January 2009

The FCC last week issued a decision that should make Buyers think twice in determining how sales of broadcast stations are concluded – especially in the days of $325,000 potential fines for indecency violations.  In the case decided last week, the Commission concluded that the licensee of a broadcast station was liable for fines for violations…

The Corporation for Public Broadcasting and SoundExchange have reached an agreement on the Internet radio royalty rates applicable to stations funded by CPB.  While the actual agreement has not yet been made public, a summary has been released.  The deal will cover 450 public radio webcasters including CPB supported stations, NPR, NPR members, National Federation of Community Broadcasters members, American Public Media, the Public Radio Exchange, and Public Radio International stations.  All are covered by a flat fee payment of $1.85 million – apparently covering the full 5 years of the current royalty period, 2006-2010.  This deal is permitted as a result of the Webcaster Settlement Act (about which we wrote here), and will substitute for the rates decided by the Copyright Royalty Board back in 2007.

 The deal also requires that NPR drop its appeal of the CRB’s 2007 decision which is currently pending before the US Court of Appeals in Washington DC (see summary here and here), though that appeal will continue on issues raised by the other parties to the case unless they, too, reach a settlement.  CPB is also required to report to SoundExchange on the music used by its members.  In some reports, the deal is described as being based on "consumption" of music, and implies that, if music use by covered stations increases, then the royalties will increase.  It is not clear if this increase means that there will be an adjustment to the one time payment made by CPB, or if the increase will simply lead to adjustments in future royalty periods. Continue Reading SoundExchange and CPB Reach a Settlement on Webcasting Royalties – More Deals to Come?

The FCC’s has published in the Federal Register certain aspects of its November decision on closed captioning – most notably the Further Notice of Proposed Rulemaking asking if a broadcaster’s multicast streams should each count as a separate "channel" potentially exempt from closed captioning requirements if that channel doesn’t bring in more than $3 million…

The press was abuzz yesterday with the news that Julius Genachowski is apparently the pick of the Obama Administration for the position of FCC Chairman.  Mr. Genachowski was at the FCC during the Reed Hundt Administration, and has since worked in the private sector in the telecommunications industry, including work with Barry Diller and running a DC-based venture capital fund.  From the positive reactions that the appointment has received from all quarters, the choice would seem to be a great one.  But, in looking at some of the reactions, you have to question whether everyone has to be reading what they want to see into the new Commission.  For instance, while the NAB has praised the choice of Genachowski (stating  that he "has a keen intellect, a passion for public service, and a deep understanding of the important role that free and local broadcasting plays in American life"), so too did media-reform organization Free Press ("This moment calls for bold and immediate steps to spur competition, foster innovation and breathe new life into our communications sector. With his unique blend of business and governmental experience, Genachowski promises to provide the strong leadership we need.")  What will this appointment really mean for broadcasters?

In short – who knows?  When Kevin Martin was appointed Chairman of the FCC, few would have imagined that a former communications attorney, a person deeply involved in the Bush campaign, and a former staffer of FCC Commissioner Harold Furtchgott-Roth (perhaps the most free market Commissioner ever) would have supported sustained, wide-reaching inquiries into the underbrush of FCC regulation – e.g. localism, embedded advertising, indecency.  So we can’t really know what a Chairman will do until he does it.  The Washington Post and the Wall Street Journal both suggest that the new chairman will be focused on Internet issues, and may be less interested in indecency – but who knows?Continue Reading Julius Genachowski as New FCC Chair – What Will It Mean to Broadcasting’s Future?

Just after Christmas, the FCC gave a number of broadcasters the equivalent of coal in their stocking – fining six different licensees for violations of the FCC’s EEO rules.  The fines issued that day ranged between $7,000 and $20,000, and included penalties issued to major broadcasting companies including Fox and Cumulus.  Also included were fines against Urban Radio in New York City and Puerto Rico Public Broadcasting – demonstrating that the FCC’s EEO rules, adopted in late 2002 after previous rules were declared unconstitutional essentially on "reverse discrimination" grounds (as they encouraged broadcasters to make hiring decisions not based on qualifications but instead based on race or gender), are truly race and gender blind.  It would be logical to assume that Urban Radio and Puerto Rico Public Broadcasting both had significant numbers of minority-group members on their staffs but, as they could not demonstrate that they had complied with the new rules requirements to reach out to all groups in their communities (as opposed to just racial or gender focused groups), they were assessed fines.  Reporting conditions, requiring that the broadcasters regularly file reports with the FCC so that their EEO efforts can be monitored, were also imposed.  All of the decisions can be found on the FCC’s Daily Digest for that day, here.

The basis of all of these fines was the failure of the licensees to be able to demonstrate that they had "widely disseminated" information about all of their job openings.  The core of the 2002 EEO regulations was the requirement that licensees broadly disseminate notice about their job openings in such a way so as reach all of the significant groups within the community that the station serves.  The Commission was not looking to specifically force minority hiring, but instead to push for hiring from diverse sources.  The Commission wanted to push broadcasters to use recruitment sources beyond the existing broadcast community – so that hiring was not simply done by word of mouth or from within other professional broadcast circles.   Thus, the rules require that broadcasters use recruitment sources that reach out to various groups within their community and document those efforts. Continue Reading FCC Fines Multiple Broadcast Stations for EEO Violations – Fines Up to $20,000 Imposed

A day after the Obama transition team wrote to Congress suggesting that the DTV transition now scheduled for February 17 be delayed, there are indications that a bandwagon effect is beginning to develop in favor of such a delay.  Broadcasting and Cable magazine’s website reports that the four major TV networks have indicated that they support a delay in the transition if it will better serve their viewers, and that Senator Rockefeller has started drafting legislation to delay the transition.  The New York Times featured a guest editorial from two former FCC Chairmen – Republican Michael Powell and Democrat William Kennard – supporting the delay (and mentioning one of the same issues that we had mentioned the day before – the need for education of consumers about the need for different antennas to receive the digital signal).  But others are not so sure that a delay makes sense.

While the NY Times editorial may make it look like the delay request is a bipartisan effort, there are other indications that there is at least some evidence of partisan differences beginning to develop.  The NY Times today quotes Joe Barton, a senior Republican on the House Energy and Commerce Committee, as opposing a change.  Republican FCC Chairman Kevin Martin is quoted by the Associated Press as saying that the delay will confuse consumers, while Democratic Commissioner Jonathan Adelstein is quoted in the same article as being sympathetic to the postponement.  While the political groups are taking sides, many in industry seem reluctant to delay the transition date. Continue Reading More Evidence that a Digital Television Conversion Delay May Be On Its Way – But There is Opposition

What a difference a few days makes.  At the beginning of this week, it was full speed ahead for the February 17 termination of analog television.  Then NTIA announced that it was out of money to pay for DTV coupons to assist the public in buying converter boxes so that analog TV sets will continue to work after the transition.  This action, in turn, caused Consumers Union to ask Congress for a delay in the transition, resulting in Congressman Markey’s office suggesting that the DTV transition might need to be delayed (as we wrote yesterday).  Today, the other shoe dropped as the Obama transition team formally wrote to Congress asking for a delay of the termination of analog television.  That letter leaves everyone asking – will Congress respond?  If so, what are the ramifications?

The NAB responded with a press release talking about how broadcasters are still prepared to meet the deadline, and how the deadline has focused all parties (TV stations, electronics manufacturers, cable and satellite companies) on doing what they need to do in order to be ready for the transition.  But the Obama team’s call for the postponement does not seem to be focused on the readiness of program providers to accomplish the switch, but instead on the readiness of viewers to deal with the new digital environment, especially given the lack of coupons for last minute shoppers still waiting to buy their converter boxes.  As we’ve written before, many in Washington are worried about the political ramifications of the transition – especially if millions of people wake up on February 18 and can’t watch the Today Show or Good Morning America.  And while that is a legitimate concern, one wonders if it will ever be possible to prepare everyone for the transition deadline.  Sure, if the deadline is postpone 4 or 5 months, there will be a marginal increase in people who are ready, but there will still be stragglers.  Catching up to them all may never happen until they are hit with the reality of their analog sets not working on the day after the transition, whenever that day may be.  If so, shouldn’t someone at least consider the costs that a delay will impose on broadcasters? Continue Reading Obama Transition Team Requests Delay of DTV Transition Deadline

Several press reports were issued today suggesting that there is at least some consideration in Congress of delaying the DTV transition now scheduled to be completed on February 17.  The consideration stems from the announcement that the NTIA (the National Telecommunications and Information Administration) had run out of money to issue the $40 coupons…

2009 – a new year, and a whole new cycle of regulatory requirements.  We wrote last week about the potential for changes in regulations that may be forthcoming but, like death and taxes, there are certain regulatory dates each year that broadcasters need to note and certain deadlines that must be met.  Those dates…

The Copyright Royalty Board today published a notice in the Federal Register announcing the start of its next proceeding to set the royalties to be paid by Internet radio operators for the performance rights to use "sound recordings" (a particular recording of a song as performed by a particular performer) pursuant to the statutory royalty.  As we’ve written extensively on this blog, the statutory royalty allows an Internet radio station to use any publicly released recording of a song without the permission of the copyright owner (usually the record company) or the artist who is recorded, as long as the station’s owner pays the royalty – currently collected by SoundExchange.  In 2007, the Copyright Royalty Board set the royalties for 2006-2010, a decision which prompted much controversy and is still under appeal.  In the Notice released today, the CRB set February 4 as the deadline for filing a Petition to Participate in the proceeding to set the royalties for the next 5 year period.

The 2006-2010 royalties are currently the subject of negotiations as the parties to the last proceeding attempt to come to a voluntary settlement to set royalties that are different than those established by the CRB decision.  The Webcasting Settlement Act (which we summarized here) gives webcasters until February 15 to reach an agreement as to rates that would become an alternative to the rates that the CRB established.  The Act also permits parties to reach deals that are available not only for the 2006-2010 period, but also allows the deals to cover the period from 2011-2016.  Thus, theoretically, webcasters could all reach agreements with SoundExchange to establish rates that cover the next royalty period, obviating the need for the proceeding of which the CRB just gave notice.  But, as is so often the case, those settlements may not be reached (if they are) until the last minute – so parties may need to file their Petitions to Participate before they know whether a settlement has been achieved.Continue Reading Here We Go Again – Copyright Royalty Board Announces Date for Filing to Particpate in Proceeding to Set Webcasting Royalties for 2011-2015