Broadcasters and advertisers should take note of the more than 90 warning letters that the FTC sent out this week as a reminder of the need to disclose material sponsorship connections in social media promotions and endorsements.  The FTC has since 2009 announced a policy that any online content for which anything of value has been received must disclose that consideration – even social media posts (see our article here about that policy).  This is in the nature of the FCC’s sponsorship identification rules for broadcast content.   That same policy statement addressed the need for those making personal endorsements to make these sponsorship disclosures.  The recent warning letters are notable not only for their sheer number, but also because the warning letters were addressed to marketers and social media “influencers” – the individuals whose social media followings make their endorsements valuable.  To date, the FTC has only named marketers (Warner Brothers Home Entertainment and Lord & Taylor) in its social media endorsement cases.  Although the FTC did not say who received warning letters, its press release noted that the letters were “informed by petitions filed by Public Citizen and affiliated organizations” in September 2016.

By directing warning letters to marketers and influencers, the FTC is sending a firm reminder that both sides of a sponsorship arrangement need to disclose their connection, “unless the connection is already clear from the context of the communication containing the endorsement.”  Specifically, the FTC advises influencers that they must “clearly and conspicuously” disclose any material connection with a marketer; and marketers, in turn, should ensure that the influencers they sponsor disclose their material connections. Continue Reading FTC Puts “Influencers” on Notice:  Disclose Marketing Relationships in Social Media Posts

The FCC on Friday released a declaratory ruling making it significantly easier for broadcasters and MVPDs to meet their EEO obligations imposed by FCC rules.  These rules for broadcasters and MVPDs (cable and satellite TV providers) requires that these businesses, when filling job openings, widely disseminate information about the openings in a manner that is expected to reach members of all community groups in the area from which employees are likely to be found.  In the past, under the rules adopted in 2002, the Commission has not allowed recruitment to be conducted solely through online sources.  Instead, the 2002 order suggested that the daily newspaper would, in many communities, be an outlet that would reach the diverse groups within a community – though most broadcasters supplemented newspaper publication with notifications to numerous schools, community organizations, educational institutions and others who might possibly refer employee candidates.  Stations that relied solely on online sources faced substantial fines from the FCC (see the cases we summarized here and here).

The decision on Friday recognized that we are in a different world than when these rules were adopted almost 15 years ago.  Now, most recruiting is done online.  Thus, in response to a petition I filed on behalf of clients (summarized here), the FCC determined that a broadcaster or MVPD can rely solely on online sources in its recruiting.  It no longer needs to use the newspaper, reach out to community groups community groups or even use its own airwaves to give notice of job openings to satisfy the wide dissemination obligation.  The FCC encouraged stations to continue to use some of these outreach methods, but it is no longer required.  The broadcaster or MVPD needs to be reasonable in picking online sources that are likely to reach the members of various groups within its community – though the decision as to exactly which online employment sources to use will be left to the good-faith discretion of the broadcaster or MVPD.  The Commission went so far as to say that, depending on the circumstances, a single online source could reasonably be found to be sufficient. Continue Reading FCC Finds Online Sources Satisfy EEO Requirements for Wide Dissemination of Job Openings by Broadcasters and MVPDs

With the FCC last week announcing the results of the reverse auction portion of the incentive auction and setting the timetable for the repacking of the TV spectrum, the next question on everyone’s mind will be how successful the television industry will be in adhering to the schedule established by the FCC for clearing the TV spectrum above Channel 37. The FCC yesterday released a Public Notice showing how it will be doing its part to monitor and assist in that repacking. The FCC announced that it is appointing 10 Commission employees to serve as “Regional Coordinators” to help ensure a “smooth and efficient post-auction transition.” These coordinators will each have a geographic region to which they are assigned. They will keep in touch with the television stations affected by the repacking in their area to assess them stations progress in complying with the required channel moves and to assist where possible in smoothing issues that may arise in that process.

The Public Notice provides the names and contact information for each of these coordinators and a list of the stations to which they are assigned. The coordinators will be reaching out to stations to introduce themselves in the near future. The notice also provides the names of FCC contacts for LPTV stations that will be affected by the repacking. As we all know that applications can at times get bogged down at the FCC, and unexpected regulatory issues can from time to time arise in connection with any broadcast construction project, it would seem like a good idea for station personnel to get to know their coordinators so that stations can feel comfortable in seeking the coordinators aid should such issues pop up during the transition process.

Last year, the FCC made some modifications in its assessment of foreign ownership of companies with broadcast interests, relaxing some of their compliance rules to take account of the realities of the current public stock trading marketplace – realities that, using the FCC’s old policies, made determinations of the level of foreign ownership in any company difficult. We wrote about the changes made by the FCC here. Those rules became effective yesterday, when the approval of the changes by the Office of Management and Budget under the Paperwork Reduction Act was published in the Federal Register.

As we wrote here, the FCC has already referred to these new rules in assessing and approving broadcast ownership in excess of 25% of several broadcast companies. In fact, as we wrote here, the FCC has even allowed 100% ownership of a privately-held company with broadcast interests – where a husband and wife team from Australia purchased a number of primarily radio stations in Alaska and Texas. With the new rules now effective, the opportunity for more foreign investment in US broadcast stations is highlighted once again.

Last week, we wrote about two of the three broadcast items to be considered at the FCC meeting on April 20. We wrote here about the draft order to restore the UHF discount, and here about the relaxation of the restrictions on fund-raising for third parties by noncommercial stations. The third item, also related to noncommercial licensees, is the resolution of the long-simmering dispute about whether or not to require that those individuals with attributable interests in noncommercial broadcast stations – officers and board members – to provide their Social Security Numbers or other personal information to the FCC to obtain an FCC Registration Number – an FRN. The draft order released last week indicates that the FCC will eliminate that requirement at its April 20 meeting.

The obligation to obtain an FRN was adopted so that the FCC could comprehensively track the ownership of broadcast stations, and determine the interests of individual parties across the broadcast media nationwide. This was principally done for purposes of assessing the diversity of ownership of the media – including by minorities and women. By making each attributable owner get their own FRN, interests across the broadcast media landscape could be tracked with greater precision. However, objections were raised when the FCC proposed to apply this obligation to noncommercial broadcasters, requiring that officers and board members provide their Social Security Number or other personal information to obtain an FRN. Despite these objections, the previous Commission ordered noncommercial broadcasters to provide this information, going so far as to suggest that attributable interest holders who did not provide the information necessary to obtain an FRN could be sanctioned. See our articles here and here. The current FCC under Chairman Pai rescinded the decision of the Media Bureau upholding the obligation (see our post here) – leading to the draft order to be considered at the April 20 meeting. Continue Reading FCC to Eliminate Need for Social Security Numbers from Board Members of Noncommercial Licensees for Biennial Ownership Report

In the last month, there have been two bills introduced in the US House of Representatives seeking to impose a performance royalty for sound recordings on broadcast radio stations in the US. The bill introduced yesterday, The PROMOTE Act (standing for the Performance Royalty Owners of Music Opportunity to Earn Act – whatever that may mean, can be found here), seems to have garnered more attention, perhaps as it was promoted by its principal sponsor, California Congressman Darrell Issa, as giving performing artists the right to decide whether or not their music is played by radio stations. In fact, it does not do that, instead merely setting up a royalty system similar to that in place for Internet radio operators, allowing broadcasters to play music only if they pay royalties on “identical” rates and terms as do webcasters.

The PROMOTE Act proposes to add to the Copyright Act’s Section 106 enumeration of the “exclusive rights” given to copyright holders a provision stating that sound recording copyright holders (for most popular releases, that is usually the record company) have the exclusive right to authorize the performance of recorded songs by broadcast radio stations. That is in addition to the existing right to authorize the playing of these songs by digital audio transmissions (e.g. webcasters, satellite radio and digital cable services). But, like with the right to play music by digital services, that right to prohibit the playing of recorded songs is not absolute. Instead, like for the digital services, through a proposed amendment to Section 114 of the Copyright Act, broadcasters will have the right to play the songs if they pay a royalty set by the proposed legislation at “rates and terms” “identical” to those paid by webcasters. Let’s look at these issues more closely. Continue Reading New Congressional Attempts to Impose a Performance Royalty for Sound Recordings on Broadcast Radio, Including the PROMOTE Act – What Do They Provide?

Prometheus Radio Project, an advocacy group which has been active in lobbying for the interests of LPFM applicants and licensees, has asked that the FCC stay the April 10 effective date of the new rules liberalizing the location in which FM translators serving AM stations can locate (see its petition here). We wrote about those new rules here and here. Prometheus alleges that the liberalization in the rules will restrict the areas in which LPFM stations can locate their transmitter sites if the sites from which they currently operate become unusable. Their allegation is that the moves by these translators will “box in” LPFM stations at their current site. Based on this alleged harm, Prometheus asks for a stay of the effective date of the new rule while they appeal its adoption.

The petition does not say how this phenomena of “boxing in” LPFM stations will occur simply because translators can be located at distances greater than currently authorized. The new rules do not authorize new FM translators, and (contrary to some broadcast trade press reports published today) they do not give broadcasters another opportunity to move translators great distances from their current locations. All they do is change the rules so that, instead of limiting FM translators to the areas where their 1 mv/m contour does not extend beyond the lesser of the AM station’s 2 mv/m contour or a circle 25 miles from the AM station, the translator can operate in any area where its contour does not extend the 1 mv/m beyond the greater of the 2 mv/m contour or 25 mile circle. The new rules do not increase the permitted power of translators or in any other way significantly change their preclusive effect. In short, who is to say whether a translator will impose greater restrictions on LPFMs from their current locations or from locations authorized under the new rules? Continue Reading Request Filed with the FCC to Stay Effective Date of New Liberalized Rules on the Location of FM Translators for AM Stations

The FCC yesterday released the agenda for its April 20th meeting – and it includes three broadcast items.  Two deal with noncommercial broadcasters (undoing the requirement for noncommercial broadcasters to get Social Security Numbers from its board members so that they can acquire an FCC Registration Number for them – see our articles here and here on this issue – and one allowing noncommercial broadcasters to interrupt programming to raise funds for unrelated non-profit organizations- see our article below).  But in a decision which, if adopted, will likely have an immediate impact on the market for the purchase and sale of television stations, the FCC released a draft order, to be voted on at the April 20 meeting, proposing to reinstate the UHF discount.

That discount, in assessing the broadcaster’s compliance with the 39% cap on the nationwide audience that any broadcaster can reach with TV stations in which it has an attributable interest, accords half the weight to the population of television markets in which a broadcaster holds a UHF station.  The discount was adopted back in the days of analog television, when UHF stations had signals that were harder for most viewers to receive, and the stations were more expensive to operate than VHF stations.  In the digital world, that deficit has disappeared, underlying the September decision of the Commission (which we summarized here) to abolish the discount.  The September decision did away with the discount, and the Commission had effectively put on hold television transactions that would exceed the cap for several years while considering the September order.  This effectively froze the acquisition of new stations by the major television groups – a freeze that may quickly thaw if the Commission follows through and adopts its draft order on April 20. Continue Reading FCC Releases Draft Order to Reinstate UHF Discount at April 20 Meeting – A New Round of TV Consolidation? 

The FCC released the agenda for its April 20th meeting – and it includes three broadcast items.  Two deal with noncommercial broadcasters (undoing the requirement for noncommercial broadcasters to get Social Security Numbers from its board members so that they can acquire an FCC Registration Number for them – see our articles here and here on that issue – and one allowing noncommercial broadcasters to interrupt programming to raise funds for unrelated non-profit organizations).   The third deals with the UHF discount (see our summary of this proposal here).  The third-party fundraising issue has been pending at the FCC for almost 5 years, when the FCC proposed to relax its policy that prohibits noncommercial broadcasters from interrupting normal programming to raise funds for “third-party” nonprofit groups (see our article here on the proposal).  A noncommercial station can raise funds for nonprofit groups during normal program breaks in PSAs or other similar brief announcements, but under current policy, they cannot conduct a telethon or radiothon to raise funds for the Red Cross, a local charity, a religious organization or even for the football team or orchestra at a college or university that owns a noncommercial broadcast station.

The FCC yesterday released its proposed order that would change the current policy.  It would allow a noncommercial station to raise funds for another non-profit entity, but only for 1% of its airtime – about 87 hours a year.  However, this relaxation would be limited to noncommercial stations that do not receive CPB funding, as many PBS and NPR stations opposed the change fearing that they would be deluged by requests for funding from local nonprofits (including, for university licensees, from their licensees themselves for non-station related financial needs).  It was feared that such campaigns could undermine the noncommercial service provided by these stations, and could interfere with the station’s own fundraising. Continue Reading FCC Proposes to Adopt Rules Allowing Fundraising for Third-Party Nonprofit Organizations By Non-CPB Noncommercial Stations

With April Fools’ Day only a few days away, we need to play our role as attorneys and ruin the fun by repeating our annual reminder that broadcasters need to be careful with any on-air pranks, jokes or other bits prepared especially for the day.  While a little fun is OK, remember that the FCC does have a rule against on-air hoaxes. While issues under this rule can arise at any time, broadcaster’s temptation to go over the line is probably highest on April 1.  The FCC’s rule against broadcast hoaxes, Section 73.1217, 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 that fits within this definition and causes a public harm, 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 falsely claimed that they had been taken hostage, and another case where a station broadcast bulletins reporting that a local trash dump had exploded like a volcano and was spewing burning trash.  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 responding to real emergencies.  In light of this sort of incident, the FCC adopted its prohibition against broadcast hoaxes.  But, as we’ve reminded broadcasters before, the FCC hoax rule is not the only reason to be wary on April 1.  Continue Reading Plan Your April Fools’ Day On-Air Pranks with the FCC in Mind