Posted on January 11, 2012 by David Oxenford

FCC Makes Changing City of License of Radio Stations More Difficult

Changing the city of license of an AM or FM station is getting more difficult, based on recent FCC decisions.  As we have written before, the FCC's Rural Radio order changed the manner in which the FCC reviews city of license changes.  In connection with any proposed city of license change, the FCC reviews the proposal to make sure that the change will result in a favorable arrangement of allotments, making sure that the distribution of radio channels is in the public interest.  In making that decision, the FCC has relied on a series of priorities - first insuring that all areas of the country get at least two radio reception services (Priority 1 was to provide service to "white areas" that currently receive no radio service at all, Priority 2 was to provide a second reception service to all areas).  The next priority was to provide as many communities as possible with their first "transmission service", i.e. a station licensed to that community that would have a primary responsibility to address its needs and interests.  Finally, if there was no proposal to provide a first or second reception service or a first local transmission service, the FCC  looked at Priority 4 factors, i.e. other public interest matters.  In the past, service to a greater number of people itself was a Priority 4 consideration.  Based on a case released last week, service to a greater population apparently is no longer be viewed as justification for the change in the city of license of a radio station - even if the proposed move is from a rural community that already has a significant amount of service to a similarly well served urbanized area and results in a significant increase in the population served by the station.

The Rural Radio order changed the Priority 3 preference for a first transmission service by determining that any proposal for a city of license within an urbanized area would be viewed as being a proposal for service to the entire urbanized area (meaning that, instead of being a first local service to a named community, all the stations in the urbanized area would be considered as serving the same city). Thus, a proposal to take a station from a rural area (e.g. proposing to take the third radio station from some smaller rural town) to a city without a service in a urbanized area would no longer be viewed as providing the first local transmission service to the suburban community (but would instead be viewed as being a proposal to provide just another service to a metro area that probably already has many stations that are licensed to the various communities in the urbanized area).  Some had thought that, while Priority 3 would no longer justify such a move, a Priority 4 preference would be available if the move would allow the station to serve a much larger population, and if any loss area was already well served.  In the proposed move discussed last week, the Commission relied on language in the Rural Radio Order that stated that population increases alone would not be enough to justify a city of license change when a station proposed to move into an urbanized area.  In this case, the Commission's staff found wanting a proposal to move from the well-served community of Boone, Iowa to a community in the Des Moines urbanized area - even though the proposed change would result in service to over 300,000 more people than are currently served by the station - increasing the number of people served by the station from less than 100,000 to over 400,000. The request was not denied outright, but instead the applicant was given another opportunity to supply additional information to demonstrate the public interest benefits that would result from the move. 

The Rural Radio presumptions seem to be looking for qualitative judgments about the areas and populations being served.  Various petitions for reconsideration of the Rural Radio order have been filed and are pending before the FCC (including one that I filed for clients) questioning the revised presumptions - and asking how they can be applied in real life situations.  In cases such as this one, and another decided last month, significant populations increases that would vastly improve the reach of a station were deemed insufficient to justify a city of license move.  Clearly, broadcasters and listeners would benefit from such moves, yet the Rural Radio Order seems to want to protect every listener choice of those in more rural parts of America.  While the Order does not explicitly rule out all moves into urban areas, it does not provide any clear-cut guidelines as to when such moves might be seen to be in the public interest, or even as to what specific criteria will be evaluated when reviewing such moves.  Will the Commission determine that loss of service to any area outside an urbanized area - no matter how well served that area may be - is more important than providing more service to an urbanized area?  Seemingly, this will cut off all opportunities to move stations to urbanized areas, entrenching the competitive landscape that currently exists in such area, without any evaluation of the economic survival opportunities of these additional services in rural areas.  New cases will probably answer such questions but, in the interim, many broadcasters will be left with little or no guidance on how such moves will be treated. 
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Posted on January 3, 2012 by David Oxenford

FCC Deadlines in January - Quarterly Issues Programs Lists, Children's Program Reports, Comments on TV Online Public File and Public Interest Obligation Proposals, FM Window and More

In addition to the normal FCC deadlines for routine filings, January brings the deadline for comments in a number of FCC proceedings, and a filing window for new FM applications.  For TV stations, the Commission recently extended to January 17 the Reply Comment deadline on its proposals (summarized here) for an online public inspection file.  Many public interest groups have supported the FCC's proposals to put the public file online, including the political file and new information concerning sponsorship identification information, while broadcasters have expressed concerns about the burden and practicality of an online file with all the information that the FCC is considering.  Comments are also due on January 17 on the related Notice of Inquiry looking into the adoption of a new form to document the public interest programming of TV broadcasters to replace the never-effective Form 355.  Comments deadlines on Petitions for Reconsideration of two other rulemaking decisions - on the adoption of rules allowing AM stations to use FM translators, and the Rural Radio proceeding - are due on January 4 with replies on January 17.  That the FCC only now sought comments on the 3 year old Reconsideration petitions in the AM translator proceeding is unusual, as the issue raised by the reconsideration petitions has also been incorporated in the recent FCC proceeding looking at the relationship between FM translators and LPFM opportunities.

We just reminded broadcasters of the new FM window, where applications for 119 new FM channels can now be filed between now and the January 12 deadline.  Broadcasters also need to remember to complete their Quarterly Issues Programs lists, and place them in their public file, by January 10.  As we've written, there are big fines for stations who forget to complete these reports and have to report their absence at license renewal time.  See our advisory on the Quarterly Issues Programs Lists, here, and also our advisory on Children's Television obligations, including Form 398, that needs to be filed at the FCC by January 10, along with a public file report documenting compliance with the limitations on commercial advertising in children's programming . 

For more information on many of the routine regulatory deadlines for broadcasters, see our Broadcasters Calendar for 2012 here.

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Posted on August 30, 2011 by David Oxenford

FCC Clarifies Rural Radio Order for City of License Changes Within a Market and From One Market to Another

Changing the city of license of a broadcast station was made more difficult by the FCC's rural radio order.  That order, about which we wrote here, imposed substantial obstacles on broadcasters attempting to move their stations from rural areas into urbanized areas - making such moves difficult if not impossible in many cases.  However, in two recent cases, the FCC clarified that decision so as to permit some changes to be made without the substantial new showings. Specifically, these cases permit the move of stations from one city within a market to another in the same market, or from one urbanized area to another, without doing the complex showing that might otherwise be required.

The rural radio decision had changed the an FCC policy that had favored, in allocations decisions, a first transmission service (i.e. the first station licensed to a community) to a large community within an urbanized area over a service to a less populous community, even if that community was outside an urbanized area.  After the rural radio decision, there was a presumption that service to any community within an urbanized area was service to the entire urbanized area - so a first service to a suburban community, instead of being treated as the first transmission service to that community, was treated as if it were the 20th (or 30th or 40th,depending on the number of stations in the entire market) service to the urban area.  Thus, the proposal would routinely not be entitled to a preference over a new service to a community outside of the urban area in the absence of a complex and convincing "Tuck showing" that analyzed a number of factors to show that the suburban community was independent of the central city in the urban area and that the proposed station would really meet the needs of this independent community, not of the whole urbanized area.  In one decision released last month, the FCC made clear that a move from one city within an urbanized are to another within the same urbanized area did not need this Tuck showing, as both were considered part of the same community for allocations purposes.  In a variation on that theme in a case released last week, the FCC's staff held that a move of a station from one urban area to an adjacent urban area did not require the showing.  Presumably this was because each urban area would have dozens of services, so that loss of one service in one market and the gain in another would be inconsequential.  Seemingly simple decisions, but ones that can save applicants significant time and trouble when filing city of license change applications for stations that are already located within urbanized areas. 

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Posted on March 7, 2011 by David Oxenford

FCC Adopts Rules Restricting Rural to Urban Radio Moves and Translator Band Hopping - And Adopts Tribal Area Preferences

The FCC's decision in its rural radio proceeding addresses numerous radio issues - some of which seem to provide a solution in search of a problem.  In an era where the President has called for agencies to review their decisions to access how they will affect businesses and job creation, some aspects of this rural radio decision appear to be moving in the opposite direction - imposing new hurdles on broadcasters trying to improve their operational facilities. While the FCC in this decision adopted largely uncontested rules that would promote the development of new radio stations on Tribal lands, the Commission also adopted rules making it harder for radio stations to move from more rural areas into more urban ones - rule that were almost universally condemned by broadcasters. The decision also restricted the ability of FM translators to "hop" from the commercial to the noncommercial band and vice versa, and adopted rules that codified the determination of how AM applications are determined to be "mutually exclusive" when filed in the same window for new or major change applications.  The changes to the procedures for consideration of AM and FM station allotment and movement are summarized below.  The other changes made in this proceeding will be discussed in a subsequent post on this blog.

Easily the most controversial of the decisions made by the Commission in this proceeding was the conclusions reached as to the movement of AM and FM radio stations from more rural areas into more urbanized ones.  We wrote about some of the concerns raised by broadcasters last week.  Many of the new rules and policies adopted by the Commission were ones feared by broadcasters - though many of the policies are still undefined, and how they are enforced may well determine their ultimate impact.  That impact may well take years to sort out.  Regardless of the ultimate impact on the actual movement of stations, there is no question that these rules will require far more paperwork from broadcasters seeking to allot new channels and from those seeking to change the cities of license of existing stations, and open more moves to challenge, making the process slower and more expensive.

The most fundamental change in policy adopted by the FCC was to change the process used to evaluate the Section 307(b) priorities between competing proposals for broadcast stations that will serve different communities.  Section 307(b) of the Communications Act is the section that requires that the Commission make a "fair, efficient and equitable distribution of radio services" among the "several States and communities."  The FCC has principally looked at three factors in making Section 307(b) determinations:

  1. First priority is to proposals for coverage of "white areas" - areas that currently receive no other primary signals from any radio station
  2. Second priority is given to coverage of "gray areas" - areas that currently receive only one other service - so that the new service would provide a first competitive "reception" service (a reception service meaning that the station can be received in that area, i.e. the area falls within a station's protected service contour).
  3. The third criteria, equal in importance to the second, is the provision of a first "transmission service" to a community, i.e. the first station licensed to that community with primary responsibility to cover its needs and interests.
  4. After that, the fourth priority was "other public interest factors", which traditionally looked at a comparison of proposals to see which provided more reception service to more people.

The change adopted in this case was to essentially return to an old policy, abandoned decades ago, that determines that a first reception service, priority 3 preference, was not available to applicants who file for a community that is part of an urbanized area.  Instead, the FCC will look to the transmission services available to the entire urbanized area to determine if a preference should be accorded to the applicant and, as all urbanized areas have multiple stations licensed to cities in the urbanized area, that preference would never apply to such a community (except where the presumption adopted here is rebutted, as set forth below).  While there are some differences, the newly adopted policy is similar to that which applied through the mid-1980s under the FCC's "suburban community policy and its "Berwick doctrine", both of which led to results similar to those that will probably result from the new rules.  Under the new policy, the presumption that a station proposing to serve a community is really one for the whole urbanized area would apply when a proposed station would cover 50% of the urbanized area around a major city - either from the proposed transmitter site or from another likely site.  The presumption can be rebutted, but that would require:

  • Showing that the proposed community of license, while in or near the urbanized area, is still independent of the principal city in that area
  • Showing that the community is not only independent but has actual needs for a local transmission service, and
  • Demonstrating that the proposed station would in fact meet those needs.

In assessing the rebuttal, the FCC would look at:

  • How much of the urbanized area would be covered by the proposed station
  • The size of the proposed community of license versus that of the metropolitan area
  • The "Tuck" factors - factors set out in a 20 year old case that looks at issues such as the existence of local government, civic and educational organizations in a community, whether it has an independent business and cultural existence, and whether it has its own media, post office and phone book, and generally whether it is more of an independent community or a bedroom of the nearby bigger city.

These Tuck factors would be applied more strictly than they have been in recent years, looking to give a preference only to those few communities in or near a metropolitan area that have a demonstrably separate existence from the central city. 

In addition, the Commission will create a new priority 4 to the 307(b) priorities listed above, giving the provision of a third, fourth or fifth reception service to substantial areas greater weight than the simple coverage of greater populations.  How that preference is applied is different in different circumstances.

In fact, all of these new policies would be applied slightly differently, depending on the circumstances in which they arise.  In AM cases, where there are mutually exclusive applications filed in a window for new or major change applications, proposing different cities of license, the Commission need not reach a decision on 307(b) grounds as, if there is no winner based on these grounds, the applicants simply go to an auction.  Thus, in addition to the presumptions summarized above, the Commission gave specific guidance on the evaluation of the priority 4 preferences.  Preferences will only be given to applicants who have a 25% greater coverage of areas where they will provide a third, fourth or fifth service, and propose to provide a transmission service to a city that has fewer than 2 such services.  In addition, an applicant can submit a Service Value Index study (a study based on the 20 year old decision setting out a formula for evaluating the number of people in coverage areas proposed by applicants, with the raw population numbers adjusted by the number of services these areas already receive) to show that their proposals would better serve the public interest.  An SVI 30% better than that of a competing applicant will merit a preference.  Otherwise, it's off to an auction.

In cases where two or more petitioners are seeking to allot a new FM station to different communities, where such proposals are mutually preclusive, in addition to the general presumptions about service to communities in or near to an urbanized area being service to the whole urbanized area, the Commission decided, as in AM, to put more weight on third, fourth and fifth services.  There was no definitive percentage specified as to when such weight would be decisive, nor was there any indication as to whether a SVI showing would be considered.  No explanation of why an SVI was considered important for AM, but not for FM, was provided.  

In situations involving city of license moves, where there are usually no competing proposals for the FCC to evaluate.  So the FCC looked at standards that would make it generally more difficult for stations to move from rural to urban areas.  The Commission stated that it would generally disfavor moves that removed a second service from a community of over 7,500 people, and disfavor moves that created new areas that did not receive third, fourth or fifth services, if those areas constituted over 15% of the station's service area before any proposed move.  Applicants will also need to provide much more specific data on how many services are received in both the gain and loss areas (not stopping at 5 services, as is the common custom currently, but instead providing detailed analysis of how many services all gain and loss areas would receive).  These required showings will make city of license changes more costly to prepare, and will also make their consideration by the FCC more time-consuming and uncertain, as there are no criteria specified by which the detailed showings will be judged.  Apparently the proposals will need to be evaluated on a case-by-case basis.

These are but highlights of the changes made by the Commission.  The Order provides more detail on the showings required, the grandfathering that will be accorded to pending proposals, and other implementation issues.  But, needless to say, the differences from the current processing will be significant.

But what is perhaps most interesting is trying to figure out why these proposals were adopted now - when there are few new requests for the allocation of new FM channels, there is a decreasing interest in new AM service, and there are very few move-ins of stations to metropolitan areas - as the economics of those actions simply are not what they were years ago. These new rules, which will make many applications more costly to prepare, and will make challenges to proposals much more time-consuming to defend, solve problems that simply don't exist.  The FCC seems to justify these new rules on its beliefs that even rural residents deserve a choice of a multiplicity of entertainment and informational outlets (deeming 307b to be a consumer protection statute, not a broadcaster-centric model that encourages spectral efficiency - an interesting conclusion in this era where efficiency, not consumer protection, seems to be the buzzword of the FCC on the television side - see the proposals about which we have written many times - to repurpose the TV band for broadband).  The Commission does not consider questions of whether it is in fact economic to provide such services, and whether the multiplicity of services to rural areas is even so necessary in an age when anyone, anywhere, can receive hundreds of channels by buying a Sirius XM receiver.  While the Commission states many times in this order that the justifications underlying Section 307(b) have not changed since the 1930s, they fail to recognize that the radio industry and the media landscape generally has changed in the intervening 77 years since the section was adoption as part of the Communications Act. 

No doubt there will be appeals of this decision.  And there are many implementation issues that will need to be addressed by cases that try to apply the new policies that have been adopted.  So the final impact of this order is not yet knowable.  So watch as these issues develop. 

 
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Posted on February 23, 2011 by David Oxenford

Restrictions on Moving Radio Stations From Rural to Urban Areas May Be Coming - What's The Potential Impact?

At the FCC meeting next week, the Commission will be considering an item dealing with radio stations that serve rural areas, and the ability of licensees to make technical modifications to those stations that would change the communities which they serve.  While, as we wrote last week, most of the attention of broadcasters has centered on the television issues to be considered at the meeting as the Commission is to begin an inquiry on the retransmission consent process.  The rural radio issue poses real concerns for radio operators - especially those contemplating a move of a radio station from a community outside of a metropolitan area to one in a metro.  In the name of protecting service to rural areas, the Commission may well restrict minority groups, specialty programmers, and other new entrants from bringing new services to metropolitan areas - permanently entrenching those companies who currently have major market stations as the only competition in those markets.  A proposal to protect service to rural areas may well have the impact of decreasing diversity in large markets.

In virtually every large market, there is little or no potential to add new channels for FM service both because of interference protections that need to be accorded to stations in the market and because of protections to stations outside of the market but close enough to be short-spaced to any potential station in the metro area.  In some cases, creative engineering has found ways for some of these non-metro stations to be moved into the metropolitan area, or at least close enough to provide some service to those markets.  "Move-in stations" have allowed new entrants, some with specialized programming, to provide service to large cities - when such entrants could never afford the price of an existing in-market station, even if one was for sale.  Even "rim shots", those move-ins that don't provide full coverage of a metro area, may be very worthwhile for groups with unique formats (religion, Spanish language, and other targeted programming) trying to reach a small audience that is not otherwise going to get service in such markets.   

Spectrum congestion is usually not as acute in more rural areas so, to the extent that an area looses service when a station is moved into a larger market, if that service is needed (or can be profitable), another frequency can often be moved in to back-fill any service loss.  Of course, a station moving closer to a larger market may still provide some service to rural areas.  And Commission rules already preclude (except in rare circumstances) moving a community's only station out of that community, and prohibit the creation of "white areas" and "gray areas" - areas where residents will receive primary service from no radio stations (a "white area") or only one radio service (a "gray area").  So a baseline of service is already established by the rules.

Rumor has it that the new rules circulating at the Commission may require a greater number of stations be left in every community before any station from that city can be moved.  They may also require more reception service beyond white and gray areas, and may generally prohibit the movement of stations from rural areas into metros.  If this is in fact the case, the Commission may ignore the fact that all "communities" are not created equal.  Some rural areas may be in sparsely populated areas, where multiple stations cannot economically thrive.  The definition of "community" should also be considered, as in any metro, there may be many "communities", not all defined by political boundaries.  Some communities - defined by various social or economic or ethnic classifications, may well be deserving of service not provided by the existing stations in a market.  Putting the stop on the movement of new stations into a metro area may forever deny such service.  That is why virtually all broadcast groups, and several minority organizations, opposed such restrictions when they were first proposed. 

The rules and procedures of the allocation process are very detailed.  The changes made in this process four years ago, which made it easier to move stations from one city to another, are still subject to reconsideration petitions, and still have left several procedural issues unresolved.  No one outside the FCC knows exactly  what the new rules provide, so we don't know how they will interact with the existing rules, and whether they may be other unanticipated results.  So broadcasters should watch this decision carefully, and determine what ramifications they may have on your future plans. 
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Posted on February 13, 2011 by David Oxenford

Next FCC Meeting Full of Issues for Broadcasters - Retransmission Consent, Moving Rural Radio Stations Toward Urban Areas, and TV Video Description

After a series of FCC meetings where the only mention of broadcasters was in connection with taking TV spectrum for wireless broadband, the tentative agenda for the next FCC meeting, to be held on March 3, 2011, is full of broadcast issues - issues that could have broadcasters wishing that they were ignored once more.  The biggest issue is the initiation of a proceeding to re-examine the retransmission consent process by which television broadcasters negotiate with cable and satellite companies for payment for the carriage of their signals.  But also on the agenda are proceedings to look at rural radio services and whether the Commission should limit the ability of broadcasters to move stations from rural to urban areas, and the initiation of a proceeding to require that television programmers provide audio descriptions of the action taking place on the video portion of their programs to aid those who are visually impaired.

The retransmission consent proceeding is one which arises after several well-publicized cases where television stations and multichannel video program distributors (like cable and satellite television providers) have had disputes about the amount to be paid to the television broadcaster for the carriage of their signal by the MVPD.  In a few cases, this has resulted in the television station being pulled from the MVPD for some period of time until the dispute can be resolved.  Some MVPDs have argued that there should be more oversight over the process by which television stations can force the MVPD to pull the station's signal until the retransmission negotiation is completed.  MVPDs argue that viewers, who can get the signal over the air as it is made available by the TV station for free, should not be held hostage to the negotiations and should not suffer when the station is pulled from the MVPD to further the TV station's negotiation posture.  Broadcasters, on the other hand, argue that the system is working, that the number of stations who have been pulled from an MVPD is few, and that the MVPD should pay for the valuable television signal, just as it pays for other programming that it carries from cable networks.  The FCC is expected to ask whether some reform of the process, and perhaps some government oversight or mandatory mediation, should be required.

The rural radio proceeding is one which we wrote about here.  In addition to the proposal to give a preference to the initiation of new radio services on Tribal lands to service Native American populations, the proceeding more broadly looks at whether some restrictions should be placed on the ability of owners of rural stations to move those stations toward more urban areas.  Virtually all of the comments in that proceeding opposed more restriction, asking how the rural and urban areas would be defined and, as long as some minimum level of service was preserved to the rural area, are such limits really necessary?  Restrictions on the ability to move stations, in the name of Section 307(b)(the section of the Communications Act that mandates a fair and equitable distribution of broadcast services among the states and communities), could undo the liberalization granted to broadcast station owners to move their stations to respond to marketplace demands, that was just adopted four years ago (about which we wrote here).  As comments have already been filed in this proceeding, the Commission could issue a final decision in this proceeding next month.

The final proceeding, to require television stations to provide an audio description of action that occurs visually on a TV screen so that the visually impaired can understand what is happening.  Several years ago, the FCC had adopted such a requirement, which was thrown out by the Courts as being beyond the statutory authority of the Commission.  To overcome that court decision, Congress has adopted new legislation to require the FCC to adopt such rules, spelling out much of the adoption timetable (see our article here).  So watch for the FCC to specify at its upcoming meeting how this requirement will be implemented.

All in all, a big meeting for broadcasters.  So pay attention.
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Posted on May 15, 2009 by David Oxenford

Comments Due on July 13 on FCC Proposals to Restrict Movement of FM Stations

Last month, the FCC released its proposal to restrict the movement of FM stations from rural areas into larger markets (which we summarized here).  The proposals that the FCC has put forward would greatly restrict the ability of broadcast owners to move stations to cover larger population areas - in many senses reversing the decision of the FCC just two years ago granting stations more flexibility to change cities of license and otherwise improve their facilities (see our posts here and here).  As we pointed out in our summary of the proposals, if adopted, these new rules could impair diversity - making it harder for minorities and other new entrants to acquire stations in larger markets, as move-in stations often provide the only opportunities for such groups to acquire stations at reasonable prices.  The FCC order advancing these changes has now been published in the Federal Register, setting the date for the filing of public comments on these proposals.  Comments are due to be filed on July 13, with replies due by August 11.   Broadcasters interested in these issues should start to prepare those comments now, providing the Commission with sufficient information to show the public interest benefits of these station moves.   

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