Posted on July 29, 2009 by David Oxenford

A Full Five Person FCC - What's Next For Broadcasters?

For the first time since the term of FCC Commissioner Tate expired and Chairman Martin resigned, the FCC will be back to full strength with the Senate's approval of new FCC Commissioners Mignon Clyburn and Meredith Attwell Baker.  What issues of importance to broadcasters will the Commission, now headed by Chairman Julius Genachowski, take up in coming months?   The new Chairman, who gave a number of interviews last week with the trade and popular press, emphasized the importance of the broadband rollout.  Beyond that, his priorities for the broadcast media were not detailed.  He did, however, emphasize, that any broadcast regulation (specifically referencing the mandatory review of the broadcast ownership rules that must begin next year), would have to take into account the realities of the marketplace - including the current economic conditions.

Beyond that, there were few clues as to the new FCC's priorities in the broadcast world.  But, even though there are no indications of the FCC's priorities, there are many open broadcast issues that the Commission will, sooner or later, need to resolve.  Some involve fundamental questions of priorities - trying to decide which user of the spectrum should be preferred over others.  Other issues deal with questions of what kind of public service obligations broadcasters will face.  And yet another set of issues deal with just the nitty gritty technical issues with which the FCC is often faced.  Let's look at some of these open issues that may affect the broadcast industry. 

In the first category - the issues of priorities of one type of service over another, issues include the following:

  • The priorities between LPFM stations and FM translators and full power stations (see our posts here and here on that issue)
  • Final resolution of the White Spaces issues - implementing the FCC's decision to make TV spectrum available for use by wireless devices, or reconsidering that decision based on the pending appeals by the television industry
  • Deciding whether to take TV channels 5 and 6 and change them into radio channels (see our post here), when a limited number of full power TV stations, as well as a number of LPTV stations are currently using the channels
  • Making a decision about increased HD radio power, which some other FM stations that rely on service at the fringes of their protected contours or or beyond worry would interfere by such power increases

In the second category of issues - the question of what public interest regulations the Commission should impose on broadcasters, issues include:

  • Dealing with the Petitions for Reconsideration of the FCC's decisions to require TV stations to put their public files on line and to complete the Form 355 detailing all of their public service programming in minute detail - rules adopted in late 2006 but never implemented or even sent to the Office and Management and Budget for review of their compliance with the Paperwork Reduction Act
  • Resolution of the FCC's localism proceeding proposing regulations including:
    • A return to mandatory main studios in the station's city of license
    • Manned main studios during all hours of station operations
    • Mandatory public service obligations for broadcasters
    • Consideration of the process for the selection of music on broadcast stations and whether more local music should be required
    •   Potential extension of the TV public file and Form 355 obligations set out above to radio
  • Issues about the Arbitron PPM and whether it discriminates against minority owned stations
  • Resolution of the rural radio proceeding which includes questions about what kind of service stations need to provide to their city of license
  • Decisions on the proposals to mandate stricter sponsorship identification rules allegedly to protect the consumer from being influenced by undisclosed sponsors

Other more technical or procedural issues are also pending before the Commission, including:

And, of course, there are those issues that never go away.  Indecency cases are still pending before the Courts, so the Commission may once again have to face that issue.  And there is that little question of the Fairness Doctrine that just refuses to go away.  I'm sure that there are other issues that have escaped my mind while I'm writing this - but even if there were not, it is clear that the new Commission has plenty to keep it busy without even needing to bring up any new issues for the broadcaster.  And Congress can always give the FCC new things to do, like reregulating children's television programming or restricting prescription drug advertising.  Let's hope that these keep the Commission plenty busy for now, and that they don't have time to start anything new. 
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Posted on May 25, 2009 by David Oxenford

Localism Without Government Regulation

This past week, I attended the BIAfn Winning Media Strategies Conference in Washington, DC.  During the course of the conference, there was much talk about how broadcasters and publishers need to provide unique service to their communities in order to survive in the competitive media marketplace.  The point was made over and over again that, in each market there are unique attributes and personalities that a station should be covering in its programming, and should be exploiting even more broadly through their digital assets, to tie it to its community.  Only by doing so will the station be able to survive in the new media environment - and by doing so, the station may be able to thrive.  In fact, I was stuck by a statement by USC's Adam Clayton Powell III that domination of the local online and digital media marketplace was "the broadcasters to lose."  In other words, the broadcaster has such unque promotional abilities with its current audience that it can establish its brand in the online and in the mobile world far easier than other media players.  But there were also the repeated warning that there is more and more competition for this local digital market from new entrants and other media entities and that, if the broadcasters did not take advantage of their current advantage, the local service would come from someone else.  What most stuck me was that there was no question that the superservice to local needs would be coming from someone - broadcaster or not - as a result of marketplace developments, not because of any government mandate.  The broadcaster has to adapt to and compete in this new media marketplace or become culturally and economically irrelevant.  The broadcaster needs to serve the local market to meet these challenges, not because some Washington agency has ordered him to do so.  And the broadcaster needs to serve his community in a way that the public will find compelling, not in a way that the government thinks is best.

At BIAfn, the presentation that made the greatest impact was probably that of Greenspun Media from Las Vegas, which has reinvented a secondary newspaper and a Low Power TV station as an on-line powerhouse, uncovering the aspects of the community that would draw the largest audience and covering that information in great detail.  The Las Vegas Sun site not only covers hard news, but also the gaming industry, University of Las Vegas sports and even state government issues in a way that its audience seems to find interesting.  Even a history of Las Vegas, in great detail, is included.  And video plays a big part of the site, with the company in development of a hip news and events program, 702.tv, that will soon be a daily program on the television station and online (featuring local "celebrities" doing the weather, including strippers and Neil Diamond sound-alikes).  While some attendees at the conference thought that Las Vegas presented unique opportunities that might not be available in all communities, many were immediately speculating on the opportunities in their own communities to find unique personalities and events that could be developed on-air and on-line in ways to maximize their connection with their audience. 

After the conference on Friday, I found two emails waiting in my inbox from broadcast industry pundits, both echoing the same sentiment that was reflected at the conference - that broadcasters need to take advantage of their current connection with their markets to grow their digital platforms, or someone else will come along and preempt the opportunity.  See the comments from Hear 2.0 and Inside Music Media - both making the case that broadcasters must change to serve their communities to meet the new competitive threats.  The message seems clear - broadcasters need to serve their communities or someone else will (see this blog post by USC Professor David Westphal, cited by Powell in his remarks, about how these other new media entrants can micro-target audiences and survive economically) .

All of these commentators seem to agree that there will be more and more service to local communities - either provided by broadcasters or by someone else.  And this service will be provided without the need for any FCC mandates.  The service will come if there is a market for that service - a need that can't be artificially manufactured by government fiat.  The FCC in the mid-1980s recognized that a broadcaster would either provide local service or be replaced by someone else who would, justifying the abolition of detailed public interest requirements.  This was a full decade before the service that is now provided by the Internet was even a possibility.  To now talk about reviving those detailed localism mandates, when the competition is far greater than anything imagined in the 1980s, seems almost impossible to justify.  We'll see what happens as the FCC deals with its localism proceeding in the near future.
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Posted on May 14, 2009 by David Oxenford

Even Though Old Media May Be Dying - Let's Regulate Them While We Can - Broadcast License Renewals Every Three Years?

In a speech to the Free Press Summit, Acting FCC Chairman Michael Copps suggested that broadcast license renewals should no longer be a "postcard", but instead should be a real test of the broadcaster's service to the public interest - and should happen every three years, rather than on the eight year renewal cycle that is currently provided for by the law.  While the Chairman acknowledged that many suggest that the old media are in troubled times and may well be supplanted by new forms of communications, "If old media is going to be with us a while still...we still need to get serious about defining broadcasters’ public interest obligations and reinvigorating our license renewal process."  In other words, while broadcasters may be dying, we should regulate them while we can.

First, it should be pointed out that the broadcast license renewal is no longer a postcard, and really hasn't been for almost 20 years.  The current renewal forms require certifications on many matters demonstrating a broadcaster's service to the public and its compliance with the rules, and additional documentation on EEO performance and other matters.  TV broadcasters also have substantial renewal submissions on their compliance with their obligations under the Children's television rules.  Issues of noncompliance with the rules resulted in many fines in the last renewal cycle, demonstrating that this is not a process where the FCC is without teeth.  Yet most of these fines were for paperwork violations (e.g. not keeping detailed records of EEO outreach or quarterly issues programs lists demonstrating the public interest programming broadcast by a station), not for any substantive claims that station licensees were fundamentally unqualified and should forfeit their licenses.  In fact, the Acting Chairman's speech recognizes that most broadcasters do a fine job serving their communities, yet he believes that more regulation is necessary to police those that don't.  But is this the time to be imposing additional regulatory burdens on all of the industry, for the actions of a few.  Will the overall public interest be served by such actions?  .

As we wrote years ago when this proposal was proposal was previously floated by Commissioner Copps, the license renewal process was lengthened based on findings that the old process was cumbersome and unnecessary - often provoking litigation and delay, but only rarely uncovering any real evidence of serious problems with a licensee warranting Commission action.  There simply were no benefits to the substantially increased costs of the 3 year license term.  Moreover, the processing of the applications imposed a substantial burden on an already overworked FCC staff that took their attention off of the processing of the many other matters already before them. 

The period was gradually extended - going to 5 years for TV and 7 years for radio, and reaching its current 8 year term as part of the Telecommunications Act of 1996.  The Act specifies that the license renewal term shall be for "not more than 8 years," theoretically leaving the FCC with the flexibility to decide on some term less than 8 years.  However, when the Commission decided in 1997 to extend the renewal term to the full 8 years, it did so relying on statements of Congressional intent that Congress had expected to lighten the regulatory burden on broadcasters by extending the term for the full period.  Thus, were the FCC to try to shorten this period, it would have to explain why these findings were no longer relevant.

According to Broadcasting and Cable, Commissioner Copps later stated that he did not expect to rule on localism issues, or presumably raise this license renewal extension, during his interim chairmanship.  And the NAB immediately objected to the proposal.  Yet, as this issue has been raised by the Acting Chairman before, and as he will remain on the Commission even when the permanent Chair is seated, we can no doubt expect to hear this proposal raised yet again, perhaps in a formal setting, in the near future.  Broadcasters should be prepared to address any such formal proposal. 
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Posted on May 15, 2008 by David Oxenford

Broadcasters and the Regulatory Pendulum - Swinging Toward More Regulation

In recent months, the broadcast industry has experienced one of the most active periods of regulatory activity in recent memory. Since November, the FCC has adopted enhanced disclosure obligations concerning the public interest programming of television broadcasters and requirements for an on-line public inspection file; rejected most calls for increased deregulation of broadcast ownership (allowing only the cross-ownership of broadcast stations and newspapers in the largest markets); established specific prohibitions against advertising practices that involved “no Spanish, no urban dictates”; placed mandatory disclosure obligations on television broadcasters in connection with promotion of the DTV transition; proposed rules that could favor low power FM stations over improvements in full-power broadcast services and existing FM translator licensees; and proposed sweeping regulation of broadcasters which could potentially require specific amounts of nonentertainment programming by all stations, restrict the flexibility of broadcasters' location of their main studios, require 24-7 live staffing for all stations that operate on that basis, and perhaps even evaluate the music selection process of radio operators. Rumored to be in the offing are proposals to regulate embedded advertising, to adopt enhanced rules on sponsorship identification in connection with video news releases and payola-like practices, and perhaps even expand EEO reporting requirements (as the FCC recently asked for public comment on the employee-classification information for its long-suspended requirements for the filing of FCC Form 395 – the Annual Employment Report in which stations categorize all their employees by their employment duties, race and gender). And Congress has not been idle, with proposals introduced for the adoption of a performance royalty on over-the-air radio for the use of sound recordings, hearings about potential restrictions on prescription drug advertising, and a proposal to roll back the limited ownership reform adopted by the Commission in December.

With all this activity in a six month period under a Republican administration with a Republican majority on the FCC, during a time of great turmoil in the broadcast industry itself, as television prepares for the digital transition and broadcast revenue growth is slow or nonexistent (based on a variety of factors including general economic conditions and competition from the plethora of new media choices), many broadcasters are wondering what’s going on? And some fear even more changes could come about in any new administration that may come to Washington after the November elections, no matter what the result of that election. The one candidate with the most experience in the regulation of broadcasting, Senator McCain who has chaired the Senate Commerce Committee which regulates the broadcast industry, has by no means been a captive of the broadcast industry – leading efforts to enhance the use of LPFM and at one point pushing a spectrum tax proposal for television broadcasters for the use of the digital spectrum.

So what is going on? There was an interesting article in the Wall Street Journal several weeks ago discussing the cyclical nature of government regulation. While the article focused on the financial industry and the calls for re-regulation in light of the subprime mortgage problems, the thesis of the story is equally applicable to the broadcast industry. After almost 25 years of gradual deregulation by the FCC under both Republican and Democratic administrations, where the general consensus was that the less government regulation was better and more reliance on marketplace forces would insure service to the public, the regulatory pendulum has swung back with a vengeance in broadcasting, paralleling moves in almost every industry toward a more aggressive role of the Federal government. Proposals for regulation of broadcasting are simply falling into line with proposals for greater regulation of financial institutions and mortgage companies, airlines, consumer product safety matters, and environmental regulation, just to name a few.

Soon after I graduated law school and started representing broadcasters in 1980, the FCC began the deregulatory progression. Many of the issues that I dealt with in the first few years of my legal practice disappeared – ascertainment, quantitative program obligations, the regulatory “underbrush” (regulations governing many very specific advertising and operational practices of broadcast stations – from restrictions on horse racing ads to FCC enforcement of fraudulent billing practices of some radio stations and even the regulation of whether a station used accurate coverage maps in its promotional materials). At that point in my career, a senior lawyer told me that this was all part of a regulatory cycle that swung from more regulation to less than back again. While I was skeptical at that time, it appears that these statements are now, some 25 years later, being borne out. So, for what little comfort this may provide, the cycle will no doubt at some point run its course and the pendulum will begin to swing back in a more deregulatory direction at some point in the future. Let’s hope that this point is not too far in the future and, during this more regulatory phase, the regulators take the reality of the business into account, and don’t take actions that could, during this time of increasing turmoil in the business, jeopardize the robust over-the-air broadcast business that we have enjoyed for so long .
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