Broadcast Law Blog

Broadcast Law Blog

FCC Decision Illustrates Details of the Application of FCC Foreign Ownership Approval Requirements

Posted in Multiple Ownership Rules, Public Interest Obligations/Localism

In a decision released yesterday, the FCC issued a “remedial declaratory ruling” finding the change in control of stock in a company that owned broadcast stations did not offend the public interest, and that the approval of foreign ownership in the company that controlled broadcast stations above 25% (but capped at 49%) that was issued last year could stay in effect. The reason we’re bringing this case to your attention is because it highlights the specific limitations on a grant of FCC consent issue to foreign ownership above 25% in companies that control broadcast properties. As we wrote here, the FCC has set out specific rules for its approval of foreign investors who can acquire an interest above that level, and what those investors can do once they acquire their interest. What we did not emphasize in that article (or in other articles on this topic, like those here, here and here), only foreign ownership by specific individuals are approved in these declaratory rulings by the FCC. Only ownership by named foreign individuals is approved – not any foreign ownership of the company holding the broadcast interests. Where foreign ownership or control of a company that owns an interest in a company with broadcast stations changes, that change needs FCC approval, even if the same foreign entity still owns the stock but with different controlling owners. That is presumably so that the FCC can assess whether any ownership concerns are raised by any individual control party.

In this case, the broadcast company stock subject to the foreign ownership limits was held by a Trust administered by a Trust committee of Mexican citizens. The Trust was itself held by the Mexican banking subsidiary of a bank organized in the United Kingdom. The approval in this application was for the change in the bank holding the trust to a Mexican subsidiary of a Spanish bank. While the Trust committee stayed the same, the actual trust was held by a different foreign bank, triggering the need for this approval. This case reminds foreign companies who are approved to own more than 25% of a company controlling broadcast assets to be on the alert for any significant ownership or control changes, as those changes will require FCC approval.

Nationwide EAS Test Postponed to October 3; New Filing Dates for ETRS Reports

Posted in Emergency Communications

A Nationwide test of both the wireless and broadcast-based EAS was scheduled for tomorrow, September 20 (see our article here). It has now been postponed until October 3 presumably due to the continuing issues following Hurricane Florence (see notices from the FCC here and from FEMA here). In addition to the postponement of the test, the FCC announced the dates for the filing of the reports that are due after the test. EAS Participants shall file the “day of test” information sought by ETRS Form Two at or before 11:59 PM EDT on October 3. EAS Participants shall file the more detailed post-test data sought by ETRS Form Three on or before November 19. Note the changes and be ready to participate in the rescheduled test and to file the post-test reports.

Court of Appeals Upholds Copyright Royalty Board’s 2015 Webcasting Royalty Rate Decision

Posted in Intellectual Property, Internet Radio, Music Rights

The US Court of Appeals today released a decision upholding the Copyright Royalty Board’s 2015 decision setting the SoundExchange royalty rates for 2016-2020. We wrote about that decision here, and provided more details here. In any appeal of an agency decision, the Court routinely affords the agency deference in reaching its decision. The Court will not overturn that decision unless it has no basis in the record developed on the matter before the agency, or unless the agency decision was arbitrary and capricious – in plain English, the agency did not reach a logical conclusion based on the facts before it. That means that the Courts will not overturn a decision just because the agency might have logically reached another decision – but instead it will only intervene where the agency came to a conclusion that could not be logically supported. In this case, no reason to overturn the CRB decision was found.

SoundExchange on appeal had attacked the CRB decision on several grounds – arguing that several defects led to an inappropriate decision as to the rates that would have been determined by a “willing buyer and willing seller” in a marketplace, the standard to be used by the CRB in setting rates. SoundExchange attacked the benchmarks that were relied on by the CRB to set the rates (the direct licensing deals on royalties arrived at between webcasters Pandora and iHeart Media and various record companies) arguing that these rates were too low as they were negotiated in the “shadow of the statutory license.” They argued that the only direct deals that could have been done were ones that were lower than the rates established by the CRB during the prior rate term, as no music service would agree to higher rates. Arguments were also raised that these rates relied on “steering” – the prospect that labels who agreed to the rates had songs played more frequently than those that did not agree to lower rates. SoundExchange argued that not all labels could take advantage of steering (as a label can only get the benefit of steering when a service is playing less of the music of labels that did not pay for steering). The appeals also challenged the determination that a qualified auditor to check royalty compliance had to be a CPA licensed in the state where the audit was conducted. Continue Reading

More Podcast Legal Issues – Remembering Sponsorship Identification

Posted in On Line Media, Payola and Sponsorship Identification, Podcasting

In recent weeks, we’ve written about a number of legal issues that need to be considered in connection with podcasting – getting releases from guests, making sure that ownership of the podcast is clear, and considering music royalties. Another issue that I discussed in my presentation on legal issues for broadcasters entering the podcast industry at Podcast Movement in late July was one of sponsorship identification. Broadcasters are familiar with the FCC requirements for the identification of those who provide something of value to a station in exchange for any on-air content. While the FCC does not regulate podcasting, those issues cannot be ignored even in this online medium.

As we have written before (see our articles here and here), the Federal Trade Commission has rules similar to the FCC about identifying when the podcast producer has been paid to say something in his or her podcast. The FTC requires that disclosure of sponsored material be “clear and conspicuous.” So, even on short-message social media applications like Twitter, influencers paid to tweet about a product or service are required to identify their sponsored message in some way – like a “#ad” in the tweet to identify that it was sponsored. In the podcast world, where podcast hosts often do “live reads” of sponsor’s messages, the host needs to be careful to meet the FTC’s clear and conspicuous requirements. So if the commercial message is integrated so closely into the podcast content that the listener cannot tell that it is a commercial message, some sort of disclosure is required. Similarly, if the host of the podcast is using his or her social media to promote the sponsored message in the podcast, sponsorship identification would be required there as well. I’ll be talking about this and other legal issues for broadcasters in connection with their podcasts in a webinar for the Michigan Association of Broadcasters (and many other state broadcast associations) on Thursday. If you are interested, check with your state broadcast association to see if they are participating in this program.

AM Station Proposes to Test Silencing AM to Operate 100% From a Translator – What Does It Say About the AM Band?

Posted in AM Radio, Digital Radio, FM Translators and LPFM, Multiple Ownership Rules

The broadcast trade press was abuzz this morning with a report that an Arizona AM station currently simulcasting its programming on an FM translator has asked the FCC for permission to conduct a test where it would shut down its AM for about a year and operate solely through the FM translator. To grant this request, the FCC would need to waive its rule (Section 74.1263(b)) which prohibits an FM translator station from operating during extended periods when the primary station is not being retransmitted.

This idea of turning in an AM station to operate with a paired FM translator (though, in this case, the licensee promises to return the AM to the air within a year) is not a new one and has in fact been advanced in the AM Revitalization proceeding. The proposal offers pros and cons that the FCC will no doubt weigh in evaluating this proposal, and also raises many questions about the future of the AM band. Continue Reading

Advertising for E-Cigs – Concerns about Targeting Children

Posted in Advertising Issues, Children's Programming and Advertising, Programming Regulations

E-cig advertising has been one of those areas where broadcasters and other media companies have been looking warily at the potential for regulatory intervention. So far, as we wrote here, the FDA has only required general disclosures that “e-cigs contain nicotine and that nicotine is an addictive chemical” – an obligation that took effect last month, on August 10 (see our article here, though note that advertising disclaimers on cigars and pipe tobacco that were also supposed to have taken effect on that date were postponed by a court order – see the FDA notice here). In addition to this required warning about nicotine, the FDA and other government authorities have separately prohibited ads for e-cigs or vaping from making any health claims (e.g. you can’t claim that they are better for your health than cigarettes or that they will help you kick the cigarette habit), and restricted any advertising directed to children (see our article here). On this last issue, as the New York Times wrote yesterday, the FDA has taken some aggressive regulatory actions against e-cig manufacturers (in particular, manufacturer Juul) and issued warnings that, if they cannot show that they are not targeting children with their products, they may be forced off the market. These actions suggest that broadcasters and other media companies approach those ads with caution.

Coupled with the FDA’s recent actions against the manufacturers, the FDA issued a series of warning letters and fines to retailers of e-cigs who had not been restricting the sales of these products to minors (see the FDA webpage about these actions here). Note that, in the sample letter to the targeted retailers that was provided by the FDA, it promises to review the promotional activities of these retailers to assess their compliance with all laws in this area. In earlier letters to the manufacturers (here), particular note was paid to ads for flavored vaping products, suggesting that these were particularly enticing to children. As we have written before, broadcast stations who have substantial numbers of minors in their audience (including any radio or TV broadcasters airing programming with audience demographics indicating that a substantial number of minors under the age of 18 are in that audience), for fear of FTC action and pursuant to voluntary alcohol industry guidelines, prohibit ads for beer or hard liquor in such programs. That same policy would seem wise in airing e-cig and vaping ads, given this aggressive regulatory activity by the FDA. In this environment, broadcasters in particular should consider all such advertising, and if they accept it, review its contents carefully and make sure that it meets or exceeds all guidelines and keep it out of programs with audiences with a substantial number of minors. Also, watch carefully for further state and federal actions in this area, and consult experts on these issues (and we do not claim to be FDA experts) to avoid any other issues that may arise. This obviously is an area of much concern for the government at this time, and broadcasters, as federally-regulated entities, need to approach any area of government concern with caution. The government, of course, already prohibits advertising for cigarettes and chewing tobacco, and it is possible that e-cig advertising could be headed in the same direction.

With a Hurricane Bearing Down on the East Coast, Remember the FCC’s Requirements for Emergency Communications

Posted in Emergency Communications, Television

With Hurricane Florence about to hit the East Coast, broadcasters are well reminded of their obligations with respect to the airing of emergency information. Broadcasters may also want to consider the benefits that the FCC can offer in an emergency. While the FCC yesterday announced the postponement of its test of DIRS, the Disaster Information Reporting System, broadcasters may want to consider quickly getting familiar with this system. The voluntary system allows stations in the area affected by any disaster to report on the status of their operations. In the past, FCC officials have assisted stations that were off-the-air or operating with emergency facilities in order to direct resources (like gas trucks to fuel emergency generators) to these stations so that they could continue to provide emergency information. Registering in DIRS can facilitate getting the information about your station’s status to the FCC. More information is available on the FCC’s website, here. [Update, 9/11/2018, 1:30 PM the FCC just released a Public Notice providing contact information in various FCC Bureaus for licensees to contact about service outages, STA filings and their needs to resume service to the public].

But emergencies also impose regulatory obligations on broadcasters – particularly TV broadcasters. Last year, the issued a FCC Public Notice reminding all video programmers of the importance of making emergency information accessible to all viewers. The FCC has just posted a link to a notice about a disaster preparedness webinar it will be conducting on September 27 for state and local government officials, and we would not be surprised to see a new notice reminding broadcasters of their emergency obligations in the coming days. Last year’s notice serves as a good refresher on all of the obligations of video programmers designed to make emergency information available to members of the viewing audience who may have auditory or visual impairments that may make this information harder to receive. The notice also reminded readers that they could file complaints against video programming distributors who do not follow the rules. Thus, TV broadcasters need to be extremely sensitive to all of these requirements. Continue Reading

FCC Reminds C-Band Satellite Dish Users – Including Broadcasters – To Register By October 17

Posted in AM Radio, FM Radio, General FCC, Programming Regulations, Television, Tower Issues

On Friday, the FCC issued a reminder to all operators “of fixed-satellite service (FSS) earth stations in the 3.7-4.2 GHz band that were constructed and operational as of April 19, 2018 that the filing window to license or register such earth stations closes on October 17, 2018.” This frequency band is commonly referred to as the “C-Band”, and many of the “FSS earth stations” are satellite dishes that receive programming used by both radio and TV stations. The FCC is exploring allowing additional users into this spectrum, and has warned that only registered users of the spectrum will be entitled to any protections against any new users who may be authorized. In Friday’s public notice, the FCC also noted that those being protected not only need to have been operating by April 19 and registered by October 17 to be protected, but those entities will need to certify that the information in their registrations is correct on a form that will be made available at some point in the future. Users who have already registered are urged to make sure that their registrations are accurate by October 17, as certain corrections will not be allowed after that date. So broadcasters using this spectrum to receive satellite-delivered programming should heed the FCC’s advice and register by October 17.

FCC Opens Settlement Window For More Translator Applications in Second Translator Window

Posted in AM Radio, Broadcast Auctions, FM Translators and LPFM

The FCC last week issued a Public Notice announcing another window for mutually exclusive applicants filed in the second translator window to attempt to resolve the interference conflicts that the FCC found to exist between certain of these applications. A window for such settlements had been opened several months ago, but these are additional applications now identified as being in conflict. The conflicting applications are listed here. These applications were filed in the second translator window in late 2017, which was opened primarily so that Class A and B AM stations could seek authority to rebroadcast their signals on new FM translators that would be tied to those AM stations. Engineering amendments resolving the problems or other settlement agreements must be filed before September 20, 2018. If there is no resolution by that date, the applications will end up in an FCC auction.

As we wrote here, applications filed in the second translator window that were not mutually exclusive filed their “long-form” applications detailing their technical proposals back in May. Many of those applications and those that were able to resolve their issues in the first settlement window have already been granted. While these applications are being processed, the FCC is still dealing with other translator issues, including a pending petition for reconsideration of the FCC’s dismissal of objections filed by LPFM advocates in connection with hundreds of translator applications (see our summary of that pleading here), and the Notice of Proposed Rulemaking on translator interference (about which we wrote here). Reply comments in that proceeding were due last week, so stay tuned for an FCC decision on those issues.

Broadcasting and Cable Political Window Begins September 7 For November Elections – A Refresher on the FCC’s Lowest Unit Charge Rules

Posted in Advertising Issues, Political Broadcasting

With the lowest unit charge window for the November elections going into effect tomorrow (September 7), we thought that it was a good idea to review the basics FCC rules and policies affecting those charges. With this election, where control of Congress may well be hotly contested and may result in competitive elections across the country, your station needs to be ready to comply with all of the FCC’s political advertising rules. Lowest unit charges (or “Lowest Unit Rates”) guarantee that, in the 45 days before a primary and the 60 days before a general election, legally qualified candidates get the lowest rate for a spot that is then running on the station within any class of advertising time and particular daypart. Candidates get the benefit of all volume discounts without having to buy in volume – i.e., the candidate gets the same rate for buying one spot as your most favored advertiser gets for buying hundreds of spots of the same class. But there are many other aspects to the lowest unit rates, and stations need to be sure that they get these rules right.

It is a common misperception that a station has one lowest unit rate, when in fact almost every station will have several – if not dozens of lowest unit rates – one lowest unit rate for each class of time in each daypart. Even at the smallest radio station, there are probably several different classes of advertising spots. For instance, there will be different rates for spots running in morning drive than for those spots that run in the middle of the night. Each time period for which the station charges a differing rate is a class of time that has its own lowest unit rate. On television stations, there are often classes based not only on daypart, but on the individual program. Similarly, if a station sells different rotations, each rotation on the station is its own class, with its own lowest unit rates (e.g. a 6 AM to Noon rotation is a different class than a 6 AM to 6 PM rotation, and both are a different class from a 24 hour rotator – and each can have its own lowest unit rate). Even in the same time period, there can be preemptible and non-preemptible time, each with its own set of charges resulting in different classes of time, each with its own lowest unit rate. Any class of spots that run in a unique time period, with a unique rotation or unique rights attached to it (e.g., different levels of preemptibility, different make-good rights, etc.), will have a different lowest unit rate. Stations need to review each class of time sold on their station, find the lowest rate charged to a commercial advertiser for a spot of the same class that is running at the same time that the candidate wants to buy a spot, and that lowest rate will be what the candidate is charged. Continue Reading