Broadcast Law Blog

Broadcast Law Blog

FCC Declines to Allow Experimentation with Noncommercial Underwriting Rules

Posted in Advertising Issues, Noncommercial Broadcasting

The FCC yesterday issued an order declining to allow experimentation with the noncommercial underwriting rules that was requested by the licensee of noncommercial radio stations in the Phoenix area.  The licensee had asked the FCC for permission to conduct a three year experiment by relaxing the underwriting rules in certain ways to determine the effect such a relaxation would have on its ability to raise revenue, and the impact on the listening and support that the station currently enjoys.  In denying the station experimental authority to conduct the test, the FCC determined that it lacked the authority to authorize it, as the relaxation that the license was seeking would be prohibited not only by FCC rules, but also by statute, and the FCC cannot waive or grant an exception to a statutory provision (unless specifically permitted by the statute). 

The underwriting rules prohibit noncommercial stations from running advertising for commercial entities.  These rules have been relaxed somewhat over the last 30 years to allow for “enhanced underwriting” announcements, which allow noncommercial stations to identify their sponsors, and provide limited information about the products and services of those sponsors.  But the information cannot be promotional in nature.  Specifically, there are a number of limitations put on these announcements.  Some of these limitations include: (1) the announcements cannot contain “calls to action” – statements that suggest that listeners buy from the sponsor or patronize their place of business; (2) the announcements cannot have qualitative claims – so noncommercial stations cannot say that their sponsor was voted the “best car repair shop in the city by City Magazine,” even if that statement of fact is true; and (3) the announcement cannot provide price or other information relevant to a buying decision, e.g. where tickets are sold, interest rates, etc.  For more information about these rules, see some of our previous articles on this topic here, here, here and here, as well as a presentation on that issue that is discussed here.  What did this licensee seek to change in its experiment? Continue Reading

FCC Proposes To Amend Rules Governing Broadcast Contests – Suggests Allowing Disclosure of Material Terms of the Contest on the Internet

Posted in AM Radio, FCC Fines, FM Radio, General FCC, Programming Regulations, Website Issues

The FCC on Friday proposed to amend its rules governing contests conducted by broadcast stations by allowing the required disclosure of the material terms of the contest on the Internet, as an option for broadcasters in lieu of the current requirement that these disclosures be made by broadcasting them on-the-air a reasonable number of times.  But the proposed rule change is not as simple as one would think, with the FCC asking about whether a number of specific obligations should be attached to any online disclosures, even potentially adding the requirement that the full URL for the online disclosure be made every time a contest is mentioned on the air, not simply a reasonable number of times as required under the current rules.  So just what is the FCC proposing, and what is the big issue here?

The rule governing the conduct of broadcaster’s contests, Section 73.1216, covers contests conducted by broadcasters over-the-air.  It does not cover contests by broadcasters that are exclusively conducted online (though, as we wrote here, if the contest is announced on the air, even if primarily conducted online, all the required on-air disclosures apply).  It does not cover contests conducted by third-parties that are broadcast on the air (so contests conducted by an advertiser are not covered by this rule).  The current rule, in addition to requiring that the contest be conducted fairly and in accordance with the rules adopted for the contest, requires that the “material rules” be broadcast on the air on a regular basis so that listeners know what they might win, how to play the contest, and how the winner is selected.  It is this requirement, that the material rules be broadcast on the station, that has led to problems in the past, and thus prompted the proposed changes advanced on Friday. Continue Reading

New York Court Finds Public Performance Right in Pre-1972 Sound Recordings – How Will This Affect Businesses that Use Music?

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

On Friday, the US District Court in the Southern District of NY found that there is a public performance right in pre-1972 sound recordings in that state, following two decisions from California finding a similar right under California law (though on different grounds).  Like the first decision in California (about which we wrote here), this decision was the result of a law suit by Flo and Eddie of the Turtles against Sirius XM, arguing that Sirius XM was infringing on their rights by playing old Turtles songs without paying the duo (who now own the Turtles’ copyrights) any compensation.  Unlike the California decision which looked to specific language in the California statute about ownership of pre-1972 sound recordings, the NY Court reaches a decision in some ways broader than the California decision, but potentially also in some ways narrower.  What does it mean for the many businesses that play such recordings?

There is no public performance right in sound recordings generally in the United States, with the limited exception of the public performance of such recordings in a digital medium.  Sound recordings had not been covered by Federal copyright law at all until 1972, when they were covered for purposes of protecting reproductions and distributions and other general rights, but Federal law specifically did not include this public performance right in sound recordings until the 1990s.  When sound recordings were added to Federal law in 1972, the regulation of pre-1972 sound recordings was specifically left to state regulation (where it had been prior to Federalization).  The limited digital performance right was adopted in a series of laws enacted in the late 1990s, as fears of digital piracy based on Internet and other digital transmissions grew.  So webcasters, satellite radio, digital cable radio and other digital users of sound recordings have paid a royalty for the performance of such recordings.  That royalty is set by the Copyright Royalty Board (see our article here about the most recent CRB proceeding to set rates), paid by noninteractive services to SoundExchange, and distributed by SoundExchange to copyright holders and artists. For interactive services (like Spotify or iTunes or Rhapsody), the performance rights have to be directly negotiated with the copyright holder, leading to disputes like the recent decision of Taylor Swift to pull her new album from Spotify (see our article here about the difference between interactive and noninteractive services).  As the 1990s adoption of the limited public performance right in sound recordings was a Federal act, most observers believed that there was no public performance right in sound recordings for pre-1972 recordings, as there never had been one prior to Federalization (despite many attempts by artists and labels to have one included in the law)(see our article here when the Flo and Eddie suit was first filed).  Continue Reading

The Election is Over, But the Complaints Keep Coming – Should Michael Bloomberg Have Been Identified as the True Sponsor of an Ad Run by his PAC?

Posted in Payola and Sponsorship Identification, Political Broadcasting, Television

Even though the election is over, political broadcasting issues have not stopped.  Yesterday, the same groups (the Campaign Legal Center, Common Cause, and the Sunlight Foundation) that had previously objected to the sponsorship identification of issue ads funded by PACs with a limited donor base have struck again.  This time, they have filed a complaint with the FCC against a Chicago TV station claiming that it should have identified former New York City mayor Michael Bloomberg as the true sponsor of an ad run by a PAC. That PAC stated on its website that it had been formed by the former mayor and, from its FEC filings, it appears that it was 100% funded by Mr. Bloomberg.

The complaint differs from complaints filed earlier this year about similar ads in that, in this case, the station was given written notice by the Petitioner of the claim that the sponsorship identification should have included Mr. Bloomberg.  In previous cases, no such notice had been given to the station (the lack of such prior notice resulting in the FCC’s rejection of the initial set of complaints filed by this group, see our article here).  In addition, this is the first complaint where it appears that the PAC in question was 100% funded by a single individual.  See, for instance, our article here, where we asked in connection with previous complaints where the PACs in question were not 100% funded by a single individual how a station was supposed to know at what point the individual donor needed to be identified, and when there were a sufficient number of other donors that the identification of the groups as the true sponsor was proper.  Will these factual differences mandate a different result from the FCC? Continue Reading

Noncommercial Webcasters Royalty Rate Proposals for 2016-2020

Posted in Intellectual Property, Internet Radio, Music Rights, Noncommercial Broadcasting

Noncommercial webcasters are often forgotten in the discussion of the current proceeding to set Internet radio sound recording royalties. But, along with the royalties for commercial webcasters (we wrote about the proposed commercial rates here), the current Copyright Royalty Board proceeding will also set the rates for noncommercial webcasters.  Various proposals for noncommercial royalties have been submitted to the Judges.  In fact, one proposed settlement agreement between SoundExchange and CBI (a group that represents college radio stations) has been submitted to the Judges, and last week that proposed settlement was published in the Federal Register, with a request for comments by November 26.  There are other proposals for noncommercial rates that were submitted by other parties, and we talk about those below. 

Setting rates for noncommercial webcasters is not easy.  Colleges and other schools, public radio and religious organizations usually are not motivated by the kinds of commercial considerations that give rise to evidence submitted under the “willing buyer willing seller” standard applicable to all CRB webcasting royalty decisions.  Thus, the noncommercial rates are often set as an afterthought.  In fact, perhaps because noncommercial rates have been such an afterthought, it has been these rates that have led to the greatest number of appellate issues for the CRB.  The decision on noncommercial rates from the 2006 proceeding was just issued by the Judges after an appellate court remand.  In that decision, the Board upheld the decision from the 2006 case setting the minimum fee for noncommercial broadcasters at $500 for the 2006-2010 proceeding – a decision reached after a remand of the case from the Court of Appeals to the Board following an appeal by IBS, another group of noncommercial broadcasters associated with colleges and other schools.  But let’s look at the proposals for the upcoming case, and compare them to the rates currently in effect. Continue Reading

Formal Proceedings to Begin to Revise Rules for Broadcasters’ On-Air Contests and Expand the Online Public File Obligations to Radio, Cable and Satellite

Posted in AM Radio, Cable Carriage, FCC Fines, FM Radio, General FCC, Political Broadcasting, Public Interest Obligations/Localism, Television, Website Issues

Since our note Friday about November regulatory dates for broadcasters, it’s become clear that the FCC will be acting on two more matters of interest to broadcasters – particularly radio broadcasters though each have some implications for TV as well.  First, as we hinted at the end of our article on Friday (the rumors that we had heard having now been confirmed), Chairman Wheeler has circulated a draft Notice of Proposed Rulemaking on the expansion of the online public file to radio (as well as cable and satellite).  And, secondly, the FCC has announced that, at its open meeting on November 21, it will open a rulemaking to modernize the disclosure rules for on-air contests conducted by broadcasters – rules which have resulted in FCC fines over the last few years.

The fact that the online public file proposal for radio has now matured into a Notice of Proposed Rulemaking is confirmed by the FCC’s list of Items on Circulation (basically, draft orders that the Commissioners currently have in front of them for review and voting), which now lists that item near the top of its list.  See the list of Items on Circulation, here: http://www.fcc.gov/fcc-items-circulation.  While most folks in radio knew that the day would come when their public files might be required to go online, the speed with which the FCC now seems to be acting is what is most surprising, as it was only a bit over two months ago that the FCC took comments on whether or not to even consider that proposal (see our article here).  But, with lightning speed, the order appears to be moving forward.  How fast will it be implemented? Continue Reading

November Regulatory Dates for Broadcasters – The End of the Political Window, Incentive Auction and Online Video Clip Comments and More

Posted in General FCC, Incentive Auctions/Broadband Report, Internet Video, License Renewal, Low Power Television/Class A TV, Political Broadcasting, Television

The month of November is one of those rare months on the FCC calendar when there are few routine regulatory filing deadlines for broadcasters.  In odd years, we would have Biennial Ownership Reports but, being an even year, we can wait until 2015 for that obligation for commercial broadcasters.  There is a new November 28 deadline, about which we wrote here, for TV stations with Joint Sales Agreements with other stations in their markets to file such agreements with the FCC.  While we are getting to the end of the current license renewal cycle, there are still some obligations of television stations for the airing of renewal pre or post filing announcements.  Commercial and Noncommercial Full-Power and Class A Television Stations in Alaska, Hawaii, Oregon, Washington, American Samoa, Guam, the Mariana Islands, and Saipan need to air License Renewal Post-Filing Announcements on the first and sixteenth of the month, while television stations in Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont need to air their pre-filing announcements in anticipation of the filing of their license renewal applications on December 1. 

November brings a few other dates of note for broadcasters.  With the end of the political window for lowest unit rates on Election Day, broadcasters have a few last minute issues to remember.  If they sell ads on Election Day, those ads must be sold at lowest unit rates.  If they have opened their stations to take new advertising or changes in copy for any commercial client in the past year, they must be ready to take similar steps for federal candidates over this last weekend before the election.  Even if they never accommodate a commercial advertiser over the weekend, they may still need to provide weekend access to accommodate last minute equal opportunities requests.  Continue Reading

FCC Policy by Blog Post – Over-the-Top Internet-Delivered Television Programming Providers May be Treated as MVPDs, a Reaction to Aereo?

Posted in Cable Carriage, Digital Television, Incentive Auctions/Broadband Report, Intellectual Property, Internet Video, On Line Media, Programming Regulations, Television

The FCC announced two significant policy initiatives by Blog post in the last week – perhaps recognizing that the Internet provides a better way of packaging a message about policy directions than an unpredictable news conference.  The two decisions announced this week by Blog post were (1) the Chairman announcing that he has directed that a Notice of Proposed Rulemaking be circulated among the other Commissioners to treat Over-the-Top TV providers (“OTT” providers, usually those that provide service over the Internet) of linear programming as MVPDs – meaning that they would be treated, for regulatory purposes, in much the same way as cable and satellite TV services, and (2) an announcement by the head of the incentive auction task force that the auction by which some of the broadcast TV spectrum will be purchased from TV users and resold to wireless carriers for broadband wireless uses will be postponed from its expected date in the summer of 2015 until early 2016.  We will write about the postponement of the auction later.  But what does the MVPD proposal mean?

The MVPD issue is one that we last wrote about here.  At the urging of some OTT providers, apparently including Aereo, the FCC has been urged to treat these providers, when they provide “linear” programming (programming that is provided at set times on a set schedule, in the manner of broadcast TV or cable programming, as opposed to the on-demand programming of a Netflix or Hulu), in the same fashion as cable and satellite.  The Chairman, in his blog post, announces his support for an FCC proceeding to review that proposal, apparently looking to use linear Internet programmers as a new competitive force against cable and satellite TV.  By treating these services as MVPDs, they could get access to over-the-air TV programming (if they can negotiate retransmission consent agreements with the TV stations) and equal access to programming provided by vertically integrated cable programmers (those programmers that have attributable ownership from cable system operators).  But, obviously, there are some big “ifs” here. Continue Reading

FCC Requires that TV JSAs be Filed By November 28, and Releases Guide to Filing Obligations

Posted in Multiple Ownership Rules, Television

As we wrote in early April, the FCC has determined that TV Joint Sales Agreements, by which the owner of one TV station in a market sells more than 15% of the advertising time on another station in the same market, are “attributable interests” under the multiple ownership rules.  That means that a station can only have a JSA with a station in the same market if it can own that station under the rules limiting the ownership of TV stations in one market.  The FCC gave stations involved in existing JSAs two years to undo current agreements, and the decision is on appeal by the NAB and other affected broadcasters.  Nevertheless, the filing requirement has now passed review by the Office of Management and Budget under the Paperwork Reduction Act, and the FCC this week announced that the obligation to submit existing JSAs to the Commission (and to either make them available in each station’s public file or include them in the list of contracts in the file that can be provided upon request) will be effective November 28.

To implement that obligation, and the obligation to submit new JSAs to the FCC within 30 days (and presumably there will be few new JSAs as it will be rare when one station will want to do a JSA with another station in its market if they can actually own that station), the FCC yesterday released a “Small Entity Compliance Guide” to this obligation.  These Guides are required by legislation intended to aid Small Businesses by making compliance obligations clear.  While the Guide does not disclose anything unexpected, it does make clear that the JSAs must also be reported on Forms 2100 (the new construction permit application for TV stations), Forms 314 and 315 (assignment and transfer application forms), and on the Form 323 (the FCC ownership report form).  Licensees should be aware of those obligations.

TV Music Licensing Committee Settles Antitrust Action with SESAC over Music Licensing Rates and Terms – Radio Watches and Wonders if It Can Get a Similar Deal

Posted in AM Radio, Broadcast Performance Royalty, FM Radio, Intellectual Property, Music Rights, Television

SESAC is the one major performing rights organization whose rates have not, until now, been subject to judicial review as part of an antitrust consent decree.  Perhaps because of that fact, broadcast stations have often complained about the rates they charge for the music that they license, as there is currently no cap on what SESAC can charge, and there is no requirement that SESAC treat all similar licensees in the same way.  In fact, because of this dissatisfaction, both the TV and Radio Music License Committees have filed antitrust suits against SESAC seeking relief from the rates they charge.  In a settlement announced this past week, the Television Music Licensing Committee has entered into a settlement by which SESAC will pay the TVMLC $58.5 million and agree that, over the next 20 years, SESAC will negotiate license agreements with TVMLC.  Under the agreement, if rates can’t be reached as a result of negotiations, SESAC and the TVMLC would submit to an arbitration process to arrive at the appropriate rates.  The full settlement can be found on the TVMLC website, here

Under the terms of the settlement, commercial TV stations (except for those owned by Univision, which appear to have opted out of the class of stations covered by the TVMLC settlement) will have their SESAC obligations covered for the rest of this year and next, including website SESAC music use and use in digital multichannel programming.  In 2015, TVMLC will negotiate with SESAC over rates for the period from 2016-2019.  If no rates are agreed to by the parties, an arbitration panel will set the rates.  The same process will continue for 4 year periods through 2035, as long as ASCAP and BMI are also subject to either rate court or arbitration review of the rates charged by those organizations.  While the Department of Justice is reviewing the ASCAP and BMI consent decrees that require rate court review of royalty rates charged by these groups (see our article here), it appears that they are not asking for an end to all rate review.  Instead, they are asking that the review be done by an arbitration panel, not the US District Court that currently reviews such rates.  So it would appear likely that the “out” in the deal would not give SESAC an escape from this agreement to be bound by arbitration any time soon. Continue Reading