Broadcast Law Blog

Broadcast Law Blog

Looking at Music Royalty Issues for Radio and TV Broadcasters

Posted in Advertising Issues, Broadcast Performance Royalty, Intellectual Property, Internet Radio, Music Rights

Last week, I participated in a discussion about music royalties for broadcasters at the Texas Association of Broadcasters Annual Convention in Austin. Speaking on the panel with me were the heads of the Radio Music License Committee and the TV Music Licensing Committee. These are the organizations that represent most commercial broadcasters in their negotiations with ASCAP, BMI and SESAC for public performance licenses for “musical works” or “musical compositions” – the underlying words and music to any song. In our discussion, there was a general summary of the licenses needed for the use of music by broadcasters, a summary of the status of some of the current royalty negotiations, and questions about other issues in music licensing. As this discussion raised a number of issues that I have covered in articles posted on this blog, I thought that it might be worth highlighting some of that past coverage so that those interested in any topic can read a bit more on these subjects.

The TV industry seems to have far fewer issues than radio, perhaps because radio is so much more music-dependent. While there is music in many TV programs, some of it is cleared (i.e. licenses have been negotiated) by the program providers (including some networks), so that stations need only worry about licenses for programming where the music has not been pre-cleared. Thus, TV stations have alternatives of blanket licenses for all programming (principally used by affiliates of networks where music has not been pre-cleared) or per-program fees where stations pay for music only in programs or program segments where music has not been licensed by the program suppliers. Continue Reading

Looking for a New FM? – FCC Releases a Potential “Shopping List” of Channels that Will Be Available in a Future Auction

Posted in Broadcast Auctions, FM Radio

It has been over two years since the last window allowing applicants to file for new FM stations (see our article here). There had been some speculation that the number of requests for new allotments was decreasing, leaving the FCC with few FM channels to auction off and thereby breaking what had been an almost yearly start of a new FCC auction for new FM channels. But, yesterday, the FCC released an Order noting numerous vacant FM channels, though this time they are not newly allotted channels, but instead ones that had previously been awarded to applicants who either did not pay the amount they bid in the auction, or who received a CP and then did not construct the station. Even included on this list is the FM channel of the station that had its license designated for hearing as the station had been silent for almost its entire renewal term (see our article here), a hearing that never had to happen as the licensee surrendered its license rather than trying to litigate over whether its renewal should be granted.

Of course, many of these channels may have some inherent issues leading those who initially sought them not to construct. The issues could be location specific (e.g. no readily available transmitter sites for a price that made construction feasible) or there could be issues with the applicant not being able to fulfill its initial plans. Interested parties should do their investigation. When will the channels be available? Continue Reading

Preparing for Annual Regulatory Fee Filing – Order on This Year’s Fees Circulating at the FCC

Posted in AM Radio, FCC Fees, FM Radio, Television

About this time each year, broadcasters and other entities regulated by the FCC prepare to find out the amount of their annual FCC regulatory fees. These fees are likely to be paid in September, before the October 1 start of the new government fiscal year. Last week, the FCC added to its list of “items on circulation” (FCC orders that have been written and are circulating among the Commissioners for a vote) an order to establish the specifics of this year’s regulatory fees, and to propose some additional changes to be considered next year. We wrote in late May about the proposal for this year’s fees that were advanced in a Notice of Proposed Rulemaking. Among the proposals were ones to reduce the relative contribution of smaller stations to the total amount to be paid by the broadcast industry by increasing the contribution of larger stations in larger markets. Also proposed was a reduction in the amount to be paid by TV satellite stations, and increasing the exemption for “de minimis” obligations – allowing those companies with a total fee obligation of less than $1000 to avoid paying fees altogether (an increase from the $500 in previous years). We will see when the order on circulation is released whether any of these proposals will be implemented for the fees to be paid this year.

Once the FCC releases the order on circulation deciding the policy issues about the fees, there usually follows a public notice setting the actual dates for payment, and fee guides from each of the FCC’s Bureaus providing details of the payment process for each FCC-regulated service. At that point, broadcast companies will be able to determine the specific amount of the fees that they will owe for this year. Failing to pay the fees on time can lead to substantial late fees, and can put the processing of applications by a licensee on hold. So be ready – the order should be out soon and the deadline for the payment of fees is fast approaching.

GMR Offers Commercial Radio 6 Month Extension of Interim License to Play Their Songs

Posted in Broadcast Performance Royalty, Intellectual Property, Internet Radio, Music Rights

Global Music Rights, commonly known as GMR, is the newest Performing Rights Organization (PRO) in the US music business, licensing public performance rights to musical compositions of songwriters as diverse as various members of the Eagles to Pharrell Williams to George Gershwin. As we wrote here, in December, they offered a temporary license to the radio industry to allow radio stations to play their music if the stations pay a royalty reportedly based on a percentage of what stations pay to ASCAP and BMI. That license, which was accepted by many radio stations, expires at the end of September. Many stations were concerned as to what would happen on October 1, and whether they could continue to play GMR music. This week, that question was answered when it was announced that GMR has offered to extend the license for another 6 months at the same rates stations are now paying.

While this extension may answer the question of what happens on October 1, it certainly does not resolve all GMR issues. It seems pretty clear that, unless there is a major breakthrough, GMR and the Radio Music License Committee (the organization that negotiates performance royalties for commercial radio operators) will not come to an agreement on rates before the end of September. As we wrote here, RMLC has sued GMR, asking that a court make them subject to an antitrust consent decree much like SESAC where rates, if they cannot be voluntarily negotiated, would be set through arbitration (see our article on the results of the recent RMLC-SESAC arbitration here). GMR has countersued (see our article here), and litigation continues as it may well for years absent a settlement. Continue Reading

A Full House at the FCC as Two “New” Commissioners Confirmed

Posted in General FCC

Since the beginning of the year, the FCC has been acting with fewer than its full complement of Commissioners. Since the January departures of Chairman Wheeler and Commissioner Rosenworcel, the Commission has had three Commissioners – two Republicans (Chairman Pai and Commissioner O’Rielly) and one Democrat (Commissioner Clyburn). Last week, Congress confirmed the nominations of Democratic Commissioner Rosenworcel for her return to the FCC, as well as new Commissioner Brendan Carr, a Republican. With these two expected to be sworn in in the very near future, it will complete the full house of three Republicans and two Democrats. With the background of the new Commissioners, and the 3-2 Republican majority, is this a winning hand?

With this make-up of the FCC, the Commission will likely continue to proceed in the deregulatory fashion that we have seen so far this year.   Commissioner Rosenworcel is a known quantity, having served on the FCC for several years before her term ran out in January. While a Democrat, during her initial term as a Commissioner, her views reportedly departed from those of Chairman Wheeler in a few instances , modifying the outcome of some of his initiatives. New Commissioner Carr has been serving as the FCC’s General Counsel under Chairman Pai, and had previously worked as a legal advisor in Pai’s office. While his legal background has primarily been in non-broadcast areas, as General Counsel, his office was involved in several significant broadcast actions, including the recent defense of the reinstatement of the UHF discount against attempts by certain public interest groups to have the Court of Appeals impose a stay the effective date of the Commission’s action (see our article here). Of course, these positions are not necessarily indicative of his stances when he is acting as an independent Commissioner instead of acting in a role that was subject to the direction of the Commissioners. Only time will tell for sure how the new fully-staffed Commission will interact with each other, but the bets are that the general direction will not be changing. Continue Reading

$17,500 Settlement by TV Broadcaster for Not Identifying Educational and Informational Children’s Programming – Reminder that the FCC is Still in the Enforcement Business

Posted in Children's Programming and Advertising, FCC Fines, License Renewal, Programming Regulations, Television

The FCC announced a Consent Decree with a New Jersey TV station where the licensee agreed to make a $17,500 payment to the US Treasury for failing to identify “core” educational and informational programming directed to children with the required “E/I” symbol on the programming itself. This programming was, according to the consent decree, run on the station’s multicast streams – stations having an obligation to run at least 3 hours of educational and informational programming on each of its program streams. The settlement payment also covered Commission findings that the station had not adequately and accurately reported these omissions in both its Quarterly Children’s Television Reports (Form 398) and in its license renewal application. The Commission also noted that the station had not adequately informed publishers of program guides about these educational and informational programs.

We’ve written about similar fines in the past (see, e.g., our articles here and here). But what this decision emphasizes is that the FCC is still in the enforcement business. Many broadcasters have heard about the deregulatory philosophy of the majority of the current FCC commissioners. In fact, in the Media Regulation Modernization Initiative (where reply comments are due today) some broadcasters have suggested changes in the children’s television obligations, especially in connection with digital multicast subchannels of TV stations. Why require, for instance, a 24-hour weather channel to broadcast children’s programming (or for that weather channel to trigger an obligation for another channel to carry 6 hours of educational and informational children’s programming as the broadcaster is allowed to shift the educational requirement of one subchannel to another of its channels) when so much educational and informational programming is available in the marketplace through MVPDs or online sources? While these issues have been raised in the last month, the FCC has obviously not taken action yet on the proposals. Until the rules are changed, broadcasters need to honor those rules, or face potential consequences like those reflected in this consent decree.

FCC To Hold Hearing to Determine Whether to Deny License Renewal of Radio Station that was Silent for Most of its License Term

Posted in FM Radio, License Renewal, Programming Regulations, Public Interest Obligations/Localism

The FCC yesterday took what some may suggest is an unprecedented action to potentially deny the license renewal of an FM broadcast station that was silent for all but one day each year during its license renewal term. According to the Hearing Designation Order, the station operated one day each year to avoid forfeiting its license pursuant to Section 312(g) of the Communications Act (a provision we have written about here and here, which provides for the automatic cancellation of the license of a broadcast station that has been silent for more than one year). The order released yesterday points to a 20 year-old case as warning broadcasters that, if they do not operate for substantial portions of a license renewal term, they are in danger of losing their license. As the FCC points out, if the station is not operating, it cannot fulfill the obligation of a licensee to serve the public interest.

The hearing scheduled by the FCC will be a “hearing” in name only. As there are unlikely to be disputed facts, the FCC has adopted a simplified process of a paper hearing. The licensee of the station will need to submit all the records of station operations during the last renewal term, if such records exist (e.g. station logs, issues-programs lists, and EAS test reports), and a written statement of no more than 25 pages setting out why the license should be renewed. That evidence, along with any comments filed by any party that wants to intervene in the case, will be reviewed by the Commissioners themselves. No oral presentation will be made, and no administrative law judge will be involved in the review of the record compiled by this station. Hearings where the FCC proposed to revoke the license of a station have in the last four decades been held before an administrative law judge, usually with live witnesses. In commenting on this new procedure, Commissioner O’Rielly notes that cases before an administrative law judge can take years to resolve, and often end up being reviewed by the Commissioners themselves anyway, so this paper hearing before the Commission will be much more efficient. Continue Reading

FM Translators for AM Stations – Now that the Filing Window is Done, What’s Next?

Posted in AM Radio, Broadcast Auctions, FM Translators and LPFM

The window for filing applications for new FM translators for Class C and D AM stations has now closed. According to a statement from FCC Chairman Pai, over 1000 AM stations took advantage of the filing window.  What’s next? The FCC will take these applications and determine which of them are mutually exclusive with some other application filed during the window that ended yesterday. Those that are not in conflict with any other application filed during the window will be asked to complete the Form 349 application (so far, applicants have filed only the “tech box” setting out the basics of their technical proposal). The completed Form 349s will be processed and, barring any issues, construction permits will be granted.

The FCC will also determine which applications are mutually exclusive. At some point, it will release a list of all mutually exclusive applications, and these applicants will be able to discuss resolving their conflicts by minor technical amendments to their applications (e.g. site changes, directional antennas, changes to a new channel within 3 channels of the channel they originally proposed in the tech box application). It is important that applicants not discuss possible resolution with other broadcasters in their market at this time, as this is theoretically an auction proceeding where there are rules against “prohibited communications” that are now in effect. It might seem silly that you can’t discuss a resolution of a conflict with a competitor now when, in a few weeks, the FCC will allow it (and in fact probably encourage it). But, by applying the auction rules to this filing window, these prohibitions are in effect and are taken seriously by the FCC until the settlement window opens. Continue Reading

First Post-Incentive Auction Window Opens for Modifications By Repacked TV Stations that Can’t Build on Their Assigned Channel

Posted in Digital Television, Incentive Auctions/Broadband Report, Low Power Television/Class A TV, Television

Earlier this week, the FCC announced the first of its post-auction filing windows for TV stations that are forced to abandon their current channels as a result of the repacking of the TV band after the broadcast incentive auction. As a result of the shrinking of the TV band, many TV stations were required to change channels so that all stations could fit into the smaller TV band. The first window, open from August 9 to September 8, is for a limited number of TV stations that fall into two classes: (1) 25 repacked stations that were granted a waiver of the July 12 filing deadline for applications for initial construction permits because the FCC agreed that those stations were unable to construct the facilities that the FCC assigned to them when they were repacked; and (2) any repacked station or any other station entitled to protection that is predicted to experience a loss of population served in excess of one percent as a result of the repacking process. More details of the requirements for this first window are in this week’s FCC announcement of the window.

There will be additional windows, about which we wrote here. The next window later this year will be for repacked stations that want to maximize their coverage on their new channel. The facilities that they were assigned in the repacking notice were meant to replicate their current service area, but on their new channels some stations may be able to increase power or coverage. A third window, opening probably in 2018, will be for LPTV and TV translators who are displaced by the repacking to find new channels on which to operate (see our articles here and here). Obviously, if any station can take advantage of possibilities offered by one of these windows, it should stay alert for these upcoming filing dates.

SESAC Royalties for Commercial Radio Slashed By More Than Half – Both SESAC and RMLC Claim Victory in Arbitration

Posted in Broadcast Performance Royalty, Intellectual Property, Internet Radio, Music Rights

It was announced this week that SESAC’s royalties for radio for the period starting at the beginning of 2016 through the end of 2018 have been slashed – being reduced to less than half what they were in 2015.  This decision came out of an arbitration process that resulted from the settlement of an antitrust lawsuit that the Radio Music License Committee (RMLC) brought against SESAC (see our article here for a summary of the settlement).  Yet, despite the significant reduction in the royalties for radio operators, both sides declared victory (see RMLC press release here and press reports on SESAC’s reaction here).  Can both be right?  While the decision of the arbitrators is not public so we can’t know for sure the reasoning behind the result, it might be that there is something to each of these claims.

For radio, the victory is clear.  For commercial radio broadcasters, the royalties were significantly decreased, retroactive back to the beginning of 2016 year for stations that had elected to have RMLC represent them in this lawsuit.  Some stations had been enticed by an offer made by SESAC at the beginning of 2016 offering stations a new SESAC license at rates 5% less than they were in 2015 (see our article here).  Those stations may not qualify for the much greater royalty reduction available to the majority of commercial stations that opted into RMLC representation and are covered by the arbitration result.  The new SESAC royalties will also cover the use of SESAC music on broadcaster’s streaming platforms and HD broadcasts, uses for which broadcasters had previously had to pay SESAC separately.  Of course, stations still need to pay public performance royalties for musical compositions to ASCAP, BMI and, in many cases, GMR and public performance royalties for sound recordings, when streaming recorded music, to SoundExchange. Continue Reading