May 2010

On Friday, the FCC released seven Notices of Apparent Liability for violations of children’s programming rules, proposing forfeitures (i.e. fines) of $25,000 to $70,000 per station.  Most of the violations cited were overages of the commercial limits, which restrict stations to broadcasting 10.5 minutes per hour of commercial material during childrens programming on weekends and 12 minutes per hour on weekdays.  Many of these overages were for durations of 15 seconds each.  In one case, the FCC found a Pokemon program to be a program length commercial (discussed below) where a Pokemon game card with the letters "MON" was displayed for one second in a Nintendo GameBoy commercial during the show.  In addition to overages of the commercial limits, other cited violations included failing to provide program guide publishers with information regarding the target child audience of core programs;  failing to update the public file regarding compliance; and failing to publicize the existence and location of the station’s children’s television programming reports, in addition to the program length commercial issue described above. 

The largest fine, for $70,000, was issued in a case where most of the violations were for "program length commercials", in which a commercial for a memorabilia website shown during a "Yu-Gi-Oh" television program contained a "very brief" reference to Yu-Gi-Oh trading cards.  A program length commercial occurs when an advertisement contains a mention of a character or product that is associated with the program in which the ad appears.  In these situations, the Commission fears that children will not be able to perceive the difference between the programming and the commercial, and thus treats the entire program as a commercial.  In so doing, the station is considered to have exceeded the commercial limits by the entire length of the program less the number of commercial minutes allowed.  This is done even if the commercial image of the character or other program-related material is fleeting.  We’ve written about the difference in treatment between a commercial overage and program length commercial before, and this case makes clear just how seriously the Commission considers the latter and how costly this can be to the offending station.Continue Reading FCC Increasing Fines for Violations of Children’s Programming Rules – Fines As High as $70,000 Per Station Issued

The FCC yesterday released a Notice of Inquiry, formally beginning its Quadrennial Review of the Multiple Ownership Rules.  While the FCC informally began the process of the Congressionally-mandated review of the ownership rules last November through a series of informational panels and workshops, the Notice of Inquiry ("NOI") provides the first formal opportunity for the public to comment on the ownership rules.  The FCC will take the comments that it receives in response to the NOI, and formulate some more specific proposals on how it plans to change the current rules (if at all), which will then be released for additional comments in a Notice of Proposed Rulemaking.  The NOI is a broad-ranging document that gives little indication of the FCC’s final direction in this proceeding – though it does go into detail as to how the media marketplace has changed in recent years, citing declining advertising revenues, and more media outlets providing competition to broadcasters for both audience and advertising revenues.   The NOI posed dozens of detailed questions asking how the Commission should assess the various aspects of the ownership rules, and what impact the changes in the media marketplace should have on its consideration of rule changes.

The FCC is concerned with all aspects of its media ownership rules.  Thus, it sets out that it will explore the following rules:

  • The Local Television Ownership cap, which limits owners to two stations in markets where there are at least 8 competing television owners and operators, and which forbids combinations of the top 4 stations in any market.  Television operators, particularly in smaller markets, have been urging the Commission to allow more consolidation in those markets so that stations can provide better service to their communities.  They argue that the current limits preclude small market consolidation, which is most needed in these markets where the costs of operation are not significantly lower than in large markets, but where revenue opportunities are far more limited.
  • The Local radio ownership caps, that currently limit owners to 8 stations in the largest markets, no more than 5 of which can be in any single service (i.e. AM or FM).  Some radio owners contend that these limits no longer make sense given the competition for audio listening from so many sources (including satellite and Internet radio, who can provide unlimited formats in any market).  Other issues include whether AM and FM still need to be treated separately, and even whether AM should be counted to the same degree as FM in a multiple ownership analysis.
  • The Newspaper-Broadcast cross-ownership rule, that forbids cross-ownership of broadcast stations and daily newspapers without a waiver – which, as the result of changes in the cross-ownership rules in 2007, will be granted on a more liberal basis, but only in the top 20 markets.  Given the economic state of the newspaper industry, many seek the repeal of this rule in its entirety. As we have written before, will the newspaper cross-ownership rule outlive the newspaper?
  • The Radio-Television cross-ownership rule, which limits the number of radio and television stations that can be owned by a single party in a single market
  • The Dual Network Rule, that prohibits the common ownership of any of the top 4 television networks.

Each of these rules is up for review, and numerous questions have been asked, and issues identified, for consideration in this proceeding. Continue Reading FCC Issues Multiple Ownership Notice of Inquiry – Formally Begins Quadrennial Review With Lots of Questions To Assess the Impact of Media Consolidation

In a very cryptic announcement, the Chairs of the House and Senate commerce committees, and the Chairs of the subcommittees dealing specifically with communications matters, have announced that they are beginning the process of rewriting the Communications Act of 1934, the Act which governs regulation of broadcasters as well as telecommunications, satellite and mobile communications entities.  The announcement, from Senator John D. (Jay) Rockefeller IV, Chairman of the U.S. Senate Commerce, Science, and Transportation Committee, Rep. Henry A. Waxman, the Chairman of the House Committee on Energy and Commerce, Senator John F. Kerry, the Chairman of the Senate Subcommittee on Communications, Technology, and the Internet, and Rep. Rick Boucher, the Chairman of the House Subcommittee on Communications, Technology, and the Internet, merely states that they will "will invite stakeholders to participate in a series of bipartisan, issue-focused meetings beginning in June" to address the issues that would be involved in such a rewrite.  The announcement then says that more details will be forthcoming.

What does this mean for broadcasters?  At this point, until more details are released, the issues to be addressed are anyone’s guess.  Much has been made in recent years of the changing nature of the media and communications industry, particularly in light of the development of the Internet.  In a recent decision, the Courts have said that the FCC is limited in its ability to regulate the provision of Internet services, and the initial impetus for this rewrite proposal may well come from that decision.  But these processes, once begun, often take on a life of their own, with new proposals covering issues not necessarily anticipated at the outset of the proceeding arising as the process goes on.  While there are minor amendments to the Act almost every year, the last comprehensive rewrite of the Act took place in 1996.  There, while much of the debate focused on telecommunications issues (which will likely be the case here as well, as there are far more dollars at stake than in the broadcast world), broadcast ownership reform emerged at the last minute – abolishing numerical caps on television ownership and all caps on radio ownership nationally, and raising the local limits on radio ownership from the 4 stations (2 AMs and 2 FMs) previously allowed to be owned in one market by any party, to the current cap allowing ownership of as many as 8 radio stations in the largest markets.Continue Reading Congress to Rewrite the Communications Act – What Could It Mean For Broadcasters?

The DISCLOSE Act recently passed the Committee in the House of Representatives charged with dealing with it, without many of the provisions that most worried broadcasters and cable companies.  We recently wrote about the DISCLOSE Act legislation proposed in both the House and Senate in response to the Citizens United Supreme Court case (which freed…

On Wednesday, Congress passed the Satellite Television Extension and Localism Act of 2010 (STELA), which extends the blanket copyright license allowing satellite television providers to deliver distant signals to "unserved" viewers who are unable to receive a signal from their local network affiliate.  The Act extends that blanket license for five more years until December 31, 2014.  Enactment of this bill (assuming President Obama signs it into law) will essentially extend the current blanket license scheme — which previously expired on December 31, 2009, and which had been hastily extended temporarily a couple of times this year — that governs the importation of distant signals.  Although the Act did not tackle many of the issues that had been raised and debated regarding satellite television and the rebroadcast of local station over the past six months, the final bill does allow Dish Network to get back into the business of rebroadcasting distant signals directly, instead of through a third party.  In exchange for this change in the law, Dish Network has committed to delivering local television signals into the remaining dozen or so markets in which it doesn’t provide local-into-local service presently.  By virtue of this trade, Dish will likely become the first satellite television provider to offer local TV stations via satellite in all 210 markets in the country.

One subtle, but potentially very significant change for broadcast stations is the fact that the rule changes the definition of what constitutes an "unserved household".  Today, the law defines an unserved household (i.e., one that would be entitled to the importation of a distant signal) as:  "…a household that cannot receive, through the use of a conventional, stationary, outdoor rooftop receiving antenna, an over-the-air signal of a primary network station affiliated with that network…"  47 USC 119(d)(10)(A).  Now, however, the STELA Act changes that definition to simply state that an unserved household is one that:  "…cannot receive, through the use of an antenna, an over-the-air signal…"  Changing the definition to reception simply by "an antenna" instead of a "conventional, station, outdoor rooftop receiving antenna" would appear to mean that Congress has just extended the definition of unserved households to include those that cannot receive an adequate signal using rabbit ear antennas, not one that can’t receive a signal using a 30-foot, fixed, outdoor antenna.  This could lead to a significant change in the provision of distant signals and potentially eat away at a station’s protected service area.  How exactly this plays out and whether or not it allows the satellite providers to bring distant signals to households previously considered "served" remains to be seen. Continue Reading Congress Passes STELA Act Extending Satellite Television Provisions and Changing the Definition of Unserved Household