The amount paid to songwriters and publishing companies for the making of “phonorecords” will be going up after a Copyright Royalty Board decision just released to the parties to the case. A summary of the findings have been published on the CRB website, here. The new rules are available here. A full decision explaining the CRB reasoning will follow at some later date.

These royalties are not ones paid by broadcasters or non-interactive webcasters or internet radio stations. Instead, these are the royalties paid under Section 115 of the Copyright Act for the making of copies of musical compositions when making a sound recording (this would include the amount paid by a record label or performing artist to the composer of a song or the composer’s publishing company for the use of the composition in a CD or for a digital download) and, more importantly in today’s world, in connection with on-demand or interactive music services. While one might wonder if an on-demand stream really makes a reproduction of a composition when it is sent to a customer to enjoy, by tradition that has grown up over the last decade, these royalties are paid by these services (though, in one case, Spotify questioned whether they were legally required). Continue Reading Copyright Royalty Board Decision Will Raise Royalties Paid to Songwriters and Publishers By Digital Music Services

At its December meeting, the FCC adopted a Notice of Proposed Rulemaking to review the national ownership cap for over-the-air television, which limits one owner from having attributable interests in television stations reaching more than 39% of the national audience. That Notice was published in the Federal Register on Friday, setting February 26 as the date for initial comments, and March 27 as the date for reply comments. When the FCC last year reinstated the UHF discount (see our article here), one of its justifications for the reinstatement was that the elimination of the discount could not be done without a full review of the national ownership rules – as the elimination of the discount could affect the video marketplace, and any potential adverse effects should be studied before abolishing the UHF discount (the discount counts each UHF station as reaching only one-half the audience of a VHF station). When the FCC reinstated the discount, the Commission promised to initiate this rulemaking proceeding.

The NPRM basically asks two fundamental questions – does the FCC have the authority to amend the cap, and if does, should it use that authority to make changes now? The initial question is based on the fact that the 39% limit is written into statute by Congress. Obviously, this is a fundamental question, and the usual political party divide over the interpretation of ownership rules is not fully in evidence here. Republican Commissioner O’Rielly indicated in his statement supporting the initiation of the proceeding that he believes the FCC does not have the power to change the cap – only Congress can do that, as Congress set the cap and did not provide explicit authority for the FCC to review or amend it. The two Democratic Commissioners also questioned that authority – so one of these three Commissioners would have to change their initial understanding of the law for any change to become effective, or Congress would have to step in. Continue Reading Comment Dates Set on National TV Ownership Caps – Can and Should the FCC Amend the 39% Audience Cap?

Last week, Commissioner O’Rielly published an article on the FCC blog, suggesting that one of the next steps in the FCC’s Modernization of Media Regulation initiative should be the review of the FCC rules setting obligations for television stations to air educational and informational programming directed to children.  Stations are required to air an average of 3 hours of educational and informational programming per programming stream, and there are a host of related obligations generally requiring that the programming be run at regular times and be at least 30 minutes in length.  The rules also limit the ability to count repeats of such programs and requires that this programming be advertised in local programming guides.  We have written about fines or warnings that the FCC has issued in many cases, including questioning whether programming classified as educational and informational really should have been classified in that manner, for failing to have an onscreen “E/I bug” labeling, for counting one-time programs to meet the requirement for 3 hours of regularly scheduled programs, the programming as educational, and for failing to publish information about these programs in local program guides.

The Commissioner raised the question of whether the obligation, adopted in the 1990mos (see the FCC order here) really continues to make sense in today’s media marketplace.  So much has changed in the last 23 years, including the explosion of different sources of educational programming for children – including cable, Internet and other sources.  No longer are TV stations the only sources of video programming – and, in a world where even Big Bird has moved to a cable platform, there is a real question as to whether over-the-air television stations are even the best platforms for the delivery of such programs.  With so many competing sources of children’s programming, the Commissioner asked whether there is really a need for each station to do 3 hours of such programming on each of its channels.  Certainly, there have been questions of whether quality programming can be produced to meet the obligations for each channel and subchannel, when the new program sources are splintering the potential audience for any such programs.  The Commissioner also suggests that the current rules limit creativity in programming – forcing broadcasters to spend money on 30-minute on-air programs and not on other potential ways of meeting the needs of children, e.g. through short-form programs or online information. Continue Reading Time for the FCC to Review Children’s Television Educational Programming Obligations of Broadcasters?  Commissioner O’Rielly Thinks So

As we wrote last week, Prometheus Radio Project and the Media Mobilizing Project have filed an appeal of the FCC’s November decision to eliminate the newspaper-broadcast and radio-television cross-ownership rules and to relax the local TV ownership rules (see our summary here).  These groups have now filed a request – an Emergency Petition for a Writ of Mandamus – asking not only that the Court put the rule changes on hold, but also that the Court appoint a “special master” to oversee the FCC’s further action on the ownership rules.  The request to put these rules on hold could, if adopted, block transactions that are pending or those that parties are planning on filing to take advantage of the changes in the ownership limits.  The request also asks that the case be assigned to judges on the Third Circuit who have dealt with prior appeals of the FCC’s ownership rules and have, in a few cases, overruled those decisions (see, for instance, our article here).

These public interest groups allege that the FCC has ignored prior decisions of the Court which the groups characterize as requiring that the FCC look at the impact of any rule change on minority ownership, and look for ways to enhance ownership diversity, before any changes are made in the ownership rules.  Of course, the same court has also suggested that the FCC do away with the newspaper-broadcast cross-ownership rules and recognized that other changes in the ownership rules (like on JSAs) need not be stopped in their tracks (see our post here on one such order from the Court).  And several broadcast owners previously asked the Third Circuit to wipe all the media ownership rules off the books—creating, in effect, complete deregulation in the industry. While the court declined to do so, it noted that “this remedy, while extreme, might be justified in the future if the Commission does not act quickly to carry out its legislative mandate.”

So the public interest groups’ filing is, as is always the case, one side of the story.  We will be watching to see further developments in this case in the near future.  As the ownership decision is set to go into effect on February 7 (see our post here), if any action is taken on this motion, it would have to be taken quickly.

 

 

In looking at today’s deregulatory FCC, one might think that the Commission would look to the intent of a rule, rather than focusing on the details of the language implementing that rule. But in the case of a San Francisco TV station asking to be carried on DISH’s satellite television system pursuant to the rule that requires a satellite broadcaster who carries one local TV station to, upon request, carry all stations in the market (the “carry one, carry all” rule), those details became very important to the FCC. In a decision released earlier this week, the FCC’s Media Bureau denied the carriage request as the rules state that such requests have to be sent by certified US mail, return receipt requested. The station’s request was instead sent by Priority Express Mail. While there seemed to be no question of whether the carriage request was received by the October 1 deadline for the service of such requests, the decision looked to the language of the rule which states: “an election request made by a television station must be in writing and sent to the satellite carrier’s principal place of business, by certified mail, return receipt requested.” Because the process outlined in the rules was not followed, the decision rejects the carriage request.

What is the lesson of this case? Read the FCC’s rules very carefully and follow the procedures that are set out in those rules. Any adverse party who is looking for a way to deny your request can exploit any deviation from the language of the rules to try to deny you what you want. In this case, the FCC decision even noted that the FCC is thinking of changing the delivery method for most MVPD notices (see our article here), but until the rule is changed, the rule specified a process, and where that process was not followed, the relief the station sought was denied.

The FCC this week published a Small Business Compliance Guide for companies looking to take advantage of the FCC’s elimination of the main studio rules and the studio staffing requirements associated with those rules (see our articles here and here summarizing the rule changes). The Compliance Guide points out that stations looking to eliminate their main studios still must maintain a local toll-free telephone number where residents of the community served by the station can call to ask questions or provide information to the licensee. The Guide also references the requirement that access to the public file must be maintained. While, by March 1, all broadcast stations (unless they have obtained a waiver) will have their public files online (see our article here), it is possible that some stations may have a remnant of their file still in paper even after the conversion date. “Old political documents” (documents dealing with advertising sales to candidates, other candidate “uses,” and issue advertising) that were created before the date that a station activates its online file for public viewing need not be uploaded but can be kept in a paper file for the relevant holding period (generally two years). If the station decides not to upload those old political documents, or closes its main studio before they have gone live with their online public file, they will need to maintain a paper file in their community of license. The Guide also mentions how Class A TV stations, which are required to show that they originate programming from their local service area, will be treated since they will no longer have a legally mandated main studio. But are there questions that the Guide does not address?

We think that there are, and that broadcasters who are considering doing away with their main studio need to consider numerous other matters. First, and most importantly, the obligation for a station to serve its local community with public interest programming remains on the books. So stations need to be sure that they are staying in touch with the local issues facing their communities, and they need to address those issues in their local programming. Addressing these issues needs to be documented in Quarterly Issues Programs lists which are the only legally-mandated documents that demonstrate how a station has served its community. There are other issues to consider as well. Continue Reading What Issues Should Broadcasters be Considering When Taking Advantage of New Rules Abolishing Main Studio and Staffing Requirements?

The FCC yesterday issued a Hearing Designation Order for two AM stations in Virginia as these stations were silent for most of their license renewal terms. One of the two stations was on the air for only 54 days out of the 3.4 years that the licensee held the station during the license term, and only 66 days out of the over 6 years since the term ended. The second station operated for only 48 days of the 3.4 year license term, and 309 days of the 5.3 years following the term, and then only at a reduced power covering only a small portion of its city of license. Given these brief periods of operation, the Commission determined that it could not make the finding required by the Communications Act necessary to justify a renewal – that the station had served the public interest during its license renewal term. Thus, the licenses were designated for a paper hearing, where the licensee has the opportunity to come forward with evidence of its service to the public during the license term, and the FCC will then decide whether or not to renew the license.

This case follows several others about which we have written (see our articles here, here and here), where the FCC has questioned whether stations that were off the air for significant periods deserved a license renewal. The cases all stem from radio station license renewals filed during the last license renewal window from 2011 to 2013. In some cases, this seemed to take licensees who had consistently received FCC approval for extended periods of silence by surprise when, even though the FCC had approved their silence, the FCC decided that the prolonged silence meant that their licenses could be put in jeopardy. These FCC actions were based on a decision in 2001 where the FCC determined that a station that had been silent for prolonged periods had not served the public interest, but that the Commission could not deny its license renewal because the broadcast community had not been put on notice that long periods of silence would put a license renewal in jeopardy. The recent decisions look to the 2001 case as putting the industry on notice that the Commission’s policy going forward would be to deny licenses where stations had been off the air for most of their renewal term – though that policy did not become evident until a decade later when it was enforced during the next license renewal cycle starting in 2011. These recent cases indicate the current thinking of the FCC. With the next radio license renewal cycle beginning in 2019, licensees that have stations that are currently silent should make efforts now to get back on the air on a long-term basis to avoid having these issues brought up when their next license renewals are being evaluated.

The Copyright Royalty Board on Friday published in the Federal Register its decision setting the royalty rates that noncommercial broadcasters will pay to the performing rights organizations for the public performance of musical compositions in over-the-air broadcasting during the period 2018-2022.  The rates reflect settlements between ASCAP, BMI and SESAC and various organizations representing noncommercial broadcasters. The Corporation for Public Broadcasting agreed to one set of rates paid to cover NPR and PBS affiliates. The NRB (the religious broadcasters’ organization) agreed to another set of rates that apply to non-NPR radio stations not owned by colleges and universities, setting out rates that these noncommercial stations pay to each of the three legacy performing rights organizations. For these radio stations, the rates are based on the population served by each noncommercial station. College and university-owned stations can take advantage of a third set of rates, based primarily on the number of students in the school.

Interestingly, the newest PRO, GMR (about which we have written many times in connection with its battles with commercial radio – see for instance our articles here and here), did not file to participate in this proceeding when the proceeding began in early 2016 (see our article here on the commencement of the proceeding). The settlements approved by the CRB recognized that there may be some songwriters and publishers who are not members of ASCAP, BMI and SESAC but have music that is played on the air. A $1 fee to cover this unaffiliated music was provided in the settlement agreements. Only after these settlements were fully negotiated, filed with the CRB for approval, and published in the Federal Register as required by applicable law (well after what would otherwise have been the time for the litigation over the royalty rates had there been no settlements), GMR objected arguing that it should have been allocated royalties equal to those that SESAC is to receive. In the order published in the Federal Register on Friday, the GMR claim was rejected as being barred by the Copyright Act which effectively prohibits organizations from sitting back and ignoring a proceeding until the very last moment. Only “parties” to a proceeding, those that had timely participated in the case, are entitled under the law to object to a settlement and offer alternative proposals. Thus, for the five year period for which these royalties are in effect, this decision settles what the noncommercial broadcaster pays for the public performance rights to musical compositions for over the air broadcasts.

As anyone who had turned on TV, listened to the radio, looked at the Internet or read a newspaper knows, the Federal government ran out of money at midnight on Friday, and news outlets are calling it a government shutdown.  But, unlike shutdowns in the past where all agencies closed their doors at the same time (see our articles here, here and here), not all agencies will be closed for business on Monday, even if no settlement is reached before then.  The FCC on Friday announced that they had sufficient funds to keep running normally through the coming week, seemingly postponing closing until after business is done on January 26.  We have even heard that FCC auctions (including the upcoming filing window for FM translators for AM stations) may be funded differently than the rest of the agency, and may continue even if there is no resolution to the shutdown, though we will have to wait for official confirmation that the filing window will go on.

Other Federal agencies with which media companies regularly deal need to check with the agency to see what their status is.  The Copyright Office has an announcement on its website that it is closed and its website frozen in the same form that it had at midnight on Friday.  By contrast, the Patent and Trademark Office states on its website that it has sufficient funds from prior appropriations to continue to function “for a few weeks.”  The FAA is slightly more vague – saying that it will continue to perform only “exempt functions” but, other than to say that airport controllers and security will remain functioning, there is no definition as to what exempt functions include.  The FTC website is totally silent about the shutdown (we understand that they will be shut down, but no statement appears on their website, so watch for more information).  So if there is no resolution of the impasse over government funding, and you have business with the Federal government on Monday, find out from the agency what their status is, and how the shut-down is affecting them.

Prometheus Radio Project and Media Mobilizing Project, public interest groups who have been opponents of relaxation in the FCC’s broadcast ownership rules, have filed the first Petition for Review of the FCC’s Order on Reconsideration of the Quadrennial Review of those rules. In November, the FCC by a 3 to 2 vote eliminated the rule requiring that eight independent television voices remain in a market before a TV duopoly would be approved, eliminated the newspaper/broadcast and radio/television cross-interest rules, and made other changes (which we summarized here). The petitioners filed their appeal in the Third Circuit, which has for more than a decade heard appeals of FCC ownership rulemakings, and has often been skeptical of FCC actions (though most recently, as we wrote here, seemed to express some views that the newspaper/broadcast cross-ownership ban was outdated). In any event, these groups have filed before the effective date of the new rules, and there is some thought that they may seek a stay of that effective date (the filing of the appeal itself does not itself stay the effectiveness of the decision). Stay tuned….