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The FCC adopted proposed auction procedures for its incentive auction at its meeting on Friday, and thus far has released a Fact Sheet on these procedures by which it plans to buy back spectrum from broadcasters and resell it to wireless companies for wireless broadband uses.  The tentative procedures, along with the recent “Greenhill Report” setting possible prices to be paid to television stations who are willing to surrender their channels for the FCC to resell to wireless companies (see our summary here), are setting the stage for a series of meetings with broadcasters to attempt to convince enough to participate in the auction to satisfy the FCC’s goals for the auction – goals that also became a bit clearer from Friday’s releases.  Further information on the auction procedures is expected soon in a more detailed Public Notice fleshing out the proposals outlined in the Fact Sheet so that comments can be filed by the end of January. 

The fact sheet is not the detailed notice of auction procedures that some broadcasters may be familiar with from participating in past broadcast auctions – that will apparently come soon in the Public Notice that it summarizes.  But it does provide an outline of proposed general principles that will be applied to the incentive auction.  Initially, it proposes that the FCC would set opening prices for each station – prices at which the FCC would offer to pay the licensee to give up its spectrum.  The prices would be set based on an analysis of two factors: (1) the impact that the station would have on the repacking of the broadcast spectrum after the auction because of the interference that it causes and (2) the population covered by the station.  If a station agrees to move to the VHF band instead of surrendering its licenses altogether, it would receive somewhere between a third and a half of the opening price if it accepts a high VHF channel, and between 67 and 80% of the opening price for a low VHF channel.  According to the fact sheet, the prices that will initially be offered to the broadcaster will be initially set high, and will be lowered as the auction progresses until the prices reach a point where there are just enough broadcasters willing to take the lowered offer to clear the amount of spectrum that the FCC needs to fill the demands of the wireless users.  There has also been introduced the concept of a “dynamic reserve price,” setting a limit on how much the FCC is willing to pay some stations for giving up their spectrum, which could conceivably result in the amount that they are offered being lowered even when it is known that they cannot be repacked into the amount of the spectrum that remains available in the smaller post-auction TV band.   How much spectrum must be cleared for the auction to go forward?
Continue Reading Putting Details to the Incentive Auction – FCC Asks for Comments on Fact Sheet on Auction Structure, and Prepares for Meetings with Broadcasters

We are often asked by television broadcasters if specialty programming – particularly local programming, like a local church’s broadcast of its Sunday morning church service – is covered by the FCC’s closed captioning obligations.  In a decision released on Friday, the FCC staff denied the request of a church for an exemption from the rules requiring the closed captioning of most television programming, and may have helped to make clear an answer to those questions.  This decision also helps to clear up a big question that has been hanging over such programs, for over 3 years since the FCC reversed dozens of prior waivers granted by its staff to nonprofit groups claiming that the captioning would be economically burdensome on their operations (including the waiver that had been granted to this church).  So what factors did the Commission review in denying this “economically burdensome” waiver request?

In 2011, the Commission stated that its staff had to consider the overall circumstances of each petitioner in evaluating economic waivers of the captioning rules, and could not simply rely on the fact that the petitioner was a nonprofit organization the FCC.  After revoking the waivers, the Commission asked the groups whose waivers were revoked to refile their requests with greater detail and support, not simply relying on the fact that the proponent was a nonprofit organization.  Factors to be considered in evaluating any claim that the captioning obligation was economically burdensome include: (1) the cost of the closed captions for the programming and attempts of the programmer to find cheaper sources of captioning; (2) the impact of the captioning obligation on the operation of the provider or program owner; (3) detailed information on the financial resources of the provider or program owner including income and expense statements for the prior two years; (4) attempts to get outside sponsors for the programming or support from the station on which the programming is to be broadcast; and (5) the type of operations of the provider or program owner.  In applying these factors in the decision released on Friday, the FCC staff concluded that the church had not justified a waiver because it had sufficient funds from which to pay the cost of the captioning. 
Continue Reading FCC Denies Closed Captioning Waiver for Church Service – Clarifying New Standards on “Economically Burdensome” Exceptions to Captioning Requirements

Last week, the Senate approved a reauthorization of STELA, the new bill called STELAR (the “STELA Reauthorization Act of 2014”), adopting the version that had been approved by the House of Representatives earlier in the month.  In addition to simply giving satellite television companies (essentially DISH and DirecTV) the a five-year extension of their rights to rebroadcast the signals of over-the-air television stations without authorization from every copyright holder of the programming broadcast on those stations, STELAR made other changes to both the Communications and Copyright Acts that will have an impact on TV station operators once this bill is signed by the President.  The Presidential signing is expected before the end of the year.  [Update, 12/5/2014 – the President signed the Bill yesterday evening, so it is now law]

Some of the important provisions for TV stations contained in this bill include provisions that impact not only the relationship between TV stations and satellite TV companies, but also ones that have a broader impact on the relationship of TV stations with all MVPDs, including cable systems. There is also a provision actually providing more latitude for LPTV stations to negotiate carriage agreements.  Some of the specific provisions of this bill include:

JSA Extension:  STELAR will give TV stations currently operating with a Joint Sales Agreement with another station in their market which they cannot own under the current multiple ownership rules 6 more months to terminate such operations – until December 19, 2016 (after the next Presidential election).  See our discussion of the changes in JSA attribution here and here.
Continue Reading Congress Passes STELAR – Renewing Authorization of Satellite Carriers Carriage of TV Stations – With Some Important Changes to JSA, Retransmission Consent and Market Modification Rules

Even though the election is over, political broadcasting issues have not stopped.  Yesterday, the same groups (the Campaign Legal Center, Common Cause, and the Sunlight Foundation) that had previously objected to the sponsorship identification of issue ads funded by PACs with a limited donor base have struck again.  This time, they have filed a complaint with the FCC against a Chicago TV station claiming that it should have identified former New York City mayor Michael Bloomberg as the true sponsor of an ad run by a PAC. That PAC stated on its website that it had been formed by the former mayor and, from its FEC filings, it appears that it was 100% funded by Mr. Bloomberg.

The complaint differs from complaints filed earlier this year about similar ads in that, in this case, the station was given written notice by the Petitioner of the claim that the sponsorship identification should have included Mr. Bloomberg.  In previous cases, no such notice had been given to the station (the lack of such prior notice resulting in the FCC’s rejection of the initial set of complaints filed by this group, see our article here).  In addition, this is the first complaint where it appears that the PAC in question was 100% funded by a single individual.  See, for instance, our article here, where we asked in connection with previous complaints where the PACs in question were not 100% funded by a single individual how a station was supposed to know at what point the individual donor needed to be identified, and when there were a sufficient number of other donors that the identification of the groups as the true sponsor was proper.  Will these factual differences mandate a different result from the FCC?
Continue Reading The Election is Over, But the Complaints Keep Coming – Should Michael Bloomberg Have Been Identified as the True Sponsor of an Ad Run by his PAC?

Since our note Friday about November regulatory dates for broadcasters, it’s become clear that the FCC will be acting on two more matters of interest to broadcasters – particularly radio broadcasters though each have some implications for TV as well.  First, as we hinted at the end of our article on Friday (the rumors that we had heard having now been confirmed), Chairman Wheeler has circulated a draft Notice of Proposed Rulemaking on the expansion of the online public file to radio (as well as cable and satellite).  And, secondly, the FCC has announced that, at its open meeting on November 21, it will open a rulemaking to modernize the disclosure rules for on-air contests conducted by broadcasters – rules which have resulted in FCC fines over the last few years.

The fact that the online public file proposal for radio has now matured into a Notice of Proposed Rulemaking is confirmed by the FCC’s list of Items on Circulation (basically, draft orders that the Commissioners currently have in front of them for review and voting), which now lists that item near the top of its list.  See the list of Items on Circulation, here: http://www.fcc.gov/fcc-items-circulation.  While most folks in radio knew that the day would come when their public files might be required to go online, the speed with which the FCC now seems to be acting is what is most surprising, as it was only a bit over two months ago that the FCC took comments on whether or not to even consider that proposal (see our article here).  But, with lightning speed, the order appears to be moving forward.  How fast will it be implemented?
Continue Reading Formal Proceedings to Begin to Revise Rules for Broadcasters’ On-Air Contests and Expand the Online Public File Obligations to Radio, Cable and Satellite

The month of November is one of those rare months on the FCC calendar when there are few routine regulatory filing deadlines for broadcasters.  In odd years, we would have Biennial Ownership Reports but, being an even year, we can wait until 2015 for that obligation for commercial broadcasters.  There is a new November 28 deadline, about which we wrote here, for TV stations with Joint Sales Agreements with other stations in their markets to file such agreements with the FCC.  While we are getting to the end of the current license renewal cycle, there are still some obligations of television stations for the airing of renewal pre or post filing announcements.  Commercial and Noncommercial Full-Power and Class A Television Stations in Alaska, Hawaii, Oregon, Washington, American Samoa, Guam, the Mariana Islands, and Saipan need to air License Renewal Post-Filing Announcements on the first and sixteenth of the month, while television stations in Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont need to air their pre-filing announcements in anticipation of the filing of their license renewal applications on December 1. 

November brings a few other dates of note for broadcasters.  With the end of the political window for lowest unit rates on Election Day, broadcasters have a few last minute issues to remember.  If they sell ads on Election Day, those ads must be sold at lowest unit rates.  If they have opened their stations to take new advertising or changes in copy for any commercial client in the past year, they must be ready to take similar steps for federal candidates over this last weekend before the election.  Even if they never accommodate a commercial advertiser over the weekend, they may still need to provide weekend access to accommodate last minute equal opportunities requests. 
Continue Reading November Regulatory Dates for Broadcasters – The End of the Political Window, Incentive Auction and Online Video Clip Comments and More

The FCC announced two significant policy initiatives by Blog post in the last week – perhaps recognizing that the Internet provides a better way of packaging a message about policy directions than an unpredictable news conference.  The two decisions announced this week by Blog post were (1) the Chairman announcing that he has directed that a Notice of Proposed Rulemaking be circulated among the other Commissioners to treat Over-the-Top TV providers (“OTT” providers, usually those that provide service over the Internet) of linear programming as MVPDs – meaning that they would be treated, for regulatory purposes, in much the same way as cable and satellite TV services, and (2) an announcement by the head of the incentive auction task force that the auction by which some of the broadcast TV spectrum will be purchased from TV users and resold to wireless carriers for broadband wireless uses will be postponed from its expected date in the summer of 2015 until early 2016.  We will write about the postponement of the auction later.  But what does the MVPD proposal mean?

The MVPD issue is one that we last wrote about here.  At the urging of some OTT providers, apparently including Aereo, the FCC has been urged to treat these providers, when they provide “linear” programming (programming that is provided at set times on a set schedule, in the manner of broadcast TV or cable programming, as opposed to the on-demand programming of a Netflix or Hulu), in the same fashion as cable and satellite.  The Chairman, in his blog post, announces his support for an FCC proceeding to review that proposal, apparently looking to use linear Internet programmers as a new competitive force against cable and satellite TV.  By treating these services as MVPDs, they could get access to over-the-air TV programming (if they can negotiate retransmission consent agreements with the TV stations) and equal access to programming provided by vertically integrated cable programmers (those programmers that have attributable ownership from cable system operators).  But, obviously, there are some big “ifs” here.
Continue Reading FCC Policy by Blog Post – Over-the-Top Internet-Delivered Television Programming Providers May be Treated as MVPDs, a Reaction to Aereo?

SESAC is the one major performing rights organization whose rates have not, until now, been subject to judicial review as part of an antitrust consent decree.  Perhaps because of that fact, broadcast stations have often complained about the rates they charge for the music that they license, as there is currently no cap on what SESAC can charge, and there is no requirement that SESAC treat all similar licensees in the same way.  In fact, because of this dissatisfaction, both the TV and Radio Music License Committees have filed antitrust suits against SESAC seeking relief from the rates they charge.  In a settlement announced this past week, the Television Music Licensing Committee has entered into a settlement by which SESAC will pay the TVMLC $58.5 million and agree that, over the next 20 years, SESAC will negotiate license agreements with TVMLC.  Under the agreement, if rates can’t be reached as a result of negotiations, SESAC and the TVMLC would submit to an arbitration process to arrive at the appropriate rates.  The full settlement can be found on the TVMLC website, here. 

Under the terms of the settlement, commercial TV stations (except for those owned by Univision, which appear to have opted out of the class of stations covered by the TVMLC settlement) will have their SESAC obligations covered for the rest of this year and next, including website SESAC music use and use in digital multichannel programming.  In 2015, TVMLC will negotiate with SESAC over rates for the period from 2016-2019.  If no rates are agreed to by the parties, an arbitration panel will set the rates.  The same process will continue for 4 year periods through 2035, as long as ASCAP and BMI are also subject to either rate court or arbitration review of the rates charged by those organizations.  While the Department of Justice is reviewing the ASCAP and BMI consent decrees that require rate court review of royalty rates charged by these groups (see our article here), it appears that they are not asking for an end to all rate review.  Instead, they are asking that the review be done by an arbitration panel, not the US District Court that currently reviews such rates.  So it would appear likely that the “out” in the deal would not give SESAC an escape from this agreement to be bound by arbitration any time soon.
Continue Reading TV Music Licensing Committee Settles Antitrust Action with SESAC over Music Licensing Rates and Terms – Radio Watches and Wonders if It Can Get a Similar Deal

The FCC has extended the comment deadline for ideas about the draft form that the FCC plans to use to determine the amount of reimbursement to be paid to individual TV broadcasters for changes in channels caused by the television spectrum repacking after the incentive auction (by which portions of the TV spectrum will be…