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In two other cases, the FCC found Class A stations to be in violation of the Children's television rules.  In one case, a group of Class A stations were initially fined $20,000 each because of their failure to file Children's Television Reports for the stations for several years, and because they failed to publicize the location of the location for public inspection of their children's television programming reports.  Because these stations were financially unsuccessful, demonstrated through the filing of tax returns that showed that the stations could not pay any fine, the FCC dropped the fines entirely because of the licensee's demonstrated inability to pay.  Otherwise, the steep fines would have been levied.  In another case where the stations did not prove financial hardship, the failure to have a complete public inspection file, the late filing of two years worth of Children's Program Reports, and the failure to publicize the location of the children's television reports will cost the licensee $9600.

These cases remind Class A licensees to remember their obligations as primary stations.  Pay attention - or fines may be coming your way.

Alternatively, certain parties suggested that the current Designated Entity ("DE") status is too broad, as it could include all sorts of new, small businesses, even including some that are backed by wealthy individuals who do not need government assistance. Thus, if race-based classifications are not acceptable, these groups suggest that the Commission confer DE status only on those groups that demonstrate to the Commission, through a “full file” review, that they are socially and economically disadvantaged. This would be similar to some programs established by university admissions offices to avoid race-based classifications, but still admit minorities and members of other socially disadvantaged groups who might otherwise be overlooked in an admissions process. The Commission asks the proponents of these rules to explain what criteria the FCC would use to determine who is socially and economically disadvantaged, and whether the adoption of such a standard would require a unique review of every applicant who comes before the FCC seeking such status, or if there are objective criteria that could be used to make review easier.

FCC Form 323 Revisions.  To gather information about minority ownership, the Commission is also asking if it should revise some of the processes it uses to collect ownership information, particularly ownership information about broadcast ownership by minorities and women. This information is gathered currently on a station's Ownership Report, submitted every two years on FCC Form 323 (or more often if there has been a transfer of ownership).  Rather than filing ownership reports every two years on the anniversary date of a station’s renewal filing, the Commission asks if it should create a single, uniform date for the filing of FCC Form 323 ownership reports by all broadcast stations. The Commission also asks if it should require the filing of reports by stations owned by individuals and partnerships owned entirely by individuals (which are currently exempt from the requirement to file updated Ownership Reports every two years, as the Commission considers any ownership changes in these entities to require the filing of a transfer form, at a minimum a short-form Form 316 pro-forma transfer of control as, under the common law, any change in the partners of a general partnership represented the creation of a new partnership). Also, to insure that ownership information is correct, the FCC asks if it should conduct random audits of the Form 323 reports that are submitted.

Proposals For Changes in FCC Technical Rules to Increase Broadcast Opportunity.  The Commission also advanced certain suggestions to make available more broadcast stations for DEs to acquire. These include the following proposals:

• Allowing FM licensees who are multicasting in digital to actually sell one of the multicast channels to a DE, which would be given a separate license for that station, which could itself be sold in the future, separate from the main station with which it is associated. 
• Allowing AM licensees who operate an Expanded Band AM station (operating on 1610-1700 on the AM band) to keep both the expanded band AM and their original AM station in the traditional AM band if they are a Small Business, or to sell one of the stations to a DE within a year. Most of these stations were supposed to turn in one of these licenses at some point within the last few years (within 5 years of the commencement of operation by the Expanded band station), but many have been permitted to retain the stations on a temporary basis while this proposal, first advanced two years ago, makes its way through the Commission.
• Reassigning TV channels 6, and possibly 5, for use for new FM stations after the digital television transition. Channel 6, which is immediately adjacent to the FM band, has been kept pretty much vacant under the DTV allocation table, to eliminate interference to FM noncommercial stations which sometimes occurs under current rules. We previously wrote about this proposal, here.
• Allowing the change in city of license of a radio station to any other community within the same radio market (presumably to allow for better coverage of population centers) even if the move would leave the current community without any full-power radio service, if the applicant agrees to finance the construction of a low power FM station in the community that is being abandoned.
• Proving must-carry status to Class A TV stations (presumably enhancing their economic viability). Class A TV stations are LPTV stations that were specially designated as Class A stations in a one-time window in the late 1990s, if they could show that they were originating local television programming and otherwise met all rules applicable to full-power stations (e.g. main studio, public file, children’s television rules). Such stations are given protected status from being bumped off the air by new full-power TV stations or increases in the facilities of existing stations.

Incubator Program.  In addition to these proposals, the Commission asked for comments on a proposal to create a trail “incubator program": by which a large broadcaster could receive an exemption from the radio multiple ownership rules so that it could have one more station in a market than would be otherwise permitted if it “incubated” the ownership of another radio station in the same market by providing financing or other assistance to the incubated station.

Proposals to Review Broadcast Transactions for Effect on Minority Ownership.  Finally, the FCC asked for comments on proposals that the Commission be able to evaluate any broadcast transaction for its potential effect on minority ownership, to deny temporary multiple ownership waivers in large broadcast transactions which would create temporary ownership holdings in excess of the ownership rules, and to allow minority owners to exceed ownership caps in any market if necessary for those owners to have holdings equal to those of the largest owner in a market (which might have grandfathered holdings).

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These proposals include ones that could create opportunities for many broadcasters and for many individuals who are interested in entering the broadcasting industry through the construction of new stations or the acquisition of existing stations.  There are, however, potential issues for some broadcasters, particularly in connection with the final proposal to review broadcast transactions for their effect on minority ownership, which could slow the processing of some transactions.  Broadcasters should review the entirety of the proposals made by the FCC, and file comments on those issues that most directly affect them. 

The deadline for LPTV conversion is also in question.  A number of proposals have been made to allow these stations to keep operating in analog through 2012, as Federal funds to assist them in the digital conversion may be available, but not until 2010.  Of course, by then most viewers will have been watching digital television for years, so many LPTV stations may have made the conversion voluntarily well before that date to stay in tune with the viewers.

The final issue that we'll be seeing more of is the classification of more LPTV stations as Class A TV stations.  LPTV stations are generally secondary stations, which can be knocked off the air when a new full-power station starts broadcasting or when one improves its facilities in such a way so as to create interference to the LPTV.  A Class A station is not secondary, but instead must be protected by new stations or the increases in power of full-power stations.  Class A stations were created in a one-time window years ago, by demonstrating that they originated local programming and otherwise observed all of the rules followed by full-power television stations.  The Commission has discussed the possibility of allowing more stations to qualify as Class A stations, which will become more important as the freeze on modifications to full-power stations and on requests for the allotment of new full-power TV channels expires later this year once the final details of the digital transition have been set. 

Watch for all of these issues to be addressed in the near future, as the final digital transition details are set.

The proposal for the establishment of a community advisory board would mark a return to the "ascertainment" process - a process that resulted in much litigation in the 1970s and early 1980s before it was done away with in 1984.  That process required that each broadcast licensee meet with specific, identifiable groups of community leaders every six months to assess the needs of the community so that those needs could be addressed in public service programs.  When the process was abolished in 1984, the Commission noted that it had produced much litigation over whether the mandatory details of the process were observed by licensees, but it never resulted in any significant sanction for a broadcaster.  It is curious that now, 24 years later, the FCC seems to think that the same type of process will produce a different result.

Similarly, the quantitative public interest requirements that mandated specific amounts of news and public affairs programs to avoid special scrutiny of a license renewal application, were also done away with in 1984.  These rules were abolished in the belief that marketplace competition would insure that each station served the community in its own way to avoid becoming irrelevant and being replaced by a marketplace competitor.  Now, the FCC is thinking of reimposing requirements on broadcasters, though it is thus far unclear what those requirements would be.  There was some discussion at the FCC meeting that the requirements would include a mandatory amount of local programming, though whether that would be further broken down to require specific amounts of news and public affairs programming seemed to be open to comment.

 At the meeting and at the Press Conference following the meeting, there was also discussion of other issues that would be addressed in the Notice of Proposed Rulemaking.  These apparently include some requirement for broadcasters to report on their music selection process.  Though not outlawing national playlists (if such things exist), the FCC seemed intent on seeing how radio broadcasters select the music that they play, and on possibly mandating that some local music be played on each radio station.  Issues of payola may also be considered in the Notice.  The FCC was also concerned about the responsiveness of broadcasters to local emergencies.  To address that perceived concern, the FCC seems to be proposing to require main studios in the station's community of license and to require that these studios be manned whenever a station is in operation.  A decade ago, when the rules required manned main studios during all hours of operations were abolished, many stations started round-the-clock operations, freed from the cost of having to man the studio during the "graveyard shift" during overnight hours.  Would new rules bringing back the requirements that stations be manned during all hours actually result in less programming being aired?  That may be one issue that the FCC is forced to address as this proceeding continues.

This proceeding will seemingly hit hardest at smaller, local stations. While some broadcast critics seem to think that these proposals can easily be addressed by broadcasters, often their focus is on big market, big media stations.  Small "Mom and Pop" stations are often ignored in the calculus used to weigh such regulatory proposals.  Often Mom and Pop barely have the staff to keep the station in operation, much less to deal with paperwork and processes that don't contribute to meeting payroll or the over-the-air product.  Hopefully, once the Commission provides the specifics of its proposals and the deadlines for comment on these proceedings, stations of all kinds will make clear to the Commission the impact that these proposals will have on their operations.