The FCC, apparently not in a holiday mood, yesterday released a Notice of Apparent Liability proposing a $13,376,200 fine against Sinclair Broadcast group for alleged violations of the sponsorship identification requirements of Section 317 of the Communications Act and Section 73.1212 of the FCC rules. The FCC alleges that program segments contained in news broadcasts of certain Sinclair stations and certain program-length reports featured stories about the Huntsman Cancer Institute which were not tagged as being sponsored – even though they were broadcast as part of a contract that required that Sinclair air advertising for the Institute and develop programming about the Institute’s activities.

While the amount of the fine is large given the thousands of alleged broadcasts missing the sponsorship tags, the Commission’s basis for the fines are not new. The FCC has previously fined stations for news segments that were sold as part of a commercial package and aired without sponsorship identification tags (see our article here.)  Accepting any consideration, even video footage, from a commercial entity, can be seen by the FCC as consideration requiring sponsorship identification. See, for instance, our article here about one such case. The stand-alone programs that Sinclair argued were identified as having been sponsored were found wanting by the FCC as, while the fact that the programs were sponsored was made clear, the actual sponsor’s name was not explicitly stated in the announcement. The Commission rejected claims that the visual depiction of the Institute’s logo that was shown visually just before the sponsorship announcement, and a welcome from the announcer thanking the audience for joining in the broadcast “from the Huntsman Cancer Institute,” were sufficient to notify the audience as to the sponsor of the broadcast. As in cases we wrote about here and here, the FCC takes a hard line on these cases, requiring that the name of the sponsor, and the fact that they sponsored the programming be presented clearly so that any viewer will know who is sponsoring a broadcast program. Continue Reading Proposed $13,376,200 Fine Illustrates FCC Concern over Sponsorship Identification Issues

The FCC this week announced the filing of two applications seeking broadcast acquisitions by non-US based companies. In one available here, a company controlled by Mexican citizens would go from 25% to 100% ownership and control of a company that owns 2 FM stations in California and Arizona. In another, available here, an Italian company would acquire a number of radio stations in Florida. Each of the FCC notices ask for public comment on the proposed acquisitions.

As we wrote here, early this year, the FCC allowed an Australian couple to acquire a number of US broadcast properties, and (as we wrote here, here and here) the FCC has otherwise liberalized its rules to permit up to 100% foreign ownership of US stations where there would be no security risk to US interests from the purchase of the stations by foreign individuals or companies. This is a dramatic reversal of past precedent restricting “alien” ownership of US broadcast stations, and we have expected more foreign companies to make US investments in broadcast companies. Perhaps these two cases signal a start of a new wave of investment into the US broadcast market.

The FCC yesterday issued a Public Notice announcing the immediate freeze on the filing of minor change applications for LPTV and TV translator stations. This is to stabilize the FCC’s database so that applicants in the upcoming window for the filing of displacement applications by LPTV and TV Translator stations displaced by the incentive auction will have an opportunity to locate new channels on which they can operate. Translators and LPTV stations were displaced both because of the contraction of the TV band after the incentive auction repurposed TV channels above 37 for wireless uses, and because full-power and Class A TV stations were repacked into the remainder of the TV band, in some cases onto channels that would cause destructive interference to the service provided by LPTV and translators which are secondary to full-power TV stations.

The Commission has promised to open a window for the filing of “displacement” applications for LPTV and TV translator stations where they can seek new channels in the core TV band on which they can operate. We wrote about the FCC’s plans for that filing window here. Now that this freeze notice has been issued, we would expect that the dates for the displacement window will be announced shortly. The announcement of those dates is supposed to provide give 60 days’ notice of the opening of the window, and the window is to last 30 days.   If your stations are affected, keep your eyes open during the holidays for announcement of the window dates, which we expect will put the filings in the early part of next year.

Yesterday, the US Court of Appeals for the Second Circuit in a “Summary Order” that the Court said does “not have precedential effect,” upheld an even briefer decision of the US District Court Judge who oversees the BMI antitrust consent decree, determining that the Department of Justice was wrong in its interpretation of the consent decree requiring that all songs licensed by BMI represent 100% of the musical work. This is a very arcane issue very deep into the nitty-gritty of copyright law – and an issue that we wrote about several times before, including our articles here and here.

The issue arises as many songs are written by several co-writers. Often times, it is simply a composer of the music and someone else who writes the lyrics. But more and more in many musical genres, there are multiple people who receive songwriting credits on any single song. Each of these authors is deemed to have a “fractional interest” in the song. When these multiple authors of a song belong to different performing rights organizations (e.g. ASCAP, BMI, SESAC and GMR, organizations which authors and their publishing companies join to simplify music licensing to users of lots of music – like radio stations, digital music services, and even bars, restaurants and retail establishments that play music to entertain customers), the issue addressed in this case arises. The question that parties before the court have been debating is whether, when one of these PROs signs a deal with a music user, the user gets the rights to actually perform the song, or whether they simply get the fractional interest in the song that is held by the songwriter who is a member of the PRO, which would require that the user also get the rights to the other fractional interests before the user can play the song. Continue Reading Court of Appeals Upholds BMI Decision Allowing Fractional Music Licensing – What Are the Issues?

The Copyright Royalty Board issued a notice yesterday, here, that summarized its decision on the sound recording performance royalties for 2018-2022 to be paid by Satellite Radio and “Pre-existing Subscription Services” (“PSS”), essentially Music Choice for its music service usually packaged with cable television subscriptions. The terms associated with the new rates, embodied in the new rules adopted by the CRB, are available here. The CRB announcement states that the Sirius XM rates will be 15.5% of revenue, which represents an increase from the 11% they are paying currently. The terms for these rates set out a means by which Sirius XM can reduce the revenue subject to the royalty by directly licensing music or using pre-1972 sound recordings, the percentage of such songs being determined by determining their percentage of play on Sirius XM Internet radio channels that correspond directly to their satellite service.

By contrast, the rates for Music Choice (and any other similar PSS having been established prior to 1998 when the Digital Millennium Copyright Act was adopted that may still be in existence) decreased from 8.5% of revenue to 7.5%, the rate that had been in effect in 2012. Our article here describes the decision in 2012 setting the current royalty, and the article here summarizes the Court of Appeals decision upholding the 2012 CRB determination. Continue Reading Copyright Royalty Board News – Sirius XM Rates Going Up, Some Cable Radio Rates Going Down, and Webcasting Rate Appeal to Be Argued in February

Early this month, the Copyright Office released a Notice of Proposed Rulemaking dealing with two separate but related issues. First, it asks for comments on certain changes in the reporting that cable systems and satellite TV operators provide to the Copyright Office on the programming that they carry – information that is used to provide baseline information for the Copyright Royalty Board to use in its determinations on how the royalties paid by cable systems for the carriage of television stations are distributed to the programmers and content owners that provide programming to the stations.   While certainly the reporting of information used to distribute the royalties paid by cable and satellite for their compulsory license to carry the programming broadcast by TV stations is important, perhaps the more interesting portion of the Notice was the questions that it asked about the definition of a cable system – proposing to adopt the definition of cable systems that exclude Internet-based systems that has been reflected in recent court cases.

We have written about the issue of whether online platforms qualify for the compulsory license to carry television stations many times (see for instance our article here when the issue was first raised by Aereo), when services such as Aereo and FilmOn argued that they could carry television stations on their online platforms without specific consent from the stations as they qualified as cable systems.  These arguments have been consistently rejected by the Courts (see, for instance, our articles here and here) , most recently in the Spring when the 9th Circuit Court of Appeals overturned the one District Court decision that had found that the argument advanced by FilmOn had merit (see our summary of the Ninth Circuit decision here).  The Copyright Office proposes to adopt that definition. Continue Reading What is a Cable System – The Copyright Office Wants to Know

The Copyright Office yesterday issued a “Final Reminder” to Internet Services that want to be able to assert that they are insulated from Copyright liability for content posted on their sites by third-parties.  Services need to be sure that they have used the Copyright Office’s new online system to the register the names of their designated agents who can be served with take-down notices from copyright owners demanding that content that infringes on intellectual property rights be removed from the website. For that registration to be valid to preserve the “safe harbor” of Section 512 of the Copyright Act for copyright infringement contained in third-party content, electronic registration of the agent for take-down notices must be completed by December 31. Previous registrations done in the Copyright Office’s paper system will no longer be valid after the end of this year.  For more information, see our articles here and here.

With the FCC about to propose changes in its national ownership cap for television at its meeting tomorrow (see our article here), we thought that we would take a look back to the week before Thanksgiving, when the FCC made some important decisions for the broadcast industry – including the approval of the Next Generation TV transmission standard and the change in numerous broadcast ownership rules.  We promised to take a deeper look at these decisions when the texts of the orders were released, and here is a look at some of the interesting items in the ownership decision.  We will only lightly touch on radio issues here, concentrating primarily on TV matters, as the FCC made few changes that directly affected radio, pushing most to the next Quadrennial Review of the ownership rules, likely to begin next year.  We’ll post some thoughts on radio issues at some point in the future.

Certainly, there was plenty of legal discussion about the standards for reconsidering an FCC decision (this reconsideration being a review of the FCC’s ownership order adopted under the last administration in August 2016).  While the FCC ultimately concluded that it could review the 2016 decision where it believed that there were substantial errors in the Commission’s initial decision, the legal wrangling over the process for the review is perhaps less interesting to most in the broadcast industry than is some of the other discussion contained in the order and what that may portend for further ownership review by this administration.  So let’s look at the FCC’s discussion of the various issues that it faced in the reconsideration order. Continue Reading A Deeper Dive on The FCC’s Ownership Order

A Notice of Apparent Liability released yesterday shows that the FCC is still enforcing its EEO rules even though those rules have been somewhat relaxed to reflect modern recruiting practices. As we wrote here, the FCC now allows a station to recruit to fill employment vacancies solely by using online sources. But, as we warned here, that does not mean that a station can ignore its obligations to document its EEO efforts and to otherwise observe all of the obligations set out in the EEO rules. In yesterday’s action, the FCC’s Media Bureau proposes a $20,000 fine for a license operating a 5-station cluster in South Carolina that allegedly did not keep good EEO records and, when subject to a random EEO audit, was unable to identify any recruitment sources for other than word-of-mouth recruiting for 6 of 11 hires over a two-year period. For several positions, the licensee was said to not even be able to provide information about any recruitment sources that were used by the station.

The FCC requires stations to use sources other than its existing employees to recruit to fill full-time vacant positions. Using simply word-of mouth recruiting is considered to be recruiting through the “old-boys network” that the FCC’s EEO rules are designed to overcome, so this violation alone was enough for the FCC to have concerns. But, according to the FCC’s Notice, that was not the only deficiency in the licensee’s paperwork. Continue Reading FCC Still Enforcing EEO Rules For Broadcasters – $20,000 Fine for Stations that Did Not Document EEO Outreach

The week before last, Bobby Baker, the head of the FCC’s Office of Political Programming and the acknowledged guru on political broadcasting issues, and I conducted a webinar for 20 state broadcast associations discussing the FCC rules regarding political advertising and related issues. We have done this seminar every other year for quite some time to help broadcasters prepare for an upcoming election year. Every time we conduct the session, we are faced with some new questions, usually not because the FCC rules have changed, but instead because new advertising practices have arisen in the industry. This year, one of the issues that prompted a question from the audience dealt with “programmatic advertising” – the question being how advertising bought through various programmatic platforms would play into the political broadcasting analysis that each station must conduct to prepare for the political season (including questions of political rates and access rights that might be affected by programmatic sales).

While most of the principles governing the FCC rules on political broadcasting are relatively established (and many are summarized in our Political Broadcasting Guide available here), new advertising practices and opportunities always raise questions as to how those established rules are to be applied. Programmatic buying of advertising time is one of those areas where these questions have arisen in recent years. In the last few years, programmatic buying has become the buzzword in broadcast advertising circles for both radio and TV. It is intended to make ad buying easier and more akin to the experience that ad buyers have when they place online advertising, allowing most of the buying process to take place from the buyer’s computer, anywhere and at any time, often without directly engaging with a station account rep. Continue Reading Political Broadcasting and Programmatic Buying – Issues to Consider