The FCC today acted on a reasonable access complaint by Randall Terry against a Washington DC television station, ordering the station to sell commercial time to his campaign as he is on the ballot as a legally qualified candidate for President in the state of West Virginia. The decision was based on the Commission’s finding that a
October 2012
FCC Issues Emergency Communications Reminders to Broadcasters and Other Communications Entities in the Path of Hurricane Sandy
By David Oxenford on
Posted in Emergency Communications, Television
With Hurricane Sandy bearing down on the US East Coast, the FCC has issued reminders to consumers and communications companies about what to do in areas affected by the storm. Late Friday, it issued two public notices. The first public notice advised broadcasters and other communications companies that the FCC will be available 24-7 over the weekend and during the storm to answer calls about service outages, to assist where possible in restoring any lost service, and to issue emergency authorizations for temporary facilities. As we have written before, the FCC has been helpful in past disasters – seemingly able to bridge bureaucratic barriers that might otherwise delay the restoration of communications services. The second public notice was directed to consumers, telling them to try a variety of means to communicate if one service is not working, suggesting text messages if mobile networks are affected by the storm, and urging that communications be kept short and limited to immediate needs so as not to overload any communications systems.
The FCC did not issue another notice that is usually issued in these circumstances, but we will remind television broadcasters and other video providers of their obligations to visually present any information that identifies an immediate threat or which conveys actionable information about an emergency to the public. This information was related to broadcasters in a Public Notice issued just before Hurricane Isaac reminding video providers – particularly television stations, but other video providers as well – that they need to visually present emergency information that they may be conveying verbally on the air so that the hearing impaired have access to that information, and similarly that information that is provided visually (e.g. through a crawl), be also provided aurally, or at least alert tones must be used to put the visually-impaired on notice of the fact that emergency information is running on the station. It is important that video providers remember this obligation, as many complaints are filed with the FCC each year by groups who represent those with a disability, calling television stations to task for not meeting their captioning obligations.
Copyright Royalty Board Oral Argument on Sirius XM SoundExchange Royalties – A View of the Application of the 801(b) Standard Proposed for Internet Radio
By David Oxenford on
The royalties that Sirius XM will pay to SoundExchange for the next 5 years will be decided by the Copyright Royalty Board ("CRB") in December. To summarize the hearings that have been held over the last year, the CRB held an oral argument last week, where Sirius XM and SoundExchange presented their arguments as to what those royalties should be. Sirius argued that the rates should be decreased, while SoundExchange contended that the rates should go up significantly from the 8% of revenue that the service now pays (see our summary of the current Sirius XM rates here). How can these parties have such different perspectives on the value of music, and what did this argument say about the application of the 801(b) standard that applies to Sirius? This standard is the standard that webcasters are seeking to apply to Internet Radio services through the Internet Radio Fairness Act which we wrote about here. If the IRFA is adopted, it would apply when the CRB next reviews webcasting rates in a case that will be decided by the end of 2015.
Sirius XM and cable music provider Music Choice, which was also part of the proceeding, are both governed by the 801(b) standard rather than the “willing buyer, willing seller” standard that applies to Internet Radio. The oral argument made clear that the adoption of the 801(b) standard is not in and of itself a panacea for the concerns about the royalties that have been set by the Copyright Royalty Board. Last week’s argument focused on the value of music in a marketplace – essentially the “willing buyer, willing seller” question. While other 801(b) factors were discussed, they were seemingly passed over quickly, with most of the focus being on the questions of the marketplace value of the music.
Court of Appeals Overturns Case Questioning Lending Practice of Taking Security Interest in Proceeds of the Sale of an FCC License
By David Oxenford on
Posted in Assignments and Transfers, General FCC
An uncertainty for the broadcast lending world was by removed by a decision of the US Court of Appeals issued last week. In 2010, a US District Court considering the bankruptcy of Tracy Broadcasting Corporation ruled that a security interest in the proceeds of the sale of a broadcast license could not be enforceable after a bankruptcy action had commenced unless the sale agreement had been signed prior to the bankruptcy – a situation that almost never occurs. As the FCC forbids taking a security interest directly in an FCC license, the practice of lenders for over 20 years, based on past precedent of the Commission, is to secure their loans by a security interest in the proceeds of the sale of the license. When the Tracy case was decided by the District Court, many lenders expressed their concern as to whether that long-standing precedent was still valid. We wrote about the Tracy decision and how it had been rejected by other courts as its reasoning was inconsistent with the prior FCC precedent.
Last week’s decision of Court of Appeals directly overturned the District Court decision. The Appeals Court looked at the District Court decision, and the economic reality of the situation, and determined that a security interest in the proceeds of the sale was indeed enforceable after bankruptcy, even if the sale agreement did not come into being until after the bankruptcy petition had already been filed. The District Court had looked at certain provisions in the bankruptcy code providing that a creditor could not acquire a security interest in property or rights that arose after the bankruptcy proceeding had commenced. The District Court reasoned that an interest in the proceeds of the sale of a license could only arise after a sale agreement was signed and approved by the FCC. Thus, if the sale and FCC approval did not occur until after the bankruptcy, the rights to the proceeds did not arise until after the bankruptcy, and thus there could be no security interest in the proceeds of that sale. The Court of Appeals rejected that reasoning.
Reconsideration of FCC’s Rural Radio Decision – Making It Difficult to Move a Radio Station from a Rural to an Urban Area
By David Oxenford on
Moving a station from a rural area into a more urban one was a fairly common occurrence until the recent recession – when the value of new "move-in" stations in many larger markets essentially collapsed. Soon after the collapse, the FCC stepped in to stop what the marketplace had already severely slowed, by effectively prohibiting the practice of moving stations into urbanized areas. In its Rural Radio Order (which we summarized here), the Commission adopted “presumptions” that eliminated preferences that applicants had received for proposing a new service to large suburban communities, and preferences based solely on the number of people that a modified station would serve. A number of parties (including ones that I represented), sought reconsideration of the FCC’s order, challenging both the theory of the FCC order and some of the details. On Friday, the FCC issued its order on reconsideration, denying any fundamental changes in the policy, but clarifying some of the details of the showings to be made in evaluating city of license changes for broadcast stations, and also grandfathering under the old rules more of the applications that were pending when the new rules were adopted.
Before discussing the changes, it is worth reviewing the Commission’s processes for deciding which of competing proposals for new FM channels in different communities should be granted, and whether the change in the city of license of an existing station is in the public interest. These choices are governed by Section 307(b) of the Communications Act and the substantial case law that has built up at the FCC around that section. Section 307(b) requires that the Commission make a “fair, efficient and equitable” distribution of radio service among the states and communities. Over the years, the FCC has adopted standards for determining how to make this distribution – favoring applications that propose a “first local reception service” (or service to “white areas” – those that currently receive no predicted service from other stations), net favoring a second reception service, next giving a preference to those providing a “first transmission service” (i.e. a first station licensed to a community). Finally, if none of the preceding preferences come into play, the Commission looks at “other public interest factors” – usually the total population served by a proposal, including an evaluation of the other services from other stations available in both the gain and loss area of a proposed facility move (or in the proposed coverage areas of the new allotments that the Commission is evaluating).
Political Broadcasting Refresher Part 5 – Why Don’t TV Stations Pull More SuperPAC Ads? Is There Potential Liability for These Ads?
By David Oxenford on
Posted in Political Broadcasting
We recently wrote about candidate ads, and the "no censorship" provision of Section 315 of the Communications Act. Broadcasters can’t censor a "use" by a political candidate (a candidate ad that features his or her recognizable voice or image), and thus the broadcaster is not liable for the content of a candidate’s ad. So no matter what the candidate may say – the broadcaster runs the ad as is. Ads from third parties (PACs, SuperPACs, labor unions, right to life groups and other advocacy organizations) are, however, different. The “no censorship” provisions of the political rules don’t apply, so broadcasters are free to accept or reject third party ads based on the content of the ads. Even though broadcasters can reject political ads that come from third-party groups, they rarely do, and we seemingly see just as many outrageous claims about candidates in third party ads as we see in the candidate ads that can’t be censored. Why don’t broadcasters more aggressively decide which ads are truthful and which are not, and reject those ads that are not accurate?
A recent article in the Tampa Bay Times asks that question, citing a political ad running on a television station which had, in a news segment, determined that the contents of the ad were not true. Why was the ad still running on that very station? I spoke to the author, and was quoted as saying that broadcasters don’t want to act as “gatekeepers.” In more detail, I said that broadcasters don’t want to be in the position of being the arbiter of what ads are "truthful enough" to run and which ones should be rejected. In the political world, the concept of “truth” is often in the eyes of the beholder. Whether a candidate a “big-spending liberal” or not is not a claim that cannot be factually evaluated. Even in cases where the import of specific legislation is involved, or questions of what a piece of legislation accomplishes or the purposes underlying its adoption can be seen by different people in the political world from very different perspectives, making determinations about “truth” very difficult. In the eyes of some, a legislative act may be motivated by a desire to respond to constituent desires, but in the eyes of others that same act may be motivated by caving in to special interests or as part of some vast conspiracy to undermine the American way. In most cases, broadcasters are reluctant to draw lines as to when an ad is truthful enough to run on the air and when it is not – instead leaving the debate over the "truth" to the marketplace of ideas. If someone thinks that an ad is untrue, they can buy their own ad and spell out their position on the issue. (See this article from the Denver Post complementing TV stations on fact-checking and making their results available for the public to check on the veracity of political ads). But does that station need to worry about liability for the third-party ad?
RMLC Files Antitrust Suit Against SESAC – What Does It Mean For Broadcasters?
By David Oxenford on
Last week, the Radio Music License Committee (“RMLC” – see our article about the RMLC), filed a complaint in US District Court in Pennsylvania against SESAC, arguing that SESAC is a monopoly and should be treated like ASCAP and BMI. RMLC is asking that SESAC be subject to an antitrust consent decree as are these two bigger collection societies. As we have written before, SESAC is not a non-profit organization like ASCAP and BMI, and is not subject to consent decrees like these other performing rights organizations (“PROs”). Instead, it is a private company, owned by venture funds which, up to now, has set its own prices for licenses subject only to negotiations with the rights holders. So what is this suit all about, and will broadcasters see any changes in SESAC licensing in the short-term?
RMLC claims that SESAC, by effectively being the only way to license the public performance of compositions by thousands of different composers, effectively can get monopoly prices. Practically speaking, radio stations cannot individually license all the songs written by SESAC performers and, even if the stations were able to directly license some of the music from SESAC writers, SESAC still would not reduce their fees. All SESAC licenses are blanket licenses that give stations the right to use all the music in the SESAC catalog, but are not reduced by any pro rata amount should any music be directly licensed. Thus, argues RMLC, stations cannot try to reduce their licensing liability through direct licenses with songwriters even if such deals could be negotiated.
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Continue Reading RMLC Files Antitrust Suit Against SESAC – What Does It Mean For Broadcasters?
CALM Act Waiver Requests Due By October 12
By David Oxenford on
This Friday (October 12) is the deadline for requesting a waiver under the FCC’s Commercial Advertisement Loudness Mitigation (“CALM”) Act implementing procedures, intended to combat "loud commercials." We wrote about the implementing rules and the obligations of television stations to come into compliance with the standards set out in the rules, adopting a protocol that seeks to maintain consistency between commercials and surrounding programs, here. The Commission’s order allowed for waiver requests by stations that would have a financial hardship in complying – with such waivers being due 60 days before the compliance deadline. As that deadline for compliance is December 13, the waiver requests are due on Friday.
All such waiver requests must be submitted through the FCC’s Electronic Comment Filing System. Waiver applicants must demonstrate that purchasing the required equipment would result in “financial hardship.” Such waivers, if granted, will be valid for one year and may be renewed for one additional year. The FCC also retains the authority to issue a waiver for good cause. “Small stations” are eligible for a streamlined waiver process for demonstrating financial hardship.
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Continue Reading CALM Act Waiver Requests Due By October 12
FCC Commissioner Proposes Review of the AM Band to Make it More Competitive – What Can Be Done?
By David Oxenford on
Posted in AM Radio
At the NAB Radio Show, Commissioner Ajit Pai delivered an address discussing a number of topics, including a proposal for the FCC to undertake a study of AM radio and to come up with a plan to make that service more competitive. We cover many topics here on the Broadcast Law Blog, and often write about changes in service for FM radio and television, as well as the digital media, but it seems that our coverage of AM mirrors the FCC’s attention to the service in the last few years – relegated primarily to situations where struggling AMs run on a shoe string budget run into the FCC’s Enforcement Bureau because of some significant violation of the Commission’s rules. So what did Commissioner Pai propose, and is it realistic to expect real reform of the AM service?
The mere fact that the Commissioner proposed a study, and one to be completed in just over a year, is in and of itself encouraging. The NAB has been internally conducting a similar study, though no results have been released yet. The AM band has suffered from many problems, including a decrease in the quality of AM receivers as FM has become much more dominant, and the increase in background “noise” creating interference to AM service – all sorts of electronic devices that are now so common everywhere, including many of the lights now used both indoors and outdoors, create interference to the AM service that make listening, especially in most urban areas, difficult. So what can be done?
Chaffetz Bill Introduced in House of Representatives to Adopt 801(b) Standard for Internet Radio Royalty Decisions of Copyright Royalty Board – What’s It All About?
By David Oxenford on
The recent introduction of a bill by Congressman Jason Chaffetz offers proposals for reform of the operations of the Copyright Royalty Board – reforms that many in the Internet Radio industry have hailed as promising real change in the way that royalty decisions for webcasters have been made. While some webcasters seem to think that relief is at hand, in fact, the bill has simply been introduced into Congress co-sponsored by four congressmen, so it has a long way to go before it can be adopted by Congress and become the law of the land. But it is worth looking at the many issues that the Bill addresses so that webcasters know what it says so that they can rationally argue for its passage.
Most webcasters have focused on the provisions of the bill that would substitute the standards set out in Section 801(b) of the Copyright Act for the standard that currently applies – "the willing buyer, willing seller" standard. 801(b) sets out five factors to be considered in determining the rates to be set for a statutory royalty. These factors are:
(A) To maximize the availability of creative works to the public.
(B) To afford the copyright owner a fair return for his or her creative work and the copyright user a fair income under existing economic conditions.
(C) To reflect the relative roles of the copyright owner and the copyright user in the product made available to the public with respect to relative creative contribution, technological contribution, capital investment, cost, risk, and contribution to the opening of new markets for creative expression and media for their communication.
(D) To minimize any disruptive impact on the structure of the industries involved and on generally prevailing industry practices.
In contrast, the current “willing buyer, willing seller” standard looks only at one question – what a willing buyer and willing seller would agree to in a marketplace transaction. What is the difference between these two standards?