public file violations also drew fines of $10,000, but the facts and circumstances were quite different. In one case, the violation was discovered by a station inspection by the FCC, and the FCC found no public file whatsoever. In the second case, the licensee voluntarily disclosed to the FCC, in its license renewal application, that it was missing 2 1/2 years worth of quarterly issues programs lists from an 8 year license renewal period. So it was missing just one element of the public file. So despite voluntarily reporting the violation, and having that violation affecting just one element of the public file, and just a portion of that element, the fine is the same as that for a station that didn't keep a file at all, and got caught by the FCC. Shouldn't the FCC recognize the difference in circumstances, and lessen the penalty for a party that was missing only part of its file, and voluntarily reported that violation?

Perhaps at some time the FCC will offer the public the opportunity to comment on the relative value of FCC fines, and perhaps do something to make the fine schedule more rational. Broadcasters have, from time to time, argued that the public file rule was archaic and should be abolished, though the FCC now seems to be taking the opposite tack - looking to put the file online (see our summary of the FCC proceeding to do so here). In any event, for the foreseeable future, the public file remains a big deal for the FCC, so be sure the yours is in good order. For more information on doing that, see our most recent Advisory on the Quarterly Issues Programs Lists and our Advisory on the Basics of the Public Inspection File for Commercial Broadcasters.

$44,000 Fine for Radio Station Not Including Sponsorship Identification in Paid Message

David Oxenford — Sun, 05 Feb 2012 12:31:12 -0500

The FCC proposed a $44,000 fine on a Chicago radio station for running 11 announcements that did not contain a sponsorship identification. This fine was not for 11 different announcements for different groups, but instead a single announcement run 11 times. Each airing of the announcement triggered a $4000 fine (which is the amount of the FCC "base fine" for a sponsorship identification violation). According to the FCC decision, a group called the Workers Independent News ("WIN") bought 2 two-hour programs, one one-hour program, and a number of shorter promotional announcements for those programs. 11 of the promotional announcements did not specifically state that they were sponsored. Instead, these 11 announcements - each 90 seconds long - consisted of an interviewer, identifying himself as being with Workers Independent News, discussing a local issue with local legislator. While the announcement did open with a mention of WIN, it didn't specifically say that they had paid for the spot. Presumably, the FCC feared that the spot sounded like a program element, perhaps even a news interview (even though it ran in a commercial break), and held that the mere reference to WIN without any explicit statement that the spot was paid for by that group was not enough to convey sponsorship of the ad or to meet the FCC rules requiring sponsorship identification.

The decision here shows how seriously the FCC takes the issue of being able to identify who is trying to influence listeners by providing some form of valuable consideration to a broadcast station in exchange for the broadcast of a message. This issue is the subject of an FCC rulemaking proceeding, has previously led to fines for other stations (though rarely ones of this magnitude, even where the FCC has found whole programs or portions of programs to have been sponsored - see, for example, the cases we've written about here and here dealing with "video news releases"), and has become part of the proposals for the new on-line public file, suggesting that sponsorship identification information be made available for any "pay-for-play" programming in such a file. The issue has even become important in the online world, with the FTC issuing rules that require similar sponsorship identification even in connection with social media posts for which the author has received consideration (see our summary of the FTC order here).

This case, though, seems to impose a very high penalty for a limited number of violations. Here, the announcement arguably let people know that WIN was involved with the production of the spot, even if it did not explicitly say that they had paid for the airtime. As the Licensee argued, ads for normal commercial products and services don't need explicit sponsorship tags, as listeners assume that they are being persuaded by the company that offers that product or service (even if the company is totally anonymous).

So what is the lesson of this case? First, the case says that the FCC is very concerned about sponsorship identification. Moreover, it says that the stations need to be especially careful in any sort of paid programming dealing with controversial issues. Many of the FCC's recent sponsorship fines have been in the areas of issue programming, and in those cases the fines tend to be higher than in commercial cases (compare the cases we wrote about here involving programming dealing with political issues where the host had received consideration for expressing his on-air opinions on controversial issues, with those in the cases linked to above and here, involving commercial programs where the fines were much lower). So if you are airing programming - especially programming dealing with political or controversial issues - and receiving anything of value for that programming, make sure that the audience knows who is paying for that message to reach the airwaves.

FCC Decides That Randall Terry Not Entitled to Run Graphic Anti-Abortion TV Ads in the Super Bowl For His "Presidential Campaign" - But Questions Remain

David Oxenford — Fri, 03 Feb 2012 17:48:04 -0500

In an 11th hour decision released at about 5 PM on the Friday before the Super Bowl,the FCC decided that TV station WMAQ-TV in Chicago was justified in denying Randall Terry's request to buy advertising time in the Super Bowl. As we've written before, Mr. Terry is claiming that he is a candidate for the Democratic nomination for President, and as such has a right of reasonable access to broadcast stations, meaning that they must sell him advertising time. If he had such rights, the stations could not censor the content of the ads that the candidate decided to run (see our article here about the Communications Act's no censorship rule). As Mr. Terry has promised to run some very graphic antiabortion ads featuring images of aborted fetuses, many stations were reluctant to run the ads, especially in the Super Bowl when families will be watching the big game. The FCC decided that WMAQ-TV acted reasonably in denying Mr. Terry time in the Super Bowl for two reasons: (1) he had failed to make a substantial showing of his candidacy for the Democratic presidential nomination in Illinois, and (2) even if he had, he had no right to demand that his ads be placed in the Super Bowl. Each of these prongs of the decision clarifies some issues in the law of political broadcasting that had been long-debated, but the first part of the decision leaves questions - important questions to which many stations want answers.

The first prong of the decision concluded that WMAQ-TV was justified in determining that Mr. Terry was not a bona fide candidate for the Democratic nomination for President in Illinois as he was not on the ballot there, and had not made a "substantial showing" that he was otherwise a candidate in the state (see our discussion of the requirements to be a legally qualified candidate, here). The FCC found that the station did not need to be a private investigator and ferret out every instance of campaign activity that Mr. Terry had engaged in within the state to determine if his activity was substantial. Instead, the station could rely on the information that Terry presented to it when he made his request. That information essentially amounted to the fact that he had made appearances in two small towns in the state, and had some campaign literature (though there was no evidence that it was ever distributed in Illinois). Based on those facts, the Commission denied the request - concluding that he had not engaged in campaign activities throughout a substantial portion of the state, as required by prior FCC precedent. While this may answer the question in this case (and helped to clarify the law as to the showing that write-in candidates need to make before they can demand reasonable access to broadcast stations), it leaves several questions unanswered for stations that have or may receive Mr. Terry's request for airtime in other states where Mr. Terry is on the ballot.

The decision did not reach the question of whether Mr. Terry could be a qualified candidate in other states, including states where his name does appear on the ballot for the Democratic nomination (including Missouri and Oklahoma). The FCC's decision cites a letter from the Democratic National Committee that concludes that Mr. Terry cannot be considered a bona fide Democratic candidate, as he had not shown that he had a history of participation in the Democratic Party, was dedicated to the party's success and would participate in the Democratic Convention in good faith. But the FCC decision does not specifically state that the DNC letter ends the question of whether he is a bona fide candidate for the Democratic nomination. In a case in the late 1990s involving Lyndon LaRouche, the FCC stated that the determination of a political party as to who was a qualified candidate for its nomination was binding on the FCC and would not be second-guessed. Some have suggested that the LaRouche decision gives stations the ability to conclude based on the DNC letter that Mr. Terry is not a bona fide candidate, even where he is on the ballot. But the LaRouche case arose after all the primaries were done, and the only debate was whether the candidate could run ads about the party convention. The decision did not have to address the issue of what happens when a candidate is actually on the primary ballot in a state and demands time before the primary. As the FCC rules state that a place on the ballot is enough to be a legally qualified candidate, the FCC has left stations in states where Mr Terry is on the ballot in a precarious situation - can they rely on the Democratic Party letter and deny him advertising time, or simply because he paid his filing fee and secured a place on the ballot, is he then entitled to buy time? Certainly, the latter option opens up the campaign process to all sorts of shenanigans, as anyone could pay the filing fee in states where there are not complicated ballot qualification processes, and then be able to demand time on broadcast stations - at the cheapest rates that such stations sell advertising time during the lowest unit rate windows 45 days before an election, and rely on the no censorship rule to advertise almost anything that they wanted to - bypassing many station's standards for advertising content.

The second part of the decision, that stations need not sell advertising time to candidates in the Super Bowl, is much more straightforward. Stations have always known that candidates do not have the right to demand access to any specific ad placement, as long as the station offers the Federal candidate "reasonable" access. The Commission went further here, relying on one of its policy statements on the political broadcasting rules that said that stations did not need to sell time to candidates in one-time programs of special significance where the stations would be unlikely to be able to provide equal opportunities to opposing candidates as required by law. As the Super Bowl is the highest rated program in the TV year, were the station to sell some of its limited advertising inventory to Mr. Terry, how could it offer equal opportunities to President Obama's campaign, which would have 7 days to make an equal time demand? As the Super Bowl is unique, it would simply be impossible to offer comparable time to opposing candidates after-the-fact, as required by law. This decision makes perfect sense as the Super Bowl's limited local advertising inventory provides all sorts of problems for stations - even without having to worry about political ads and the potential for equal opportunities.

This decision may not bring the Terry story to an end, as we'll have to see if more time is demanded on other stations in other states. But it does illustrate some of the many practical and philosophical questions about the implementation and obligations put on stations by Sections 312 and 315 of the Communications Act. First Amendment issues abound with forcing stations to sell time to candidates with whom they disagree and whose messages may be upsetting to many viewers. We'll see if these broader issues are further discussed as the still-young campaign season progresses.

Pirates, Pirates Everywhere - Fines Up to $25,000 for Unlicensed Radio Stations

David Oxenford — Thu, 02 Feb 2012 23:09:53 -0500

For an industry that some say is about to be made obsolete because of its digital competition, there are still many people who want a piece of the FM spectrum. We've written much about the contest between LPFM and translator proponents seeking their piece of FM spectrum - a contest that we should see resolved by the FCC in the very near future. One topic that we have not written much about is "pirate radio," stations that operate illegally - without FCC authority. This week, the FCC issued several orders, fining individuals up to $25,000 for operating pirate radio stations in various places around the country (see decisions here and here, and two other fines of $20,000 or more noted below). Pirate radio has been and remains a big problem for many broadcasters and, despite the fines in cases like this, pirates seem to continue to crop up - especially in urban markets.

The pirate radio problem has always been with broadcasters. In the past there was both the romance of the outlaw radio operator and concerns over the snake oil salesmen who were broadcasting from stations in Mexico, and there was a famous religious broadcaster who lost a battle with the FCC over the Fairness Doctrine in connection with a real radio station and then resumed operations from a boat off the coast of New Jersey. But in the last 20 years pirates have been much more localized, low power operators, trying to reach audiences largely in urban areas. Despite a series of court decisions rejecting any First Amendment claim of pirates, and denying any claim that these low-power, local stations did not implicate the FCC's power over interstate commerce regulation, pirates have never gone away. In many ways, the FCC introduced the concept of Low Power FM stations in the 1990s as a way to provide an outlet for those who might otherwise be inclined to operate an unlicensed station. In fact, one of the big arguments at the time of the initiation of LPFM was whether former pirate radio operators should be allowed to apply for LPFM stations.

But LPFM has never stemmed the pirate radio tide, as these stations keep cropping up all over the country. Perhaps LPFM has not been rolled out fast enough, or perhaps it simply is easier to just throw up a pirate station, rather than having to wait for the FCC processes - which, in the end, may not allow for a radio station in a particular community anyway because of interference concerns. The interference concerns are, of course, the biggest issue - as many full-power stations, which have been purchased for significant sums and which have large audiences, can have real issues reaching these audiences because of pirate radio stations. The pirates can also threaten public safety, as was the case with one pirate fined $20,000 last week for operating an illegal station that was causing interference to frequencies adjacent to the FM band that are used for FAA purposes.

So what can be done besides waiting for FCC enforcement, which can take time given the limited FCC staff in field offices and the multitude of activities that they must perform - and the difficulty of playing "whack-a-mole" with pirate stations who may shut down in one location, only to reemerge elsewhere a day or two later? (see this case decided last week, where a pirate was fined once by the FCC, only to start up operations a second time, leading to a $25,000 fine as a repeat operator). Some states, including Florida, New Jersey and New York have enacted state laws that make operation of a pirate radio station a state crime, so that state and local police can assist in enforcement. In some cases, that has worked very well, but local law enforcement is also tasked with many other priorities and they may not be as familiar with this crime as they would be with issues that they deal with on an every day basis.

So what is the broadcaster who is facing interference or competition from a pirate to do? First, he needs to be active in pursuing the matter, providing as much information as possible to the Federal authorities (and to state authorities where state laws apply). Find out where the illegal signal is originating. Look for other evidence of the operation (in one case in which a client of mine was involved, the pirate went so far as to have a website advertising its operations). In some cases where owners can be identified, civil suits from owners of program content (like music rights holders) can also be brought to bear. And don't give up, as authorities will usually act when provided enough information about the illegal operations, as these recent cases demonstrate.

Why Broadcasters Have To Air Political Attack Ads Even If They Don't Want To

David Oxenford — Tue, 31 Jan 2012 22:14:33 -0500

With the Florida broadcast airwaves overrun with political ads in the last few days - the great majority of them attack ads - many ask why do broadcasters keep running those ads? Of course, there are revenue considerations. But as the attacks get nastier, and perhaps even go against the interest of the station owners themselves, why do broadcasters keep running these ads? Often, it's because broadcasters have to - under the applicable laws. We've seen two stories this week that illustrate that point - one where Gloria Allred, the well-known attorney, has written to a number of television stations asking them to refuse graphic anti-abortion ads to be run during the Super Bowl sponsored by purported Democratic presidential candidate Randall Terry, and a second about an NBC-owned station in Florida apparently continued to run a Mitt Romney ad attacking Newt Gingrich, featuring NBC News footage of an old Tom Brokaw Nightly News report, even after NBC News asked the Romney campaign to stop using the clip. The NBC station apparently recognized its obligations, while Ms. Allred ignored the station's obligations under Section 315 of the Communications Act and the FCC's political broadcasting rules.

Broadcasters are sometimes in a sticky position with nasty political ads, as by law (Section 315 of the Communications Act) they are not allowed to censor a candidate ad. What this means is that they cannot reject a candidate ad based on its content, with the possible limited exception of where the ad violates a Federal felony statute like the obscenity laws (though not the indecency rules, which are not felony statutes). If the ads just violate someone's property interests, or could give rise to some sort of civil liability (e.g. defamation), as we've written before, the broadcaster is immune from liability for running the ad by a candidate or his authorized campaign committee. The broadcaster is also immune from liability from a perceived copyright action like that alleged by NBC. But that immunity arises only because the station cannot, under law, reject the ad. So the only remedy for someone objecting to the content of a candidate's ad is to seek a remedy against the campaign itself, not against any station that runs the campaign's ad. (See examples of suits against the candidates, but not the stations, in cases we wrote about here and here) So, even if the copyright owner who objects to the use of its copyrighted content in an ad owns the TV station, it is still stuck running the ad if the candidate insists.

Similarly, in the case that Ms. Allred complained about - asking stations to pull the graphic anti-abortion ads sponsored by Randall Terry, she posed the wrong question - alleging that the ad would be offensive and inflammatory. Stations can't make those judgments about political ads - they have to run them even if they can be upsetting. The FCC has even been told by the Courts that it can't allow stations to channel upsetting political ads (like those anti-abortion ads that Mr. Terry plans to run), into late night hours. If a candidate wants to run ads in the middle of the day (or in the middle of children's programs), a station can warn its audience that the ad may be disturbing and that it is being forced by law to run it, as long as such warnings are done in a neutral fashion, but it must run the ad in the form the candidate created it. So what should Ms. Allred have argued about the Terry ads?

In recent weeks, as the Terry ad has sprouted on more and more TV stations around the country (see our article here), there have been questions raised as to whether he really is a bona fide legally qualified candidate for the Democratic nomination for president. Some have questioned whether he is even a Democrat, and recently the Democratic National Committee issued a letter addressing the subject - finding that Mr. Terry did not meet the party's qualifications to be a Presidential candidate. Mr. Terry is contesting whether that letter is enough to take him out of the status of a "legally qualified candidate", especially in states where he has qualified for a place on the ballot. Stations will need to make a judgment as to whether this letter itself is sufficient to disqualify him as a candidate based on some prior precedent from the FCC that seemed to decide, in a 15 year old case involving Lyndon LaRouche, that where the party declared someone was not qualified, the FCC would not second guess that determination. But the facts of that case were different, including the fact that the primaries had been completed at the time of the ad request. So we don't know for sure what decision on this issue will come from the FCC. Watch to see if there is any FCC guidance in the few remaining days before the Super Bowl.

But back to the subject at hand - stations must run candidate ads without censorship. But note, as we've written many times before (see, for instance, our articles here and here), the no-censorship provision applies only to candidate ads. Third party ads - those by PACs, Super PACs, labor unions, interest groups or even corporations or individuals - don't get this same "no censorship" treatment - so stations are not shielded from liability for the contents of those ads. We are sure that we will be writing about this subject again soon as this hotly contested campaign cycle plays out.

Details of the ASCAP Settlement with the Radio Industry - What Will Your Station Pay?

David Oxenford — Mon, 30 Jan 2012 23:55:22 -0500

ASCAP and the Radio Music Licensing Committee have reached a settlement on the amount that radio stations will pay to ASCAP for the use of music for the period through the end of 2016. The agreement was approved last week by the US District Court in the Southern District of New York acting as a “rate court” to consider those fees. We reported that a settlement had been reached in early December, and now we’ve seen the actual documents and can provide some details of this agreement between the commercial radio broadcast industry and ASCAP. It should result in significant savings for broadcasters from rates that they had been paying prior to January 1, 2010.

As we wrote in 2010 when RMLC and ASCAP were first trying to reach a deal on new rates, the biggest problem with the old rates was the payment structure. Rather than making ASCAP a partner of the broadcaster by cutting them in for a percentage of the broadcaster’s revenue, under the deal that ended in 2009, ASCAP was to receive a set fee each year from the broadcast industry. That set fee was divided among all commercial radio stations not based on station revenues, but instead based on the market size and technical coverage of each station. So all similarly powered stations in a market paid the same ASCAP fee, whether they were big revenue producers or not. And the agreement was entered into during a period where radio broadcasters thought that revenues would be ever-increasing, so that set fee to be paid to ASCAP increased each year. As the economy and broadcast revenues fell during the later years of the deal, while the set fee kept increasing,broadcasters were paying an ever-increasing percentage of their revenues to ASCAP – far more than would have been paid had the industry stuck to a percentage of revenue formula.

Well, the experiment is over, as the new deal returns to a traditional percentage of revenue deal. Music radio pays ASCAP 1.7% of “revenues subject to fee from radio broadcasting." Essentially, that is all the revenue that a station receives from advertising and promotions, less a 12% deduction (presumably to cover commissions and costs of collection). Barter revenues, and payments made to networks (as opposed to the stations themselves), are excluded from the gross revenue calculation. All revenues from HD programming (including any amounts received for brokered programming) is also included (at least for the time being – subject to reevaluation should HD revenues account for 25% of radio revenues by 2015). New Media revenues, if the arise exclusively from streaming your station on the Internet, are also included in this gross revenue calculation.

Unlike the old deal, this deal also covers other New Media revenues that arise from other Internet music uses. Under the old deal, if you launched a “side channel” on your website (i.e. a web-only internet radio channel) or made other use of music on your website, you had to get licensed separately for this activity under an ASCAP web license. Only simulcast streaming was covered by the old broadcaster's deal with ASCAP. Under this new deal, New Media revenues that are more than just simulcasting your over-the-air signal are also covered, and are also subject to the same 1.7% of revenue fee, but there is a 25% deduction from that fee (presumably due to the higher commissions customarily paid for online revenues, but subject to adjustment back to 12% if the total of the higher new media deductions would cost ASCAP more than $5,000,000 than if the deductions had been at the 12% level).

Other good news includes that the broadcast industry has been paying too much from January 1, 2010, when this rate period began, until now, and the radio industry is owed a $75 million refund by ASCAP. As we wrote in 2010, radio has been paying under an interim fee arrangement since the old deal expired. The interim fee represented a discount off of the old fees, but it was a discount that was not as steep as that which the new deal represents. The overpayment will be paid back to radio broadcasters in $15 million yearly installments, allocated to the stations that paid those royalties by being applied to their obligations in 2012-2016 using a formula set out in the agreements.

The deal also provides for fees to be paid on a per program basis for station that use little music in their broadcasts (or on their websites). Formulas for calculating these fees are provided in the agreements.

Recordkeeping is also addressed in the agreement, providing for reporting only one week per year for music stations. More frequent reporting is required for stations paying on a per program basis. Records of what music was played on the station will be reported electronically on forms to be developed by ASCAP and approved by the RMLC.

Minimum annual fees for any station are $588.

Finally, the Judge’s order approving the agreement provide for payment to RMLC to support its enforcement of the agreement and its efforts going forward to work with broadcasters on licensing issues. Fees range from $12 per station for those with less than a $6500 annual obligation to $510 per year to stations that pay over $20,000 per year to ASCAP.

Obviously, this summary just hits the highlights of the deal. Radio stations should be receiving a copy of the agreement, and should review it carefully to determine how it applies to their operations. And remember, this is but one part of the adjustment of the radio music licensing rates, as the RMLC still has to reach an agreement with BMI on the rates that they will charge. This agreement may set a benchmark for RMLC’s proceeding with BMI to set rates covering the same period. Watch for developments in that case in the coming months.

New FCC Rules Regarding Broadcast and Communications Towers; Further Steps Taken to Protect Migratory Birds

Brendan Holland — Sun, 29 Jan 2012 17:34:50 -0500

With the recent publication in the Federal Register, several new Commission rules and policies regarding communications towers and migratory birds are now on the books, however, they are not yet effective as the collection of information still requires OMB approval. The Commission's new rules are an outgrowth of a decision from the Court of Appeals in 2008 in which the court found the FCC's tower registration procedures to be inadequate. In its Order on Remand released December 9, 2011, the Commission revised its rules governing the review and registration of proposed broadcast and communications towers to provide greater opportunity for comment by the public and interested parties. In addition, while this Order does not resolve the ongoing FCC rule making regarding the impact of towers on migratory birds it does adopt interim policies regarding certain tower proposals. The Commission's new rules require the following:

Prior to the filing of an antenna structure registration for a new tower or antenna structure, members of the public must be given an opportunity to comment on the potential environmental effects of a proposal. Thus, an applicant for a new tower that requires antenna structure registration, or a modification of a registered tower that would have a significant environmental impact, must initially submit a partially completed tower registration form (Form 854) and give local notice of the proposed tower through a local newspaper or local zoning public notice process. After local notice has been provided, the FCC will post the partially completed registration form on its tower website for 30 days notice. Members of the public may then file comments or to request further environmental review of the proposed tower. The FCC staff will consider any comments received from the public to determine whether an Environmental Assessment is required for the tower. Notably, this additional period for public review and comment will be required for all towers requiring registration in the FCC's ASR database, even if the applicant has determined that the proposed tower will not have a significant environmental impact and that a complete Environmental Assessment is not required.

Environmental notice will also be required if an applicant seeking to register an antenna structure changes the lighting of an existing tower to a less preferred lighting style.

Proposed towers that require an Environmental Assessment must file such assessments with the antenna structure registration application and the Environmental Assessment will be considered in the context of the tower registration, rather than considered with a service-specific license or permit application. Previously, some environmental assessments were filed with the license application and considered by the FCC Bureau issuing the service license or permit (for example, by the Media Bureau as it issued a radio or television station construction permit.)

Institute an interim procedural requirement that an Environmental Assessment must be filed for all proposed registered towers over 450 feet in height. FCC staff will review the Assessment to determine whether the tower will have a significant environmental impact. This processing requirement is an interim measure pending completion of the ongoing programmatic environmental analysis of the FCC's antenna structure registration program to determine what changes, if any, are necessary to consider the impact of towers and tower lighting on migratory birds.

Once OMB approval is received for the collection of information required by these new rules, the FCC's Wireless Telecommunications Bureau will issue a further Public Notice establishing the date on which these new environmental notification requirements will become effective. According to the Order, antenna structure registration applications that are pending on the effective date ordinarily will not be required to complete the new environmental notification process. Given the new requirements for public notice and the ability for interested parties to file comments electronically through the FCC's tower registration database, these additional procedures will add add more time to the process of proposing and building a new broadcast or communications tower. Stations or parties interested in building new towers are advised to review the Commission's new procedures carefully and plan on additional lead time when considering new construction.

$22,000 FCC Fine for Failure to Broadcast All Material Rules for a Station Online Contest

David Oxenford — Fri, 20 Jan 2012 12:02:18 -0500

The FCC released a Notice of Apparent Liability proposing a $22,000 fine for a contest to win a car conducted by a cluster of five stations. The contest (the award of a car to the entrant who produced the best commercial for the car, as voted on by website users) was conducted principally through the stations' websites. But the stations did promote the fact that the contest was being conducted on the air. A disappointed contestant accused the licensee of rigging the contest by awarding the prize to a friend of a station employee for a video that was entered after the official end of the contest. The FCC totally rejected the basis of the complaint (finding no basis for the conclusion that favoritism had been shown - especially as voting for the winner was done by website visitors, not station employees). Nevertheless, the FCC proposed the $22,000 fine for the failure to broadcast all of the material rules of the contest on the air. This proposed fine reinforces two principles that we have written about in previous cases:

You must provide all of the material rules of the contest in on-air announcements a sufficient number of times so that a listener could be expected to hear such announcements (see our article here about what are considered the "material terms" of a contest), and
The rules for a contest that is primarily conducted through a station website must still be broadcast on the air if the fact that the contest is occurring on the website is promoted over the air (see our article on a previous case reaching the same conclusion).

Here, the licensee posted the rules of the contest online, which one might think would be sufficient, as all contestants entered online, and the winner was selected through online voting. But the FCC felt that some of the information given on the air (and in the contest rules) about entry dates was somewhat ambiguous, and decided that, once a contest by a broadcaster is mentioned on the air, all the rules must be given on the air. As the contest was conducted by multiple stations, the fine reflects a multiple of the FCC's standard $4000 fine for a contest rule violation. This decision seems to penalize a broadcaster for being a broadcaster, as a similar contest, had it been run by the car company instead of the station, could have been promoted and conducted in exactly the same way, and the FCC would not have penalized the station. But according to the FCC's interpretation of Section 73.1216 of its rule regarding station contests, a station conducting a contest on its website, but promoted on the air, needs to be careful to publicize all of the material rules on the air avoid this FCC trap for the unwary.

Is Super Bowl Protected by Trademark or Copyright Law? Try Both.

David Silverman — Thu, 19 Jan 2012 17:29:15 -0500

One of the questions we commonly get from broadcasters and others around this time of year is whether and/or how they can use the term SUPER BOWL. Some refer to it as a trademark while others call it a copyright. Who is right...and how can it be used? The term SUPER BOWL is a registered trademark owned by the National Football League. We previously discussed this issue in 2009, 2010 and 2011.

Actually, the NFL owns at least eight trademark registrations containing the words SUPER BOWL, as well trademark registrations for the terms PRO BOWL and even SUPER SUNDAY. Aside from these trademark registrations, the NFL also owns the copyright to the telecast of the game itself. You may have heard that in past years, the NFL tried to stop Super Bowl parties shown on large TV screens. This was an enforcement of the NFL's copyright in the game. Now, the NFL apparently no longer tries to stop Super Bowl parties unless the proprietor charges admission to see the game. Again, this is a copyright issue. But what do these rights mean for a broadcaster who wants to run a Super Bowl promotion or an advertiser who wants to run a campaign involving the Big Game?

When it comes to use of the trademarked term SUPER BOWL, the NFL will take action against third party attempts to use that term in a commercial sense, in other words, to sell goods and services using the term SUPER BOWL in advertising. This is because commercial sponsors pay the NFL to be the official car or soft drink or whatever of the SUPER BOWL. Any unauthorized use of that term in advertising could imply a false sponsorship or affiliation with the NFL.

So, what is permitted? It is fine to use the term SUPER BOWL in news stories about the game and in conversations about the game. There is a trademark concept called "nominative fair use" that allows others to use a trademarked term when there is simply no better way to refer to it. But that concept does not extend to commercial use of the term.

In summary, you can discuss the Super Bowl and do news stories about the Super Bowl, all while referring to it as the Super Bowl. But any commercials or promotional announcements should avoid use of that trademarked term. It is OK for commercials to refer to it as the "Big Game" or any other term that does not include the words "Super Bowl" or "Super Sunday."

And go ahead and have that TV Super Bowl party you were planning. You will not be violating any copyright enforced by the NFL so long as you do not charge admission to see the game. By contrast, selling food and drink at the venue is permitted. In fact, that is pretty much what every bar in the US will be doing on Super Sunday.

Broadcast Station Reminders: License Renewals, Pre- and Post-filing Announcements, EEO Public File Reports, and Noncommercial Ownership Reports due for Select States

Brendan Holland — Thu, 19 Jan 2012 15:11:25 -0500

Just a reminder to broadcast stations in certain states of several upcoming February obligations. First up, February 1st is the deadline for Radio Stations in Arkansas, Louisiana, and Mississippi to file their FCC Form 303-S license renewal applications seeking a renewal of their broadcast licenses. (See our earlier license renewal advisory for more information about the FCC's license renewal process.) Accordingly, radio stations in those state/territories will also need to begin their License Renewal Post-Filing Announcements on February 1st to inform their communities of the renewal filing. Specific language for the announcements can be found on the Commission's website here, and the post-filing announcements continue on Feb. 16, Mar. 1, Mar. 16, April 1, and April 16.

Second, the next batch of radio license renewals -- which will be filing their renewals on April 2nd -- is Indiana, Kentucky, and Tennessee, which means that Radio Stations licensed to those states, must begin their License Renewal Pre-Filing Announcements on February 1. The precise language of the pre-filing announcements—which is again dictated by the FCC’s Rules—can be found here. The pre-filing announcements for these stations continue on Feb. 16, Mar. 1, and Mar. 16.

Third, by February 1, Radio and Television Station Employment Units (SEUs) in Arkansas, Kansas, Louisiana, Mississippi, Nebraska, New Jersey, New York and Oklahoma must prepare and place in their public inspection file their Annual EEO Public File Report. Stations that have websites must also post the Annual Report on their website. The Annual EEO Public File Report summarizes the station's or the SEU's EEO activities during the previous 12 months, and provides information about the recruitment and outreach that the station conducted in the past year. A copy of our recent reminder advisory with more information can be found here. In addition, Radio Stations in Arkansas, Louisiana, and Mississippi will also be filing an FCC Form 396 EEO Report by February 1 in connection with their license renewal filing.

Finally, February 1st is the deadline for Noncommercial radio stations in Arkansas, Louisiana, Mississippi, New Jersey and New York, and Noncommercial television stations in Kansas, Nebraska and Oklahoma to prepare and file an FCC Form 323-E Biennial Ownership Report with the FCC. Please note, this filing date applies only to noncommercial radio and TV stations in the states noted above. The FCC has revised its rules regarding the reporting of ownership interests for commercial broadcast stations, as well as revised the commercial Ownership Report—Form 323. Accordingly, commercial stations now file biennial ownership reports on one unified filing date, which will next occur on Nov. 1, 2013. A copy of our recent reminder to noncommercial stations about the February 1 filing deadline can be found here.

Comment Deadline of March 5 Established on FCC Proposals for Reform of Multiple Ownership Rules

David Oxenford — Thu, 19 Jan 2012 09:01:24 -0500

The FCC' Notice of Proposed Rulemaking in its Quadrennial Review of the Multiple Ownership Rules was published in the Federal Register today, setting the deadline of March 5 for initial comments in that proceeding. Reply comments are due on April 3. We summarized the FCC's tentative conclusions on changes to the ownership rules when the Commission first released its NPRM in late December. The issues to be considered include changes to the broadcast-newspaper cross ownership restrictions, the possible elimination of rules restricting the ownership of radio and TV in the same market, the potential attribution of TV shared services agreements (i.e. potentially making a shared services agreement "count" as an ownership interest in a multiple ownership analysis), and other possible revisions to the local radio and TV ownership limitations (or exceptions that would allow for waivers of the limits in defined circumstances). The Commission is also looking for suggestions on how these rules can be used to promote the minority ownership of broadcast stations.

As we wrote in December, this is but one more step in a long process before any new rules will be adopted. After the filing of the comments, there are bound to be many groups informally discussing proposed changes with FCC Commissioners and staffs, and much consideration before any final rules are adopted. Even these tentative conclusions took the FCC over a year and a half to produce from the date of the initial Notice of Inquiry in this proceeding. Given the upcoming elections, and the potential for just about anything to become a campaign issue, a decision like this, that may contain controversial elements, will most likely be postponed until some time after election day. And even when decided, these rules are often debated for years afterward, as this NPRM is reviewing issues that Courts have rejected from previous ownership review orders reached in 2003 and 2007. Nevertheless, look for much more debate on these issues in the coming months.

Further Details on the New Closed Captioning Rules for IP-Delivered Video Programming

Brendan Holland — Wed, 18 Jan 2012 11:35:10 -0500

As we reported last week, the FCC has adopted a Report and Order establishing rules for the closed captioning of video programming delivered via Internet protocol (i.e., IP video), as required by the 21st Century Communications and Video Accessibility Act (CVAA). DWT has now released an advisory with further details about the new rules, which is available here. The new rules govern TV stations, cable systems, broadcast and cable networks and virtually every other professional video program producer who is now, or will be in the future, making programming available online. The rules also impose new requirements on hardware (such as set-top boxes, PCs, smartphones DVD players, Blu-ray and tablets) designed to receive or play back video programming transmitted simultaneously with sound and integrated software.

With rules that are so wide-reaching, everyone involved in these businesses needs to understand what the new rules entail. A summary of the Commission's Order follows below, and please see our advisory for complete details about the new rules. Consistent with CVAA's mandate, the FCC has adopted rules that:

Extend to all full-length video programming previously distributed on television with captions to require that captioning appears when such programming is displayed online via IP;
Establish a two-year transition for uncaptioned, archival IP-delivered content that is shown on TV with captions after the new rules’ effective date;
Require video programming owners to send caption files for covered IP video to video programming distributors and video programming providers along with the program files, or alternatively, inform the distributors–using a mechanism agreed to by the parties–that captions are not required for a particular program;
Require video programming distributors and video programming providers to enable the rendering or pass-through of all required captions to the end user;
Require captioning of covered IP video to be of at least the same quality as the captioning that the programming had when it appeared on TV;
Establish deadlines by which categories of covered IP video must be captioned, as follows:
- Programming that is prerecorded and unedited for online distribution, when subject to the new requirements, must be captioned within 6 months of the rules’ effective date;
- Programming that is aired live or “near-live” on TV, when subject to the new requirements, must be captioned within 12 months of the rules’ effective date;
- Programming that is prerecorded and edited for online distribution, when subject to the new requirements, must be captioned within 18 months of the rules’ effective date;
Adopt the Society of Motion Picture and Television Engineers (SMPTE) Timed Text format (SMPTE ST 2052-1:2010: “Time Text Format (SMPTE-TT)” 2010 as a safe-harbor interchange and delivery format, but stop short of requiring all covered entities to use this standard;
Decline to adopt categorical exemptions other than that mandated by the CVAA (i.e., consumer generated programming. which is statutorily exempt);
Establish procedures by which video programming providers and video programming owners may petition for exemptions from the new requirements based on economic burden;
Accommodate de minimis failures to comply with the new captioning obligations;
Adopt procedures for complaints alleging violations of the new rules;
Decline to adopt specific forfeiture amounts, opting instead to penalize violations based upon the facts and circumstances of each case;
Permit entities to comply with the new requirements by alternate means; and
Impose requirements for devices subject to the closed captioning requirements.

Given the scope of the new rules, there will undoubtedly be questions and requests for clarification that arise along the way. We wll continue to track these new rules and provide further updates on this important issue.

FCC Releases Final Rules on Closed Captioning for IP-Delivered Video Programming

Ronald London — Fri, 13 Jan 2012 17:01:39 -0500

This afternoon, the FCC released its long-anticipated Report and Order (R&O) setting forth the Commission’s new closed captioning rules for IP-delivered video programming, pursuant to the 21st Century Communications and Video Accessibility Act (CVAA).

As we explained when the rules were first proposed in September, the CVAA directed the FCC to establish how and when certain IP-delivered video programming must be captioned, as well as the closed captioning capabilities for devices used to view video programming. The R&O adopts closed captioning requirements for owners, providers, and distributors of IP-delivered video programming; a safe harbor technical standard and delivery format for IP video captions; a staggered compliance schedule; complaint rules; and requirements for manufacturers of devices used to view the video programming at issue.

We are currently reviewing this comprehensive rulemaking, and will post our in-depth review next week, both here and on our DWT Advisories page.

More EEO Fines on Their Way - And Helpful Hints on EEO Compliance From the FCC's EEO Webinar

David Oxenford — Thu, 12 Jan 2012 09:11:37 -0500

Last week, I participated in an FCC-sponsored webinar to discuss its EEO rules. Along with two other private firm lawyers, the chief of the FCC's Office that administers its EEO rules and one of his senior staff members participated on a panel to discuss the legal obligations of broadcasters and MVPDs in meeting the EEO rules. The panel, which lasted almost two hours, was a very thorough discussion of the requirements of the FCC rules. It provided insight into how the FCC identifies problems, and even suggested some ideas as to how broadcasters can assure compliance with the requirements in the easiest way possible. While lengthy, the webinar, which is archived on the FCC's website, is worth viewing to get a very good summary of the FCC rules. If a station or MVPD has its management employees and others with hiring responsibility sit down and watch the video, and use it as part of a training program for management employees on EEO matters, it may even count as one of the non-job specific supplemental outreach initiatives that the FCC requires each entity subject to the EEO rules to conduct.

We wrote last week about a recent set of FCC fines to two broadcasters that had not widely disseminated information about all of their job openings - relying instead on only a combination of internal sources (word-of-mouth, station websites, intra-company referrals) and Internet websites for their outreach efforts for a substantial number of job openings. At the webinar, the FCC officials said that there were a number of other enforcement actions in the pipeline that should be public soon. The FCC is reviewing every license renewal application that is filed with the FCC to determine if its accompanying Form 396 provides information necessary to demonstrate compliance with the three prongs of the FCC's EEO program - wide dissemination for all job openings, notice of job openings to community groups that request such notice, and non-vacancy specific initiatives that are designed to educate a community about the nature and requirements of broadcast jobs. Stations are also reviewed when the FCC conducts random audits (5% of all stations and MVPDs are supposed to be audited annually) and when complaints or other information comes to the attention of the FCC staff. Staff members remarked that they have even called stations to discuss issues when visiting a station website for personal reasons and noting the absence of the most recent Annual EEO Public File Report that needs to be posted on a station website on the anniversary date of the filing of the license renewal applications for stations in the state of the station's city of license.

While there was discussion about the Internet issue, and whether, in today's world, the Internet had become the one easy way to reach all groups within a community (replacing the large daily newspaper whose classified ads the FCC used to look at as the safe harbor for broadcasters to use for their wide dissemination of information about job openings), the FCC staff indicated that there was no movement within the Commission currently on the horizon to change their current position. However, the FCC staff members offered a willingness to reevaluate the issue if they were presented with information about the pervasiveness of online job searching. In the interim, broadcasters need to reach out to all the significant community groups in their area with information about job openings using these more traditional sources, like the local newspaper and direct outreach to community groups through direct emails or letters. All the panelists agreed that making at least some personal contact with outreach groups - including local colleges and trade schools, minority and community organizations, employment agencies and others - helps to make the outreach effort more effective.

We also discussed the "internal promotion" exception to the wide dissemination requirement. If a station wants to promote a current full-time employee, no recruitment is necessary (the assumption being that if, for instance, a sales person is promoted to sales manager, there would be an opening for a new sales person, and recruiting for that open position would take place). Promoting a part-time or temporary employee to a full-time position can take advantage of this internal promotions exception, if the part-timer or temp was hired using wide-dissemination. While there is an old proceeding outstanding about whether or not to extend the wide-dissemination requirements to part-time hiring, at this point the FCC staffers indicated that no decision was imminent. But, obviously, using outreach efforts to fill part-time positions is advantageous so a part-timer can be promoted to full-time without the outreach efforts if they prove to be a valuable employee.

There was also much discussion about the non-vacancy specific employment initiatives, or supplemental efforts, that stations need to conduct to comply with the FCC rules. These supplemental efforts are conducted by all broadcast employment units with five or more full-time employees, whether or not the station has any job openings. The idea is that stations help to educate the public about the types of jobs available at a station, the qualifications for those jobs, how to find out about those jobs. Also counted are programs to train existing employees to acquire new job skills. The FCC staffers on the panel seem to take an expansive view of these efforts - evidencing a willingness to count any meaningful activity where station employees take on this educational role. Credits or partial credits can be obtained for employees speaking at schools, for station visits by boy scout troops, for station promotional efforts in the community where some information is provided to attendees at the event about broadcast employment issues, and (in some instances) for training of existing station employees. Internships have always been a staple of meeting these supplemental efforts requirement and, as the efforts are judged on a two year period, the FCC staff saw nothing wrong for claiming credit for two separate internship programs where there was recruitment at different times. In other words, if you have an intern in the fall semester, and then recruit at a school for an intern who you host in the spring semester, the FCC staff seemed open to counting this for two credits. But, as I warn broadcasters at all EEO seminars that I do, overachieve on these initiatives, as we have yet to see any cases where the FCC formally interprets what does and does not count in connection with these programs.

Documentation and self-assessment were also discussed. The FCC, in virtually every case where there has been an EEO fine, has also assessed a fine for failure to self-assess the EEO program. Self-assessment is written into the rules, so stations should be meaningfully reviewing their programs to make sure that they are being properly conducted, all of the required records are being kept, and that the programs are actually producing interviewees from recruiting sources outside of the traditional, in-house sources which the FCC felt that broadcasters in the past relied on too heavily.

These are but some of the issues tackled during this program, and just some of the issues to be considered in evaluating your EEO program. For more information about EEO compliance issues, look at some of past articles on this issue, and check out some of our other advisories on the subject. Our Guide to the FCC's EEO Rules is available here. Our most recent advisory about the requirements for the annual public inspection file report is available here. And slides from a recent presentation that I did about these rules for a state broadcast association are available here.

FCC Makes Changing City of License of Radio Stations More Difficult

David Oxenford — Wed, 11 Jan 2012 10:17:36 -0500

Changing the city of license of an AM or FM station is getting more difficult, based on recent FCC decisions. As we have written before, the FCC's Rural Radio order changed the manner in which the FCC reviews city of license changes. In connection with any proposed city of license change, the FCC reviews the proposal to make sure that the change will result in a favorable arrangement of allotments, making sure that the distribution of radio channels is in the public interest. In making that decision, the FCC has relied on a series of priorities - first insuring that all areas of the country get at least two radio reception services (Priority 1 was to provide service to "white areas" that currently receive no radio service at all, Priority 2 was to provide a second reception service to all areas). The next priority was to provide as many communities as possible with their first "transmission service", i.e. a station licensed to that community that would have a primary responsibility to address its needs and interests. Finally, if there was no proposal to provide a first or second reception service or a first local transmission service, the FCC looked at Priority 4 factors, i.e. other public interest matters. In the past, service to a greater number of people itself was a Priority 4 consideration. Based on a case released last week, service to a greater population apparently is no longer be viewed as justification for the change in the city of license of a radio station - even if the proposed move is from a rural community that already has a significant amount of service to a similarly well served urbanized area and results in a significant increase in the population served by the station.

The Rural Radio order changed the Priority 3 preference for a first transmission service by determining that any proposal for a city of license within an urbanized area would be viewed as being a proposal for service to the entire urbanized area (meaning that, instead of being a first local service to a named community, all the stations in the urbanized area would be considered as serving the same city). Thus, a proposal to take a station from a rural area (e.g. proposing to take the third radio station from some smaller rural town) to a city without a service in a urbanized area would no longer be viewed as providing the first local transmission service to the suburban community (but would instead be viewed as being a proposal to provide just another service to a metro area that probably already has many stations that are licensed to the various communities in the urbanized area). Some had thought that, while Priority 3 would no longer justify such a move, a Priority 4 preference would be available if the move would allow the station to serve a much larger population, and if any loss area was already well served. In the proposed move discussed last week, the Commission relied on language in the Rural Radio Order that stated that population increases alone would not be enough to justify a city of license change when a station proposed to move into an urbanized area. In this case, the Commission's staff found wanting a proposal to move from the well-served community of Boone, Iowa to a community in the Des Moines urbanized area - even though the proposed change would result in service to over 300,000 more people than are currently served by the station - increasing the number of people served by the station from less than 100,000 to over 400,000. The request was not denied outright, but instead the applicant was given another opportunity to supply additional information to demonstrate the public interest benefits that would result from the move.

The Rural Radio presumptions seem to be looking for qualitative judgments about the areas and populations being served. Various petitions for reconsideration of the Rural Radio order have been filed and are pending before the FCC (including one that I filed for clients) questioning the revised presumptions - and asking how they can be applied in real life situations. In cases such as this one, and another decided last month, significant populations increases that would vastly improve the reach of a station were deemed insufficient to justify a city of license move. Clearly, broadcasters and listeners would benefit from such moves, yet the Rural Radio Order seems to want to protect every listener choice of those in more rural parts of America. While the Order does not explicitly rule out all moves into urban areas, it does not provide any clear-cut guidelines as to when such moves might be seen to be in the public interest, or even as to what specific criteria will be evaluated when reviewing such moves. Will the Commission determine that loss of service to any area outside an urbanized area - no matter how well served that area may be - is more important than providing more service to an urbanized area? Seemingly, this will cut off all opportunities to move stations to urbanized areas, entrenching the competitive landscape that currently exists in such area, without any evaluation of the economic survival opportunities of these additional services in rural areas. New cases will probably answer such questions but, in the interim, many broadcasters will be left with little or no guidance on how such moves will be treated.

Supreme Court Hears Oral Argument in Broadcast Indecency Case

Ronald London — Tue, 10 Jan 2012 18:29:16 -0500

The Supreme Court heard oral argument today (Jan. 10, 2012) in FCC v. Fox Television Stations, which put squarely before the Court the constitutionality of the FCC’s current indecency enforcement regime. The case came to the Court from decisions by the Second Circuit, involving broadcasts of the Billboard Music Awards and NYPD Blue, which held that the enforcement regime at the center of the FCC’s “crackdown” on broadcast indecency over the last several years had become unconstitutionally vague.

The FCC argued that, whatever inherent judgment calls its “contextual” approach to indecency may present in close cases, the broadcasts at issue were clearly indecent under the current test, which it urged is not unconstitutionally vague. Broadcast television networks argued the Second Circuit correctly held the enforcement regime gives the FCC too much discretion to intrude on editorial judgments by broadcasters and to enforce the indecency prohibition arbitrarily. The current regime, it was argued, allows Commissioners to apply their subjective views of a program’s merit, and to unconstitutionally assess whether it was “essential” for a show to include its potentially indecent elements. They further urged the time has come for the Supreme Court to revisit its landmark Pacifica case, which gives the government greater leeway to regulate indecency in broadcasting in ways that it generally cannot for other media.

The Justices asked both the Solicitor General, who argued for the FCC, and the broadcasters’ counsel a number of probing questions. They explored both the FCC’s track record in enforcing indecency rules, especially its decisions that the Second Circuit and broadcasters cite as creating unpredictable standards for whether programs can be found indecent and punished with fines, as well as the implications of invalidating the current standard as vague. They also examined whether technological evolution renders Pacifica an anachronism.

The members of the Court appeared to come at the case from very different angles. Some sought to explore whether the case could be decided on very narrow grounds, while others were willing to probe the ultimate constitutionality of the indecency regime, while still others suggested the evolution of media technology might ultimately overtake the constitutional dispute, rendering it self-resolving. Some Justices seemed more than willing to allow the FCC to try to preserve broadcasting as a “safe haven” for non-indecent programming, even suggesting that doing so could be allowed for its “symbolic” value, if for no other reason. There were also questions about whether TV, which allows individualized blocking of programs and channels by viewers who wish to do so by using the V-Chip, could be treated differently for constitutional purposes vis-à-vis indecency, from broadcast radio, where such user-empowering tools do not yet exist.

Justice Sotomayor recused herself from this case, so a 4-4 split on the Court is theoretically possible, which would uphold the decision of the Second Circuit. But ultimately, the argument is one that is particularly difficult to handicap, except to say it is likely the decision will be deeply divided and announced in June as the current Supreme Court Term draws to a close.

Extensions of Time for Comments in FCC Proceedings on New Form to Document TV Public Interest Obigations and Online Public File

David Oxenford — Mon, 09 Jan 2012 14:29:13 -0500

The FCC has extended the comment deadline in two proceedings looking at imposing new public interest obligations on TV broadcasters (and potentially, at some point in the future, on radio stations as well). Both proceedings are an outgrowth of the FCC's Future of Media Report, that suggested that broadcasters be made to be more responsive to their communities through better documentation of how they are meeting their public interest obligations. We mentioned in our post on January FCC deadlines last week, that the reply comment deadline on the Notice of Proposed Rulemaking on the online public inspection file, which was originally scheduled for last week, has been extended until January 17. In addition, the initial comments on the Notice of Inquiry on the development of a form on which broadcasters would report on their public interest programming (to replace the Form 355 that was adopted but never implemented) were due on January 17, but the due date for those comment has been extended until January 27, with replies now due on February 9. We summarized the issues raised by the online public file notice of proposed rulemaking here, and those set out in the Notice of Inquiry on the new form to document the public interest service of TV broadcasters here. File comments as to how these proposals would affect your operations, and watch to see what action the FCC takes later this year in these very important proceedings.

Copyright Royalty Board Starts Proceeding to Set Royalty Rates for Background Music Services - Reminder to Webcasters To Start Thinking of the Next Royalty Case

David Oxenford — Thu, 05 Jan 2012 07:57:42 -0500

The Copyright Royalty Board has just announced that it is accepting petitions to participate in the next proceeding to set the royalty rates to be paid for the ephemeral copies made by "business establishment services" in connection with any digital transmission of sound recordings. Business establishment services are essentially background music services who provide music to businesses to be played in stores, restaurants, elevators, and other establishments. Under the Copyright laws, businesses are not required to pay a public performance royalty under Section 114 for the use of sound recordings (they do pay ASCAP, BMI and SESAC for the public performance of musical compositions). But the law (Section 112) does require that these services pay for the ephemeral copies made in the transmission (e.g. server copies). In the last proceeding, settled in 2008, SoundExchange and participating services reached an agreement to pay a fee of the greater of $10,000 or 10% of revenues. Parties who want to participate in this new proceeding to possibly adjust this rate must file a petition with the Copyright Royalty Board, showing their interest in the proceeding, by February 2. The CRB will later this year announce a settlement window, hoping that the parties who file notices of intent to participate can work out a deal. If no deal is reached, direct cases will be due in the fall, and a hearing will be held next year, with the rates to be set before the current rates expire at the end of 2013.

This Notice reminds webcasters that all sound recording performance rates are temporary ones, that have to be readjusted every 5 years. Webcasters will be filing similar notices to participate in the next proceeding in January 2014, with new rates to be set before the end of 2015. We'll write soon about the issues that are likely to come up in that proceeding. But webcasters should be making their plans now to be ready to put on a good case as to why the current rates should be adjusted in the 2015 proceeding.