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Here we are, almost a full month into the new year, and a number of important dates for broadcasters are already upon us.  As we wrote here, for instance, the payment of a minimum fee to SoundExchange by radio stations streaming their signals on the Internet is due today.  Lowest unit rates are in effect in many states for upcoming Presidential and even some Congressional primaries (see our post announcing the beginning of the LUR period for Super Tuesday).  FCC filing deadlines for Annual Ownership Reports for a number of states are due on February 1, as are EEO Public File Reports for several states.  And, on February 18, full power television stations must file with the FCC a Form 387 Status Report detailing where they are in their transition to digital television in time for the February 2009 transition deadline.  How is a broadcaster to keep all these dates straight?  Check out our advisory on the Important Dates for Broadcasters in 2008, available here, which tracks many of the deadlines that will occur this year - including the dates of routine FCC filings, lowest unit rate windows for political broadcasting purposes, and digital television transition milestones.

And a reminder about February 1 deadlines.  Radio stations in Arkansas, Louisiana, Mississippi, New Jersey, and New York, and television stations in Kansas, Nebraska, and Oklahoma must prepare and file electronically an FCC Form 323 Biennial Ownership Report with the FCC.  Our Advisory on completing and filing the Ownership Report can be found, here.  And radio and television Station Employment Units in Arkansas, Kansas, Louisiana, Mississippi, Nebraska, New Jersey, New York, and Oklahoma must place in their Public Inspection File and post on their website, if they have a website, their FCC Annual EEO Public File Report.   In addition, radio stations in Arkansas, Louisiana, and Mississippi with eleven or more full-time employees must also prepare and file electronically with the Commission an FCC Form 397 Mid-Term EEO Report.  Our Advisory on these filing requirements can be found here.  Stay on top of all these deadlines with our advisory on Important Dates for Broadcasters for 2008.

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The Commission's DTV Third Periodic Review adopting the rules and procedures for moving television stations through the end of the DTV transition was published in the Federal Register today, meaning that almost all of the new rules and forms adopted by the Order are now effective.   Now that the majority of the new rules are in effect, several related filing dates have been established.  As expected, this evening the FCC released its Public Notice notifying stations of several deadlines and summarizing some aspects of the Commission recent DTV Order. 

First, the FCC Form 387 DTV Status Report is now available and can be filed electronically through CDBS.  Consistent with the Third Periodic Review, all television stations, even those that have built and licensed their post-transition DTV facilities, must file a DTV Status Report on FCC Form 387 by February 19th (the FCC gave one extra day due to the federal holiday).

Second, as part of the final push to digital many television stations need to obtain a construction permit for their post-transition facilities.  In order to avail themselves of expedited processing, stations must file their Form 301 or Form 340 construction permit applications by March 17th (45 days from today).  If stations 1.) file their applications before March 17th, 2.) the application does not expand the station’s facilities beyond its final post-transition DTV Table Appendix B facilities, and 3.) the application specifies facilities that match or closely approximate the DTV Table Appendix B facilities, then the FCC has said that it will expedite processing of the application, generally acting on such applications within ten days. 

Third, the FCC has imposed deadlines by which stations that need to obtain a construction permit for their post-transition facilities must file their construction permit applications.  Stations with an August 18, 2008 construction deadline must file a CP application no later than March 17, 2008.  Stations with a February 17, 2009 deadline must file a CP application no later than June 19, 2008.

The particular steps necessary for a station to complete the DTV transition by the February 17, 2009 end of analog broadcasting will vary depending on the station, but now that the new rules and forms are in effect stations are urged to begin preparing their applications immediately.  See our earlier posting for more details about the Third Periodic Review and the specifics about how stations will complete the DTV transition. 

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Each year, Internet radio stations must pay a minimum fee to SoundExchange, and that fee is due by January 31.  These minimum fees are applied against  the obligations of a Internet radio service to pay royalties for the use of sound recordings on their stations.  SoundExchange does not send bills, so webcasters must remember, on their own, to make the payments.  For commercial webcasters (including broadcasters who stream their signals on the Internet), under the Copyright Royalty Board decision released last March, a minimum fee of $500 per channel is due.  While SoundExchange and certain large webcasters agreed to cap this minimum fee liability at $50,000 no matter how many channels a webcaster transmits (see our post here), this agreement has yet to be submitted to the CRB for approval.  Minimum payments are also due from noncommercial and small webcasters.

Under the CRB decision, noncommercial webcasters also owe a minimum fee of $500 per channel.  Small webcasters, who earlier this year accepted the SoundExchange offer about which we wrote here, owe a minimum fee of $2000 if they had 2007 revenues of less than $50,000, and minimum fees of $5000 if their 2007 revenues exceeded $50,000.  Note that details about these minimums are difficult to locate on the SoundExchange website.  Nevertheless, the current rules require that these payments be made.  Future settlement negotiations may adjust some of these minimums but, as of this moment, the failure to pay the minimum fees could, at a minimum, subject an Internet radio service to penalty fees and interest payments. 

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We recently wrote about the Notice of Apparent Liability for violation of the FCC's indecency rules that was issued last week by the Federal Communications Commission, proposing to fine 52 ABC network affiliates $27,500 each.  This $1.4 million fine was suggested by the FCC for alleged violations which occurred almost 5 years ago in a broadcast of the now canceled television program NYPD Blue.  For those interested in more details of the case, and about the cause of the trouble for these affiliates, our firm, Davis Wright Tremaine, has issued an Advisory to Clients, here providing more background.  Clearly, this notice is not the end of the story - watch for more developments in this case in the coming months, as ABC and the affected stations file their responses to the fines proposed by the FCC.

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Last week, the FCC approved the long-pending application for the transfer of control of Clear Channel Broadcasting from its public shareholder to several private equity funds. Even though the application had been pending at the FCC for over a year, the Commission’s decision was notable for the paucity of issues that were discussed. The decision approves the transfer, conditioned on certain divestitures by the Company and by the equity funds that will control the new company, including divestitures previously ordered by the Commission in connection with the investment of one of these funds in Univision Broadcasting but not yet completed, and rejects three petitions that, from the Commission’s description, did not involve fundamental issues about the nature of the overall transaction, but were instead devoted to certain limited issues, in two cases involving actions in a single market. The divestiture conditions were approved seemingly as a matter of course, and do not provide any new insights into the law concerning the FCC’s attribution rules (unlike the recent decision approving the transfer of control of Ion Television, about which we wrote here, which contained an extensive detailed discussion of what it takes to make an ownership interest “nonattributable” for purposes of the FCC multiple ownership rules). Given the lack of controversy in the Commission's order, what is perhaps most noteworthy about the decision are the concurring statements of the two Democratic Commissioners, which may provide some indication of the concerns of the Commission should we have a Democratic-controlled Commission following this year’s Presidential election.

Of course, as we’ve described in our posts about the FCC’s Localism Notice of Proposed Rulemaking (here), and the new rules regarding Enhanced Disclosure requirements for television broadcasters (here), the Commission has already begun to act in a far more regulatory manner than any other Commission in the past 20 years. Yet the issues raised by the Democrats in this decision are in areas not yet considered by the Commission. Commissioner Copps expresses his concern about the role of private equity in broadcast ownership, and whether such ownership is in the public interest. In numerous proceedings and in response to the presentation made at the FCC’s January meeting by the Media Bureau, Copps has suggested that private equity should be investigated, both to determine whether the Commission is fully aware of all ownership ties of the companies involved, and also (as emphasized in this case) for the potential economic impact on the operations of the broadcast stations caused by the new debt involved in the acquisition. Here, Commissioner Copps questions whether the announcement of a potential downgrade of the bonds of the Company if these deals occur should have been of more concern to the Commission. Private equity should be aware that, in a future FCC, an investigation of the economics of their operations should be expected.

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The FCC has released the full text of its Order adopting enhanced disclosure requirements for broadcast television stations - requiring that they post their public files on their websites and that they quarterly file a new form, FCC Form 355, detailing their programming in minute detail, breaking it down by specific program categories, and certifying that the station has complied with a number of FCC programming rules.  The Commission also released the new form itself and, as detailed below, the form will require a significant effort for broadcasters to document their programming efforts - probably requiring dedicated employees just to gather the necessary information.  The degree of detail required is more substantial than that ever required of broadcasters - far more detailed than the information broadcasters were required to gather prior to the deregulation of the 1980s - though, for the time being, much (though not all) of the information is not tied to any specific programming obligations set by the FCC.

 Before getting to the specifics of the new requirements, the thoughts of the Commission in adopting this order should be considered.  The Commission's decision focuses on its desire to increase the amount of citizen participation in the operation of television stations and the decisions that they make on programming matters.  While many broadcasters protested that the public rarely cared about the details of their operations, as evidenced by the fact that their public files were rarely if ever inspected, the Commission suggested that this was perhaps due to the difficulty the public had in seeing those files (the public actually had to go to the station to look at the file) and the lack of knowledge of the existence of the files (though broadcasters routinely broadcast notice of the public file's existence during the processing of their license renewal applications, rarely producing any viewers visiting the station to view the file).  With respect to the new Form 355 detailing the station's programming, the Commission rejected arguments that reporting of specific types of programming in excruciating detail imposes any First Amendment burden on stations, as the Commission claims that it has imposed no new substantive requirements.  Yet the Commission cites its desires that the public become more involved in the scrutinizing of the programming of television stations, which it states will be aided by the new form, and also emphasizes the importance that the Commission places on local service (an item detailed in Form 355).  At the same time, in its proposals detailed in its Localism proceeding (summarized here), the Commission is proposing rules requiring specific amounts of the very programming that is reported on Form 355, the very numbers that, in this proceeding, it claims have no significance.  Moreover, citizens will be encouraged by the Commission's actions to scrutinize the new reports, and file complaints based on the perceived shortcomings of the broadcaster's programming.  Broadcasters in turn will feel pressured to air programming that will head off these complaints.  So, implicitly, the Commission has created the First Amendment chilling effect that it claims to have avoided.

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This evening, at about the close of business on a Friday evening, the FCC issued a decision on an number of indecency complaints involving a five-year old episode of "NYPD Blue."  The Commission fined approximately fifty or so ABC affiliates in the Central and Mountain time zones $27,500 each for airing indecent material.  Specifically, the Commission found that a scene in the episode aired on February 25, 2003 containing adult female nudity to be indecent.  The Commission rejected ABC's seemingly common sense argument that a woman's buttocks are not "sexual organs" within the definition of the indecency rules.  Instead, the FCC has now determined that showing the backside of a naked woman is a violation of the indecency rules if it airs before 10 PM, as it did in the Central and Mountain time zone.  A copy of the FCC's decision can be found here.  If there is a silver lining it is that the FCC imposed the statutory maximum that existed at the time the programming was aired -- $27,500 -- rather the new, stepped up fines.  Further, the Commission fined only those stations about which it received an actual complaint, and not simply all stations in those time zones that aired the episode. 

The stations have until February 11th to either pay the fine or appeal the forfeiture.  This is an accelerated timeframe for responding or paying the fine, as usually Commission gives stations 30 days to respond to a Notice of Apparent Liability for Forfeiture.  It is unclear what the impetus was for the FCC to finally issue a decision on the "NYPD Blue" complaints nearly five years after the episode originally aired and with several challenges on earlier Commission indecency rulings currently pending before the courts.  No word yet on whether ABC and the affected affiliates will appeal the decision, but it seems likely that this indecency decision will join the others already in the pipeline for judicial review.  And in the meantime, broadcasters have been put on notice that a woman's posterior is now officially indecent material.  No word yet on whether showing a man's rear end is equally problematic, but if there's a station willing to air it and a viewer willing to complain, the FCC will undoubtedly tackle that critical issue if and when it arises.   

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At its December meeting, the FCC adopted a Notice of Proposed Rulemaking on Localism.  At that meeting, while the Commissioners discussed the generalities of the proposals being made, the specifics of the proposals were unknown.  The full text of the NPRM has now been released, and it sets out the areas in which the Commission proposes to re-regulate broadcast stations.  The order also hints at a number of other proceedings that the Commission intends to launch in the near future, and reminds broadcasters of a number of other existing proceedings that will potentially bring about greater regulation.  From the discussion in the NPRM, new rules will apply to all broadcasters - large and small - and potentially place significant burdens on all stations which, as always, are hardest for small stations to deal with.  Given the number of new regulatory initiatives discussed by the Commission, the NPRM is a must-read for all broadcasters, and this proceeding is one in which all broadcasters should participate.

Among the specific proposals on which the Commission asks for comments include the following:

Community Advisory Boards:  The Commission tentatively concludes that all stations will be required to establish a community advisory board to advise the station on the issues of importance to the community that can be addressed in the station's programming.  The Commission indicated that it did not want to bring back the burden of the ascertainment process that was abolished in the 1980s, but asks how the Board should be established so as to represent the entire community, suggesting that the categories of community leaders that were used in the ascertainment process could be used as a standard to guide the licensee in determining the make-up of the board.  Other questions include how often the board should meet, and how the board members should be selected (or elected - though by whom, the Commission does not suggest).

Other Community Outreach Efforts.  The Commission also suggests that other community outreach efforts should be considered as possible mandates for broadcasters.  These would include the following:

• Listener surveys by telephone or other electronic means (general public surveys were also part of the ascertainment process abolished in the 1980s, so if this were adopted together with the Community Advisory Board, ascertainment would effectively be back)
• Focus sessions or town hall meetings
• Participation of management personnel on community boards, committees, councils and commissions (mandatory civic participation?)
• Specific phone numbers or email addresses, publicized during programming, for the public to register their comments on station operations.

Remote Station Operations.  Comments are sought as to whether television stations should be forbidden to operate without being manned during all hours of operation.  Radio operations will be addressed in the proceeding to consider the public interest issues posed in the Digital Radio Proceeding (see our summary here).

Quantitative Programming Guidelines.  The Commission proposes to adopt quantitative standards for programming that a station would have to meet to avoid extra processing and scrutiny at license renewal time.  Questions include what categories of standards should be established (just local programs - or more specific requirements to set required amounts of news, public affairs and other categories - and how to define what programming would qualify in each category), should requirements be established as specific numbers of minutes or hours per day or per week or by a percentage of programming or through some other metric, should other specific requirements or measurements be established?

Main Studios.  The commission suggests reverting to the pre-1987 requirement that each station maintain a main studio in its community of license

Network Programming Review.  The Commission asks whether rules should be adopted to require that local network affiliates have some ability to review all network programming before it is aired.  If so, what programs would be exempt from the requirement (e.g. live programs), how much prior review is necessary, would such a right disrupt network operations?

Voice Tracking.  The Commission asks if "voice-tracking," (i.e. a radio announcer who provides announcing on a radio station from outside a local market, sometimes including local inserts to make it sound as if the announcer is local) should be limited or prohibited, or if disclosure should be required.

Local Music.  While the Commission indicates that it did not think that a ban on national playlists was required, it did ask whether broadcasters should be required to report the songs that they play, and how they choose their music.  With that information, the Commission asks if it should consider the amount of local music played when assessing whether a station has served the needs of its community at license renewal time.

Class A TV.  The Commission asks whether it should adopt rules that permit more LPTV stations to achieve Class A status, meaning that they would no longer be secondary stations subject to being forced off the air by interfering uses of the TV spectrum by full-power TV stations.

 

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Last week, we published a note that the FCC had published the new rules on Low Power FM (LPFM) stations in the Federal Register, starting the comment period on the issues raised in the Further Notice of Proposed Rulemaking in that proceeding - principally addressing the relationship between LPFM stations and FM translators and improvements in full power FM stations.  But we were wrong about the comment date.  In an unusual action, the Federal Register publication only contained that portion of the FCC's order actually adopting new rules on ownership and transferability of LPFM stations, limiting the number of FM translator applications that one entity can process from the 2003 filing window, and announcing interim processing rules with respect to situations where interference to an LPFM station would be caused by upgrades to FM stations.  The section of the document which constitutes the Further Notice of Proposed Rulemaking were omitted from the Federal Register publication, even though it had been acted on simultaneously with the new rules that are going into effect, and even though the language dealing with the Further Notice was released together with the new rules, in a single document back in early December.

So the comment date on the relationship between LPFM stations, FM translators and the upgrades of full-power stations remain to be set - watch for the date to be set soon. 

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The FCC has now joined the Nevada Courts (see our post here) in denying Dennis Kucinich entry into the Presidential debates.  In a decision released this week, the FCC found that they could not force CNN to include Kucinich in its Democratic Presidential Debate, as such an action would violate the First Amendment.  The FCC only has the jurisdiction to determine if Kucinich was entitled to equal opportunities for not being included, and the Commission rejected that claim as well, finding that the carriage of the debate was on-the-spot coverage of a news event, exempt from equal opportunities. 

This decision is what we predicted in our post when the court's denied Kucinich access to the Nevada Presidential debate.  As we set out in that post, to encourage political debates, the FCC has determined that debates are on-the-spot coverage of news events as long as more than one candidate is included, and the decision as to which candidates to invite is made based on some rational criteria that is not exercised in some discriminatory, partisan fashion.  In this case, the Commission found that CNN's criteria - that a candidate had to have finished in the top 4 in a previous primary and be polling over 5% in an established national Presidential preference poll were not standards that were being applied arbitrarily for partisan reasons. The Commission concluded that the mere fact that Kucinich was receiving Federal funds and had unique positions on the issues was not enough to conclude that CNN was required to either include him in the debate or provide him equal time.

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The FCC has announced that on January 24 it will begin a new round of testing of wireless devices that will work in that part of the communications spectrum currently reserved for television station operation.  The idea, about which we wrote here, would be that these devices could operate at low power, on channels not used by television stations in a particular market (the so-called "white spaces"), without creating interference to television stations.  Proponents (mostly tech and computer companies) claim that these low power devices could be used for wireless broadband and other communications devices, while opponents (principally television broadcasters, but also and wireless microphone companies which operate in the television spectrum) fear that the devices, when released into an unregulated, real-world environment, will create damaging interference to the new digital television operations that begin in February 2009.  The Commission's tests will attempt to resolve this controversy.

The Commission has already once tested some devices, and found them wanting (see our summary here).  However, those who support the devices claim that the tests were flawed and one of the devices that was tested was malfunctioning.  So the FCC has announced revisions in the testing process, and opened the testing process to public observation.  Four devices will be tested.  No matter what the results of the tests, you can be sure that the debate will continue.

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[Correction 1/24/2008- we have published a correction to this entry, here, noting that the Federal Register publication described below contained only half of the FCC's order in its LPFM proceeding, omitting the portion seeking public comment.  That section of the order will apparently be published in the Federal Register at a later date - so the February 19 comment date set out below is incorrect.  Everyone has more time to prepare their comments.  The actual filing date will be set in the future.]

The FCC Order establishing new rules for Low Power FM (LPFM) Stations was published in the Federal Register on January 17.  This sets the date of February 19 for the filing of comments on the question of the relationship between LPFM stations and both FM translators and full-power FM stations.  These comments will address two issues, (1) whether LPFM stations should remain secondary stations, subject to being knocked off the air by new full-power FM stations and (2) whether LPFM stations should get some sort of priority over some or all FM translator stations.

LPFM stations have been "secondary" stations, meaning that they could be knocked off the air when a new FM station came on the air, or when improvements to the facilities of an existing FM station were constructed, if the new full-power FM facilities would be caused interference from the existing LPFM station.  As we wrote here, at its November meeting, the FCC decided that it needed more information to determine whether LPFM stations should continue to be secondary to new or improved FM stations.   While not reaching a final determination on that issue, the FCC adopted temporary processing policies which essentially force the full-power stations to deal with LPFM operators in cases where such interference arises - potentially blocking improvements in the facilities of a number of FM stations. 

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In a wild series of legal decisions preceding the Democratic Presidential debate in Nevada, a Nevada judge ruled that MSNBC had to include Congressman Dennis Kucinich in its debate, only to be overruled by a decision of the Nevada Supreme Court released less than a hour before the debate was to begin.  Notably, the initial decision was not based on FCC rules, but instead on a breach of contract theory, as FCC precedent seems relatively clear that a Presidential debate sponsor need not include all candidates in a debate for the coverage of that debate by a broadcaster or cable operator to be exempt from the equal opportunities rules enforced by the FCC. 

 The FCC has long recognized that, to promote the coverage of debates on broadcast media, the sponsors need to be able to limit participation in those debates for them to have any meaning.  In some races where there are minimal requirements for being placed on a ballot, there can be dozens of candidates for a particular office.  If all needed to be included in a broadcast debate, the debate would never be broadcast, and the public would not receive the benefit that on-air coverage would provide.  The issue first arose when the equal opportunities rule was adopted, as broadcasters feared that, unless every candidate for a particular office was included in the debate, any broadcaster or cable company carrying the debate would have to give free "equal time" to any candidate that did not participate in the debate. 

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As 2007 wound to an end, advertising issues figured prominently on the agenda of Washington agencies, including both the FCC and the FTC.  While the FCC is looking at specific regulatory requirements governing broadcast advertising, the FTC is investigating the privacy issues raised by advertising conducted by on-line companies.  In November, the FTC held a two day set of workshops and panels where interested parties discussed issues of behavioral advertising - advertising that can be targeted to individuals based on their history of Internet use, and whether or not regulation of these practices was necessary.  The wide-ranging discussion is summarized on our firm's Privacy and Security Blog, here.  After gathering this testimony, we will see if the FTC decides to proceed to propose any regulations dealing with this sort of personalized, on-line advertising.

At the FCC, there are two separate proceedings dealing with advertising issues for broadcasters.  The first came about as part of the FCC's diversity initiatives adopted at its December meeting.  There, the Commission determined that broadcasters will need to certify in their renewal applications that they have not discriminated in their advertising practices.  While this proposal was adopted at the Commission's December 18 meeting, the full text of the decision has yet to be released, so we do not know the specifics of this new requirement.

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The FCC has released the agenda for its first open meeting of the year, scheduled for this Thursday, January 17, 2008.  The agenda consists solely of presentations by the various Bureau Chiefs discussing their various policies and procedures in implementing the agency's "strategic plan."  Such an agenda, while not common, is not unheard of, especially for the first meeting of the year, and especially after so many controversial decisions were made in the last two meetings at the end of 2007.  

This agenda was released a few days after House Energy and Commerce Committee Chairman John Dingell announced an investigation of the Commission's rulemaking procedures and management practices.  FCC Chairman Kevin Martin has been under fire from Republicans and Democrats alike in both the House and Senate, especially following the agency's December meeting in which the newspaper/broadcast cross-ownership ban was modified, as we discussed here.  Congress has criticized the agency's lack of transparency, and infighting among the Commissioners has become open and much talked about in Washington, as reflected in meetings that are often delayed by hours and in Commissioner's Copps' vitriolic dissenting statement read aloud at the December meeting. 

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This week, the Copyright Royalty Board issued an Order denying a request by SoundExchange for rehearing of certain aspects of the decision released last month setting the royalties for satellite radio - XM and Sirius.  These are the royalties for the use of sound recordings by these services on their digital systems.  The decision, which set royalties at 6 to 8% of revenues of these services, and the denial of the rehearing motion, provide examples of how the CRB applies the 801(b) standard of the Copyright Act.  In setting royalties, that standard assesses not only the economic value of the sound recording, but also the public interest in the wide dissemination of the copyrighted material and the impact of the royalty on the service using the music.  The satellite radio decision sets a royalty far lower than that assessed on Internet radio - where the royalty is set using a "willing buyer, willing seller" standard looking only at the perceived economic value of the sound recording.  That willing buyer, willing seller standard is also proposed for broadcast radio in the recently introduced performance royalty bills now pending before Congress (see our summary here) - so it could be expected that any royalty set using that standard would be higher than that set for satellite radio. 

The initial Copyright Royalty Board decision, the full text of which is available here, first made a determination of how to compute the royalty.  While both the satellite radio companies and SoundExchange initially suggested a percentage of revenue royalty given that satellite radio can't count specific listeners, the parties later amended their proposals (after the Internet radio decision) to include a computation based on the frequency of a song's play, to try to more closely approximate the Internet radio performance-based model (about which we wrote here).  In addition to the suggestion that this metric more closely approximated that used in the Internet radio decision, the satellite radio companies suggested that a metric based on the songs played would give them the opportunity to adjust their use of music to reduce their royalty obligation.  The satellite companies suggested that, if the royalty was too high, they could reduce the number of different songs that they played.  While not specifically referenced in the decision, it is possible that they also considered the possibility of getting waivers from artists to encourage playing particular songs, which could further reduce a royalty based on a per song computation.  The Board declined to provide that option, finding that the percentage of revenue option best took into account the business of the companies.  The Board also suggested that it doubted that satellite radio really had the ability to lessen the use of music in reaction to a high royalty rate.  (The Board does not discuss the possibility of royalty waivers, which are essentially worth nothing in a situation where the royalties are based on a percentage of a service's entire revenue). 

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Investors in broadcast properties often seek to have their interests "insulated" from "attribution"   meaning that the interests do not count in a multiple ownership analysis.  In other words, if a party has an attributable interest in a company owning a broadcast station, that interest counts in determining whether the party can, under the FCC's multiple ownership rules, own an interest in another station in the same market.  The FCC has extensive case law describing when an interest is non-attributable and does not count in a multiple ownership review.  In most cases, a non-attributable interest is one that does not hold voting rights on most company decisions.  However, the Commission has always recognized that the non-attributable, non-voting equity owner may retain certain voting rights when dealing with certain fundamental company actions, as necessary to protect the fundamental integrity of their investment.  In the recent decision approving the transfer of the Ion Media Network broadcast stations, the FCC clarified some of the permissible voting rights of nonattributable shareholders.

In the past, the FCC has permitted nonattributable owners to vote on certain fundamental actions of a company without threatening the owner's nonattributable status.  Such fundamental actions included changes in the articles of organization or the by-laws of the company, a sale of more than 10% of the assets of the company, a merger or transfer of control of the company, a declaration of bankruptcy, or the issuance of new stock.  As these actions could all affect the fundamentals of the economic interests of the nonattributable owners, votes on these actions was permitted.  In the Ion Media case, new rights were found to not affect the non-attributable status of their investments

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The National Telecommunications and Information Administration ("NTIA") now has made available the coupons for consumers to use to buy converter boxes that will allow analog television sets to pick up the digital signals of television stations.  We have written about the NTIA program before, here.  Digital signals are now available in most markets, and these signals will be the only signals available from full power television stations after the February 17, 2009 digital conversion deadline. The coupons, valued at $40, will be available until they run out (and, by most estimates, Congress has not appropriated enough money for every household to get coupons).  They are available to any household regardless of financial need, but can be used only to buy certain very simple converter boxes to convert over-the-air digital transmissions to analog so that the digital programs can be seen on analog television sets that are not hooked up to cable or satellite (cable and satellite systems will provide signals that will not need the use of these boxes).  The NTIA has a very helpful website, here, to explain the coupon program.  The applications for the coupons are available here. 

Any household can apply for up to two coupons.  Coupons cannot be aggregated to buy a single box - so the multiple coupons will only be of use to households with more than one set that is not connected to cable or satellite.  As set forth on the NTIA site, the boxes are expected to cost between $50 and $70, so the coupon will not completely cover the cost of the box.  What is perhaps most interesting is that, even though the applications for the coupons can be filed now, the coupons will not be sent out for another month or two, as there are no boxes yet available in local retail outlets.

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On the last day of 2007, the FCC released a 108 page order detailing its rules for the final stages of the transition of US full power television stations from analog to digital, a transition that is to be completed in less than 14 months.  The Third Periodic Review, as the order is titled, covers in detail the timing of required construction of the final facilities for each full power television station, as well as various details on other transition issues.  While we will prepare a more detailed summary of the order, some of the more significant issues that the Commission addressed include the following:

• Established firm construction deadlines for final digital facilities for television stations which have not yet constructed those facilities. The deadlines are:
  • February 17, 2009 for stations moving to a new digital channel, or to their analog channel, for their ultimate digital operations
  • May 18, 2008 for stations that will remain on their current digital channel and which already hold a construction permit for their digital operations
  • August 18, 2008 for stations that will remain on their current digital channel but which do not have a construction permit for their ultimate facilities
• Extensions of these deadlines will be permitted only upon a showing that the circumstances preventing construction were unexpected or beyond the control of the licensee, including zoning and financial inability - though these standards were made more limited than those that previously applied.  Any extension beyond February 17, 2009 will be granted only if it meets the Commission's tolling standards, e.g. there is litigation which must be resolved before the construction can begin or an Act of God that temporarily precludes construction.
• By February 18, 2008, each television station licensee must file a new form with the FCC, Form 387, detailing the status of construction of the digital facilities of the station, and must update the information periodically if they have not yet completed their DTV construction.
• The Commission has agreed to allow stations to receive Special Temporary Authority to operate with limited facilities, and to even cease analog broadcasting before the end of the transition or for periods of up to 30 days, if necessary to facilitate their ultimate construction, under certain specific guidelines and after prior notification that must be given to viewers. 
• The current freeze on applications for increased facilities will be lifted after August 18, 2008
• The Commission adopted new interference standards for applications for improvement in digital stations
• Any digital station, whether operating as a licensee or permittee, must pay fees for any ancillary or supplementary services that they provide with their digital spectrum
• Provided a format for the station identification that must be used when a digital station uses a secondary channel to rebroadcast another station, such as a low power television station.

 

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