Broadcast Law Blog : Broadcast Lawyer & Attorney : Davis Wright Tremaine Law Firm : Broadcast Law Blog : Seattle, Los Angeles, Washington D.C., New York, San Francisco, Shanghai

This week's Economist includes an interesting story on the competitive pressures being faced by newspapers.  One of the observations about successful newspapers in this competitive, digital world is the ability of the newspaper to exploit its on-line presence.  Successful newspapers were able to not only use their existing content on the Internet, but were also able to expand the reach of their paper and create compelling content to attract their readers and others to the website.  This includes the extensive use of audio and video.

On Friday, I participated in a live webcast, "Webcasting for Rookies" sponsored by the International Webcasters Association.  In a discussion with Michael Gordon of Limelight, the content delivery network, a similar observation was made - that newspapers are some of the biggest users of streaming media.  He observed that newspapers did not view on-line audio and video as competitive to their primary product, but instead as complementary, so they were more willing to promote their on-line product.  Conversely, broadcasters were reluctant to exploit the Internet, as it was seen as being more like broadcasting, and more threatening. 

Mr. Gordon's comments, and those of the other speakers including my discussion of legal issues for webcasters, can be accessed here (free registration required).  Broadcasters should take note.  As the Internet grows, they don't want others to steal their audiences by doing what broadcasters do best - audio and video.

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On Friday, the FCC announced that it will auction 9 new FM channels on January 10.  These are channels that went unpurchased in prior FM auctions - either because no one bid on the channels or because the winning bidder defaulted on its winning bid (presumably by not paying for the channel when the full payment was due). 

The channels are for new stations at the following locations:  Covelo and Tecopa, California; Cedar Key and Perry, Florida; Kihei, Hawaii; Outlook, Montana; Ocracoke, North Carolina; Meyersdale, Pennsylvania; and Parowan, Utah.  The FCC proposed rules for the auction, here, and set out the amounts of minimum bids that it expects to collect for each of these channels, here.  The exact date for the filing of the initial short form applications and the posting of the minimum bids will be announced after the final rules for the auction are adopted.  Comments on the Proposed Rules and the minimum bids are due on September 6.

Perhaps most interesting is the fact that the FCC has chosen to open only this mini-window at this time.  In each of the last two years, at about this time of year, the FCC has announced the opening of auction windows for large numbers of FM stations.  Hundreds of stations have been auctioned in these last two years.  The FCC has hundreds of FM allotments around the country that already been made but which have never been available for applications.  These will be apparently be subject to auction at some later date.

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The Corporation for Public Broadcasting announced recently that it has provided $7.74 million in grants to assist 85 public radio stations in their transition to digital operations.  This announcement is interesting, coming as it does only a week after Communications Daily reported on August 16 that CPB engineers were finding that HD Radio was providing the coverage that was initially expected.  The press report indicated that CPB was discovering that HD Radio was providing coverage to only about 60% of a typical FM station's analog service area, and that it was causing more interference issues than had been expected.  CPB was planning additional studies to look into these issues.

In discussing HD Radio implementation issues with broadcasters over the last few months, I've heard similar reports about coverage.  I've also heard troubling reports of interference to adjacent channel FM stations from HD operations - especially from multicast operations.  The interference is usually caused to weaker FM stations.  These were stations had listenable signals in a market that were no longer listenable in some areas after a station on an adjacent channel began digital operations (and it has not just been on first adjacent channels).  While these problems can apparently be addressed by the use of filters by the digital station, the levels of interference are often below the FCC prohibited levels of out-of-band emissions, so cases have arisen where there have been disputes about the resolution of these problems.  Of course, as the stations experiencing the interference had weak signals to begin with, the problem could be caused by issues other than the new digital operations.  It will be interesting to see if CPB confirms that these alleged cases of digital interference were in fact caused by the new digital radio operations.  And it will also be interesting to see if the FCC's digital radio order, when it is finally released (see our July 17 posting on the expected release of the FCC order on "final" digital radio rules), provides any process for addressing any such complaints of interference.

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Comments are due to be filed with the FCC by this Thursday, August 24, on the NAB's proposal to allow AM radio stations to use FM translators to fill in nulls in their coverage.  Particularly for AM stations with very directional patterns, or with authorizations that specify little or no nighttime coverage, this proposal could provide an excellent way for these stations to maximize service to their listeners.  The NAB is making the filing of comments easy through an electronic filing system available on its website here.

While it is important for those supporting this proposal to file comments to urge the FCC to consider it, this is but the first step in a long process before this proposal can become reality.  The FCC here is asking only for comments on the NAB's Petition for Rulemaking.  If the FCC finds merit in the NAB proposal, then it would have to draft its own Notice of Proposed Rulemaking to suggest rules that would govern the use of such translators.  After taking comments on the Notice, if the FCC is still convinced that the idea is a good one, the Commission would then have to draft a set of final rules and an order adopting those rules.  Thus, in the best case, this is a long process.

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In the early 1990s, calls were heard in the halls of Congress, among public interest groups and in the press about the harmful effects of advertising on children. Within a few years, we saw legislation and FCC actions limiting the amount of advertising aimed at children, and effectively prohibiting the hosts of children’s programs from promoting goods or services during their programs. We may now be seeing a similar wave building with respect to the advertising “unhealthy” foods - particularly as that advertising affects children.

A recent Broadcasting and Cable article referred to discussions held between advertising organizations and Senator Brownback of Kansas, seeking to encourage industry self-regulation on the advertising and promotion to children of unhealthy foods.   After the discussion, the Senator reportedly agreed to refrain from pursuing any Congressional action at this time, while industry efforts to develop voluntary guidelines proceeded. However, the concern was clearly expressed that, should industry actions not be forthcoming, legislative action may follow.

These efforts to regulate the advertising of unhealthy foods have been arising not only at the Federal level, but also in state legislatures around the country.   Several state broadcast associations have faced proposals in their legislatures to enact restrictions on the advertising of unhealthy foods. So far, most of these efforts have not resulted in actual regulation, at least in part because of the difficulty of defining what foods would be covered by any rules that may be adopted. 

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Today, press reports stated that the FCC has sent letters of inquiry to 77 television stations inquiring about their use of Video News Releases (VNRs) without properly notifying their audience about the source of such releases.  VNRs are essentially pre-produced segments provided to television stations for inclusion in their programming.  The Washington Post carried a story, here, describing some of the stories which triggered the FCC investigation.  These reportedly included a report from an electronics show used by several TV stations in their news reports.  The producer of the report had been paid by the electronics manufacturers featured in the story for including their products in the story.

The FCC released a Public Notice in April, 2005 detailing its policies on VNRs.  The Public Notice makes clear that a station must disclose who paid for material broadcast on a station, whether or not the station received the consideration.  Clearly, if an advertiser paid a station for airing a news report, the station would be required to disclose the payment.  But the Public Notice makes clear that the station also owes its audience a disclosure even if it received no consideration, if the party that produced the material broadcast on the station received some consideration, and the station could discover that consideration by asking the producer if he or she was paid or through other means of reasonable investigation. 

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On July 18, we wrote about the arrest of the CEO of BetOnSports, the Internet gambling site, and the indictment of individuals involved with the Company, including representatives of its advertising agencies.  Yesterday, the New York Times reported that BetOnSports has stopped taking bets from people in the United States in compliance with the US Court Order banning all such activities.  The Times story is here.

Even though BetOnSports has ceased US operations, there are other Internet gambling sites that continue to operate, continue to solicit US citizens to place wagers, and continue to seek to entice broadcasters to run their advertising.  We warned our clients of the risks posed by taking such advertising in our bulletin on the subject.  As we stated in the bulletin, not only is the Federal government active in enforcing restrictions against such sites, but state governments have enforced their own bans.  Given the capitulation of the one of the biggest and best financed of the Internet gambling sites to the US Court order, broadcasters should not be promoting the sites directly, and must very carefully consider the risks of taking any advertising which even indirectly solicits US citizens to patronize these on-line gaming sites.

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Apparently the FCC misspoke when it emphatically stated on July 20, 2006, that “critical details of emergency information must be closed captioned” (emphasis in the original) by stations that cannot use the electronic newsroom technique to caption their news live programs.  (See our July 20^th blog below for further details.)  Upon further reflection, the Commission has revised its stance, and now recognizes the potential problem with requiring stations to live-caption all emergency information - if live-captioning resources are not available when the emergency news breaks, it could force a television station to choose between not providing emergency information or covering the news anyway but breaking the FCC’s closed captioning rules.   

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As some of you may know, in 2005 Congress passed a law extending Daylight Savings Time by four weeks.  Beginning next Spring, daylight savings will begin three weeks earlier than before, and extend an extra week into the Fall.  Specifically, as of March 11, 2007, daylight savings will start on the second Sunday of March and end on the first Sunday of November.  The change was part of a bill passed by Congress aimed at spurring energy conservation.  This change, however, will also have the unintended effect of causing many AM stations to sign-on well into morning drive time, and possibly after many kids have been deposited at school, for an additional month of every year. 

Due to nighttime propagation characteristics, many AM radio stations must drastically reduce their power during the nighttime hours, or cease broadcasting altogether.  The extension of Daylight Savings Time will exacerbate the impact of the annual time shift by requiring stations to delay the start of their morning broadcast for an additional four weeks each year.  This expansion of daylight savings could have a real impact on the bottom line of many AM stations, especially daytime-only stations.  Ultimately, staying on the air for an extra hour at the end of the day does not offset the loss of an hour during morning drive time. 

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In recent months, SoundExchange has been reaching out to webcasters seeking to identify those who are delinquent in their royalty payments for music used on the Internet. Numerous broadcasters and webcasters have received calls or letters from SoundExchange seeking information about apparent underpayments or missing mandatory reports of royalty liability that should be filed regularly by webcasters.

Some webcasters may believe that, as the rates for Internet radio music use for 2006-2010 have not yet been established, they don’t have to pay anything until those rates are set. That is not correct, as the legislation adopted in 2005 which established the Copyright Royalty Board also specifically required that fees be paid at the old rates until a new rate structure is adopted. Some broadcasters have assumed that their ASCAP and BMI fees, which cover “streaming,” cover all costs of putting their signals on the Internet. Again, that is not the case, as the ASCAP and BMI cover only the use of the musical composition (the song) on the Internet.  The SoundExchange fee compensates the copyright holder in the actual performance of the music (the money that is collected goes to the copyright holder of the recording and the musicians who play on the recording).   The SoundExchange fee is entirely different from ASCAP and BMI, and is imposed only for non-broadcast digital transmissions of recorded music. Broadcasters do not pay a SoundExchange fee for their over-the-air broadcasts, and may not be familiar with this fee, but it is one that should not be overlooked, especially given SoundExchange’s recent attempts to identify noncompliant webcasters.

For those who may be unfamiliar with the royalties for use of music in an Internet radio broadcast, a memo outlining the requirements is available <here>

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