It is the beginning of another year – and a time to look ahead to look ahead at what broadcasters should expect from Washington in the coming year. With so many issues on the table, we’ll divide the issues into two parts – talking about FCC issues today, and issues from Capitol Hill and elsewhere in Washington’s alphabet soup of regulatory agencies in the near future. In addition, watch these pages for our calendar of regulatory deadlines for broadcasters in the next few days.
Each January, we publish a list of issues for the coming year, and it is not always the case that these issues make it to the top of various piles (literal or figurative) that sit in various offices at the FCC. As set forth below, there are a number of FCC proceedings that remain open, and could be resolved this year. But just as often, a good number of these issues sit unresolved to be included, once again, on our list of issues for next year. While some issues are almost guaranteed to be considered, others are a crap shoot as to whether they will in fact bubble up to the top of the FCC’s long list of pending items. So this list should not be seen as a definitive list of what will be considered by the FCC this year, but instead as an alert as to 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: Last year at this time, we wrote that the FCC was very close to resolving its Quadrennial review of its multiple ownership rules, 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 all of those decisions were put on hold after there were objections that any even modest change in the rules would have an impact on minority ownership of broadcast stations. Since then, the proceeding has been on hold, even though comments on the minority issue were filed over 6 months ago. In fact, the only real decision was to start a new proceeding on the UHF discount, discussed below in the section on TV issues.
While TV joint sales and shared services agreements have been in the news lately (and we’ll write about recent actions in that area soon), the other news on multiple ownership is that there is no news. Recently, the word from the FCC is that the proceeding is not going to be resolved before taking new comments from the public to freshen the record, and the whole proceeding may well be rolled into the next Quadrennial Review of the ownership rules. So, in 2014, we may see no resolution of the broad ownership issues, but instead more opportunities for interested parties to file comments with the FCC to update the information collected years ago in this proceeding.
Indecency: After the Supreme Court decision in June 2012, upholding the FCC’s right to regulate indecency but questioning the current procedure for doing so, the FCC’s regulation of indecency has been up in the air. Many license renewal applications for both radio and television stations continue to be 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 on pending complaints that may arise at some point in the future whenever the Commission decides what standards to apply to the pending complaints. In this past year, the FCC took public comments asking how it should proceed in this area, suggesting that it reserve enforcement actions for egregious violations – and asking for comments on how such complaints should be identified. Given that this is an election year, and the politics of the FCC are often to avoid doing anything that could be used as a political issue before an election, unless new policies are adopted early this year (and we have heard no rumors that there is a big push to do so), we may again be writing about this issue as being one on the FCC’s agenda at this time next year.
EEO Rules: There are fundamental issues about the FCC’s EEO policies that have not been addressed in the 10 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. But, with the recent fines issued to stations for not reaching out to community groups that had asked to be informed about job openings at stations, it may well be that the FCC has just decided to leave these issues as is and clarify enforcement policies through cases that come before it from renewal filings or EEO audit response.
Political Rules: In recent elections, we have seen 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 from the FCC (though there are discussions on Capitol Hill and at other government agencies about such ads). Instead, at the FCC, there may be some minor tweaking of the political broadcasting rules as cases come before the Commission. We are still looking at outstanding issues pending before the FCC from previous elections – including appeals of the decision of the FCC, issued just before the last Federal 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. As this is a political year, we wouldn’t expect any far-reaching changes to be announced prior to the election, but clarifications in cases or controversies brought before the FCC are certainly possible. Also, as TV stations in smaller markets (and those that are not in the Top 4 in the larger markets) will need to begin to put their political file into their online public file, look for there to be some last-minute lobbying on those obligations in light of the FCC’s request for comments on possible changes or revisions to the online public file rules.
Public Interest Programming Reports: At the same time as it began its proceeding to adopt an Online Public File for TV stations, 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. 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, and will probably be front and center again this year as the FCC looks to further develop its plans for the incentive auction to reclaim TV spectrum for wireless broadband users. But there are many other issues before the Commission that could have an even greater short-term impact than the incentive auction. These include issues dealing with the carriage of television stations by cable and satellite television providers, the treatment of the UHF discount, and definition of an MVPD (multichannel video programming distributor) for FCC purposes – including for the must-carry and retransmission consent debates. 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 was originally supposed to have released rules for its incentive auction in 2013. But, given the delays in the appointment of a new FCC Chair, and the complexity of the issues involved in the proceeding, the Chairman recently announced that the rules would be out in 2014, and the auction would be planned for 2015. This is an incredibly complex proceeding, 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. The stations left after the reverse auction would be packed into a smaller part of the TV band, and the spectrum that is cleared would be sold to wireless companies. But all these moving pieces need to be coordinated, as the reverse auction cannot be completed until the FCC knows that enough money will be coming in from the wireless companies to fund the buyout of the TV stations willing to give up their spectrum.
As this is a highly complex process, which will need sophisticated computer programs to keep all of the bidding straight, the FCC wants to get the process right, and have an electronic system to handle the process that will work. In addition, there are all sorts of details to be worked out – including international coordination of TV channel changes and the determination of the costs that will be reimbursed to remaining TV stations for their repacking into a smaller part of the TV band. Look for more opportunities for public input in the early parts of this year as the FCC moves towards finalizing its incentive auction rules later this year.
Retransmission Consent Reform: Another issue that was on our list last year, and remains there, is the question of retransmission consent negotiations. After every dispute between an MVPD and a TV broadcaster over retransmission fees there are new cries for legislative or regulatory changes to the retransmission consent process. 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. There is a pending proceeding at the FCC to determine if the rules governing the negotiation of retransmission consent agreements should be changed. 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.
Defining an MVPD: Two years ago, the FCC initiated a proceeding to determine if an Internet-delivered video programming service could qualify as an MVPD. While that proceeding garnered little attention, as the primary issue seemed to be the service’s ability to get access to cable programming, there has been renewed interest in the proceeding in light of the Aereo decisions (about which we last wrote here), as this proceeding could be used as a way to define the must carry and retransmission consent obligations of Internet delivered video sources should the court decisions not fully address that issue to the satisfaction of broadcasters – though there are legislative remedies possible as well.
UHF Discount: One new issue this year is the proposed repeal of the “UHF discount,” which counts a UHF station as reaching only half of a market in assessing a television company’s compliance with the current rules that limit any company to at most stations reaching 39% of the US TV households. The FCC has tentatively concluded that the digital conversion has made the discount counterproductive as UHF stations have better coverage in a digital world, instead of suffering from the coverage issues that they faced in analog TV at the time that the rule was adopted. TV station owners argue that getting rid of the discount is changing the rules in the middle of the game, especially as many of these companies have deals in the works at the current time. In a multichannel universe where most households have access to dozens, sometime hundreds of nationwide or worldwide networks, limiting the reach of a station group no longer makes sense as it once did, and effectively reducing that reach by adopting the change in the rules makes even less sense. While many thought that this issue would be resolved quickly, given the complexities involved, it may take some time before the FCC gets around to finalizing this proposal, but look for much lobbying on it this year.
Accessibility: Each year, accessibility issues play a more and more important role in video transmissions – with this past year bringing further obligations for video providers to caption television programming that has been repurposed for the Internet, including mobile applications. With the expansion of the obligations to live and near live programming this past Fall, virtually all programming captioned on TV needs to be captioned when retransmitted on the Internet.
Right now, the captioning applies only to full length programs. But at the end of the year, the FCC asked for comments on whether the rules should go further and require captioning of even video clips that are rebroadcast on the Internet. Look for this to be a matter of much debate this year, but for resolution to come in the future, as the FCC will still need to put out a formal Notice of Proposed Rulemaking should it plan specific rules to mandate such captioning.
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. With the emphasis on spectrum auctions, Class A TV stations may tie up spectrum that will otherwise be available for the repacking of the TV band for auction to wireless companies. Thus, expect the FCC’s scrutiny of these stations to continue through 2014. We’ve already seen many high proposed fines for problems like violations of the recordkeeping obligations attached to children’s programming requirements in connection with TV license renewals of many of these stations. In most cases, there is a carrot offered to the Class A licensees – give up the Class A status (and the protection from being bumped off your channel by the incentive auction that the primary status as a Class A affords you) and avoid the fine. Expect more of these Hobson’s choices to be posed to Class A licensees in the coming year.
Sports Blackout Rules. Just before the holidays, the FCC released a Notice of Proposed Rulemaking, proposing to do away with its sports blackout rule. With the attention that rule received this past weekend, as a number of NFL cities almost did not get to watch their teams in home playoff games when the games almost did not sell out, the proposal to change the rule may well get changed this year.
Radio has fewer unique issues on the front burner at the FCC, but there are still things to be thinking about. In addition to the general issues discussed above (multiple ownership, indecency, EEO, documentation of public interest efforts), issues on the radar screen for radio include:
AM Radio: For the first time in many years, AM radio was at the forefront of policy discussions at the FCC in 2013. We would expect that there will continue to be attention to AM issues in 2014. Comments in the proceeding to adopt certain technical fixes for AM, and to open an FM translator window for AM applicants will be filed this month, and we would anticipate some actions this year – perhaps starting with that translator window (see our summary of the issue in this proceeding here and here) . Longer term, look for more exploration of technical fixes for AM, perhaps including further discussions of an all-digital operation.
FM Translator Issues: While the issues involving FM translator applications left from the 2003 FM translator window have largely been settled, and thousands of new FM translators from that window granted in 2013 (see our articles here and here), there are still applications that are mutually exclusive that remain to be processed. Look for an auction for these final applications to be announced later this year. Also, as part of the AM improvement proceeding described above, the FCC is looking at potentially modifying the Mattoon waiver policy. Watch for a resolution of that issue this year.
LPFM Applications. Much attention will also be paid to the processing of LPFM applications filed in the LPFM window (see our last article on this subject here). There will some applications that will be challenged by full-power stations alleging interference, and there will also be a few conflicts between applications filed in the window and FM translator applications that were modified after the LPFM window was opened, where the FCC has indicated that the LPFM applications have some degree of priority over the previously filed translator modifications. Once LPFM stations are up and operating, we would expect that there will also be practical interference issues to resolve. While these issues will probably play out on an application by application basis, rather than as issues of broad FCC policy, they will be closely watched by radio broadcasters.
These are but some of the legal and regulatory issues that will be facing broadcasters in the upcoming year. There are many other proceedings at the FCC that can also affect stations – including reexaminations of the EAS rules, review of the environmental rules applicable to tower construction, and a reexamination of the allocation of FCC costs as reflected in the annual regulatory fees that broadcasters pay (see our articles here and here). There are also other issues that are pending but have seemingly stalled at the FCC, including a reexamination of the sponsorship identification rules, a review of the Biennial broadcast ownership filings (including whether there should be reporting of some nonattributable interests and whether noncommercial broadcasters should be brought under the same process as commercial broadcasters), and the proceeding to reexamine the rules that prohibit noncommercial broadcasters from interrupting their programming to fund-raise for third parties. Any of these proceedings could pop back to the top of the FCC’s stack at any time.
And there are many issues in Congress or at other agencies that could affect broadcasters. We will write about those issues in another article in the near future. So there is always something happening in Washington for which broadcasters need to be alert.
Each year, we make these predictions trying to include everything that we can think of, and there are always numerous other issues arise that we did not anticipate. Sometimes policy decisions will come from individual cases, and sometimes they will be driven by a particular FCC Commissioner who finds a specific issue that is of specific interest to him or her. So, while this article sets out some of the issues to which broadcasters need to pay attention, stay alert, 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.