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So just what legal, regulatory and legislative issues are currently facing broadcasters in Washington?  On Tuesday, I did a panel at the Connecticut Broadcasters Association’s Annual Convention in Hartford with Kelly Cole, the Senior Vice President for Government Relations at the NAB.  In putting together our presentation, one of the most striking things to me was the number of…

The FCC Form 323 is now available for filing by all commercial broadcasters.  The Form must be submitted by December 1 of this year.  In 2009, the FCC adopted the requirement for a biennial ownership report for all commercial stations, to be filed by November 1 every other year, with information accurate as of October 1.  In 2009…

The FCC today announced the public testing of a new TV White Spaces database system.  Starting on September 19, 2011, the FCC’s Office of Engineering and Technology will open a 45-day window to allow the public to try out the TV Band Database developed by one of the potential TV White Spaces database managers.  If approved, the Database will be used by white space…

How do you secure a loan to an FCC broadcast licensee? This was the issue discussed by a case released by the Commission last week – addressing the FCC’s policies prohibiting a station creditor from foreclosing on a broadcast license and also restricting the sale of a “bare license.” While this case involved an action for collection by a judgment creditor, it is instructive as to how any broadcast creditor, including a lender to a broadcast licensee, should act to secure loans or other financial obligations of a broadcaster, and how the creditor can exercise its rights in the event of a default. It is also instructive as to how to proceed to enforce a loan obligation to any FCC licensee – in the broadcast services or in the other services regulated by the FCC.  As the FCC has a long-standing policy prohibiting a lender from taking a security interest directly in an FCC license, lenders need to pay careful attention in documenting loans and in enforcing security agreements upon defaults to make sure that their interests are protected. 

Lenders cannot foreclose directly on a license when a broadcaster defaults on its obligations, as the FCC has made clear that a license is not a property right that can be used for security. The FCC has said that a license is not subject to “mortgage, security interest, or lien, pledge, attachment, seizure, or similar property right.”   As the license cannot be attached, to get at the value of the license if there is a default and the debtor won’t cooperate in a voluntary foreclosure, the Lender has to go to court and have a receiver or trustee appointed to oversee the assets of the debtor. An involuntary transfer to a trustee or receiver pursuant to a court order can be approved by the FCC expeditiously on a “short form” (Form 316 in the broadcast services) transfer application. Once appointed, the trustee can sell the sell the station (pursuant to FCC approval on a subsequent "long-form" application) and distribute the proceeds to the creditors. In the case decided last week, the actions of the local court that was attempting to enforce the rights of the creditor gave the Commission pause.Continue Reading Securing a Loan to a Broadcaster – Part 1 – FCC Case Clarifies How a Creditor Enforces Its Rights After a Default

We wrote about FCC Chairman Genachowski’s announcement of the repeal of the Fairness Doctrine as part of the FCC’s repeal of 83 media related rules.  Well, the full text of the repeal was released today, and the Fairness Doctrine really was the only real headline.  For broadcasters, all of the other deleted rules were even…

In 2009, the FCC adopted a uniform deadline for all commercial broadcast licensees to file an FCC Form 323 Biennial Ownership Report.  The due date for that report was supposed to be November 1 of that year, but was postponed until July of 2010 when problems popped up with the new forms.  The next Biennial Ownership reporting date was scheduled to be November 1 of this year (two years after the originally scheduled date for the first report to use the new form) – but the FCC today issued a Public Notice postponing the filing deadline for one month, to December 1.  This delay was justified so as to give broadcasters, especially those with many media interests held in different companies, more time to complete what can be a cumbersome process of filling out all of the reports and exhibits that need to be submitted.  Reports need to be filed by December 1, but all information still needs to be reported as of October 1 of this year – a standard reporting date that will remain constant each year to give the FCC a snapshot of the composition of ownership in the broadcast world.

The revised ownership report filing processwas adopted so that the FCC could get an accurate report on the ownership of broadcast properties by minorities and women, a goal that has taken on added significance in light of the Third Circuit Court of Appeal’s recent decision in Prometheus Radio Project v FCC, rejecting the FCC’s efforts to diversify ownership in the media through the use of a system giving preferences to qualified entities, i.e. small businesses.  As we wrote last month, the Court found that the FCC’s goal was to promote minority and female ownership, which was not fostered by its concentration on small businesses.  One of the issues on which the Court faulted the FCC was the lack of information about the current broadcast ownership interests of minorities and women, so that the FCC could do a "Adarand study" as to whether there are effects of past discrimination reflected in the current ownership of broadcast stations that need to be remedied by affirmative action efforts based on race or gender.  These new ownership reports are designed to help to provide that information.Continue Reading FCC Extends Filing Date to December 1 for 2011 Form 323 Biennial Ownership Report – New Significance After Prometheus Court Decision

Microwave frequencies used by television stations for their TV Pick-Ups for the transport of programming, and by cable systems for their CARS relays, were the subject of an FCC order last week looking to repurpose these frequencies to provide backhaul for wireless broadband and other telecommunications uses.  The Commission’s order sets out to protect existing users, but to allow these…

The recent decision of the Third Circuit Court of Appeals which overturned the FCC’s 2007 rulings on newspaper-broadcast cross ownership and on diversity initiatives, took an unexpected turn today.  The FCC issued a Public Notice announcing that it would immediately stop giving "Eligible Entities" an advantage in certain instances – most particularly the extension of construction permits for new stations that are close to their expiration dates.  In the FCC’s 2007 Diversity Order, the Commission, to encourage more diversity in broadcast ownership, allowed "eligible entities", i.e. small businesses under SBA definitions, to acquire construction permits for new stations that were close to expiration, and to get an additional 18 months in which to construct the station.  In most other circumstances, the FCC will not extend a construction permit (absent some limited "tolling events" that will give applicants a limited amount of time to construct – but just the amount of time that a limited unforeseen event takes out of the usual 3 year construction period).  The 18 month extensions given to Eligible Entities have become an important way of saving construction permits about to expire when the original permit holder could not complete construction in the given 3 year construction period.

Today’s decision takes away that opportunity to extend unbuilt construction permits.  And the ruling goes even further, pulling the rug out from under recent grants of CP extensions – even ones that have already been granted, unless the extensions have become "final," i.e. no longer subject to reconsideration or appeal.  Those extensions granted in the last 40 days are subject to this order, and if these CPs have an initial expiration date that has already passed, they will be canceled.  This will no doubt cause some great consternation among parties who have purchased a construction permit in reliance on an FCC order extending the permit by 18 months, and may even have taken steps to construct the station since purchasing it, and now find themselves with a permit that has already expired.  The Commission makes no suggestion why some other remedy consistent with the Court’s order, but not so harmful to parties that relied on prior Commission policy, could not have been adopted – perhaps a new "tolling event" giving applicants a limited period of time to get a station on the air before the CP was canceled.  Sellers no doubt relied on the prospects of a pending sale (and simultaneous extension) to stop taking last minute extraordinary efforts to get a station constructed before the CP expired, and Buyer’s relied on the FCC order extending a CP to close purchases.  Given the potential for some entities to suffer greatly by this ruling, look for appeals to be filed.Continue Reading FCC Stops Processing Applications By “Eligible Entities” – No Extensions of Unbuilt CPs When Sold to a Small Business

[Update – 4/9/2011.  Based on the announcement late last night, the Federal government will not be closing on Monday.  But the agreement that was reached yesterday still needs to be documented and voted on by the House and Senate.  But, barring an unforeseen breakdown in the deal, these shutdown instructions can be shelved…

With April Fool’s Day only a few short days away, and with many articles running in the trade press about what stations should and shouldn’t do on that day, we thought that we would weigh in with our own legal reminder – no matter what you do, be careful not to violate the FCC’s rule against broadcast hoaxes.  That rule, Section 73.1217 of the Commission’s Rules, prevents stations from running any information about a "crime or catastrophe" on the air, if the broadcaster (1) knows the information to be false, (2) it is reasonably foreseeable that the broadcast of the material will cause substantial public harm and (3) public harm is in fact caused.  Public harm is defined as "direct and actual damage to property or to the health or safety of the general public, or diversion of law enforcement or other public health and safety authorities from their duties."  Air a program deemed a hoax, and expect to be fined by the FCC.

This rule was adopted in the early 1990s after several incidents that were well-publicized in the broadcast industry, including one case where the on-air personalities at a station claimed that there was someone at the station who had taken them hostage, and another case where a station broadcast bulletins that announced that a local trash dump had exploded like a volcano, and was spewing burning trash around the local neighborhood.  In both cases, first responders were notified about the non-existent emergencies, actually responded to the notices that listeners called in, and were prevented from doing their duties responding to real emergencies.  In light of these sorts of incidents, the FCC adopted its prohibition against broadcast hoaxes.  But the FCC rule is not the only reason to be wary on April 1. Continue Reading Planning an On-Air April Fools Day Prank? – Remember the FCC’s Rule Against Broadcast Hoaxes