Posted on August 13, 2008 by David Oxenford

While the FCC Looks to Mandate Localism For Broadcasters - The Huffington Post Leads the Way to the Internet Going Local To Respond to the Market

We've written extensively about the FCC's proposals to turn back the hands of time, and return to the regulatory scheme that existed prior to the early 1980s by mandating that broadcasters serve their local communities - in a manner dictated by the FCC.  In the 1980s, the FCC decided that it did not need to micromanage the programming of broadcasters, as marketplace forces would ensure that stations met the public interest.  If they did not provide the services that people wanted, the FCC reasoned in the 1980s, the people would stop listening or watching - hurting the broadcaster who was not serving its community in the pocketbook.  While the FCC is now looking to retreat from this position - apparently believing that the market is no longer capable of insuring that broadcasters serve their communities, evidence that the marketplace will provide localism is now available on that most unregulated of media - the Internet.  Tomorrow, the Huffington Post, a website that had heretofore concentrated on national stories, will be launching a version of its product targeted to Chicago and, according to a story on American Public Media's Marketplace, it will be expanding by providing local service in many other markets in the next 18 months.

This is not the only evidence that the Internet is going local.  Local news sites are springing up in many communities. quite often with no ties to "established" media.  Micro-targeting of on-line ad sales shows that marketers know that, if they offer a local product, they need to reach local people to buy that product, and the Net more and more can provide that targeting.  Many websites, from registration information, IP address or other identifying information, greet users of a site with localized information - weather, TV listings or event information for the particular user's hometown.  Thus, while the FCC seems to believe that that marketplace is incapable of guaranteeing local content to serve local communities, the actions of companies on the Internet demonstrate that, if there is a need for a local service, it will be provided - more efficiently and in a way more likely to provide the public with the service that it demands - if it is left to the market to provide.  The Internet does not seem to need the government to dictate how that local service is provided - nor should the broadcaster.  Particularly now, with the broadcast industry hurting economically and facing more competition than ever before, the FCC's actions to seek mandated localism seems to be the wrong solution to a nonexistent problem - and one that will hopefully fade away in the coming months. 

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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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Posted on May 8, 2008 by David Oxenford

Format Noncompete Agreements Can Lead to FCC Fine

In a case just released by the FCC, a broadcaster was fined for enforcing a non-compete agreement that was entered into when a broadcaster sold one of its stations in a market in and agreed that it would not compete in the same format if it ever acquired another station in the same market.  The agreement had prohibited the Seller from competing with the Buyer in a news-talk format.  After the closing of the sale of the station, the Seller acquired another station in the market and adopted a format that a local court found was covered by the non-compete clause in the contract.  The local court issued an injunction against the continuation of the news-talk format.  At that point, the Seller filed a complaint with the FCC, arguing that, by obtaining the injunction, the Buyer had engaged in an unauthorized assumption of control of the station covered by the injunction, without FCC approval.  The FCC agreed with the Seller, and fined the Buyer $8000 for exercising control over the station that Seller had bought.

The FCC's reasoning in this case, citing a similar letter decision from 2006, is that the restriction on format impedes a licensee's control over its own programming, and restricts its ability to adjust its operations to account for changing market conditions.  The Commission concluded that, barring the licensee from utilizing a particular format, even for the limited period of the non-compete agreement, was contrary to the public interest.  By obtaining the injunction to prevent the Seller from using the news-talk format, the Buyer had impermissibly exercised control over the station that it had already sold.  In fact, the Commission went further, and found that the exercise of control over the programming, personnel or finances of the station would be a violation of the rules. 

Interestingly, the Commission reached this conclusion even though the Buyer had obtained a decision from the local court that the non-compete agreement was enforceable.  According to the FCC decision, the Court's decision was strictly one of contract law, not of whether the clause in the agreement was permissible as a matter of FCC policy as to what is in the public interest.  The Commission concluded that the Court could only determine the enforceability of the clause under state law, not the public interest question.  So the FCC made the decision that the non-compete agreement could not be enforced through an injunction without violating FCC rules.  However, the Commission left open the possibility that the Buyer might have a case for damages in state court for the Seller's violation of the non-compete.

The Buyer also argued that the FCC had implicitly approved the non-compete provision as it was included in the agreements filed with the Commission in connection with the application for the approval of the sale of the station from the Seller to the Buyer.  The Commission rejected that argument as well, finding that the Commission, by approving an assignment application, does not approve each and every clause in the assignment documents.  In fact, the Commission admonished both the Buyer and Seller for certifying in the assignment application that the agreements that were filed with that application complied with all Commission rules and policies.  It reminded all applicants filing assignment applications in the future to exercise care in certifying that its agreements comply with all FCC rules and policies.

This case, and the one decided in 2006, make clear that the Commission's current thinking forbids restrictions in non-compete agreements that forbid stations from making any format choices.  Under the reasoning of the decision, it might be possible to include a clause in the contract that called for a deferred payment in the event of the adoption of a competing format in violation of the noncompete (though, given some of the precedent relied on by the Commission, it is likely that such a penalty would have to be reasonably related to the damages that would be incurred as a result of the format change, and not a huge penalty that would effectively preclude the change). In theory, while this decision gives more flexibility to parties to change formats, it could restrict the opportunities of some buyers to acquire stations in the first instance.  An owner of a cluster of stations in a market, who might consider selling a station or two from its cluster, may be reluctant if they know that the buyer can immediately change the station's format and start competing.  Similarly, a buyer of a station in a market may be concerned about buying a station if it knows that the seller of the station can immediately re-enter the market and start competing - regardless of the terms of a non-compete agreement.  Seemingly, contracts will need to provide monetary damages to cover such situations.  Nevertheless, that is the current policy, so take this decision into consideration in drafting any agreement for the sale of a station in a market in which you will continue to compete.
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Posted on April 20, 2008 by Brendan Holland

Comments on Localism Proceeding Due April 28; Congress Chimes In

The deadline for submitting comments in the Commission's Localism rule making proceeding is fast approaching.  Comments are due by April 28th, and can be filed electronically through the FCC's Electronic Comment Filing System.  This proceeding contains a number of significant proposals and could possibly re-institute regulations that were lifted from the broadcast industry decades ago.  Formal ascertainment through community advisory boards and possibly other means, requirements for manning main studios during all hours of operation of broadcast stations, imposing quantitative programming requirements, and requiring that main studios be maintained within a station's community of license are just a few of the many proposals the FCC is considering.  See our more detailed summary here.  This proceeding seeks input on these and other potentially burdensome requirements, many of which were eliminated by the Commission long ago, and some of which go beyond what the FCC has ever required before.   Given the potential impact this proceeding could have on broadcast stations, broadcasters are encouraged to file comments in this important rule making proceeding.   When submitting comments, commenters should be sure to reference the docket number for this rule making, MB Docket No. 04-233.

Some members of Congress have already chimed in in this proceeding and submitted comments opposing the Commission's localism proposals.  Over 120 members of Congress signed on to a letter addressed to Chairman Martin urging the Commission to avoid imposing additional regulations on broadcasters and to carefully consider the cost and effect that such regulation would have on the industry.  A copy of the letter is available here.  A summary of the letter posted on Rep. Marsha Blackburn's web site characterizes the localism proceeding as an attempt to "restore a 1970s era regulatory regime for local broadcasters." 

In the 1980s, the FCC looked at the competitive marketplace as justification for deregulation - finding that broadcasters, as a matter of self-preservation, would find their own ways of competing in their local markets, or they would perish.  Now, when the marketplace is so much more competitive, the FCC is proposing to bring back archaic regulations potentially requiring all stations in all markets to identical amounts of news, public affairs and local programs.  As we wrote recently, this simply does not make sense in a incredibly competitive media marketplace, where each station is looking to serve a unique audience that may or may not have interest in any specific category of programming.  Does it really make sense for an all sports station to have to do specific amounts of electoral coverage?  Or for their to be local music requirements - but only on those stations that choose to play music? 

And, as we wrote just last week, the burden of any paperwork requirement falls most heavily on the small broadcaster.  While dealing with mandatory paperwork burdens imposed by community advisory boards, mandatory focus groups, and quantitative programming obligations may be something that can be absorbed by a New York City station with 100 employees, how will it be handled by a station in some small town in Oklahoma that may have only 3 or 4 full-time employees? 

The real, practical effects of these rules simply have not been evaluated by the FCC.  While the rules may sound good in theory to those isolated inside the Beltway, how they will function in practice needs to be made clear to the Commission.  So file your comments by April 28th to be heard on the direction that the FCC will take for the future of broadcast regulation. 

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Posted on April 17, 2008 by David Oxenford

FCC Form 355 - A Form Without a Reason?

The FCC Form 355 requiring "enhanced disclosure" by television stations was a frequent topic of discussion at this week's NAB Convention in Las Vegas.  That form will require that television broadcasters report significant, detailed information about their programming, providing very detailed reports of the percentage of programming that they devote to news, public affairs, election programming, local programming, PSAs, independently produced programs and various other program categories, as well as specifics of each program that fits into these categories (see our detailed description of the requirements here).  Obviously, all broadcasters were concerned about how they would deal with the expense and time necessary to complete the forms, and the potential for complaints about the programming that such reports will generate.  At legal sessions by the American Bar Association Forum on Communications Law and the Federal Communications Bar Association, held in connection with the NAB Convention, it became very clear to me that the obligations imposed by these new rules are obligations adopted for absolutely no reason, as the Commission has not adopted any rules mandating specific amounts of the types of programming reported on the form.  In fact, one of the Commissioner's legal assistants confirmed that, unless and until the FCC adopts such specific programming requirements, the Commission's staff will not need to spend any time processing these forms.  Thus, if the form goes into effect, broadcasters will be forced to keep these records, and expend significant amounts of staff time and station resources necessary to complete the forms, for essentially no purpose.

Of course, public interest advocates will argue that the forms will allow the Commission to assess the station's operation in the public interest, and will allow the public to complain about failures of stations to serve local needs.  But, as in a recent license renewal case we wrote about here, the Commission rejected a Petition to Deny against a station based on its alleged failure to do much local public affairs programming as, without specific quantitative program requirements, the Commission cannot punish a station for not doing specific amounts of particular programming. If the Commission adheres to this precedent, it will not be able to fine stations for the information that they put on the Form 355, but only for not filing it or not completing it accurately.  Thus, unless the Commission adopts specific programming requirements, the form will be nothing more than a paperwork trap for the unwary or overburdened broadcaster.  And, as is usually the case with such obligations, the burden will fall hardest on the small broadcaster who does not the staff and resources to devote to otherwise unnecessary paperwork.

We are certainly not advocating the adoption of such programming requirements.  In fact, we believe that such standards would be constitutionally suspect and would end up forcing all stations into cookie-cutter images of each other - at a time when the plethora of media choices now available demands that each station adopt a targeted identity catering to the needs of a unique and specific audience.  And in tailoring its service to specific audiences, a station cannot be constrained by specific program percentages, as each audience may have the same needs - some will not sit still for traditional news and public affairs programming, while others will demand it.  Forcing all stations to provide the same program choices simply leaves some audiences unserved.  While this may be most evident in radio, television will adapt too as there are more and more outlets for video programming.   TV will have to seek out the niches at which it will direct its programming.  Mandating a specific percentage of news, public affairs, election coverage, religious programming or anything else simply will not serve the public's interest in receiving wide and diverse programming choices.  For the individual consumer, having the programming that he or she wants when they want it is more important than insuring that some percentage of that station's programming is made up of local news.

As one broadcaster observed to me, these rules may have made some sense when broadcasters were all mass market stations, providing "full service" programming to their communities.  That was a time when there were few media outlets in each market, and to maximize audience, each station had to try to serve all elements of the community.  Now, as broadcast stations compete against programming coming from cable, satellite, Internet, mobile and other platforms, there really are few if any full-service stations, particularly in large broadcast markets.  Even broadcasters themselves, as they adapt to the multicast opportunities that are presented by digital transmission, will provide more competition in a marketplace, and hasten the need for focusing on the superserving the needs of particular audiences.

For now, the NAB is challenging in Court the implementation of the Form 355.  How the Commission will justify its retreat from the deregulation of the 1980s when it admits that this form currently serves no regulatory purpose is hard to imagine.  In the interim, comments on the potential for the adoption of specific quantitative programming obligations, as part of the Localism proceeding (see our summary here), are due on April 28.  Broadcasters should file comments to make sure that the Commission understands the current competitive marketplace, and how their programming will be constrained if they were all forced to adhere to the same arbitrarily set programming obligations for various categories of various types of programming.  It is a crucial proceeding that could determine the future of the broadcast industry - be sure to participate.
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Posted on March 22, 2008 by David Oxenford

I-Pod Radio, Internet in Cars and More Broadcast Stations Than Ever - Why Can't the Marketplace Decide?

In the early 1980s, the FCC deregulated many of the very detailed programing rules that governed broadcasters,  based on the theory that the marketplace would assure that broadcasters provided programming of interest to their local community.  The FCC looked at the marketplace, and decided that broadcasters either had to program to the needs of their community, or risk the loss of their audience to competitors.  Now, the FCC is proposing to bring back many of these rules with a vengeance (see our post on the FCC's current efforts) - imposing rules even more detailed than those that were abolished over a quarter century ago.  A look at this week's news raises the question of why now - when there are more media choices than ever (and when, particularly in the radio industry, revenues with which to meet such requirements are shrinking) - the FCC cannot rely on the marketplace to assure service to the public.  When marketplace forces require that broadcasters use their most important asset - their localism - to compete against all the new competition, the FCC is now looking to require that broadcasters meet their public interest obligations in a very specific, cookie cutter, government-mandated fashion.  Some of the announcements made this week highlight the extent of the competition that broadcasters now face.

On the most basic level, there are simply far more stations than there ever were.  According to an FCC Report published in 1980, there were 4559 commercial AM stations, 3155 commercial FM stations, and 1038 noncommercial FM stations.  While the number of AM stations had not increased substantially by the end of 2007 (4776), the number of commercial FM stations has doubled to 6309, and the number of noncommercial FMs has increased even more substantially, to 2892.  TV shows a similar increase in service - from 746 commercial and 267 noncommercial stations in 1980 to 1379 commercial stations and 380 noncommercial stations.  In addition, thousand of LPTV stations have been created, and over 800 LPFM stations - services that didn't even exist in 1980.  Clearly, the over-the-air competition is far greater than when the FCC initiated its deregulation efforts.

At the same time, competition from new media has increased exponentially.  Last week, Chrysler announced that it would provide Internet access in its cars, to make available all sorts of services, including streaming media and even downloading of movies from the car.   While there was a recent article in the Radio and Internet Newsletter suggesting that Internet radio delivered to mobile devices is not an easy thing, perhaps a mobile Internet device in a car, designed for multimedia purposes, would deliver that nirvana that webcasters seek - mobile access, where Internet radio can be competitive to terrestrial radio in the car, where much radio listening is done.

And if this type of competition is not enough, there have been articles this week that Apple is adding a mobile-music component to various of its devices, including the iPhone.  Apparently, the idea would be a subscription music service, like that offered by Rhapsody or Napster, that would deliver unlimited music to an Apple subscriber.  As Marc Ramsey, in his Hear 2.0 blog suggests, a service that provides unlimited amounts of music to a subscriber is essentially radio, or at least a substantial radio competitor.

With just these being just some of the week's announcements of potential competition to broadcasters, it is evident that there is more competition than ever.  Internet and satellite delivered audio and video, delivered almost anywhere, is a compeitior to broadcasting - a competitor that comes on top of the hundreds of new radio and television stations that have come on line since the Commission decided to look to the marketplace to insure that broadcasters would serve their communities.  As local programming serving a local audience is a broadcaster's way to compete against the new media - why does the FCC need to re-impose rules to get what broadcasters themselves need to do now more than ever?  Remember, comments are due in the localism proceeding on April 28.  Make your views known on this important subject. 

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Posted on March 6, 2008 by David Oxenford

FCC Extends Comment Date on Localism Proceeding

The FCC today released a Public Notice granting the request of several broadcast organizations for an extension of time to respond to the extensive proposals for re-regulating the broadcast industry contained in the FCC's Localism Notice of Proposed Rulemaking.  We wrote about those proposals, here.  Comments, which were to be filed next week, have now been extended, with a new due date of April 28.  Reply comments in the proceeding are now due on June 11.  Broadcasters should seriously consider filing comments in this proceeding (see our post here explaining how to file such comments), which could substantially affect the way that they do business, dramatically increasing the paperwork and regulatory burdens that they face.
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Posted on January 26, 2008 by David Oxenford

FCC Releases Rules for Enhanced TV Disclosure Requirements

The FCC has released the full text of its Order adopting enhanced disclosure requirements for broadcast television stations - requiring that they post their public files on their websites and that they quarterly file a new form, FCC Form 355, detailing their programming in minute detail, breaking it down by specific program categories, and certifying that the station has complied with a number of FCC programming rules.  The Commission also released the new form itself and, as detailed below, the form will require a significant effort for broadcasters to document their programming efforts - probably requiring dedicated employees just to gather the necessary information.  The degree of detail required is more substantial than that ever required of broadcasters - far more detailed than the information broadcasters were required to gather prior to the deregulation of the 1980s - though, for the time being, much (though not all) of the information is not tied to any specific programming obligations set by the FCC.

 Before getting to the specifics of the new requirements, the thoughts of the Commission in adopting this order should be considered.  The Commission's decision focuses on its desire to increase the amount of citizen participation in the operation of television stations and the decisions that they make on programming matters.  While many broadcasters protested that the public rarely cared about the details of their operations, as evidenced by the fact that their public files were rarely if ever inspected, the Commission suggested that this was perhaps due to the difficulty the public had in seeing those files (the public actually had to go to the station to look at the file) and the lack of knowledge of the existence of the files (though broadcasters routinely broadcast notice of the public file's existence during the processing of their license renewal applications, rarely producing any viewers visiting the station to view the file).  With respect to the new Form 355 detailing the station's programming, the Commission rejected arguments that reporting of specific types of programming in excruciating detail imposes any First Amendment burden on stations, as the Commission claims that it has imposed no new substantive requirements.  Yet the Commission cites its desires that the public become more involved in the scrutinizing of the programming of television stations, which it states will be aided by the new form, and also emphasizes the importance that the Commission places on local service (an item detailed in Form 355).  At the same time, in its proposals detailed in its Localism proceeding (summarized here), the Commission is proposing rules requiring specific amounts of the very programming that is reported on Form 355, the very numbers that, in this proceeding, it claims have no significance.  Moreover, citizens will be encouraged by the Commission's actions to scrutinize the new reports, and file complaints based on the perceived shortcomings of the broadcaster's programming.  Broadcasters in turn will feel pressured to air programming that will head off these complaints.  So, implicitly, the Commission has created the First Amendment chilling effect that it claims to have avoided.

In the order, the FCC also minimizes the costs of complying with its new requirements.  The Commission suggests that the costs of digitizing a public inspection file would "involve a one-time cost of $15,000," and then could be maintained on a server for less than $20 a month.  Even if this cost is accurate (and as set forth below, there are reasons to doubt this), for a small market television station even that cost can be quite significant.  While the Commission suggests that small stations with minimal website operations can request a waiver of these requirements, it sets no standards by which such a waiver will be judged.  Similarly, the costs for the constant review of a station's programming necessary to complete the Form 355 will be substantial, as every day's programming will need to be timed, classified, and recorded so that the weekly averages that are reported on the Form can be computed, and as the report requires a complete catalog of all public interest programming.  Someone will have to make those computations, and prepare the required descriptions of the public interest programming, again not an insubstantial cost, especially for a small market station (and even for some larger market stations).  And for what purpose?  The Commission implies that it is for the greater good that will come from the information reported in the form - information which, as stated above, in the Commission's own eyes is currently of no regulatory significance.

These issues may well be played out in appeals or requests for reconsideration of the new rules.  But, unless and until the rules are changed, broadcasters will need to comply with the new requirements.  First, the provisions governing the on-line maintenance of the public file include the following (with our observations in parentheses):

  • The Rules will become effective 60 days after the notice of their approval by the Office of Management and Budget (as required by the Paperwork Reduction Act - this is paperwork reduction?) is published in the Federal Register.
  • Stations can either post the public file contents on their own website, or on the website of their State Broadcast Association (why would the Association volunteer to do that?).  Even if the State Association agrees to host the website, the station must have a link on its website to the report. 
  • If a station has no website, it does not need to create one to comply with these rules (and it has no obligation to place the file on the State Association site).  But if it later develops a website, it must have the public file contents posted within 30 days.
  • The contents of the political file do not need to be posted on the website
  • Letters from the public do not need to be posted on the site - though emails from the public should be posted
  • Documents that are posted on other sites, including the FCC site, need not also be stored on the station site, if a link to the documents is placed on the station's site
  • The file must be accessible to the disabled, complying with Conformance Level A of the World Wide Web consortium's Web Content Accessibility (W3C/WAI) guidelines.  (Information may be found here).  This may preclude some files being stored solely in a PDF format (and will no doubt cause some consternation among those at stations, who we would expect to be most people, not familiar with these standards). 
  • Twice each day, the station must publicize on the air, with its station identification, the availability of the file on the website.  At least one of those mentions must be between the hours of 6 PM and midnight.

The FCC Form 355 requires information including the following:

  • A list of the station's programming streams (i.e. the analog channel and any digital multicast program streams) and "their main programming focus"
  • A list of the parent company and affiliates of the company which owns the station (isn't this what Ownership Reports are for?)
  • For each programming stream, the average number of weekly programming hours devoted to the following:
    • High Definition programming
    • National news
    • Local news produced by the station
    • Local news produced by some other entity (who must be identified)
    • Programming devoted to "local civic affairs," defined as programming designed to provide the public with information about local issues, including statements or interviews with local officials, discussions of local issues, and coverage of local legislative meetings.  This programming must be subtracted from the "news" programming reported above.
    • Coverage of local electoral affairs - basically coverage of local elections - which must also be subtracted from the news coverage numbers reported above
    • Independently produced programming, i.e programming not produced by a national network (presumably each local station will have to determine if a network has as little as a one-third interest in all programming that is being aired)
    • "Other" local programming - which is not defined but presumably would include sports, religious, and entertainment programming produced within the station's service area
    • Public service announcements
    • Paid public service announcements (a PSA-type announcement for which the station or any group that the station is affiliated with - presumably including state broadcast associations - receives something of value)
    • Closed captioned programming
  • A list of each national news story that includes significant treatment of community issues, listing for each such program:
    • title, length and date and time of airing
    • whether it was aired on the primary channel of the station
    • whether it was locally produced
    • whether it previously aired on this station or any other station (how is a station supposed to figure out what other stations a national news program aired on?)
    • if it was part of a regularly scheduled news program
    • whether any consideration was received for the broadcast of the segment
  • A list of all local news program segments dealing with community issues, providing the same information for each such segment as listed above for national news segments
  • A list of all local civic affairs program segments that provides significant treatment of a community issue, with all the same details as listed above for news segments
  • A list of all electoral affairs programs that includes significant treatment of community issues, with the same details as provided for news segments
  • The title, length and date and time of the airing of all independently produced programming
  • A list of all local programming not otherwise listed above, with title, length,and date and time of airing, and whether the station received consideration for airing the program
  • For each PSA, the name of the sponsoring organization, the number of times the PSA ran, the length, and the percentage of times that were during prime time hours
  • For each paid PSA, the same information as for unpaid PSAs
  • Details of programming directed to "undeserved communities," defined as demographic segments of the community to which little or no programming is directed (query - if no programming is directed to a particular demographic segment, how can a station have anything to report in this category?)
  • Details of religious services or other local religious broadcasts aired at no change
  • A description of how the station determined that its programming met community needs
  • Details on the amount of closed captioned programming broadcast by the station, and a list of exempt programs that were aired, with details as to the exemptions
  • Whether the station voluntarily provided video description of any of its programs and, if so, how much
  • Information about broadcasts about community emergencies, including a statement as to whether or not the station complied with the rules that require such programs to be accessible to the disabled
  • Whether or not more than 3 hours per day of programming is provided pursuant to an LMA or JSA.

 As I was preparing this litany of information that the Form 355 will contain, I was trying to imagine how stations will comply with this requirement. As set out above, the form calls for an inventory of all program segments that deal with issues of public concern.  To fully comply with the rules, it would appear that a station will have to have staff members dedicated to monitoring all programming broadcast on the station - including on multicast streams and including all network and syndicated programming - to determine if the programming contains a significant discussion of important issues of public concern. Then, if any segment of any program does contain such a discussion, the station will have to write up the description of that program for inclusion on the Form 355, providing the duration, topic and time of broadcast of each such program. The Form 355 will not be a form that a station can simply fill out in the last few days of the quarter, but instead will require a minute-by-minute review of station operations, and a daily updating up information to be ready to upload it on the quarterly due date.

This would seem to be an incredibly burdensome requirement for any station. But, as with any new regulatory mandate, the burden falls hardest on small market stations. The costs and time to monitor station programming is essentially the same whether a station is in Glendive, Montana or New York City, as the amount of programming that a station broadcasts in either a big or a small market is essentially the same. Yet a New York City station has far greater resources from which to pay the costs of compliance with these rules. The small market station, in many cases already reeling under the costs of the digital transition, will be crushed by the new burden that these new rules entail. If ever the Paperwork Reduction Act should be brought to bear to reject a program for the regulatory burden it imposes, this should be the case. Lets hope that the Office of Management and Budget is more attuned to the burden that these rules create than was the FCC.
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Posted on December 13, 2007 by David Oxenford

Moving Forward Back to 1980 - The FCC Set to Conclude that Specific Public Interest Obigations are Required for Broadcasters

As we wrote earlier this week, the FCC is to consider at its meeting next Tuesday a Report on the results of its "Localism" proceeding, and a Notice of Proposed Rulemaking seeking public comment on the findings contained in the Report.  From rumors going around Washington today, that Notice may ask for comments on tentative findings that would roll back of much of the broadcast deregulation of the last 25 years.   Rumors are that the Commission will be issuing "tentative conclusions" determining that the FCC should re-impose specific ascertainment requirements of some sort (requiring that broadcasters regularly meet with specific types of community leaders to get their input on station programming).  Also, the Commission will tentatively conclude that there should be quantitative programming requirements - that each station do a specific amount of local programming and perhaps specific amounts of news, public affairs other types of programs each week. If a licensee does not meet the requirements, the station's license renewal application would not be granted routinely by the FCC's staff, but instead would be subject to an additional level of scrutiny by the full Commission. The Commission is also apparently proposing that it return to the old rules that all stations have a manned main studio during all hours of operation. There is reportedly also a proposal that stations report to the FCC about how they decide what music they play.

Staring in the early 1980s, the FCC did away with many of the specific, detailed programming requirements that had previously bound broadcasters.  These requirements were quite burdensome, especially for small stations and stations in small markets with limited staffs.  Rather than spending their time on broadcast operations, station staff had to make sure that their operations met programming standards imposed from Washington, dictating the government's ideas of what was good for the station's audience, even if the station might feel, because of its format or the demographics of its audience that a particular type of programming did not serve the needs of its community.  In the mid-1980s, the FCC concluded that these rules were no longer necessary, as it was concluded that there was enough media diversity that the marketplace would dictate that broadcasters serve their audiences with appropriate content that met the needs of that audience as, if they did not, some other broadcaster would.  The economic incentive of the fear of the loss of audience to a competitor who better served the public was deemed enough to insure that the broadcaster acted responsibly.
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Now, here we are 25 years later, when the number of broadcast stations has doubled from the mid-1980s, and when there is all sorts of other competition that forces the broadcaster to serve its community, and the FCC is looking to reimpose a paternalistic regime where all stations have to broadcast specific types of content to avoid license renewal difficulties?  In today's world, with satellite and Internet radio and video and all of the other digital choices of entertainment, the broadcaster is forced by his or her self-interest to address what the local audience finds relevant, or the broadcaster will have that audience abandon the station for some other medium.  Now, more than ever, specific quantitative standards for broadcast programs are not needed. 

While the FCC and others seem to yearn for the "good old days", what really did the old rules mandate?  They required specific amounts of public affairs programs, so that usually meant that every radio station in a market was doing boring talk programs on a Sunday morning to satisfy the requirements.  And no one listened, and there was no choice of what to hear during those hours.  Every station was required to do specifically labeled "news" programs.  In the old days, most stations ran network newscasts to help fulfill these requirements, even though the audience of a particular station might not care about hard news.  Now, broadcasters use many different methodologies to determine the needs of their audiences, and meet those needs though "information" about local events supplied by the broadcaster  but maybe not in a traditional format, but perhaps as part of an entertainment format, but in a way that nevertheless builds up a  bond with the local community.  Do we want to do away with that flexibility so that someone in Washington can dictate the type of programming that best serves the public?

These findings by the Commission have not been made, and broadcasters can still submit letters or comments before the end of the comment period at 5:30 Eastern time on Friday, December 14. And then whatever proposals are ultimately adopted by the Commission will be available for comment as part of the Notice of Proposed Rulemaking.  Clearly, this is a proceeding in which all broadcasters should participate. 

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Posted on July 27, 2007 by David Oxenford

Big Fines for Public File Violation that Escalated

The FCC released an order today, fining a broadcaster $20,000 for misrepresentations made in its license renewal application about the completeness of its public inspection file.  The fine issued in this case was not a fine for the fact that the file was incomplete (two stations in the cluster had each already been fined $4000 for the actual public file violations), but instead the fine was issued because the licensee had certified in its renewal application that the public file had been complete and accurate at all points during the course of the license term.  This case highlights both the need to keep an accurate public inspection file, and the need to carefully consider all certifications made in FCC applications.  Incorrect certifications can lead to fines and potentially even more severe sanctions if the FCC finds an intentional misrepresentation or lack of candor - the potential loss of a license.  Admitting a minor paperwork transgression like an incomplete public file will result in a fine - an inaccurate certification which appears to try to hide a problem can lead to far more severe consequences. 

In this case, the FCC found that the licensee had not maintained Quarterly Issues Programs lists.  The licensee claimed that its obligations had been met through a listing of public service announcements that the stations had put in their files.  The FCC rejected that argument, citing the requirement in its rules requiring that Quarterly Issues Programs lists contain "a narrative description of what issues were given substantial treatment" by the licensee as well as the programs that treated each issue.  In addition, the time and date of broadcast of each program, as well as its title and duration, is to be provided.  A simple list of PSAs does not meet these requirements - as it does not list the issues addressed, much less provide the detailed program information required by the rule.  For a summary of the Quarterly Issues Programs list obligations, and a model form to be used to meet the obligations, see our most recent memo on the subject, here.   Remember, the Quarterly Issues Programs Lists are a broadcast station's only official record of how they have served the public interest needs of its community, so be sure that adequate attention is paid to the completion of these forms.

Perhaps more troubling in this case was the fact that the licensee, despite having twice been fined for public file violations during the course of the license term (and having paid the fines, essentially admitting the violations), nevertheless went ahead and certified that the public file had been complete at all times during the course of the renewal term.  While the licensee tried to justify its answer based on the belief that the PSAs covered the requirement, the fact that it had already paid fines on this issue seems to point to the fact that the licensee was simply sloppy in filing out the license renewal, not paying attention to the certifications in the renewal and their actual meaning.

Similar inaccurate public inspection file certifications have previously caused broadcasters to be fined and, in the case of one California noncommercial station, the designation for hearing of a license renewal application to determine if the station's license should be revoked.  Once again, it is important to emphasize that the underlying misconduct, if admitted by the licensee, would have at most cost the licensee a fine of a few thousand dollars (and, in this case, as fines were already paid, quite possibly nothing more).  But the inaccurate certification, in and of itself, is one of the most serious offenses in the FCC's jurisdiction.  On any FCC application, it is much better to admit a violation and take whatever penalty may follow than to try to hide or obscure the violation.

This case serves as a warning to all broadcasters - honestly is the best policy, and care in completing FCC forms to avoid any appearance of dishonestly is essential.
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Posted on July 25, 2007 by David Oxenford

Detailed License Renewal Requirements to Return?

In the broadcast world, if you stick around long enough, what was once big and then faded away will no doubt come around once again.  Whether its the resurrection of prime time games shows that faded in the 50s to become big again today, or the regulatory landscape - it all comes around again.  In comments made to an oversight hearing of the US House of Representatives yesterday, Chairman Martin stated that there is an item circulating through the FCC proposing to require that broadcasters file in their license renewal applications more detailed information about the types of public interest programming they provide.   Until the mid-1980s, broadcasters had to specify the percentage of their programming that was comprised of news, public affairs and "other" public interest programming, as well as the number of public service announcements that the station broadcast.  These specific requirements disappeared in the "deregulation" of the 1980s, but from the statements made yesterday, they may now be making a return if Chairman Martin and the Democratic Commissioners can agree on a set of rules to be imposed on broadcasters.

We've written about various proposals to require specific, quantifiable public interest obligations of broadcasters in the context of the recent digital radio order.  We also wrote about the long-outstanding proceeding to quantify public interest obligations of television broadcasters that was mentioned in a recent decision denying a license renewal challenge (and implying that a decision was coming soon).  Whether the Chairman's mention at yesterday's hearing of the upcoming "item" was a reference to these two proceedings, or to some entirely new effort to re-regulate broadcasters, remains to be seen.  But the "post-card" renewal that was adopted in the 1980s, which has continued to grow in size and complexity over the intervening years, may well grow significantly in the near future.

And that may not be all - the frequency of the renewal is also in question.  Commissioner Copps has been calling for a return to a three year renewal cycle (see our post about his proposals, here), rather than the eight year cycle that currently exists.  That call was repeated at yesterday's hearing.  So watch these developments carefully  - and see what develops in this coming election year, when political points are often scored by cracking down on perceived problems, whether or not they exist.
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