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

Once again, the extension of the sound recording performance royalty to broadcasters has become a hot topic in Washington. The subcommittee on Courts, the Internet and Intellectual Property of the  House Judiciary Committee yesterday approved the bill introduced by Congressman Berman (about which we first reported here).  That bill would include broadcasters in the Section 114 sound recoding royalty currently applicable to digital music users including Internet radio, satellite radio and cable radio. Under the bill, the Copyright Royalty Board would be charged with the responsibility of determining what a royalty would be using the "willing buyer, willing seller" standard. Following this subcommittee approval, the bill would next be considered by the full committee. To become law, the Committee and the full House of Representatives would have to approve it, and similar legislation would need to be enacted by the Senate. As the NAB has garnered the support of a majority of the members of the House on a non-binding resolution opposing the imposition of the royalty on broadcasters, and as there is not much time remaining in the legislative session before the election and the end of this Congress, the whole process may well have to start fresh in 2009 (bills have to be reintroduced after the end of each two-year Congressional session). Yet, with all of the controversy over the issue in recent weeks, it appears certain that the issue will arise again, so it is important to look at some of the recent action.

Two weeks ago, the House subcommittee held a hearing on the issue. Prior to the hearing, the MusicFirst Coalition (principally supported by the RIAA and the affiliated record companies as 50% of any royalty goes to the copyright holders who are usually the labels) had Nancy Sinatra and the Nitty Gritty Dirt Band making the rounds on Capitol Hill in support of the royalty. These appearances follow the precedent set in earlier Capitol Hill proceedings, where the Coalition has brought in niche or oldies artists to address Congress - not major popular current acts. The artists who have testified (who have included Judy Collins, Sam Moore, Lyle Lovett, and Alice Peacock) have argued that the additional income that they would receive from a performance royalty would supplement their incomes which, in some cases, has either never been great or has declined as the demand or ability to tour has declined. The argument is always made that the royalty will encourage musicians to produce their music – though it is rarely if ever claimed that music wouldn’t be made if the royalty is not adopted, as songs have been written and sung for time immemorial, well before any royalty existed, merely for the pleasure or to fulfill the need for self-expression. The question is not one of ensuring the availability of music, but instead it is one about who should get how much of whatever money is made, directly or indirectly, from the use of that music. 

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We recently wrote about the challenge to appointment of the Copyright Royalty Board's judges filed by Royalty Logic as part of the appeal of the Board's decision on Internet Radio royalties.  Royalty Logic argued that the appointment of the Copyright Royalty Judges was improper, as the Librarian of Congress was not the "head of a department" who can appoint lesser government officials under the Appointments Clause of the Constitution.  Thus, Royalty Logic contends that the decision reached by the Board as to Internet radio royalties was a nullity, as the Board effectively does not legally exist.  Earlier this week, the Board and SoundExchange filed their replies to the Royalty Logic motion, arguing that, in fact, the Librarian is the head of a department, as he is appointed by the President and approved by Congress and runs a government "department," i.e. the Library of Congress, of which the Copyright Office is a part.  In demonstrating that the Library is a department, the briefs reach back to the creation of the Library by Thomas Jefferson, and look at the legislative history of legislation modifying the powers of the Library and the process for the appointment of the Librarian - legislation passed in 1870 and 1897.  Essentially, the very technical argument about why the Board was not properly constituted was met with an equally technical one that says it was properly formed.  Clearly, arguments only lawyers could love.

While Royalty Logic will have the opportunity to respond, the litigation process continues on the main portion of the appeal, as SoundExchange filed its intervenor's brief the week before last, defending the decision of the Copyright Royalty Board.  In one notable departure, SoundExchange, while contending that the Board was correct in determining the minimum fees that would be required of webcasters, it said that, because of the agreement that it reached with certain webcasters that would cap minimum fees at $50,000  no matter how many channels a service might have (see our discussion of the agreement here), it asked that the Court remand that one limited matter back to the Board for adoption of the limitation on minimum fees so that it would apply to all webcasters and not just those who signed the agreement.  In all other respects, SoundExchange opposed the briefs of the webcasters.

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Today's morning newscasts were filled with the stories of the passing of George Carlin - a comedian and satirist who effectively wrote the indecency regulations that most broadcasters abide by - without the FCC ever having had to adopt the regulations that he attributed to them.  In the broadcast world, Mr. Carlin was probably best known for his routine about the Seven Words that You Can Never Say on TV.  When that routine was aired by a New York radio station, and heard by a parent who claimed that he had a child in his car when the routine came over his radio in the middle of the day, the resulting FCC action against the station resulted in appeals that ended in the Supreme Court which, in its Pacifica case, upheld the right of the FCC to adopt indecency rules for the broadcast media to channel speech that is indecent, though not legally obscene, into hours when children are not likely to be listening.  But what this case and the FCC ruling did not hold are perhaps more misunderstood than what the case did hold.

First, the case was about "indecency" not "obscenity."  Many of this morning's newscasts referred to the Pacifica decision as being an Obscenity decision.  Obscenity is speech that can be banned no matter what the time and place, as it is speech that is deemed to have no socially redeeming value.  Indecency, on the other hand, is a far more limited concept.  Indecent speech is speech that is constitutionally protected - it has some social significance such as the social commentary clearly conveyed by the Carlin routine.  It cannot be constitutionally banned.  But the Supreme Court upheld the FCC's decision in the Pacifica case that, because of the intrusive nature of the broadcast media, it can be limited to hours where children are not likely to be in the audience.  Hence, the FCC has a "safe harbor" that allows indecent programming between the hours of 10 PM and 6 AM, when "obscene" programming is never allowed on the air.

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In a proposal filed by many of the nation's largest radio broadcasters, a request was made that the FCC allow FM stations operating with the HD Radio (or "IBOC system" - for "In Band On Channel" as the digital signal is transmitted on the same channel as the current analog signal) to increase power by up to 10 dbu, which is said to be less than 10% of a station's authorized analog power.  The proposal cites the power increase as one that, in most cases, can be made without interference to adjacent channel stations.  In certain instances, particularly those of grandfathered short-spaced stations, only certain lesser power increases would be permitted under this proposal.  The proponents contend that the increased power will help stations replicate their analog service and increase building penetration so that the service can be received inside large office buildings and even in parking garages.  The proponents submit engineering studies that support their position.

I have worded this post very cautiously.  We write about many significant and controversial issues on this blog - e.g. indecency, music royalties, multiple ownership rules - but the most animated responses we usually receive is when a post deals with HD Radio.  While we have written about many broadcasters who have adopted the HD radio system and are using the multicast ability to bring new services to their communities, we recognize that there are many critics of the programming on HD Radio, or the design of the tuning functions on the radio, or for the lack of the consumer "value proposition" for the purchase of a new radio required to receive the digital transmissions.  However, we have found that there are also many who feel vehemently that there are engineering issues with the service.  So we post this notice of the FCC filing, and look forward to the response that we will receive.

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In several recent speeches and press releases, FCC Commissioner Jonathan Adelstein has challenged the FCC to do more in the regulation of children's programming.  In a recent Press Release, the Commissioner outlined proposals including the following:

• Improve the V-Chip and other program blocking technologies
• Improve ratings information for television programming - including potentially having third parties review programming for its suitability to children as opposed to the television programmers themselves doing the ratings
• In the context of a proceeding on Embedded Advertising that has been rumored for quite some time, look at how such advertising is used in children's programming
• Restrict interactive advertising directed at children.
• Convene a summit to explore these issues

In addition to these proposal, the Commissioner gave a recent speech to the Media Institute in which he expanded on these ideas, and also lengthened this agenda to include further Commission action to define and restrict violent programming.  He also expressed his regrets over the recent decision overturning the FCC's fines for fleeting expletives and urged that action be taken to overturn this decision (see our post here on the FCC's appeal of that decision).  And in yet another recent speech, he emphasized the proceeding on Interactive advertising in children's programming, remarking on how the Commission has a pending proceeding that has been pending and unresolved for several years.  He cited the Commission's tentative conclusion to ban such ads, as broadcasters form a "portal" for children's entrance to the Internet.  While the Commissioner expressed that the FCC had little jurisdiction to do much on the Internet itself (but see our recent post as asking whether the FCC may soon get more power over the Internet), he felt that restrictions on the links to the Internet from television programs would be useful in protecting children. 

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A recent Washington Post article highlights a bill that was recently introduced in Congress suggesting that the FCC bring back their rules for audio descriptions of video programming - rules which were thrown out by the Courts several years ago as being beyond the scope of the Commission's authority without explicit Congressional authorization.  But not only does this bill propose to give that missing Congressional approval to the FCC to re-introduce video description requirements for broadcast television, but it would authorize the FCC to introduce these rules, and closed-captioning requirements, on all video screens, including MP3 players, wireless devices and other video devices getting their programming through the Internet or other digital technologies.  With this bill, and various other proposals that have surfaced in recent months, it seems more and more likely that, as the Internet becomes even more important in the provision of broadcast-like programming in the future, the FCC may be called on by Congress to impose broadcast-like restrictions on that programming.

The full text of the recent bill, introduced by Congressman Markey, Chair of the House Subcommittee on Telecommunications and the Internet, can be found here.  A summary of the bill is also available on Congressman Markey's website.  The bill deals first with the accessibility of telephones and other communications devices, before setting out the provisions dealing with the captioning and video description requirements for broadcast and Internet video devices.  The bill first asks the FCC to study and report to Congress on the issues with captioning and video description on video devices, and then asks the FCC to adopt rules governing these matters, making video programming placed on the Internet that was either broadcast on a television stations or which is "comparable" to broadcast programming to be subject to these rules.  The idea is to make all TV-like programming subject to the rules, no matter what device it is viewed on.  Presumably, if adopted, the law would allow the FCC to make exemptions for certain types of programming (just as it currently allows exemptions from the current closed captioning requirements for small entities that have insufficient resources to caption a program).  The bill also requires that the FCC make sure that program guides and emergency information are available to those with hearing or visual difficulties, and that the navigation devices on video receivers can  be worked by those with disabilities.  So the FCC would have much to do to comply with this law, if adopted, and all within an 18 month period.

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According to press reports, the Obama campaign is contemplating an ad schedule during the upcoming Summer Olympics.  This raises the question of what political broadcasting rules would apply to such a buy.  The Olympics run from August 8 through 24, before the lowest unit rate window for political candidates.  Thus, the Obama campaign is not entitled to lowest unit rates.  Instead, the candidate would only be entitled to a "comparable rate" to what a commercial advertiser in a similar situation would receive.  The campaign would not get frequency discounts that a big Olympics sponsor might get, unless the campaign bought in the same frequency, or other discounts that may apply to larger advertisers.  But the reasonable access provisions of the rules do apply once you have a legally qualified candidate, so it would seem as if at least some political ads would have to be placed in the Olympic programming.  In various political seminars held throughout the country, when this question has been raised, the FCC representatives have consistently said that, given the fact that the Olympics run for such a long period, at least some access must be made available to Federal candidates who are willing to pay the price that the airtime commands.

During the Super Bowl, the Obama campaign bought time, but it was purchased on local stations, not on the network itself (see our post here).  Affiliates of NBC would also have reasonable access issues of their own, were the Obama campaign to approach them directly, or were some local Federal candidate to request time on their stations.  As these stations have less inventory during the Olympics than does the network, the amount of time that would have to be provided would be less (and a candidate need not be given access to the exact time spot that they might request - not everyone can get the coveted spots in certain high profile event's finals - as long as the access that they are given is reasonable under the circumstances).  But the access rules would apply -so at least some access would have to be given.  Note that in a few states with late primaries for Congress and the Senate, it is possible that there would be Federal candidates entitled to lowest unit rates, even during the Olympics.  State and local candidates, however, have no right of access, so stations would not have to sell them time in the Olympics.

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The processing of the applications for new noncommercial FM stations marches on.  This week, the FCC released a list of groups of Mutually Exclusive applications (commonly known by those who regularly deal with the FCC as "MX groups"), i.e. applications that are linked together in that, because of interference concerns, not all can be granted.  In some cases, all of the applications in an MX group overlap with each other so that only one can be granted.  In other cases, referred to as "daisy chains", you have a situation where Application A precludes Application B from being granted, and Application B prevents Application C from being granted.  While A and C could be granted if not for B, all three end up in a single MX group.  According to the Public Notice released with the list of MX groups, the applications on this list are all situations were there are 13 or fewer applicants in the MX group.  MX groups with a greater number of applications will appear on a subsequent public notice.  MX Groups with 4 or fewer applications were identified back in March.

The Commission has advised all applicants to review the lists to see if they were included in an MX group erroneously or omitted from an MX group in which they should have been included.  If they discover a mistake, the applicant should file, within 30 days, notice with the FCC so that its application can be processed with the group to which it belongs.  Applicants can also try to work out settlements during the 30 day comment period (or notify the FCC at the end of the period that they are still working on a settlement).  Otherwise, at the end of the 30 day period the FCC promises to begin work to resolve the MX cases through the use of the point system (which we explained, here).  So the process marches on, and we should start to see more applications from the noncommercial filing window acted on in the coming months.

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FCC Form 388 reports on the efforts of television stations to educate their viewers about the digital television transition.  We wrote about the details of that new form, filed for the first time in April.  When the form was last filed, as it had been adopted only days before, the Commission did not have time to update its CDBS system to allow for the electronic filing of that form in the system where all other FCC forms are submitted.  Instead, the FCC required that first form be filed in ECFS, the system usually used for filing rulemaking comments in docketed proceedings.  However, the Commission has just announced that the form is now available in CDBS so, when the form is next submitted on or before the July 10 deadline, reporting on the last three month's DTV educational activities, broadcasters can use the standard filing system.  The ECFS filing system caused great consternation among broadcasters and the FCC, as it did not automatically link up the reports with the stations that submitted them.  Thus, many stations that timely filed the form received admonitions from the FCC, alleging that the forms had not properly been submitted.  Hopefully, as the standard filing system can now be used, those sorts of issues will be avoided.  So remember to file the form by the deadline, and to use the CDBS system this time around.

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The FCC today issued an order extending the comment deadline in its Broadcast Diversity proceeding, extending the comment date a full month until July 30, with Reply Comments now due on August 29.  This important proceeding, about which we wrote here, will address many issues, including proposals to, among other things, repurpose television Channel 6 (and possibly Channel 5) for FM use after the completion of the television digital transition, to allow FM licensees who multicast to sell one of their multicast channels independently of the main channel, to allow certain AM stations with expanded band channels to avoid turning in one of their channels at the end of the 5 year transition period if the licensee is a designated entity (or sells one of its channels to a designated entity), and to provide Class A television stations with must-carry status.  The rulemaking proceeding will also look at whether the current definition of a designated entity (focusing on the fact that it is a small business as opposed to any review of the race or gender of its owners) is the one that the FCC should continue to use.  Thus, this is an important proceeding in which many broadcasters should be interested, and now you have more time to prepare comments on the issues that are raised.

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The FCC has just issued orders fining two stations, one for $8000 and one for $5000, for not having EAS receivers that were in compliance with FCC rules.  The stations, which are located in the same building, shared one EAS receiver.  According to FCC rules, co-located stations can share EAS receivers when they are also co-owned.  Here, however, the stations were not under common ownership so, under the rules, they could not share the same receiver.  In addition, in connection with the station that received the higher fine, the FCC noted that the receiver was not properly calibrated, having incorrect date and time information - being set permanently on January 10, 1995.  As the system was set up to automatically retransmit the required monthly EAS tests, and those tests would not be properly relayed if they were encoded with a date that the system did not think had yet occurred, the station had not been transmitting the required monthly tests, nor noting the failure to do so in their station log.

In attending several engineering seminars at broadcast conventions in the last few months, I've noted that broadcast compliance inspectors consistently identify non-working EAS receivers as the number one compliance problem at broadcast stations.  And one of the biggest problems is with receivers that either have never had the correct date set, or which have a clock which is malfunctioning so that the correct date and time is not properly updated.  Inspectors have also noted that many times they find EAS receivers not having the proper audio inputs so that they can receive the station that they are supposed to be monitoring, or proper outputs so that they can relay the tests that they do receive.  And, as a station's chief operator is supposed to be weekly checking the station's log, which should include a record of all EAS tests sent and received, these discrepancies should be noted within a few days - yet they often go unnoticed for long periods of time - meaning that the station can also be fined for not having properly maintained their station log.  As these fines can add up, stations should insure that their equipment is working and monitored to avoid making some involuntary contributions to the US Treasury.

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I’m writing this entry as I return from the annual convention of the Iowa Broadcasters Association, held this year in Des Moines, Iowa. Anyone who has read, watched or listened to the national news this week knows of the terrible tornadoes that devastated a Boy Scout camp in that state, and the floods ravaging many of its cities and threatening others. I arrived in Iowa on Wednesday having just completed the filing of reply comments in the FCC’s localism proceeding, and after reviewing the many comments filed in that proceeding. After talking with, watching and listening to the Iowa Broadcasters, I was struck by the contrast between the picture of the broadcast industry contained in the Commission’s notice of proposed rulemaking and that which I saw and heard reflected in the words and actions of the broadcasters. I could only think of how the broadcasters of Iowa and the remainder of the country have dealt admirably in their programming with the disasters that nature has sent their way, and with the other issues facing this country every day, and have been able to do this all without any compulsion by the government. Why, when we have probably the most responsive broadcast system on earth, do we need the government to step in and tell broadcasters how to serve their communities?

At dinner on Wednesday, I watched one station general manager repeatedly getting up from his meal to take calls from his station about their coverage of a tornado that had come within a quarter mile of his studio, and how he had to insist that his employees take shelter from the storm rather than continuing to broadcast news reports from their exposed location as the tornado bore down on them. Another told me of how he and another employee had spent the previous day piling sandbags around the station to keep the water from flooding the studio, all the time reporting between every song the station played updates on the weather and travel conditions in their community. Other stations had continued to operate after their tower sites flooded by gerry-rigging antennas on dry land to permit their continued operation. In one of the more minor inconveniences, one station talked about operating for a few days after their city’s waterworks had been inundated by floods , meaning that their studio (and the rest of town) had no running water for drinking or even for flushing the toilets.  Yet, between these inconveniences, large and small, the broadcasters continued their service, without being told how by the government.

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Watch what your employees are up to. That’s the message of a recent decision by the FCC, fining a broadcaster $4000 for airing a telephone call that was taped and broadcast without the consent of the caller. In the case released earlier this week, the licensee asked for forgiveness based on the fact that the employee had already left the employment of the station, and because the licensee did not know of the conduct, could not even confirm that it occurred, and did not condone that conduct if it had in fact taken place. Essentially, the FCC found that the evidence provided by the caller who complained to the FCC was so convincing that the Commission could conclude that the call had in fact been aired without the caller’s consent even though the licensee could not confirm it, and the licensee was responsible for the actions of its employees. This sends the clear message to licensees that they must carefully supervise their employees, and think twice about putting that “wild and crazy” disc jockey on the air if the licensee thinks that he won’t be restrained by the Commission’s rules.

This case is another example of the FCC’s rules against airing phone calls without the consent of the caller (or taping those calls for airing without consent), except in the limited circumstances where a caller should know from the context of the program that, by calling the station, he will be put on the air. For instance, if the caller calls on a call-in line to an on-air show where the stations employees are regularly putting callers on the air, then the station should not have problems under the rules. But broadcasters are safest if they are cautious with such phone calls – warning callers with a taped or live message that there call may be taped or put on the air before the taping or airing occurs

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The appeals of last year's Copyright Royalty Board decision on the royalties paid for the use of sound recordings by Internet radio stations continue on, and one recent filing raises interesting questions of whether or not the CRB was properly appointed.  Last week, the Department of Justice, which represents the CRB in defending its decision in the Court of Appeals, filed its brief in opposition to the briefs of the webcasters, which we summarized here.  The DOJ brief essentially argued that the webcasters' briefs were insufficient to satisfy the requirement for a successful appeal - that the CRB decision was arbitrary and capricious or otherwise contrary to law.  Essentially, a Court need not revisit the decision and substitute its judgment as to whether the it believes that the decision was correct, but instead, to overturn a decision, the Court must find that the CRB (the expert agency) either violated the law or could not, on the fact, have logically come up with the decision that it did.  Thus, the DOJ brief made arguments that there was enough factual evidence for the CRB to decide in the way that it did, and made arguments that the webcasters had not offered contrary arguments or evidence on certain points during the CRB proceeding and were therefore barred from raising those arguments now.  Just before the DOJ brief was filed, another pleading raised the fundamental question of whether the Copyright Royalty Board was properly appointed and, if not, whether it has the constitutional authority to decide the cases that it has been considering.

This new argument about the CRB’s authority comes in a request filed with the Court of Appeals by Royalty Logic, a party to the CRB proceeding.  Royalty Logic is not a webcaster, but instead is seeking to be an alternative collection agency to SoundExchange.  Its pleading seeks supplemental briefing on the question of whether the Copyright Royalty Judges are “inferior officers” of the Federal government who, under the Constitution, can only be appointed by the President, by the Courts or by the head of a Department of the government. In a recent Supreme Court case, the Court found that certain tax court judges, who were appointed by a chief judge and not by a cabinet-level officer (the head of a “department”) violated this Appointments Clause of the Constitution. There has been much press coverage in the past few weeks as to whether this decision also applies to patent judges, and whether it could invalidate hundreds of patents approved by these judges (see the NY Times article on this issue, and listen to an NPR piece about the controversy). Royalty Logic contends that the same logic should apply to the appointment of the Copyright Royalty Judges who make up the CRB.  The Copyright Royalty Judges are appointed by the Librarian of Congress.  One question would be whether the Librarian is the equivalent to the head of a department though, technically, the Library of Congress is not even in the Executive Branch of government, but instead part of Congress.  In any event, Royalty Logic notes that the Copyright Royalty Tribunal, a predecessor agency done away with during the Clinton administration as part of their "Reinventing Government" program (one of the few agencies that was "reinvented"), had members appointed by the President.

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