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An intense national conversation on racial justice and equity has been thrust upon the country by the events of the last week.  While our focus here on this blog is narrow, it is certainly worth looking at some of the issues that are within our broadcast world that are relevant to this conversation.  In recent days, for instance, FCC Commissioner Geoffrey Starks promoted more diversity in broadcast ownership, and an article in Radio Ink by the President of the National Association of Black Owned Broadcasters called for a revival of the minority tax certificate – a program ended decades ago over concerns about its cost to the government.  The tax certificate offers perhaps the most meaningful route to the goals sought by the Commissioner and is worth examination as, since its abolition so many years ago, its revival has been discussed so many times that it has become almost a cliché, with many not really understanding what it did and why it was effective.

The minority tax certificate was a program designed to provide broadcasters with an economic incentive to sell their stations to minority owners.  Rather than directly subsidizing the potential owners, the certificate instead gave a tax break to sellers that incentivized them to sell to the minority-owned business even if there were multiple bidders for their properties.  If the seller sold to a minority-owned business, the seller could take the proceeds from the sale and roll those proceeds over into a new media property without recognizing the taxable gain from the sale.  Unlike the typical like-kind exchange where the roll-over into a new property has to proceed within a few months of the sale, the tax certificate treated the sale as an involuntary sale (like the sale of a property because of a government’s exercise of eminent domain) under Section 1033 of the tax code, giving the seller several years to roll the proceeds over into a new purchase.  At that point, the new property would have the same tax basis as the old – meaning that no gain would be recognized until the sale of the new property.  This spurred many sales to minority companies by broadcasters looking not to get out of the business, but instead looking to realign their holdings or to move up into larger markets.  Several hundred radio and TV stations were purchased under this program in the last 20 years of the program’s existence.  Why was this seemingly successful program abandoned?…
Continue Reading Understanding the Minority Tax Certificate and its Potential for Promoting Diversity in Broadcast Ownership

Here are some of the regulatory and legal actions of the last week—and some obligations for the week ahead—of significance to broadcasters, with links to where you can go to find more information as to how these actions may affect your operations.

  • The comment cycle was set in the FCC’s annual regulatory fee proceeding. On or before June 12, the Commission wants to hear from interested parties about the fees that it proposes to impose on the companies that it regulates – including broadcasters.  The FCC proposes to complete the implementation of its change to computing fees for television stations based on population served rather than on the market in which they operate, a move it began last year (see our Broadcast Law Blog article here on the FCC decision last year to initiate the change in the way TV fees are allocated).  The FCC also asks for ideas about how the Commission can extend fee relief to stations suffering COVID-19-related financial hardship.  Reply comments are due on or before June 29.  (Notice of Proposed Rulemaking)
  • FCC Chairman Ajit Pai and Chris Krebs, director of the U.S. Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency, wrote to the nation’s governors asking them to, among other things, declare radio and TV broadcasters as essential to COVID-19 response efforts and to afford broadcasters all appropriate resources and access. (News Release)
  • In a good reminder to broadcasters that transactions involving the sale or transfer of control of a broadcast station must be authorized in advance by the FCC, the Media Bureau entered into a consent decree with two companies that sold an FM station and FM translator without getting approval from the Commission. The parties mistakenly believed filing license renewal applications that reflected the assignment was sufficient approval.  The consent decree includes an $8,000 penalty.  (Consent Decree).  See this article on past cases where the FCC has warned that even transactions among related companies that change the legal form of ownership of a broadcast station without changing the ultimate control need prior FCC approval.
  • The Commission granted approval to Cumulus Media, Inc. to exceed the Commission’s twenty-five percent foreign ownership threshold. The Commission will allow Cumulus to have up to 100 percent aggregate foreign investment in the company, although additional approvals will be needed if any previously unnamed foreign entity acquires 5% or more of the company or if any foreign entity desires to acquire control.  (Declaratory Ruling).  This decision shows the process that the FCC must go through to approve foreign ownership above the 25% threshold and the analysis needed to issue such approvals.  See our articles here and here about the evolving FCC policy in this area.
  • President Trump signed an executive order that seeks to, among other things, address online censorship and rollback certain protections afforded to online platforms, which include social media sites like Twitter, Facebook, Instagram, and YouTube, but which also protect any site that hosts content created by users – which could include the Internet platforms of many broadcasters. Under federal law, Section 230 of the Communications Decency Act, these online platforms generally enjoy legal immunity for what users post on their platforms.  The President directed the Department of Commerce to ask the FCC to open a rulemaking to review this immunity and asked the FTC to review whether platforms were adhering to their terms of use when commenting on or limiting third-party content.  Other government entities, including state attorneys general and the Department of Justice, were also asked to review online platforms.  For his part, FCC Chairman Ajit Pai said “This debate is an important one. The Federal Communications Commission will carefully review any petition for rulemaking filed by the Department of Commerce.”  (Executive Order).  Watch for an article on the Broadcast Law Blog this coming week on implications of this order for broadcasters and other media companies.
  • Anyone looking to hand deliver documents to the FCC needs to learn a new address, and it is not, as you might expect, the address of the FCC’s future headquarters. Deliveries by hand must now be brought to 9050 Junction Drive, Annapolis Junction, MD 20701.  The address change is to enhance security screening and is part of winding down operations at the current 12th Street headquarters.  (Order)

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Continue Reading This Week at the FCC for Broadcasters: May 23, 2020 to May 29, 2020

With many people now entering their third month of complying with stay-at-home orders and social distancing and summer being right around the corner, it would be easy for broadcasters to look past their regulatory obligations to focus on the day when they can ramp up operations and profits.  As you can read below, however, June is a busy month with important obligations for many stations.

June brings the start of summer and the start of the license renewal cycle for television stations.  By June 1, full-power TV, Class A TV, TV translator, and LPTV stations in DC, Maryland, Virginia, and West Virginia and full-power AM and FM stations and LPFM and FM translators in Michigan and Ohio must file their license renewal applications. Those stations should already be close to completing their renewal applications, looking to file them on or before the June 1 deadline.  See our article here on the FCC’s announcement of the newly-revised procedures for filing TV license renewal applications.  On June 1 and again on June 16, stations filing renewals need to broadcast their post-filing announcements informing their audiences of the filing of the renewal application.…
Continue Reading June 2020 Regulatory Dates for Broadcasters: License Renewals, EEO Reports, Broadcast Internet Consideration, and Comments on Significant Viewing, DTS, White Spaces, Regulatory Fees, and Video Description

When a broadcaster files certain types of applications with the FCC, the public must be informed.  Last week, the FCC issued an Order which will change the rules regarding the public notice that must be given – consolidating what was a confusing process with different language and timing for notice about different types of applications into one providing standardized disclosures and scheduling for all public notices.  The decision (once it becomes effective) will eliminate obligations for the newspaper publication that was required for some public notices and also ended the obligation of broadcasters to give a “pre-filing public notice” before the submission of a license renewal application.  It will also require the inclusion of an “FCC Applications” link on the homepage of each commercial station’s website, whether or not they have any applications pending.  Let’s look at some of the changes adopted in last week’s Order.

First, the FCC did not change the requirements as to what applications require notice to the public.  Public notice is required for applications for new stations and major technical changes, for assignments (sales) or transfers of station licenses (except for pro forma changes where there is no real change in control over the station), for license renewal applications, minor change technical applications that involve a city-of-license change, and certain applications involving international broadcast stations or the export of programming to foreign stations to be rebroadcast back into the US.  Notice of designation for hearing of any application is also required.  We will concentrate here on the more common applications for changes to US stations, sale and license renewals. …
Continue Reading Looking at Changes to the FCC’s Public Notice Requirements for Broadcast Applications

Comments on the proposal of GeoBroadcast Solutions to allow FM boosters to originate limited amounts of programming different from that carried on their primary stations were due to be filed by this past Monday.  We wrote about the GeoBroadcast proposal for “zonecasting” here. The comments as filed at the FCC fell principally into three categories.  GeoBroadcast Solutions and its supporters argued that the FCC should move forward with the limited rule changes that it seeks, changing the FM booster rules from requiring 100% duplication of the primary station to one which only requires substantial duplication of the main station – thus allowing for limited inserts of localized content including localized news, advertising and emergency information.  A second set of comments asked whether the technology had really moved forward sufficiently to warrant a notice of proposed rulemaking now – particularly as the system had not yet been fully tested for digital broadcast operations (commonly referred to as “HD Radio”).  Finally, there were proposals looking to expand the scope of the proceeding beyond GeoBroadcast’s limited technical proposal, to allow for other systems to provide the service and even to expand the proposal to also allow FM translators to originate programming.  Let’s look at each of these sets of comments.

Those supporting the GeoBroadcast proposal covered both the technology and business/operational aspects of the proposal.  Comments by GeoBroadcast’s engineer and the GatesAir, Inc., which developed the MaxxCasting technology for boosters to minimize interference between the boosters and their primary station, argued that the technology already works for analog broadcasts and was promising for HD Radio operations.  Support for the business case came from advocates for minority organizations (arguing that the technology would allow better targeting of these audiences), media brokers (arguing that the value of stations would increase), ad buyers (looking at the targeting prospects of the technology) and emergency communications experts (looking at the ability to target emergency information). …
Continue Reading Looking at the Comments on FM “Zonecasting” – What’s Next for This Proposal?

The responses by the major record labels to Commissioner O’Rielly’s inquiry into allegations of payola practices (see our article here) were published last week while we were all distracted with pandemic issues.  While the responses (available here on the Commissioner’s twitter feed) were perhaps not surprising – saying that the record labels do not engage in any on-air pay-for-play practices where the payment is not disclosed – they nevertheless highlight some practices that should be observed at every radio station.  As I have said in many seminars to broadcasters around the country when talking about FCC sponsorship identification requirements, if you get free stuff in exchange for promoting any product or service on the air, disclose that you got that free stuff. As made clear in these responses, when the record companies give free concert tickets or similar merchandise to a radio station for an on-air giveaway to promote a concert or the release of new music by one of their artists, they agree with the station to reveal on the air that the record company provided the ticket or merchandise that is being given away.

The responses also indicate that these record companies do not provide musical artists to play at station events with any agreement – explicit or implicit – that the station will play those artists more frequently because of their appearance.  While that might happen naturally, it also might not (if, for instance, the band is one of many acts participating at some station-sponsored festival).  The record companies state that their contracts with stations for such events make clear that there is no agreement that any artist appearance is tied to additional airplay for that artist.…
Continue Reading Record Companies Respond to FCC Commissioner on Payola – What Should Broadcasters Learn from the Responses?

Taking a station off the air is often the last resort of a broadcast company in desperate financial times.  While Payroll Protection Act loans have helped many small broadcasters avoid that action even in light of the dramatic decrease in broadcast advertising revenue in the last two months, and some relief may come in areas of the country looking at some reopening of business in the coming weeks, we have still heard of some stations that just can’t manage continued operations in this period of turmoil – either for financial or operational reasons caused by the current health crisis.  If this action is in the cards for your station because of the pandemic or for any other reason including technical failures, do not forget about the FCC requirements for taking a station silent.

When a broadcast station goes silent, it must notify the FCC of that status within 10 days of going off the air.  If the situation will continue for a longer period, a request for Special Temporary Authority providing the reasons for going off the air must be filed within 30 days of going silent.  These STAs are granted for no more than 6 months at a time, so that date should be noted for the filing of any extension that may be needed.  But be careful, as if a station is silent for a full year, Section 312(g) of the Communications Act provides that the license will be cancelled unless the FCC makes an affirmative finding that there are special public interest reasons for not taking that action (a finding made in very rare cases).  When stations resume operations, they must notify the FCC that they are back on the air.  But to be considered back on the air, there must be programming – running a test pattern is insufficient (see the case we wrote about here).  Even with authority to remain silent, there are risks.…
Continue Reading Broadcast Stations Going Silent – What You Need to Do

The FCC issued public notices this week on the license renewal process for both radio and television operators.  The Public Notice on television renewals was perhaps more significant, as it addressed several issues and procedures for the television renewal process which begins with the filing of renewals for stations located in Maryland, DC, Virginia…

Life has been upended for most Americans due to the spread of the coronavirus and that tumult is, of course, reaching broadcasters as it reaches others throughout the country.  As we wrote here, like many agencies and businesses, as part of its COVID-19 response, the FCC has moved most of its workforce to teleworking in an attempt to keep FCC staff and their families safe.  With most FCC forms and filings being submitted electronically, and remote work already being routine for many FCC employees, there should be minimal disruption to broadcasters’ routine daily dealings with the Commission.  Broadcasters should continue to comply with all FCC rules, including meeting filing deadlines, though it does appear that the FCC is willing to be flexible with some deadlines, especially when a broadcaster can point to virus-related reasons that the deadline cannot be met.  Check with your attorney on specific deadlines.  And check our article from yesterday highlighting some issues to consider while preparing for whatever comes next.

While there is much disruption to normal routines, the routines of regulatory life largely carry on.  For instance, before moving on to April deadlines, we should remind TV broadcasters that, if they have not already done so, their first Annual Children’s Television Report is due to be submitted to the Commission by March 30.  See our articles here and here on that new report.…
Continue Reading April Regulatory Dates for Broadcasters: The FCC May Be Teleworking, But Regulation Goes On

With more and more states, municipalities, and other authorities issuing shelter-in-place warnings or other restrictions on travel, and with more station facilities likely to be closed temporarily because of exposure to the COVID-19 virus, broadcasters need to be planning on how to continue to operate their facilities in the new world we are all facing.  I participated in an online conference last week with over 100 college broadcasters who are perhaps on the front lines of this problem, as so many operate from campus buildings that were closed early after (and in some cases before) the declaration of the pandemic.  We’ve had calls from many other broadcasters about the issues that they are facing in their operations, as communities take actions to enforce the personal distancing urged by medical organizations.  Many commercial broadcasters may be seeing in the upcoming days greater restrictions on unnecessary travel, perhaps impacting access to their facilities and studios.  Planning and coordination among broadcasters – and with broadcasters and local officials – is already underway in many cities and with many state broadcast associations.  But it also needs to be considered by individual broadcasters everywhere.

One of the most basic questions is one of access.  Questions are arising every day as to whether local officials can block access to broadcast stations or to the coverage of news events during the emergency.  Will broadcasters be shut down like so many other businesses?  There has been much written in the trade press and elsewhere about broadcasters being “essential services” that should be allowed access to their facilities and to news events during any crisis.  There is in fact statutory language in the US code to that effect (see, for instance, this section that tells federal officials not to limit access or facilities to radio and TV broadcasters in an emergency).  But that statute restricts the actions of federal officials to block broadcaster access and is silent as to actions by state and local officials.  Even if state laws have similar provisions, those provisions are only helpful if someone in a position of authority has the time and inclination to look at the legal niceties that apply to a given situation.  Coordination with state and local officials is paramount in a situation like the current one that affects everyone, everywhere.  Stations should already be in touch with state and local authorities to see how they can help in the current crisis.  At the same time, they should also be discussing and planning with these officials to ensure access to studios and transmitter sites, and exemptions from travel restrictions for news coverage, so that they can continue to provide their important services to the public.…
Continue Reading Essential Planning for Broadcasters Facing Coronavirus Restrictions on Access to Facilities and News Events