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The FCC meeting yesterday proposed to attribute Joint Sales Agreements (making them “count” for multiple ownership purposes – meaning that one broadcaster can’t do a JSA with another station unless it can own the other station).  The Commission also apparently kicked the can down the road on all other multiple ownership matters – not changing the local TV ownership rules or amending the newspaper broadcast cross-ownership restrictions, instead deciding to further consider any modification of the rules.  No decision on these issues is expected until probably 2016.  See the FCC’s Public Notice of that action here.  Shared Services Agreements will also be examined – though new ones have effectively been put on hold during the course of the examination by an FCC processing policy released two weeks ago that requires that any party proposing any sort of sharing agreement in a transaction requiring FCC approval demonstrate how that sharing agreement serves the public interest.  Also at the meeting, the FCC took actions to ban joint negotiation of retransmission consent fees by any two of the top 4 rated stations in a TV market, and to reexamine the network nonduplication and syndicated exclusivity rules (see the FCC’s decision here).  While we will have more details on these decisions in the coming days, as we fully analyze the texts of the FCC decisions as they are released, for now it is interesting to look at these decisions with the perspective of history.

Having represented broadcasters in Washington for over 30 years, one sees many of the same issues debated over and over again.  Many of the issues that were thought to be settled years ago come to the fore after most of the participants at the FCC, and even those in industry, forget that these battles had already been fought and seemingly decided.  In introducing the FCC’s examination of Shared Services Agreements at yesterday’s meeting, the representative of the FCC’s Media Bureau talked about how the examination of each transaction will be important for the FCC to determine if there are too many interlocking ties between stations that are supposed to be competitors in a market.  Not mentioned was the fact that this same kind of review used to be done by the FCC under what was called the “cross-interest policy,” a policy that was repealed by the FCC in 1988.
Continue Reading FCC Attributes JSAs, to Examine SSAs and Network Nonduplication and Syndex Rules – A Return to the 1980s?

The agenda is out, and the FCC’s likely action on their Quadrennial Review of the multiple ownership rules now seems to be much clearer.  And the decision seems likely to follow the rumors circulating in Washington for weeks (about which we have written here and here), with new regulatory wrinkles added to those previously suggested.  According to a blog post by the FCC Chairman, the plans are for the FCC to attribute JSAs where one TV broadcaster sells more than 15% of the ad time on another station in its market (meaning that such a JSA is only permissible if the stations can be commonly owned).  In addition, the Commission will prohibit TV non-commonly owned TV stations from jointly negotiating retransmission consent agreements with cable and satellite TV providers.  A further review of Shared Services Agreement is apparently in the works as well.  The Commission will apparently do nothing about the FCC’s cross-ownership rules, leaving in place rules prohibiting joint newspaper-broadcast cross ownership and even radio-TV cross-ownership rules, asking for comments on a proposal to actually retain those rules in a new Quadrennial Review that it will start on March 31. 

Retransmission consent is also on the agenda.  The agenda indicates that not only will the Commission ban joint negotiation of retransmission consent fees by stations involved in a JSA, but it will seek more information on other issues involved in the relationship between broadcasters and MVPDs (cable and satellite TV providers).  Specifically, the Commission will look at whether to repeal the network nonduplication and syndicated exclusivity rules which prohibit MVPDs from importing TV signals that infringe on the exclusive rights held by a local station to network and syndicated programming.  Were these rules to be abolished, to the extent that retransmission agreements permit it, distant signals might be imported by an MVPD when the MVPD and local television station were having a retransmission dispute, lessening the leverage of the local station from its ability to withhold its programming. 
Continue Reading FCC March 31 Agenda to Consider TV JSAs and Retransmission Consent Issues – Lots of Controversy for TV Broadcasters

The FCC has recently staked out a policy that the any use of EAS tones, or tones that sound like those alerts, outside of a real emergency, will lead to big fines.  Since the beginning of the year, the FCC has issued notices proposing fines totaling over $2.2 million against some of the biggest media companies in the country for such violations (see this decision proposing a $300,000 fine against Turner Broadcasting System Inc. for tones mimicking the EAS alerts that were included in a commercial transmitted nationwide in cable network programming, and this decision imposing cumulative fines of over $1.9 million on 3 cable network programmers for transmitting ads for the movie Olympus Has Fallen that included portions of the EAS alert tones).  Only days after the latter decision, a new warning about EAS tones or sound effects made to mimic those tones was sent out by the Southern California Broadcasters Association alerting broadcasters to a commercial for a charcoal briquettes company that seemingly contained such tones.  Given the strict liability that the FCC has been imposing for such commercials, watch for this recent ad and any other programming that might contain EAS tones or anything that sounds like them – and keep them off the air. 

With past warnings on this issue (see our article from November about another set of FCC fines for similar broadcasts,  and the release of an FCC press release warning media companies about the issue) and the recent large fines imposed on major media companies – both broadcast and cable – it is clear that all media companies need to be on the alert to monitor their broadcast material for the any content sounding like EAS alerts, and advertisers and program producers need to be aware that anything they produce that contains the alert tones is likely to cause problems at the FCC.  Note that these recent decisions imposed penalties on cable networks – so it is not just licensees who need to be vigilant.  In these decisions, the FCC has rejected any arguments that the media companies that transmitted the advertising containing the alert tones should be excused from liability as they did not themselves produce the ads.  So watch for these tones – even if they are packaged in someone else’s programming. 
Continue Reading Be on the Alert for EAS Tones in Non-Emergency Situations – Big FCC Fines for These Violations and Other EAS Issues

TV Shared Services Agreements have been one of the targets of public interest groups since the start of the current Quadrennial Review of the FCC’s multiple ownership rules (see our articles here, here, here and here).  Public interest groups, in their zeal to stop any media consolidation (including newspaper/broadcast cross-ownership – even if that prohibition ends up outliving the newspaper itself, see our article here), have seen Shared Services Agreements as end-arounds on the FCC’s in-market television ownership caps, even though such deals may be necessary to preserve competitive, quality TV stations in smaller television markets.  Certain cable operators have also opposed these combinations (sometimes called “sidecar” arrangements), fearing that they will give TV station operators more power in retransmission consent negotiations.  There has recently been a flurry of activity, leaving the status of these deals somewhat confused under the review of the new FCC Chairman.

Before Christmas, two transactions involving shared services agreements were approved over objections.  While these transactions were approved, there was a lengthy analysis of the SSAs involved  in the decision approving Gannett’s acquisition of Belo.  In that discussion, the Commission’s staff carefully reviewed the attributes of the SSAs proposed as part of the transaction, and found them within the precedent established in prior transactions.  This included making sure that the licensee of the station receiving the services retained at least 70% of the proceeds from the sales of advertising time on the station, and that the party providing services programmed no more than 15% of the time on the other station.  But, in a paragraph that many thought was just a statement that Commission always retains the right to review transactions that are consistent with precedent, the Commission stated:

That is why applicants and interested parties should not forget that our public interest mandate encompasses giving careful attention to the economic effects of, and incentives created by, a proposed transaction taken as a whole and its consistency with the Commission’s policies under the Act, including our policies in favor of competition, diversity, and localism

But was this simply a statement of the obvious, or did it mean more?
Continue Reading What’s Up With TV Shared Services Agreements?

We recently wrote about FCC issues that will be facing broadcasters in this new year.  While broadcasters will no doubt be busy keeping track of what the FCC is up to, they also need to have their eyes on other government agencies, as there are numerous issues that may come from Congress and the other regulatory agencies in DC that could affect their bottom lines.  So, with a watchful eye on the FCC for the issues we wrote about earlier in the month, what other issues should broadcasters be watching for from all of the other regulatory power centers in DC? 

While this is an election year, and that makes many big pieces of legislation unlikely, the discussions that occur in 2014 on these issues may pave the way for action late in the year, or in 2015 after the new Congress is in place and before the Presidential election in 2016 commands everyone’s attention.  Here are some of the issues of interest to broadcasters likely to be on the DC agenda in 2014:
Continue Reading What’s Up in Washington For Broadcasters in 2014? — Part 2, Issues beyond the FCC Including Ad Taxes, Music Royalties, Privacy Reforms, and More

The Supreme Court on Friday announced that is has decided to review the decision of a US Appeals Court in New York finding that the Aereo service of retransmitting over the Internet the signals of local television stations, without permission from or payment to those stations, was legal.  We wrote about the Second Circuit Court of Appeals decision in the Aereo case here.  The Supreme Court’s decision to hear the case, which may signal that the case will be decided before the Court adjourns its term in June, was supported not only by the television stations who had sought to block the Aereo service and the program suppliers to those television stations (including many of the sports leagues), but also by Aereo itself.  As Aereo and its copycat service FilmOn X were being sued in every jurisdiction where they started to do business, the desire to get a quick and final resolution of the legality of their services is a natural one.  This is especially true as the Courts have been reaching different decisions, as demonstrated by the two cases decided only a month apart, one in Boston finding Aereo to be legal, and one in DC finding FilmOn X to be infringing on the copyrights of the TV stations who brought the lawsuit.  So what issues will the Supreme Court be deciding?

One newspaper editorial, from the Los Angeles Times, has suggested that this is a Betamax case for the 21st century.  The Betamax case, officially known as Sony Corp. v Universal City Studios, was the case that declared the VCR to be legal, and found that its original manufacturer, Sony, was not contributorily infringing on the copyrights held by Universal and other studios that brought the case.  But that comparison really does not hold up, as the Betamax decision was premised on several findings that simply cannot be made here.  First, the Court in the Betamax case found that the VCR was not in and of itself an infringing service, as it had substantial legal uses.  In fact, there was testimony in the record that many copyright holders actually were not opposed to the use of a Betamax to copy their programs for time shifting and other purposes.  In the Aereo cases, copyright holders are for the most part universally opposed to the service and, other than retransmitting copyrighted programs without consent, there does not appear to be another use for the service.
Continue Reading Supreme Court Decides to Review Aereo – Why This is Not the New Betamax Case

It is the beginning of another year – and a time to look ahead to look ahead at what 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 Washington’s alphabet soup of regulatory agencies in the near future.  In addition, watch these pages for our calendar of regulatory deadlines for broadcasters in the next few days.

Each January, we publish a list of issues for the coming year, and it is not always the case that these issues make it to the top of various piles (literal or figurative) that sit in various offices at the FCC.  As set forth below, there are a number of FCC proceedings that remain open, and could be resolved this year.  But just as often, a good number of these issues sit unresolved to be included, once again, on our list of issues for next year.  While some issues are almost guaranteed to be considered, others are a crap shoot as to whether they will in fact bubble up to the top of the FCC’s long list of pending items. So this list should not be seen as a definitive list of what will be considered by the FCC this year, but instead as an alert as to what might be coming your way this year. Issues unique to radio and TV, and those that could affect the broadcast industry generally, are addressed below.
Continue Reading What’s Up in Washington For Broadcasters in 2014? — Part 1, FCC Issues

Sometimes the FCC decisions come out in a flurry, often with little nuggets of importance in each one.  Rather than trying to write about each one, we’ll from time to time, just try to highlight those nuggets for your consideration.  At the end of last week, three decisions came out with just such nuggets – all dealing with different issues.  The first case involved the issue of divestiture trusts – trusts set up to hold broadcast assets when a buyer of broadcast properties, usually in connection with the acquisition of a broadcast group, needs to divest some stations so that the buyer remains in compliance with the multiple ownership rules (usually in radio where the attribution of LMAs and JSAs make impossible divestitures like those used in television, to parties with no connection to the buyer but operating with a Shared Services or Joint Sales agreement).  In the past, the FCC has not put any limit on how long the stations could remain in a divestiture trust, with some stations spending 5 or 6 years (or longer) in such trusts before they are finally sold.  This case involved an acquisition of a large number of radio stations by Townsquare Media from Cumulus.  Here, the Commission established a two year limit on period of time that the trust could hold the stations placed in its care.  Thus, the trustee needs to divest of those stations within that period.  We would not be surprised to see that limit imposed on any trusts created in the future – perhaps even on some longstanding trusts still in place when they are subject to renewal applications, where such trusts have been challenged from time to time.

In TV, often stations that cannot be owned by a broadcaster who is buying another station in the same market consistent with the multiple ownership rules are not sold through a trust, but instead they are sometime bought by an independent party who can support the station through some sort of Joint Sales or Shared Services Agreements with the buyer.  In one of those cases, the continuation of an existing Shared Services Agreement was challenged in connection with the sale of the brokering station held by Young Broadcasting to Media General.  The FCC again (as they have in many cases before, see for instance our article here), held that the sale was permissible and that the SSA could continue after the sale.  The brokering station did supply news to the brokered station, but it was under 15% of the program time, and thus not attributable.  The brokered station continued to have a financial incentive to operate the station successfully, keeping 70% of the cash flow of the station.  And the mere fact that the owner of the brokering station guaranteed the debt of the brokered station did not make that interest attributable to the broker.  Note, however, that the Commission did question the staffing of the brokered station but, as that station was not being transferred as part of the sale before the FCC, the Commission said that they would review that issue in connection with the license renewal of the brokered station.  Shared Service Agreements are also under consideration in the current Quadrennial review of the FCC’s multiple ownership rules (see our stories here and here ).  So some of these issues may be revisited again in the not too distant future, when the new FCC Chair decides to complete that review.
Continue Reading Odds and Ends – Divestiture Trusts, Shared Services Agreements and Determinations of Significantly Viewed Stations

The battle over services that record and stream over-the-air TV without compensation to TV broadcasters has become even more confusing, with a US District Court judge in Boston denying an injunction to stop the Aereo service in Massachusetts in a suit brought by Hearst Corporation, which owns a local TV station. This decision comes on the heels of a decision the decision by the US District Court in Washington DC finding that Aereo-like service FilmOn X was violating the copyrights of TV stations by operating a similar service in the DC area (see our discussion of that decision here). Joining decisions in NY favoring the streaming services (a decision we initially wrote about here), and one is California favoring broadcasters, the decision appears to be headed to an ultimate resolution before the Supreme Court to reflect these conflicting points of view. In fact, TV broadcasters have already announced the likelihood of their filing a Supreme Court petition asking the Court to resolve the matter. 

Of course, the decisions outside of NY have been by District Courts, not US Appeals Courts. All except the NY decision are subject to review by the US Court of Appeals in the Circuits in which these District Courts lie. It is possible that the appeals could come out differently than the decisions by the District Courts, and either increase or decrease the likelihood of Supreme Court review, depending on whether the other appellate courts rule for Aereo or FilmOn X (decreasing the likelihood of Supreme Court review if the Circuits agree on the outcome) or against it (increasing the likelihood of review as the Court would be faced with conflicts among the circuits which is a usual ground for Supreme Court review). The Boston decision, while not as comprehensive as some of the other decisions on the topic, does raise some interesting issues that will no doubt be considered on appeal.Continue Reading The Courts Continue To Split on Streaming TV Services – As Boston Court Denies TV Broadcasters Request for an Injunction Against Aereo

We’ve written extensively about copyright issues for audio services, but the big copyright decision that recently made headlines is a TV issue, though one that could have an impact on audio as well. That was the Second Circuit decision in the Aereo case – upholding a lower court decision allowing a company to retransmit over-the-air TV signals to consumers over the Internet – without any royalties to the TV broadcasters or television program producers. The decision looked at the issue of what defines a “public performance” that would require the consent of the copyright owner. The Court found that there is no public performance of television programming where the service is set up so that the programming is streamed to the viewer individually, at their demand, rather than transmitted all at once to multiple consumers – as by a cable system or a  satellite television service. The decision is a controversial one – decided by a 2 to 1 vote with the dissenting judge issuing a strong dissent arguing that the Aereo service was nothing more than a “sham” designed to evade the royalty obligations or copyright permissions that would be necessary if the service were deemed a cable system or other type of multichannel video provider. What does this decision really mean for television stations, and could it have broader implications for the reuse of all sorts of broadcast content on the Internet?

The decision focused on the question of whether the Aereo service “publicly performs” the programming that it sends to its subscribers. Under the Copyright Act, a copyright owner has a bundle of rights which it has the exclusive ability to exploit. This includes the right to copy the copyrighted work, to distribute it, to make a “derivative work” (a work that uses the copyrighted material and changes it in some way – like putting new words to the melody of a copyrighted song), and the right to publicly perform it. The definition of a public performance includes any transmission or retransmission of a performance to multiple individuals at the same time or at different times. This language was added to the Copyright Act at the time of the advent of cable television, to make clear that services like cable, that take an existing performance (like that of a broadcast television station) and then further transmit it to other people (even people who could theoretically pick up the original performance) were themselves making a public performance that needed the consent of the copyright holder or a government-imposed statutory license (which allows the performance as long as the party making the performance pays the copyright holder an amount set by the government). From a cursory look, it would appear that Aereo is retransmitting the signal of the TV station to all of its customers. Why, then, did the Court rule that no public performance was involved?Continue Reading Aereo Court Decision Permits Internet Streaming of TV Programs Without Royalties – Undermining the Public Performance Right?