Every year, about this time, I dust off the crystal ball to offer a look at the year ahead to see what Washington has in store for broadcasters. This year, like many in the recent past, Washington will consider important issues for both radio and TV, as well as issues affecting the growing on-line presence of broadcasters. The FCC, Congress, and other government agencies are never afraid to provide their views on what the industry should be doing but, unlike other members of the broadcasters' audience, they can force broadcasters to pay attention to their views by way of new laws and regulations. And there is never a shortage of ideas from Washington as to how broadcasters should act. Some of the issues discussed below are perennials, coming back over and over again on my yearly list (often without resolution), while others are unique to this coming year.
Last week, we published a calendar of regulatory deadlines for broadcasters. This article looks ahead, providing a preview of what other changes might be coming for broadcasters this year – but these are delivered with no guarantees that the issues listed will in fact bubble up to the top of the FCC's long list of pending items, or that they will be resolved when we predict. But at least this gives you some warning of what might be coming your way this year. Issues unique to radio and TV, and those that could affect the broadcast industry generally, are addressed below.
General Broadcast Issues
There are numerous issues before the FCC that affect both radio and television broadcasters, some of which have been pending for many years and are ripe for resolution, while others are raised in proceedings that are just beginning. These include:
Multiple Ownership Rules Review: The FCC is very close to resolving its Quadrennial review of its multiple ownership proceeding, officially begun in 2011 with a Notice of Proposed Rulemaking. The rumors were that the FCC was ready to issue an order at the end of 2012 relaxing the rules against the cross-ownership of broadcast stations and newspapers, as well as the radio-television cross-interest prohibitions, while leaving most other rules in place. TV Joint Sales Agreements were also rumored to be part of the FCC's considerations – perhaps making some or all of these agreements attributable. But even these modest changes in the rules are now on hold, while parties submit comments on the impact of any relaxation of the ownership rules on minority ownership. Still, we would expect that some decision on changes to the ownership rules should be expected at some point this year – probably early in the year.
Indecency: After the Supreme Court decision in June, upholding the FCC's right to regulate indecency but questioning the current procedure for doing so, the FCC's regulation of indecency is up in the air. Many license renewal applications for both radio and television stations are held up because of pending complaints, and many sales of stations happen only when the seller's agree to escrow funds to cover any indecency fine that may occur at some point in the future – when the Commission decides what standards to apply to the pending complaints. With so many applications held up, it would seem that the FCC should deal with this issue soon.
EEO Rules: There are fundamental issues about the FCC's EEO policies that have not been addressed in the 9 years since these rules were first adopted. Proposals to extend the rules to part-time employees, and to require the filing of FCC Form 395 (the form that classifies all employees by race and gender), are still pending from that long-ago proceeding. Also pending are proposals sought in requests for reconsideration of the adoption of the EEO rules that would make the EEO rules comport with today's reality - such as the proposals to allow Internet-based EEO recruiting. Maybe this will be the year that some of these outstanding issues are finally resolved.
Privacy Issues: As the digital operations of broadcasters become more and more important, they will face many of the same issues that trouble many of the pure digital media companies. Chief among these issues is that of privacy. Congress, the FTC and other government agencies all are looking at issues as to how to protect the privacy interests of individuals while still allowing digital media companies to use information that allow the functioning of the digital systems, including the placement of advertising targeted to particular individuals based on their interests, as shown through their online habits. The FTC recently issued a report looking to update its enforcement of the Children's Online Privacy Protection Act, and expect that this will be but one of many attempts to impose new regulation on online services in an effort to protect the privacy of individuals.
Political Rules: In the recent election, we saw the effects of the Citizens United case in the significant political spending on broadcast commercials by third-party organizations. While there have been calls for more regulation on such ads, we don't expect action in that area this year. Instead, though, there may be some minor tweaking of the political broadcasting rules, as there are outstanding issues remaining before the FCC – including appeals of the decision of the FCC, issued just before the election, holding that TV stations have to give candidates equal access to certain single-issue candidates – even though such candidates are qualified only in the distant reaches of the station's coverage area, and even when such candidates are "running" for office not with any expectation that they will be elected, but instead simply so that they can get access to television stations to run some controversial commercials not primarily intended to promote their candidacy, but instead to promote their position on some other issue. In an "off-year", this might be the time to address some of these outstanding issues.
Public Interest Programming Reports: At the same time as it began its proceeding to adopt an Online Public File, the FCC began a proceeding to look at the adoption of a new form on which broadcasters would report the public interest programming that they do. This form would replace the Quarterly Issues Programs list, and the Form 355 adopted 5 years ago for television but never implemented. The proposal released in 2011 was simply a Notice of Inquiry, meaning that the FCC would need to adopt a Notice of Proposed Rulemaking to move further on this proposal. While we have not heard much about the status of this proposal lately, with some of the complaints about the usefulness of the Online Public File, this proceeding could bubble up at some point this year although, as no Notice of Proposed Rulemaking has yet to be released, before any new rules were adopted a whole new set of comments would need to be received. So don't expect a new form this year.
Spectrum issues have been the dominant TV concerns in past years, first with the digital transition, and more recently with the "white spaces" rulemaking and the proposals advanced as part of the FCC's Broadband Plan to reclaim part of the TV spectrum for wireless broadband uses. As in past years, these issues remain on the FCC's agenda, as do issues dealing with the carriage of television stations by cable and satellite television providers. Issues about accessibility to video programming and the implementation of other consumer protection issues are also on the agenda. Specific issues for TV include:
Spectrum reclamation: The FCC has issued its Notice of Proposed Rulemaking, proposing methods to implement a "reverse auction," where certain TV stations would bid to be able to sell their spectrum to wireless companies and either go out of business or move to a VHF channel or share spectrum with another station. This proposal has been a high priority of the FCC, and FCC staffers have been spending significant time working to convince broadcasters that there are real opportunities for some broadcasters in this proposal. Much consideration will be given to this proposal this year, and there will be a push to move toward finalizing these rules, as the Commission would like to actually hold the auction in 2014. Part of this process will also involve the "re-packing" of the current TV band, by trying to squeeze the remaining TV stations into less of the TV band, in order to provide more contiguous spectrum to the wireless companies. Look for more details on those proposals as the year rolls on.
Retransmission Consent Reform: There has been much talk in Congress, and a proceeding initiated at the FCC, to determine if the rules governing the negotiation of retransmission consent agreements should be changed. Some multichannel video programming distributors and some public interest groups argue that the FCC should protect viewers who may have their broadcast TV service disappear if a TV station does not reach a deal with a MVPD, while the broadcasters argue that the ability to remove the station from an MVPD is the heart of the negotiation, and removing the risk of the MVPD losing the right to carry the station would hobble the negotiation process. MVPDs also object to TV stations operating through a JSA or Shared Services agreement negotiating jointly, while TV broadcasters see that as a way to equalize their bargaining position, especially for stations not affiliated with the Top 4 networks. Look for some movement in this very controversial proceeding later in the year.
Accessibility: Each year, accessibility issues play a more and more important role in video transmissions – with this year bringing further obligations for video providers to caption television programming that has been repurposed for the Internet, including mobile applications. We would also expect that the FCC will rule on many of the waiver requests that are on file from independent programmers who had received closed-captioning waivers that were revoked when the FCC decided that it had been using the wrong standard for such waivers. The Commission also has a proceeding in which comments have recently been filed that seeks to impose rules requiring that TV broadcasters provide a second audio channel to convey to the blind emergency information that is presented visually on-screen. This would be to aid the blind, in the same way that the current requirements for on-air video captioning is required to aid the hearing-impaired. Look for more action in this area later this year.
White Spaces: The FCC has authorized the operation of wireless devices in the television spectrum, and permitted these operations throughout portions of the east coast of the United States. Expect that the roll-out of authorizations for full-implementation of white spaces to continue this year.
LPTV/Class A TV: As these stations look toward a mandatory digital conversion in 2015, expect that there will be more examination of the qualifications of Class A TV stations to retain their protected status. As the FCC looks to the spectrum auctions, Class A TV stations may tie up spectrum that will otherwise be available for the repacking of the TV band or auction to wireless companies. Thus, expect the FCC's scrutiny of these stations to continue through 2013 – especially with the license renewals of many of these stations coming due.
Radio has fewer unique issues on the front burner in Washington, but something always comes up. Here are some of the issues we see coming to the fore in 2013 for radio broadcasters:
Performance Royalty: Even though things were relatively quiet on the performance royalty in the last Congress, we would not be surprised to see the issue resurface in 2013. SoundExchange, for the first time in a long time, will not be directly fighting a royalty proceeding at the Copyright Royalty Board. As, as described below, the issue of the streaming royalty rates will likely be in front of Congress, giving more opportunities for this issue to be considered.
Streaming Royalties: In 2012, the Internet Radio Fairness Act was introduced in Congress, looking to apply a single standard for deciding the royalties to be paid by all digital music services. With a new proceeding to determine Internet radio royalties to begin in 2014, we expect that this bill will be back on the table early in 2013, and there will be significant pushes to get it through Congress this year – and significant push-back from SoundExchange and the record labels.
SESAC Antitrust Action: Broadcasters affiliated with the Radio Music Licensing Committee has filed an antitrust lawsuit against SESAC, seeking to bring it under the same kind of consent decree as ASCAP and BMI so as to try to rein in the rates that SESAC is able to command. Expect lots of litigation on this case this year, but no resolution, as these cases are very long and complex.
LPFM/FM Translator Issues: At the end of 2012, the FCC issued its long-awaited order finally dealing with the processing of FM translators left over from the 2003 FM translator window, and setting up procedures for processing LPFM applications once the translators are dealt with. The FCC has already issued an order setting January deadlines for translator applicants to pick the translators that they will prosecute under the application processing limitations imposed in last month's order. Expect the FCC to push hard to deal with all 2003 translators this year, and to open an LPFM window at the end of the year (October being the projected time, but it could potentially slip to later in the year).
These are but some of the legal and regulatory issues that will be facing broadcasters in the upcoming year. Each year, we make these predictions, and there are always numerous other issues arise that we did not anticipate. So watch the trade press and the pages of this blog to see what other challenges may be coming from Washington for broadcasters as this year progresses.