Each year, at about this time, we pull out the crystal ball and make predictions of the issues affecting broadcasters that will likely bubble up to the top of the FCC’s agenda in the coming year. While we try each year to throw in a mention of the issues that come to our mind, there are always surprises, and new issues that we did not anticipate. Sometimes policy decisions will come from individual cases, and sometimes they will be driven by a particular FCC Commissioner who finds a specific issue that is of specific interest to him or her. But here is our try at listing at least some of the issues that broadcasters should expect from Washington in the coming year. With so many issues on the table, we’ll divide the issues into two parts – talking about FCC issues today, and issues from Capitol Hill and elsewhere in the maze of government agencies and courts who deal with broadcast issues. In addition, watch these pages for our calendar of regulatory deadlines for broadcasters in the next few days.
So here are some issues that are on the table at the FCC – starting first with issues affecting all stations, then on to TV and radio issues in separate sections below.
General Broadcast Issues
There are numerous issues before the FCC that affect both radio and television broadcasters, some of which have been pending for many years and are ripe for resolution, while others are raised in proceedings that are just beginning. These include:
Multiple Ownership Rules Review: In April, the FCC finally addressed its long outstanding Quadrennial Review of the broadcast multiple ownership rules – essentially by punting most of them into the next Quadrennial Review, which probably won’t be resolved until 2016. Issues deferred include any revisions to the local ownership limits for radio or TV (such as loosening the ownership caps for TV stations in smaller markets, which the FCC tentatively suggested that they would not do), any revision to the newspaper-broadcast cross-ownership rule (which the FCC tentatively suggested that they would consider – perhaps so that this rule can be changed before the newspaper becomes extinct), and questions about the attribution of TV Shared Services Agreements (which the FCC is already scrutinizing under an Interim Policy adopted by the Media Bureau).
Other multiple ownership issues will be discussed elsewhere in this article and its companion on issues to resolved outside the FCC, as the Courts will be deciding on appeals of the FCC’s decision to attribute TV JSAs for multiple ownership purposed (meaning that a JSA can only be done between two stations that can be commonly owned under the current ownership rules). The FCC also has on its plate the question of the UHF discount in assessing compliance with national ownership caps for TV, which is discussed in more detail in the Television section, below.
Indecency: After the Supreme Court decision in June 2012, upholding the FCC’s right to regulate indecency but questioning the current procedure for doing so, the FCC’s regulation of indecency has been up in the air. In 2013, the FCC took public comments asking how it should proceed in this area, suggesting that it reserve enforcement actions for egregious violations – and asking for comments on how such complaints should be identified. The FCC has, in the past year, released holds that had been delaying action on many license renewals, some for almost a decade, perhaps signaling some internal thinking about how to enforce the indecency policies. In a recent post on the FCC Blog, it was stated that over 950 renewals have been granted after the resolution of pending complaints. It is our assumption that most of these involved the resolution of long-pending indecency complaints. Perhaps in the coming year we will see that internal thinking reflected in some external guidance to broadcasters on enforcement principles for broadcasters.
Contest Rules. Late this past year, the FCC proposed to reform the rules for contests run by broadcast stations – proposing to allow broadcasters to disclose the material terms of the contest on the Internet, rather than requiring that they be broadcast on the air enough so that a listener is likely to have heard them. This common-sense reform of the contest rules seems to be on a fast track, so we would expect action on this item sometime in 2015.
Foreign Ownership of Broadcast Stations. In late 2013, the FCC issued a statement clarifying its policies on the foreign ownership of broadcast licensees, making clear that what was thought to be an absolute prohibition on the ownership of more than 25% of the stock of the parent company of a licensee by non-US citizens was in fact only a guideline that could be exceeded if proposed greater foreign ownership of a station would not adversely affect the public interest. While many thought that this would bring an influx of foreign investors to the US broadcast marketplace, the first company to file an application seeking FCC consent under this new policy was Pandora, and not because it believed that its foreign ownership exceeded 25%, but instead because, as a public company, they could not absolutely prove the citizenship of all of their shareholders using standards that the FCC adopted in the 1970s, long before many of the current ways of trading public securities came into being. As the Pandora request has been pending for over 6 months, we would expect that the FCC will act on it this year, and perhaps further clarify its policy on foreign ownership of broadcast stations.
EEO Rules: There are fundamental issues about the FCC’s EEO policies that have not been addressed in the 11 years since these rules were first adopted. Proposals to extend the rules to part-time employees, and to require the filing of FCC Form 395 (the form that classifies all employees by race and gender), are still pending from that long-ago proceeding. Also pending are proposals sought in requests for reconsideration of the adoption of the EEO rules that would make the EEO rules comport with today’s reality – such as the proposals to allow Internet-based EEO recruiting. Maybe this will be the year that some of these outstanding issues are finally resolved, especially as larger station employment groups will begin this year to file EEO Mid-Term Reports on FCC Form 397. But, with the recent fines issued to stations for not reaching out to community groups that had asked to be informed about job openings at stations, it may well be that the FCC has just decided to leave these issues as is and clarify enforcement policies through cases that come before it from renewal filings, Mid-Term Reports or EEO audit responses.
Political Rules: In recent elections, we have seen the effects of the Citizens United case in the significant political spending on broadcast commercials by third-party organizations. While there have been calls for more regulation on such ads, we don’t expect action in that area from the FCC. Instead, at the FCC, there may be some minor tweaking of the political broadcasting rules as cases come before the Commission. We are still looking at outstanding issues pending before the FCC from previous elections – including appeals of the decision of the FCC, issued just before the last Presidential election, holding that TV stations have to give candidates equal access to certain single-issue candidates – even though such candidates are qualified only in the distant reaches of the station’s coverage area, and even when such candidates are “running” for office not with any expectation that they will be elected, but instead simply so that they can get access to television stations to run some controversial commercials not primarily intended to promote their candidacy, but instead to promote their position on some other issue. There are also reportedly issues that the Commission will be asked to address concerning station policies on levels of sold-out preemptible advertising time, and how candidates are to be treated in sold-out situations. Also, there may be further actions on the FCC complaints about the sufficiency of online political files of TV stations and on the proper sponsorship identification of PAC ads where the PAC is funded by a single individual. Given that there is a one-year respite before the next election cycle starts, it might be the case that some of these issues actually get considered and resolved.
Public Interest Programming Reports: In a proposal released in 2011, the FCC issued a Notice of Inquiry to look at the adoption of a new form on which broadcasters would report the public interest programming that they do. This form would replace the Quarterly Issues Programs list, and the Form 355 adopted in 8 years ago for television but never implemented. The proposal was simply a Notice of Inquiry, meaning that the FCC would need to adopt a Notice of Proposed Rulemaking to move further on this proposal. We have not heard much about the status of this proposal lately. As no Notice of Proposed Rulemaking has yet to be released, before any new rules were adopted a whole new set of comments would need to be received. So don’t expect a new form this year.
Spectrum issues have been the dominant TV concerns in past years, and will be front and center again this year as the FCC looks to complete the adoption of its rules for the incentive auction to reclaim TV spectrum for wireless broadband users, which is now scheduled to take place in 2016. There are many issues over the auction that are yet to be worked out, and there are portions of those rules already adopted that are subject to Court challenge (which we will write about soon in a second installment of our predictions, looking at actions in Courts and at other agencies that can affect broadcasters in the coming year).
In addition to the incentive auction, there are many other issues before the Commission that could have an impact on a TV broadcaster’s operations. These include issues dealing with the carriage of television stations by cable and satellite television providers, the treatment of the UHF discount for multiple ownership purposes, and definition of an MVPD (multichannel video programming distributor) for FCC purposes – including for the must-carry and retransmission consent debates. Issues about accessibility to video programming and the implementation of other consumer protection issues are also on the agenda. Specific issues for TV include:
Spectrum reclamation: The incentive auction is perhaps the most complex proceeding that the FCC has ever undertaken. The auction process consists of two parts, a “reverse auction,” where certain TV stations would bid to be able to sell their spectrum to the FCC to be repurposed for wireless uses and either go out of business or move to a VHF channel or share spectrum with another station. The TV stations left after the reverse auction would be packed into a smaller part of the TV band, and the spectrum that is cleared would be sold to wireless companies in a “forward auction.” But all these moving pieces need to be coordinated, as the reverse auction cannot be completed until the FCC knows that enough money will be coming in from the wireless companies in the forward auction to fund the buyout of the TV stations willing to give up their spectrum.
As this is a highly complex process, which will need sophisticated computer programs to keep all of the bidding straight, the FCC wants to get the process right, and have an electronic system to handle the process that will work. In addition, there are all sorts of details to be worked out – including how stations participating in the reverse auction will be valued in determining how much to pay them to vacate their spectrum, international coordination of TV channel changes as part of the repacking of the TV band, and the final method for determining the costs that will be reimbursed to remaining TV stations for their repacking into the smaller TV band. Comments on the auction bidding process are due at the end of January, and the FCC will be making a push to finalize all these issues this year (subject to potential delays from the pending Court appeals on some of the rules already adopted by the FCC for the conduct of the auction and the interference to which remaining TV stations can be subject as they are repacked into the smaller TV band.
Retransmission Consent Reform: Another issue that was on our list for the last few years, and which remains on the list, is the question of retransmission consent negotiations. After every dispute between an MVPD and a TV broadcaster over retransmission fees there are new cries for legislative or regulatory changes to the retransmission consent process. Some multichannel video programming distributors and some public interest groups argue that the FCC should protect viewers who may have their broadcast TV service disappear if a TV station does not reach a deal with a MVPD, while the broadcasters argue that the ability to remove the station from an MVPD is the heart of the negotiation, and removing the risk of the MVPD losing the right to carry the station would hobble the negotiation process. In the past year, the FCC adopted rules prohibiting the joint negotiation of retransmission consent agreements between stations in the same market that are not commonly owned. It also proposed rules to change or eliminate the network nonduplication and syndicated exclusivity rules. Issues about retransmission consent were also considered by Congress in its debates over the STELAR legislation, authorizing the continued carriage of TV stations by satellite television companies, though most were ultimately tabled. But action in this area may well be on the table again this year – either at the FCC or in Congress.
Defining an MVPD: Two years ago, the FCC initiated a proceeding to determine if an Internet-delivered video programming service could qualify as an MVPD. Just before Christmas, the FCC issued a Notice of Proposed Rulemaking suggesting that this in fact occur. With all of the recent announcements about Internet-delivered video programming, in many cases programming to be provided in a “linear” as opposed to an on-demand fashion like cable TV programming, it is expected that this proceeding will receive very active consideration in the coming year sa the FCC tries to decide on its role in regulating Internet-delivered video programming.
UHF Discount: In 2013, the FCC proposed repeal of the “UHF discount,” which counts a UHF station as reaching only half of a market’s population in assessing a television company’s compliance with the current rules that limit any company to at most stations reaching 39% of the US TV households. The FCC has tentatively concluded that the digital conversion has made the discount counterproductive as UHF stations have better coverage in a digital world, instead of suffering from the coverage issues that they faced in analog TV at the time that the rule was adopted. TV station owners argue that getting rid of the discount is changing the rules in the middle of the game, especially as many of these companies have deals in the works at the current time. In a multichannel universe where most households have access to dozens, sometime hundreds of nationwide or worldwide networks, limiting the reach of a station group no longer makes sense as it once did, and effectively reducing that reach by adopting the change in the rules makes even less sense. While many thought that this issue would be resolved quickly, given the complexities involved, it may take some time before the FCC gets around to finalizing this proposal, but look for much lobbying on it this year, and a decision may well be postponed until the 2016 expected resolution of the Quadrennial Ownership Review referenced above.
Accessibility: Each year, accessibility issues play a more and more important role in video transmissions. This year, rules on captioning quality will go into effect (once the FCC concluded how much authority it can assert over program providers on these issues), and new complaint procedures will also become effective for handling complaints about station compliance with new Electronic Newsroom Technique captioning procedures that went into effect last year. Secondary audio streams of TV stations will also need to begin to provide aurally emergency information, and additional rules about providing audio descriptions of video programming will go into effect for Top 4 network stations in the Top 60 TV markets. We would expect all of these issues will bring their own sets of compliance issues for TV stations, and new complaints for the FCC to process. We also expect further action (and many denials) of requests for captioning exemptions from smaller program providers (see our recent article about one such denial, here). Stations should be alert to these deadlines and watch for further FCC actions in this area.
Also on the Commission’s agenda will be the resolution of issues relating to the repurposing of captioned broadcast video onto the Internet. The FCC left open certain issues about the new captioning requirements for video clips – including whether to require that they be captioned when used on third-party websites, and how to deal with “mash-ups” of video clips taken from TV programs with video that comes from other sources. Look for this issue to be considered later this year. See our Broadcasters Calendar for more information about the implementation dates for these accessibility obligations.
LPTV/Class A TV: These stations had expected a mandatory digital conversion in 2015, but it appears that the FCC will postpone that obligation – as the status of many of these stations may be uncertain after the conclusion of the incentive auction. In addition to the postponement of the digital conversion deadline, expect the FCC to further qualify what rights, if any, these stations will have once the incentive auction and spectrum repacking takes place.
Radio has fewer unique issues on the front burner at the FCC, but there are still things to be thinking about. In addition to the general issues discussed above (multiple ownership, indecency, EEO, documentation of public interest efforts), issues on the radar screen for radio include:
AM Radio: In our predictions last year, we were optimistic that, during the course of the year, the FCC would provide some regulatory relief to AM broadcasters. Well, we remain optimistic that there will be relief – and hopefully this will be the year that it will come. We would expect that the first actions will be easier ones – opening an FM translator window to provide FM translators for AM stations and perhaps changing the “ratchet rule” which in many cases makes it difficult for AM stations to make changes in their facilities as the rule requires stations to lower power so as to decrease interference caused by such moves. Longer term, look for more exploration of other technical fixes for AM, perhaps including further discussions of an all-digital operation.
Online Public File for Radio Stations. The proposal to require an online public file for radio stations rocketed onto the FCC docket this past year with a Notice of Proposed Rulemaking to adopt that requirement. Given the speed with which the proposal has moved in the past year, and as 2016 is an election year and the political file is a driving factor in the adoption of this obligation, we predict that rules will be adopted later this year, but implementation will probably roll out slowly – starting with big market stations in 2016.
FM Translator Issues: While the issues involving FM translator applications left from the 2003 FM translator window have largely been settled, and thousands of new FM translators from that window granted in 2013 (see our articles here and here), there are still applications that are mutually exclusive that remain to be processed. Look for an auction for these final applications to be announced later this year.
LPFM Applications. The remaining LPFM applications from last year’s window will be processed this year. Look for there to be more complaints of actual interference to full-power stations from new LPFMs as new stations, grated as through the recent filing window, begin to start operations in the coming year.
These are but some of the legal and regulatory issues that will be facing broadcasters in the upcoming year. There are many other proceedings at the FCC that can also affect stations – including reexaminations of the EAS rules, review of the environmental rules applicable to tower construction, and a reexamination of the allocation of FCC costs as reflected in the annual regulatory fees that broadcasters pay. There are also other issues that are pending but have seemingly stalled at the FCC, including a reexamination of the sponsorship identification rules (sponsorship ID having been the subject of a number of recent fines, perhaps this issue is slowly moving back onto the FCC’s radar), a review of the Biennial broadcast ownership filings (including whether there should be reporting of some nonattributable interests and whether noncommercial broadcasters should be brought under the same process as commercial broadcasters), and the proceeding to reexamine the rules that prohibit noncommercial broadcasters from interrupting their programming to fund-raise for third parties. Any of these proceedings could pop back to the top of the FCC’s stack at any time. Broader communications issues, including the net neutrality debate and the consideration of various media mergers, will also have some effect on the business world in which the broadcaster operates.
And there are many issues in Congress or at other agencies that could affect broadcasters. We will write about those issues in another article in the near future. So there is always something happening in Washington for which broadcasters need to be alert. And this article provides just a sample of the many issues that may be coming your way in the coming year.