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Indecency: After the Supreme Court decision in June, upholding the FCC's right to regulate indecency but questioning the current procedure for doing so, the FCC's regulation of indecency is up in the air. Many license renewal applications for both radio and television stations are held up because of pending complaints, and many sales of stations happen only when the seller's agree to escrow funds to cover any indecency fine that may occur at some point in the future – when the Commission decides what standards to apply to the pending complaints. With so many applications held up, it would seem that the FCC should deal with this issue soon.

EEO Rules: There are fundamental issues about the FCC's EEO policies that have not been addressed in the 9 years since these rules were first adopted. Proposals to extend the rules to part-time employees, and to require the filing of FCC Form 395 (the form that classifies all employees by race and gender), are still pending from that long-ago proceeding. Also pending are proposals sought in requests for reconsideration of the adoption of the EEO rules that would make the EEO rules comport with today's reality - such as the proposals to allow Internet-based EEO recruiting. Maybe this will be the year that some of these outstanding issues are finally resolved.

Privacy Issues: As the digital operations of broadcasters become more and more important, they will face many of the same issues that trouble many of the pure digital media companies. Chief among these issues is that of privacy. Congress, the FTC and other government agencies all are looking at issues as to how to protect the privacy interests of individuals while still allowing digital media companies to use information that allow the functioning of the digital systems, including the placement of advertising targeted to particular individuals based on their interests, as shown through their online habits. The FTC recently issued a report looking to update its enforcement of the Children's Online Privacy Protection Act, and expect that this will be but one of many attempts to impose new regulation on online services in an effort to protect the privacy of individuals.

Political Rules: In the recent election, we saw the effects of the Citizens United case in the significant political spending on broadcast commercials by third-party organizations. While there have been calls for more regulation on such ads, we don't expect action in that area this year. Instead, though, there may be some minor tweaking of the political broadcasting rules, as there are outstanding issues remaining before the FCC – including appeals of the decision of the FCC, issued just before the election, holding that TV stations have to give candidates equal access to certain single-issue candidates – even though such candidates are qualified only in the distant reaches of the station's coverage area, and even when such candidates are "running" for office not with any expectation that they will be elected, but instead simply so that they can get access to television stations to run some controversial commercials not primarily intended to promote their candidacy, but instead to promote their position on some other issue. In an "off-year", this might be the time to address some of these outstanding issues.

Public Interest Programming Reports: At the same time as it began its proceeding to adopt an Online Public File, the FCC began a proceeding to look at the adoption of a new form on which broadcasters would report the public interest programming that they do. This form would replace the Quarterly Issues Programs list, and the Form 355 adopted 5 years ago for television but never implemented. The proposal released in 2011 was simply a Notice of Inquiry, meaning that the FCC would need to adopt a Notice of Proposed Rulemaking to move further on this proposal. While we have not heard much about the status of this proposal lately, with some of the complaints about the usefulness of the Online Public File, this proceeding could bubble up at some point this year although, as no Notice of Proposed Rulemaking has yet to be released, before any new rules were adopted a whole new set of comments would need to be received. So don't expect a new form this year.

Television Issues

Spectrum issues have been the dominant TV concerns in past years, first with the digital transition, and more recently with the "white spaces" rulemaking and the proposals advanced as part of the FCC's Broadband Plan to reclaim part of the TV spectrum for wireless broadband uses. As in past years, these issues remain on the FCC's agenda, as do issues dealing with the carriage of television stations by cable and satellite television providers. Issues about accessibility to video programming and the implementation of other consumer protection issues are also on the agenda. Specific issues for TV include:

Spectrum reclamation: The FCC has issued its Notice of Proposed Rulemaking, proposing methods to implement a "reverse auction," where certain TV stations would bid to be able to sell their spectrum to wireless companies and either go out of business or move to a VHF channel or share spectrum with another station. This proposal has been a high priority of the FCC, and FCC staffers have been spending significant time working to convince broadcasters that there are real opportunities for some broadcasters in this proposal. Much consideration will be given to this proposal this year, and there will be a push to move toward finalizing these rules, as the Commission would like to actually hold the auction in 2014. Part of this process will also involve the "re-packing" of the current TV band, by trying to squeeze the remaining TV stations into less of the TV band, in order to provide more contiguous spectrum to the wireless companies. Look for more details on those proposals as the year rolls on.

Retransmission Consent Reform: There has been much talk in Congress, and a proceeding initiated at the FCC, to determine if the rules governing the negotiation of retransmission consent agreements should be changed. Some multichannel video programming distributors and some public interest groups argue that the FCC should protect viewers who may have their broadcast TV service disappear if a TV station does not reach a deal with a MVPD, while the broadcasters argue that the ability to remove the station from an MVPD is the heart of the negotiation, and removing the risk of the MVPD losing the right to carry the station would hobble the negotiation process. MVPDs also object to TV stations operating through a JSA or Shared Services agreement negotiating jointly, while TV broadcasters see that as a way to equalize their bargaining position, especially for stations not affiliated with the Top 4 networks. Look for some movement in this very controversial proceeding later in the year.

Accessibility: Each year, accessibility issues play a more and more important role in video transmissions – with this year bringing further obligations for video providers to caption television programming that has been repurposed for the Internet, including mobile applications. We would also expect that the FCC will rule on many of the waiver requests that are on file from independent programmers who had received closed-captioning waivers that were revoked when the FCC decided that it had been using the wrong standard for such waivers. The Commission also has a proceeding in which comments have recently been filed that seeks to impose rules requiring that TV broadcasters provide a second audio channel to convey to the blind emergency information that is presented visually on-screen. This would be to aid the blind, in the same way that the current requirements for on-air video captioning is required to aid the hearing-impaired. Look for more action in this area later this year.

White Spaces: The FCC has authorized the operation of wireless devices in the television spectrum, and permitted these operations throughout portions of the east coast of the United States. Expect that the roll-out of authorizations for full-implementation of white spaces to continue this year.

LPTV/Class A TV: As these stations look toward a mandatory digital conversion in 2015, expect that there will be more examination of the qualifications of Class A TV stations to retain their protected status. As the FCC looks to the spectrum auctions, Class A TV stations may tie up spectrum that will otherwise be available for the repacking of the TV band or auction to wireless companies. Thus, expect the FCC's scrutiny of these stations to continue through 2013 – especially with the license renewals of many of these stations coming due.

Radio Issues

Radio has fewer unique issues on the front burner in Washington, but something always comes up. Here are some of the issues we see coming to the fore in 2013 for radio broadcasters:

Performance Royalty: Even though things were relatively quiet on the performance royalty in the last Congress, we would not be surprised to see the issue resurface in 2013. SoundExchange, for the first time in a long time, will not be directly fighting a royalty proceeding at the Copyright Royalty Board. As, as described below, the issue of the streaming royalty rates will likely be in front of Congress, giving more opportunities for this issue to be considered.

Streaming Royalties: In 2012, the Internet Radio Fairness Act  was introduced in Congress, looking to apply a single standard for deciding the royalties to be paid by all digital music services. With a new proceeding to determine Internet radio royalties to begin in 2014, we expect that this bill will be back on the table early in 2013, and there will be significant pushes to get it through Congress this year – and significant push-back from SoundExchange and the record labels.

SESAC Antitrust Action: Broadcasters affiliated with the Radio Music Licensing Committee has filed an antitrust lawsuit against SESAC, seeking to bring it under the same kind of consent decree as ASCAP and BMI so as to try to rein in the rates that SESAC is able to command. Expect lots of litigation on this case this year, but no resolution, as these cases are very long and complex.

LPFM/FM Translator Issues: At the end of 2012, the FCC issued its long-awaited order finally dealing with the processing of FM translators left over from the 2003 FM translator window, and setting up procedures for processing LPFM applications once the translators are dealt with. The FCC has already issued an order setting January deadlines for translator applicants to pick the translators that they will prosecute under the application processing limitations imposed in last month's order. Expect the FCC to push hard to deal with all 2003 translators this year, and to open an LPFM window at the end of the year (October being the projected time, but it could potentially slip to later in the year).

These are but some of the legal and regulatory issues that will be facing broadcasters in the upcoming year. Each year, we make these predictions, and there are always numerous other issues arise that we did not anticipate. So watch the trade press and the pages of this blog to see what other challenges may be coming from Washington for broadcasters as this year progresses.

The other issue likely to be addressed in the proceeding is the treatment of Shared Services Agreements and Joint Sales Agreements for television stations. The question here is whether these agreements should be "attributable", i.e. whether they should count in a multiple ownership analysis so that if you can't own a station, you can't, for instance, have a JSA with it. We warned that this seemed to be a target for public interest groups when this Quadrennial review of the ownership rules first began in 2009, and it is still being debated today as the issues are being considered in concrete form by the Commissioners. Many of the same issues that arise in the cross-ownership debate also arise here – whether the effect on diversity is such that it is more important than the economic efficiencies that are recognized by such operations – as many broadcasters submit that many small-market television stations would cease operations or drop local news but for their relationships with other stations in the market. The NAB has recently pointed out, as well, that MVPDs in many markets have their own joint sales agreements, so it seems unfair not to allow single-channel providers like TV stations to enter into such arrangements.

Ways to encourage minority ownership and other diversity in broadcasting is also likely to be addressed in the proceeding. Questions of the promotion of incubators for minority ownership, waivers or certain grandfathering rules, and the return of the tax certificate have all been discussed in this context. See our past article for many of the other proposals to encourage minority ownership that have been raised before the FCC. Given the Third Circuit review, the issue is bound to be extensively addressed by the FCC.

There are certain to be other items clarified in the decision as well. The NPRM suggested that the radio sub-caps (limiting the owner to a particular number of AM or FM stations in a market) should at least be reviewed, and the criteria for waiving ownership rules, e.g. in the instance of failed or failing stations, would also be analyzed. So, while the decision is unlikely to be in the Christmas stocking of any of the parties involved in the proceeding, by Valentine's Day participants may well have one more reason to celebrate (or another reason to dread the day depending on your position and the ultimate outcome).

Local television ownership:  The FCC tentatively concludes that the current rule, limiting TV combinations to the ownership of two stations in a market, but only where there will be 8 independently owned stations in the market after the combination, and only where the combination is not of two of the top 4 rated stations in the market.  The FCC asks for comments on that conclusion, and on a number of other issues including:

• Whether, in a digital world, it should look at ownership on a DMA basis, rather than relying on Grade B contours that really were an analog concept.  This would be similar to what the FCC does in radio - looking at how many stations are owned and how many voices are in a market based on Arbitron-defined markets
• Should there be waivers of the prohibitions on combinations of stations in smaller markets, where stations might not otherwise be able to support themselves, or support news programming, if they were independently owned?  What standards should govern such waivers?  Do combining stations need to be failing, or does there simply need to be some other public interest benefit of the combination?
• Is the prohibition against the Top 4 stations combining sufficient to preserve diversity in a market, or should a Top 5 or Top 6 rule be adopted?
• Should the sale of an affiliation be regulated, so that a Top 4 station owning a second lower ranked station could not buy the affiliation agreement of another Top 4 station - taking advantage of the FCC's policy of evaluating Top 4 status only in connection with the sale of a license (a reaction to the Honolulu case where a sale of an affiliation took place - see our article here)
• Do digital multicasting, new technologies, and other competition in the video marketplace affect the FCC's tentative conclusions?

Local Radio Ownership:  The current rules place limits on the number of stations that can be owned in each market based on the number of competitors who are in that market.  In the smallest market, one owner can have interests in two stations - one AM and one FM.  In the largest (markets with 45 or more radio stations), one owner can hold up to 8 stations, no more than 5 of which can be AMs or FMs.  The FCC proposes to keep these rules in place, but asks questions including:

• A number of broadcast groups suggest that limits not have the AM and FM subcaps - so that one owner could hold up to 8 AMs or 8 FMs in a single market.  While the FCC tentatively rejects those proposals, the Commission asks for more comments, including whether just allowing 8 AMs under common ownership might be a good idea
• Do Internet radio, satellite radio and other technologies pose a sufficient competitive force in local markets that they should be considered in an ownership analysis?
• Does digital HD radio, with multicasting opportunities, in any way affect the need for the rules, or minimize the need for liberalization of the rules?
• In the largest of markets, should one owner be allowed to hold more than 8 stations - i.e. should the FCC set up tiers where there one owner could own more stations - say allowing ownership of 10 stations in a market of more than 55 stations?
• In what circumstances should waivers of these limits be permitted?

Newspaper/Broadcast Cross-Ownership: The current rules prohibit a newspaper operator from owning a radio or TV station in the same area the newspaper serves.  In 2007, the FCC proposed relaxing that prohibition in the Top 20 markets, and also provided for waivers in smaller markets.  The Third Circuit overturned this decision based on the lack of public comment.  The FCC now proposes that a rule similar to the 2007 decision be adopted, but asks for comments as to exactly what standards should be used to evaluate proposed combinations.  The tentative conclusion is that, in the Top 20 markets, radio/newspaper ownership should be allowed, and newspaper/TV combinations be allowed if the TV station is not a Top 4 station and there are at least 8 voices in the market (one would think that the 8 voices test would be met in every Top 20 market).  But the FCC asks a number of questions including:

• Should the rules be addressed on a DMA basis, rather than on a Grade A contour methodology as is currently the case for TV/newspaper combinations?
• Should cross-ownership be based on tiers established by the number of media voices in a market?  Are the Top 20 markets significantly different than smaller markets?
• Are there circumstances where a waiver should be granted to permit combinations in smaller markets?
• Should additional factors be evaluated in permitting combinations in Top 20 markets? 

Radio-Television Cross-Ownership:  The current rules permit same-market combinations of radio and TV stations based on the number of other voices in a market, but the ownership of a TV station will set for that owner an ownership limit for radio stations lower than that which would normally apply for radio ownership in that market.  The FCC proposes to do away with any restrictions on radio and television ownership - allowing one owner to have the maximum number of each type of station that would be permitted in that market.  This is based on a finding that radio and television stations are not viewed as substantial substitutes by either advertisers or consumers.  The FCC asks for comments on this conclusion.

Dual Network Rule:  The rule currently prohibits the combination of any of the Top 4 commercial networks (ABC, NBC, CBS and Fox).  The FCC concluded that these networks still serve a much larger audience than any cable network or any other broadcast network, and are very important to both advertisers and viewers.  Based on the important role that the networks play, the Commission proposed retaining the rule.  It asks for comments on this conclusion.

Shared Services Agreements:  Given the controversy in Hawaii (summarized here) and the issues that have been raised by public interest groups suggesting that shared services agreements and similar arrangements evade the FCC ownership prohibitions, the FCC has asked if these kinds of agreements should be made "attributable", i.e. if they should count as if they are an ownership interest subject to the ownership rules.  Comments are sought on a number of questions including:

• What are the benefits of such agreements, and the perceived detriments?
• How should SSAs be defined, if a rule against them is adopted?
• Should the FCC not even try to define an SSA, but instead adopt a broader rule that encompasses any kind of significant relationship with a competing station?  (This would seem to imply a return to an old FCC "cross-interest" policy that prohibited substantial interests in competing stations, a policy that was abandoned decades ago as the FCC felt that bright line tests set by the ownership rules should determine what is permitted and what is not)
• The FCC also notes that it has had an open proceeding on the attribution of TV Joint Sales Agreement - radio JSAs having been made attributable years ago, though it gives no indication of when that proceeding will be resolved.

Diversity:  In connection with each of these rules, the FCC asked for comments on the impact that its proposals would have on the ownership of broadcast stations by members of minority communities, and whether other changes in each of these rules would somehow better serve its interest in encouraging diversity in ownership of the media.

Other Issues:  The FCC also summarized a number of studies that it conducted on media ownership and its effect on news, diversity of viewpoints, localism and minority ownership.  The FCC asks for comments on the findings of these studies.

This is a very important proceeding that will be sure to generate much controversy, and much discussion.  When will it be resolved?  My observations are that these proceedings always take much longer than anyone expects.  Moreover, given their potential to be quite controversial, they are not usually decided before a big election, like that coming up in November.  My prediction - don't look for a decision for another year (maybe during the December holidays next year?).  Be ready to file your comments when the date is announced, and participate in the upcoming debate. 

The Media Bureau's decision on the purchase of the CBS affiliation was based on the analysis of the rules that currently prevent the combination of any of the Top 4 rated stations in a market.  As the FCC noted, the rule prohibiting the combination looks at the situation at the time of the acquisition of a station.  The FCC, when it adopted the Top 4 rule, specifically stated that it would not penalize stations that grew their audience.  Thus, an owner with a Top 4 TV station could acquire another low rated station in the market, and if that second station eventually grew its audience so that it also became a Top 4 station in that market, the owner would not be penalized for its success.  The review is limited to occurring at the time of the proposed acquisition of the second station.  As no acquisition was proposed in this case (Raycom already owned the second station), the Bureau determined that there was nothing to review.  The Commission did note, however, that in connection with subsequent licensing decisions (e.g. a sale of the combined operation), the situation could be reviewed again - specifically stating that the combination could not be sold together should both stations remain in the Top 4 and the rules remain unchanged.

The shared services agreement with the new MyTV affiliate was also found to be within the FCC's previous decisions approving such agreements (see, e.g. our summaries of cases here and here).  The licensee was deemed to have an economic interest in the success of the station, as it received 70% of station revenues (from which it would have to pay it's operational costs, plus a $208,333 monthly payment to Raycom for the services that Raycom provides).  The public interest groups contended that the reality of the situation was that the licensee of the MyTV station would probably receive little money from station operations, as the potential profits would be eaten up by the monthly payments to Raycom.  The Media Bureau rejected that assertion, finding that the 70% share from which a payment to the shared service provider was within the scope of prior agreements approved by the FCC.

The FCC also found that the licensee of the MyTV station was in control of the station - that there was no unauthorized transfer of control.  Some of the specific factors looked at by the FCC in determining that the licensee maintained control included the following:

• The licensee had a full-time General Manager and General Sales Manager, and leased 4 employees from Raycom, and those 4 employees were specifically supervised and answered directly to the station's employees and performed services only for the station (and not for Raycom's stations)
• The General Manager helped produce the news run on the station (produced with Raycom), and, on a daily basis, vetoed programming offered by the MyTV Network
• The General Manager scheduled station programming, bid for syndicated programming, and negotiated agreements for local programming
• The General Manager produced two editorials each week, that were run on the station
• The General Manager produced a weekly programming report, sent to the station's owner

Based on these facts, and the financial arrangements set out above, the Bureau concluded that the licensee maintained sufficient control over the station based on prior precedent.

 As we wrote last month, Commissioner Copps already stated, when it began its online public inspection file proceeding, that these agreements were an evasion of the ownership rules.  In this case, the Bureau did not seem very comfortable in making the decisions it did, promising to revisit these issues in the upcoming Notice of Proposed Rulemaking on the revisions of the FCC's multiple ownership rules.   Recent press reports indicate that that notice is circulating among the Commissioners now, and will probably be released for public comment soon - probably without any relief from the local TV duopoly rules being proposed.  With the NPRM set to examine shared services agreements, these issues are bound to be matters of serious contention for the next year, as the ownership proceeding makes its way through the Commission.   And this case may not be at an end either, as an appeal to the full Commission is possible.  So look for the very contentious arguments on this very contentious issue to continue. 

Other proposals rejected by the FCC include one asking that access to the file be limited to local residents of a station's service area.  The reason for the rejection of this proposal seems to be based on the proposed adoption of the online file (that there would be no more burden on the station to make it available to all once it is online; that local residents could access the file when traveling; and that restricting the file to locals would create more, not less work) rather than on any philosophical reason that the file should be available to everyone.   There also seems to be no discussion whatsoever about the possibility of abolishing the public file, as some broadcasters suggested when the rule was up for review as part of the normal review of FCC rules under provisions of the Paperwork Reduction Act.

Another suggestion that the Commission considered and rejected was one that asked whether any new proposal should be phased in - with only new information placed online, and old information retained in paper form.  The FCC tentatively rejects that approach, finding that it would be too burdensome for the public to be forced to look in two places for information about station operations.  The Commission also suggests that the burden to move those portions of the public file not already online to an electronic form should not be too great.

Other specifics of the FCC's proposal include the following:

• While the FCC proposes to store the online file on its servers, and to use its site and bandwidth to make the information available to the public, the Commission also proposes that broadcasters keep an electronic back-up file in case there should be issues with the FCC's servers or other systems.
• The political file is proposed to be moved online. The Commission asks about the burden that would impose, as materials are supposed to be placed in the file "immediately" in most circumstances.  The Commission suggests that this should not be a burden as most political orders are taken electronically.  But it does not explain the connection with that fact and the ease of an electronic file.  In most cases, there is more to maintaining a file then simply placing an order into that file, and there is no indication that orders are in the same electronic format as will be the FCC's online file.  The FCC asks if it should provide forms that would make that process easier (though one wonders whether the FCC could come up with forms that are equally usable by all stations that each may have unique selling practices).  The Commission itself acknowledges that there is more to the issue, as it asks how an online political file can be organized so as to make it useful.  Should it be broken down by election, or in some other way?
• While, for privacy reasons, the FCC suggests that letters and emails from the public not be displayed on the online file, it asks a number of other questions about letters from the public:
  • Should all such correspondence continue to be maintained in a physical file, open for inspection, at the station?
  • Should broadcasters be required to report online about the number of letters received from the public, or to summarize their contents in the online file?
  • Are there other ways of making such documents available?
  • Should Facebook posts and other social media communications be made available to the public in some organized fashion as part of the public file obligation?
• Are contour maps generated by the FCC's own website sufficient for the online public file?
• The Public and Broadcasting Handbook is proposed to be eliminated from the public file obligation, as that handbook would simply be available on the FCC's website where all the files are stored
• The FCC proposes to maintain the obligation for TV stations to complete quarterly programs issues lists until any new form, more completely disclosing information about a broadcaster's public interest programming, is adopted.
• The FCC asks if, in the online file, it should post all orders dealing with sanctions imposed on a station for any rule violations, including forfeiture orders (i.e. fines), notices of violation, notices of apparent liability and other citations for violations.  Even though some of these documents are only preliminary findings of violations, which can be rebutted by a licensee, the FCC tentatively concludes that these documents would be important to the public to assess the performance of a broadcaster.
• The FCC proposes some new obligations for the public file, including:
  • An obligation to list the address and telephone number of the main studio and, for those stations operating pursuant to a studio waiver, a toll free phone number and the location of the local public file (one wonders, though, if the file is electronic, will there be any such location for the local file?)
  • An obligation to disclose in the online public file all information about "pay for play" sponsorship identifications.  The FCC notes that all that information is now required to be broadcast, but there is no way for the public to review that information after the program with which it is associated is aired.  The FCC notes that such information should already be in the file for sponsored political and controversial issue oriented program, but suggests that the public and "watchdog groups" should have a permanent, searchable database in which all such sponsorships are revealed.  The Commission notes that such on-air disclosures are, but their nature "fleeting", and that the public should be able to know who is trying to persuade them to buy something.  The FCC does not discuss how such disclosures would be made with respect to network or syndicated programming (e.g. if a network game show concludes with the tag "promotional considerations furnished by Hilton Hotels", how is the station supposed to find that information for inclusion in its file?  What if the promotional consideration was received by the producers of a movie aired by the station?  These questions were asked in the FCC's open proceeding on sponsorship identification and embedded advertising, but these difficult issues are ignored here).
  • Information about shared services agreements, including agreements where stations provide administrative support or news programming to another station, are proposed for posting on the new online file.  These agreements seem to be a particular target of public interest groups, and were characterized by Commissioner Copps as an "end run around our media ownership rules" (see our prior coverage, here). 
• Practical questions about the format in which such documents should be stored are asked.  The FCC is looking for a searchable format that will allow documents to be uploaded to the FCC site in the least burdensome manner possible.
• The FCC asks what notice of the existence of the online file should be required.  The Commission had, in 2007, suggested a twice a day announcement on the air about the file's electronic location, but now asks if a few announcements per week would be sufficient.  Should specific dayparts be mandated, the Order asks.
• The FCC also proposes that the URL of the Public File be on the homepage of the station's website, where is can be easily found by members of the public.
• The FCC proposes to eliminate the obligation on broadcasters to make the electronic file accessible to those with disabilities, as the FCC suggests that the database in which the files will be stored will be designed to be accessible, so that the burden would be on the FCC, not the individual broadcasters.

Obviously, there are many concerns for broadcasters, who already chafe at the burdens of maintaining a public file which is rarely if ever visited by the public.  New obligations to take that information, and perhaps compile more, and put it online, adds a new layer of worry to many TV broadcasters, especially smaller ones.  The FCC seems cognizant of that possibility, and asks for a full Cost/Benefit Analysis of the proposed rule.  The FCC wants broadcasters to determine the costs of complying with the various proposed obligations, and those in the public interest community to determine what the value of the benefits would be.  The FCC recognizes that the value of the benefits might be difficult to assess, so the Commission asks how the benefits to the public can be maximized while the burdens on the broadcaster are minimized.

There will no doubt be much more debate on these topics in the weeks to come.  But the FCC seems to be in a rush to get this proceeding done, as many public interest groups and Commissioner Copps have complained about the lack of action on the 2007 rules and the localism proposals.  So start preparing your comments now for filing once the FCC announces the dates for submission of comments.  We will certainly have more coverage of this important issue for broadcasters on these pages in coming weeks and months. 

Reactions of the Commissioners varied.  Commissioner Copps urged the FCC to not only require the compilation and accessibility of information about the public service provided by broadcasters, but also standards that would allow the public to complain if they did not believe that a station adequately served the needs of the local community.  Commissioner McDowell (who voted against the adoption of the Form 355) said that he feared that the FCC was again moving down the road toward burdensome regulation, and might even be facing constitutional issues about some of its proposals.  Commissioner Clyburn claimed that the public files of many broadcasters were in the deep recesses of broadcast stations, in dilapidated filing cabinets, and the materials in the files were prepared in small fonts – and visits to these files was time consuming and burdensome for those wanting to review this material.  Chairman Genachowski principally talked about the efficiencies of electronic documents, cataloging the many ways that the FCC has provided information online, including moving many other FCC obligations to online filings. 

This is obviously a very important issue for broadcasters, as the potential for new burdensome regulations clearly exists. We wrote about many of the problems with the Form 355 (see, e.g. our article here), and the new file may well impose similar burdens (especially in connection with the obligation to document sponsorship identification material, and at election time with respect to the political file). Moreover, while these proposals are for TV broadcasters only, one can expect that, if they are adopted, there will be proposals to extend them to radio at some point in the future. We will have more about this proposal once the text of the item is released, and will add links to this article once the statements of the Commissioners the FCC public notice are available.

Update - 10/27/2012, 1:15 PM - The Public Notice of the FCC action, which is not very informative, is available here. 

The Commissioner suggested that a relaxation of the ownership rules, which is currently under consideration (see our post on the pending Notice of Inquiry on the multiple ownership rules), could help existing media companies compete in the new media world.  We've written before about the concern that the prohibition against the cross-ownership of broadcast stations and daily newspapers (except in the largest markets where waivers are available, see our post here) might well outlast the newspaper.  But there are other issues to be debated - whether to allow radio broadcasters to own more stations in their markets (to compete with Internet and satellite radio which can both provide hundreds of channels of programming to any market).  And whether to allow television consolidation in smaller markets where economic realities seem to be dictating that independent television stations may not be able to survive.  These efforts will, of course, be subject to debate, as many still react with an almost automatic suspicion of more media consolidation (see our post on the opposition to shared services agreements in the TV world).  These issues, too, should play out in more detail in the coming months, as the FCC releases its Notice of Proposed Rulemaking on reform of the multiple ownership rules, where it will set out in more detail potential changes in the ownership rules that it will seriously consider in its Quadrennial review of these rules.  Watch for more on this proceeding, probably late in the year. 

The Commission is also, on a different track, completing its Future of Media proceeding (which we have summarized before).  That proceeding also looks at whether and how the local news and information needs of today's consumer are being met by the media, and how those needs will be met in the future.  This study, too, is expected sometime near the end of the year.  There have been discussions by those involved in these proceedings that the ownership review, while not formally tied to the Future of Media study, will nevertheless look at the findings of that review to inform its discussion of the ownership issues facing the FCC.  If that is in fact the case, and the Future of Media report is not completed until the end of the year, how can the modification of the ownership rules that relies on this study be completed before the end of the year?

The majority of the Commission is new since the last ownership review was completed in late 2007.  Given the emphasis on so many new issues since that time (including the broadband roll out and the proposals to reclaim some of the television spectrum for wireless broadband uses), one wonders if the Commission really will have the capacity to move quickly on the ownership review, which always involved many controversial issues.  And, with issues such as shared service agreements, newspaper-broadcast cross-ownership, television duopoly in small markets, and revisions to local radio ownership rules all seemingly on the table, there is no lack of controversy that will face the Commission this year.  So, prepare your comments, and get ready to let the FCC know what you think by the July 12 deadline.

These decisions make clear that the Commission is carefully thinking about its position on these agreements.  While there is no certainty where that thinking will come out (whether it will uphold its current policy or evolve its thinking on the matter), the issue is clearly being considered.  We have written about how certain public interest groups have targeted these agreements for FCC scrutiny in some of the preliminary hearings on its quadrennial review of its multiple ownership rules, and we expect more discussion of them in coming months.  Supporters of these agreements, who believe that they provide the only way that many smaller television stations can survive in today's media marketplace, will no doubt be heard as well.  Watch for this debate to unfold in coming months. 

The philosophical issue of whether or not regulation was necessary, and whether regulation can be accomplished in a manner that avoids constitutional issues, was a focus of much back and forth.  All panelists seem to concede that it was problematic for government to regulate content directly.  Several of the panelists suggested that the structural rules embodied in the multiple ownership restrictions were necessary to accomplish the ends that could not be directly mandated consistent with the First Amendment, like encouraging more local programming and more coverage of local issues.  Ken Ferree, the former head of the Media Bureau and now affiliated with the Progress and Freedom Foundation, asked some of the more regulatory-minded panelist how, if the purpose of this structural regulation was to accomplish goals that could not be directly mandated, could the indirect regulation be justified when done for a purpose that admittedly was prohibited.  That question did not seem to have a direct answer.

The Media Bureau representatives who were conducting the panel asked whether regulation should take into account the current economic conditions of broadcasting.  The more regulatory public interest members suggested that the current economic problems of broadcasters were not an intrinsic problem with the industry.  Instead, these representatives suggested that broadcasting, on a cash flow basis, was still a successful business, and that the current problems of broadcasters were due to their high debt loads.  Based on this belief, the representatives of several of the groups felt that, because broadcast owners had put themselves in the situation that they are in, the Commission should not concern themselves with their current economic plight when making regulatory decisions.  One panelist went so far as to say that, if broadcasters don't like the regulations that may be adopted, they don't have to operate under them - they can sell their stations or turn in their licenses.

While there is no doubt some truth to the contention that high debt burdens have caused some broadcasters current economic issues, it seems that these public interest representatives far understate the structural issues facing broadcasters.  We have written about the licenses for television stations which have been surrendered because there is no one who was willing to face the costs of the digital conversion, and of AM stations that simply can no longer make a go of their operations.  These are not imagined problems, or problems caused by debt burdens, but instead real economic issues that have caused stations to go dark and licenses to be surrendered due to changes in the media marketplace.

Several of the panelists suggested that the decisions made by the Commission be data driven - based on research and factual data.  However, many complained that sufficient data was no available to make the necessary determinations.  Suggestions on data accumulation included the Commission's rapid implementation of the Form 355 for television (which it has already been approved but not yet implemented) and for radio (where it was proposed as part of the localism proceeding).  There was other discussion about bringing back FCC Form 324, which required the reporting of annual financial information about the costs and revenues of broadcasters until the form was abolished in the early 1980s.  When asked about the paperwork burden of requiring this information, the suggestion was made that this was simply a cost of doing business in a regulated industry, and broadcasters needed to provide the information for the FCC to make good decisions.   Clearly, these individuals have never run a small market radio station, where such burdens can be crushing. 

These proposals don't reflect anything more than the views of the parties who were represented.  But, as referenced above, these are parties active in Washington and accustomed to dealing with the FCC.  They will be filing comments in the Quadrennial Review and lobbying the Commission on these matters.  And, from the fact that they were included on the panels, they have at least some attention of those within the FCC.  So broadcasters must note their concerns, and be prepared to respond to these issues when they are formally presented to the Commission.