Broadcast Law Blog

Broadcast Law Blog

Government Shutdown Delays Start of Webcasting Royalty Proceeding

By David Oxenford on Posted in Intellectual Property, Internet Radio, Music Rights

In our summary of January regulatory issues for broadcasters, we suggested that the Copyright Royalty Board this month might start WEB V, the next proceeding to determine the rates that Internet radio stations and other webcasters pay to SoundExchange for the noninteractive public performance of sound recordings. The current royalties (see our initial article on the decision setting current royalties here, and one that provided more details here) expire at the end of 2020. A proceeding to establish the rates for 2021-2025 is a two-year long process, and would normally begin with a request from the CRB for interested parties to file petitions to participate about now. But, even though the CRB itself is not closed because of the partial government shutdown, according to a notice on the CRB website, the Federal Register (in which the notice soliciting petitions to participate would be published) is only accepting notices relating to public safety and welfare – and the CRB proceeding apparently does not fit in those criteria. So the start of the case will be delayed by this government shutdown until the Federal Register publication can be accomplished.

As we have written before, this is likely to be an interesting case – just in determining who will participate. Broadcasters who stream their signals would likely participate, especially as their digital transmissions are becoming more important to some broadcast stations (see our article here on the fact that smart speakers increase digital listening to radio stations – listening on which the SoundExchange royalties must be paid). Some of the other services that have participated in the past proceedings (including Pandora and iHeart) now offer, in addition to their noninteractive services, interactive or on-demand music services for which royalties need to be directly negotiated with the record labels (see our post here for more details on royalties for interactive services). Will they participate in the upcoming case, or have they negotiated direct deals that cover their more traditional webcasting services along with their interactive services? That remains to be seen. Small commercial webcasters, who were left out of the last proceeding (see our article here), might also be interested in participating. Noncommercial webcasters usually participate in these cases as well. But all interested parties appear to be on hold right now – along with many other industries that rely on government actions – until this shutdown is resolved.

Copyright Royalty Board Final Decision on Rates for Business Establishment Services

By David Oxenford on Posted in Intellectual Property, Internet Radio, Music Rights

In one of those year-end decisions that got lost in the holiday rush, in late November, the Copyright Royalty Board issued its final ruling on the rates to be paid to SoundExchange by “business establishment services” for the ephemeral copies of sound recordings when these music services transmit programming to their customers. We wrote about the CRB’s proposal to adopt these rules in May of last year, and our comments on the decision remain relevant to explaining this order. A slightly revised version of our May post follows.

While Copyright Royalty Board decisions on royalties for webcasters, Sirius XM and mechanical royalties get most of the attention, the CRB also sets rates paid by “business establishment services” for the “ephemeral copies” made in their music businesses. Business establishment services are the companies that provide music to businesses to play in retail stores, restaurants and other commercial establishments. These services have come a long way from the elevator music that once was so derided – and now set the mood in all sorts of businesses with formats as varied as the commercial businesses themselves.  While the rates paid by these services pay for music rights is a little off-topic for this blog, these rates are a bit unusual, so they are worth mentioning.  The Copyright Royalty Board in May announced a proposed settlement between the services that were participating in the CRB case and SoundExchange which will raise the rates gradually from the current 12.5% of revenue to 13.5% over the next 5 years, with a minimum annual fee of $20,000, up from $10,000. These rates, which apply to any company that does not negotiate direct royalties with the sound recording copyright holders, went into effect on January 1, 2019 and will be in place through 2023. Continue Reading

FCC Releases Draft Order to Abolish FCC Form 397 Mid-Term EEO Report

By David Oxenford on Posted in EEO Compliance/Diversity, License Renewal

Along with the draft NPRM we wrote about yesterday to consider changes to the FCC’s rules for granting new construction permits for noncommercial stations and LPFMs, the FCC last week issued another draft order to be considered at its January 30 meeting, assuming that the partial government shutdown has been resolved and the FCC has returned to normal operations. This draft order would adopt the FCC’s proposal advanced last year (see our article here) to abolish the filing of the FCC Form 397 Mid-Term EEO Report, as that form is no longer necessary as the information gathered by the form is now largely available in every broadcasters online public file – which the FCC can review at any time. As the information is already available, the draft order concludes that it is redundant to separately file that same information in a Form 397.

The Form 397 requires the filing of a licensee’s last two Annual EEO Public Inspection file reports. These are documents available in the online public file. The Form 397 also requires the name of person at the station who is in charge of EEO matters. The FCC says that this information is already generally available in the public file, both through an EEO Form 396 filed with the station’s last license renewal, and through the general station contact for questions about the website. The only information that would not be readily apparent from the online public file is whether or not the station is part of a station employment unit (a station or group of commonly owned stations serving the same general service area and sharing at least one common employee) subject to a Mid-Term EEO review. Any TV station who prepares an EEO Public Inspection File Report would be subject to a Mid-Term review as the law requires such review for all TV stations with 5 or more full-time employees – the same employee threshold at which a station must prepare a EEO Public Inspection File Report. But for radio, the Public Inspection File Report must be prepared if the employment unit has 5 or more full-time employees, while a Mid-Term Report is only triggered for radio if the employment unit has 11 or more full-time employees. To inform the FCC as to whether a station is still subject to Mid-Term review, the FCC will require, when a radio station uploads its Annual EEO Public Inspection file report, that it tell the FCC whether or not it is part of an employment unit with 11 or more full-time employees. Continue Reading

FCC to Examine the Process for Awarding Construction Permits for New NCE and LPFM Stations – And Some of the Rules that Apply Once a New Noncommercial CP is Awarded

By David Oxenford on Posted in FM Translators and LPFM, Noncommercial Broadcasting

As we wrote on Friday, the government shutdown affects many aspects of FCC operations – and could affect the ability of the FCC to hold its regular monthly meeting, now scheduled for January 30. With the FCC likely shut down for most of this week, just before closing, the FCC released its agenda for the January 30 meeting (which would normally have been released this week – 3 weeks before the meeting). One interesting item on the agenda was a Notice of Proposed Rulemaking to change certain aspects of the criteria used to evaluate applicants for new noncommercial broadcast stations and LPFMs, and the operations of those new stations after a construction permit is issued. The draft NPRM is here. As with all draft items released with the agenda of an upcoming FCC meeting, the draft is subject to change before that meeting.

It appears that the NPRM was not prompted by any single group representing noncommercial broadcasters, but instead raises a number of issues and problems that have been raised before the FCC in comparative cases in the last decade, which use a “points system” process to determine which mutually-exclusive noncommercial applicant should have its application granted. The point system relies on paper hearings to determine which applicant has the most points, awarding applicants preferences on factors such as whether they have few other broadcast interests, whether they are local organizations, and whether they are part of state-wide networks. The NPRM also looks at the restrictions on what successful applicants can do, once they receive their construction permits to build new stations – including the length of LPFM CPs, the transferability of those CPs, and restrictions imposed on changes to certain NCE technical facilities after a CP grant. Continue Reading

January Regulatory Dates for Broadcasters – The Shutdown Does Not Put Everything on Hold

By David Oxenford on Posted in Broadcast Auctions, Children's Programming and Advertising, EEO Compliance/Diversity, General FCC, Intellectual Property, Internet Radio, Music Rights, Public Interest Obligations/Localism, Website Issues

We typically publish our article about upcoming regulatory dates before the beginning of each month, but this month, the looming FCC shutdown and determining its effect on filing deadlines pushed back our schedule. As we wrote on Friday, the effect of the shutdown is now becoming clear – and it has the potential to put on hold a number of the FCC deadlines, including the filing of Quarterly Children’s Television Reports due on January 10 and the uploading of Quarterly Issues Programs lists, due to be added to station’s public inspection files on January 10. The FCC-hosted public inspection file database is offline, so those Quarterly Issues Programs lists can’t be uploaded unless the budget impasse is resolved this week. Certifications as to the compliance of TV stations with the commercial limits in children’s television programs would also be added to the public file by January 10 – if it is available for use by then. While these and other dates mentioned below may be put on hold, there are deadlines that broadcasters need to pay attention to that are unaffected by the Washington budget debate.

We note that the FCC’s CDBS and LMS databases are up and operating, though most filings will be considered to be submitted the day that the FCC reopens. As the databases are up and operating, many applications can be electronically filed – so TV stations might as well timely upload their Children’s Television Reports on schedule by January 10, to avoid any slow uploading that may result from overloading of the FCC’s system as the FCC reopens. Other FCC deadlines are unaffected by the shutdown – most notably, as we wrote on Friday, those that related to the repacking of the TV band following the TV incentive auction. The FCC has money to keep its auction activities operating so staff are working to keep the repacking on track. Deadlines coming up for the repacking include a January 10th deadline for stations affected by the repacking to file their Form 387 Transition Progress Report. Auction deadlines proceed whether or not the FCC is otherwise open for business. Continue Reading

FCC Shuts Down Because of Government Funding Impasse – What Does It Mean for Broadcasters?

By David Oxenford on Posted in Assignments and Transfers, Broadcast Auctions, General FCC, Incentive Auctions/Broadband Report, Political Broadcasting

Do you have a deal to buy a new station or a planned technical modification that needs FCC approval? Well, it looks like those plans may have to wait as the budget controversy in Washington has shut down the FCC. But what does the shut-down really mean for broadcasters? The FCC clarified some of the questions broadcasters have in a Public Notice released Wednesday.

Most applications will not be processed, though the FCC has made clear that it will have FCC staff members available to deal with issues related to the TV spectrum repacking that was caused by the incentive auction. So for those stations needing FCC approvals for actions relating to the repacking of the TV band, the FCC will be functioning. Unlike in past shutdowns (see, for instance, our article here), the FCC website will remain up and generally will be operating, and the CDBS and LMS databases used for most broadcast applications will continue to function (though without any sort of tech support if an applicant has problems). Certain other databases relevant to some aspects of broadcast operations (like the public complaint filing system, the International Bureau’s database used for filing earth station applications, and the tower registration database) will not be available. Perhaps most surprisingly, as the FCC does not specifically mention it in the Public Notice, the FCC has shuttered its Online Public Inspection File database for broadcasters. With that database not working, public file updates (including the Quarterly Issues Programs lists that are due to be added to the files by January 10, cannot be uploaded unless the government reopens. Note that, in the FCC’s orders adopting the online public inspection file obligations, stations are supposed to be able to provide access to their political files when the FCC system is offline (see our article here). While no access to the rest of the file is required, stations are supposed to be able to provide access to back-ups of the political file. Luckily, with few elections taking place at the moment, this should not generally be a widespread issue, but it could obviously become an issue should the shutdown persist. Continue Reading

Playing Music in Bars and Restaurants – Cautions When Allowing Broadcast Stations to Play in Retail Outlets

By David Oxenford on Posted in Broadcast Performance Royalty, Intellectual Property, Music Rights

Yesterday, I noted a news story about a bar that stopped hosting live music when it was hit with a lawsuit by BMI because it had not paid royalties for its use of music.  The issue of music in bars and restaurants also came up in a continuing legal education seminar on music licensing that I moderated the week before last.  Given that I have not written on this topic in some time, I thought that it was worth a reminder that retail outlets, including bars and restaurants, have to pay music royalties to ASCAP, BMI, SESAC and perhaps GMR for the performance of music in their venues, except if they fit within very detailed exceptions that allow for certain businesses to avoid those payments.

We wrote an article here that goes into detail on the exceptions.  Basically, for very small businesses, their employees can use a single device of the type used in a home to play music.  This exception was designed to allow businesses to allow their employees to have personal audio devices to entertain themselves.  So that portable radio on the counter of the dry cleaner or at the secretary’s desk can play music without paying royalties.  For larger businesses there is a different exception that allows them to avoid liability but only if they meet very specific rules.  Continue Reading

Time Magazine Awards Journalists in Harm’s Way Person of the Year Award – What Are You Doing to Keep Your Broadcast Employee’s Safe?

By David Oxenford on Posted in Public Interest Obligations/Localism, Security

Yesterday, it was announced that Time Magazine had awarded its person of the year award to “the Guardians” – journalists around the world who risk their lives to bring us the news each day.  Most broadcasters don’t think of their on-air personnel as facing the same risks as journalists in war zones or facing imprisonment for reporting stories that certain governments don’t want reported.  But it is worth noting that Time includes among those featured in their report is an Annapolis, Maryland newspaper where 5 employees were shot by a gunman last June.  These concerns are facing more and more news outlets all across the country – with CNN this week facing evacuation over a bomb threat.  All broadcasters and other media companies need to consider the safety of their employees and plan for the unthinkable at their facilities.  For some thoughts on the safety and security of broadcast facilities and personnel, check out our recent article here about a session on this topic at a recent Wisconsin Broadcasters Association event, or just watch the video from that session here.

No Cost of Living Change in Webcasting Royalties for 2019 – Rate Proceeding for 2021-2026 about to Begin

By David Oxenford on Posted in Broadcast Performance Royalty, Intellectual Property, Internet Radio, Music Rights, Noncommercial Broadcasting

Last week, the Copyright Royalty Board announced its calculations for whether there would be a cost of living increase in the 2019 rates that Internet radio stations pay to SoundExchange for the public performance of sound recordings. In its initial release on the subject, the CRB’s announcement indicated that commercial webcasters would continue to pay at the rate of $.0018 per performance (set after a cost of living increase last year – see our post here). But that same notice indicated that the per performance rate would be $.0019 for noncommercial webcasters with substantial listening (i.e., those that stream more than the 159,140 aggregate monthly tuning hours that noncommercial webcasters receive for a $500 yearly payment), causing some concern among noncommercial webcasters as their per performance rates were supposed to be based on what commercial webcasters paid. That notice was revealed to be a typo according to a Federal Register correction published today – keeping the noncommercial rates at $.0018 once the noncommercial webcaster exceeds the initial complement of streaming hours it gets for the $500 yearly minimum payment (see our initial article on that decision here, and one that provided more details here).

While the rates stay the same for 2019, and will stay substantially the same for 2020 (subject only to a cost of living increase, if any), 2019 will begin the CRB proceeding for the setting of webcaster’s SoundExchange royalty rates for 2021-2026. The CRB sets rates in 5 year increments. But the proceedings to set those rates normally take two years to complete, so the proceeding to set the rates to be effective in 2021 will begin with interested parties filing petitions to participate in the proceeding following a CRB invitation to file, likely to be released at the beginning of 2019. Once parties have filed to participate, the CRB will announce a mandatory 90 day period in which the parties are to try to settle the case. If there is no settlement, the litigation will run through the remainder of 2019 and 2020, with a decision to be issued by the end of 2020. Continue Reading

FCC Starts Warning Stations of Noncompliance with Online Public Inspection File Rules

By David Oxenford on Posted in FCC Fines, License Renewal, Programming Regulations, Public Interest Obligations/Localism

This morning, the FCC has started to email out notices to numerous radio stations throughout the country, notifying them that there are issues with their online public inspection files. The email notices do not reveal what the specific problem is – but instead simply say that there are issues and ask for notice of corrective actions to the FCC. We have been warning of the FCC’s concern about incomplete or inactive online public files for some time, and the potential impact that noncompliance could have on license renewal, which starts for radio stations in the Washington DC area in June 2019, and then moves across the country in this three-year renewal cycle (see, for instance, our articles here and here). Clearly, this is a warning to stations that the FCC is watching their public files, and that compliance problems will bring issues, and possibly fines, if the files are not complete by license renewal time (or even earlier if documents were not timely created).

As we have written before (here and here), the biggest issues will likely be with stations not uploading Quarterly Issues Programs Lists and, for stations that are part of clusters with 5 or more full-time employees, Annual EEO Public Inspection file reports. Look at your file now and make sure that you are in compliance with these and all other public file obligations to insure that you do not have issues that can come back to haunt you at renewal time – or at any other time that the FCC decides to use its enforcement authority to start issuing fines.