This week, the appointment of Commissioner Ajit Pai as Chairman of the FCC became official.  Since his appointment on Monday, he has released a list of acting bureau chiefs at the FCC (here), including naming Michelle Carey, a long-time FCC employee, as Acting Chief of the Media Bureau upon the departure of Bill Lake who held that position through Chairman Wheeler’s administration.  Chairman Pai also addressed the Commission staff, among other things talking about how much he loves working at the FCC and how important the staff is in accomplishing changes in regulations at the Commission (the speech is available here).

What can broadcasters expect from Chairman Pai?  We’ll be summarizing some of the issues now facing the Commission in the next few days.  But in the past, Commissioner Pai has been a big advocate of AM improvement, even moderating panels at NAB and other conventions to discuss ways to resolve AM issues.  He also has spoken out against restrictive ownership rules (a review of which are likely to be on the agenda shortly, see our articles here and here), and against many of the nitty-gritty regulations that broadcasters face – most recently about the noncommercial ownership reporting rules for Biennial Ownership Reports (see our post here).  So we are likely in for a deregulatory ride – how far and how fast remain to be seen.  Look for our upcoming posts on specific issues that may be on the table for the FCC.

Each year, we write about SoundExchange issuing notices of their intent to audit various digital music services to review their royalty reporting and payment.  This year is no different, with Federal Register notices recently being issued to audit certain companies in various services, including satellite radio, webcasters, broadcasters who stream, and business establishment services.  We wrote more generally about the music royalty audits here.  Be prepared, as you never know which services SoundExchange will choose to audit, and when they do, they can look at your records for the last three year.

While notices of these audits are public, the results are not.  So all we know is that a number of services will have to deal with SoundExchange’s auditors, who under CRB rules must be Certified Public Accountants.  If the audit does not find any major issues, SoundExchange pays for the auditor’s costs.  If there is a discrepancy where the service has underpaid by 10% or more, the service pays.  So be prepared!

A bill was introduced in Congress this week (see press release here) proposing to roll back the FCC’s requirement that noncommercial broadcasters, in connection with the Biennial Ownership Reports that are due by December 1 of this year, get an FCC Registration Number for every person who has an attributable interest in a noncommercial licensee. As we wrote here and here when the FCC adopted this requirement, and here when the FCC’s Media Bureau rejected reconsideration petitions just a few weeks ago, that would require noncommercial stations to get the Social Security Number from each of their Board members (or a substitute set of personal information including the last 4 digits of the Social Security Number) in order to apply for the FRN. While the personal information would not be made public, many worry that Board members, especially those serving on the Board of an organization where the broadcast operations are but a small part of the institution’s mission (e.g. a Board member on the Board of a university that has a radio license) would be reluctant to provide that information – and either discourage people from participating on the Board or put them in peril of FCC enforcement actions if they refuse to provide their personal information.

The introduction of the bill was hailed by Commissioner O’Rielly in a statement (here), where he expressed his hope that the information collection requirement would be repealed, either through this legislative action or by the FCC under the new administration which will start its work next week. Either way, noncommercial licensees may see some relief from this obligation. Stay tuned to see how this develops in the coming months.

Early this month, the Copyright Royalty Board announced that it will be starting a new proceeding to set the royalty rates to be paid by “business establishment services” for the rights to make ephemeral copies of sound recordings. The rates will apply for the period 2019-2023. Interested parties must file a Petition to Participate by February 2, along with a statement of their interest in the proceeding, and a check for $150 to cover filing fees. Details on the filing requirements are set out in the CRB’s Notice.

As we have written before, the “business establishment service” is different from most other CRB royalty proceedings. The parties subject to the royalty are the service providers who package music programming to be played by businesses and distribute that programming to these establishments like bars, restaurants, and retail stores. The establishments themselves have no obligation to pay a public performance fee for the sounds recordings played at their businesses (though they do have to pay for the underlying musical composition – the words and music – to performing rights organizations like ASCAP and BMI – see our articles here and here). But the services who package this programming and make temporary copies of the sound recordings in order to transmit that programming to their retail customers, are deemed to owe a royalty for the “ephemeral copies” that they make. In the past, these CRB cases have usually settled, establishing a percentage of revenue royalty with a fairly large upfront minimum fee (see our article here on the last settlement setting the rates at 12.5% of revenue with a minimum fee of $10,000). Parties who file to participate in this upcoming proceeding will be able to engage in settlement discussions over the new royalty or, if those discussions are not productive, to participate in the hearings that the CRB will hold in order to set the rates.

Last year, we posted some guidelines about engaging in or accepting advertising or promotions that directly or indirectly alludes to the Super Bowl without a license from the NFL. We are at that time of year again, so here is an updated version of our prior post.

In addition to the monies it receives annually for the right to broadcast the Super Bowl, the NFL receives more than $1 billion in income from licensing the use of the SUPER BOWL trademark and logo. Not surprisingly, is extremely aggressive in protecting its golden goose from anything it views as unauthorized efforts to trade off the goodwill associated with the game. Accordingly, with the coin toss almost upon us, advertisers need to take special care before publishing ads or engaging in promotional activities that refer to the Super Bowl. Broadcasters and other news publishers have latitude to use the phrase “Super Bowl” in their news and other editorial content, but they need to wary of engaging in activities, particularly in advertising and promotion, that the NFL may view as trademark or copyright infringement. (These risks also apply to the use of “Final Four” or “March Madness” in connection with the upcoming NCAA Basketball Tournament.)

Simply put, the NFL views any commercial activity that uses or refers to the Super Bowl to draw attention as a violation of its trademark rights. Many of the activities challenged by the league undoubtedly deserve a yellow flag. However, the NFL’s rule book defines trademark violations very broadly. If anyone were willing to throw the red flag to challenge the league’s position, a review from the booth might reverse some of those calls. Continue Reading As Super Bowl Approaches, Advertisers Should Be Aware of The NFL’s Efforts to Protect Its Golden Goose – 2017 Update

Commercial radio broadcasters have been seeing numerous communications over the last week about Global Music Rights (GMR) and its seemingly contentious music royalty negotiations with the Radio Music License Committee (RMLC). Many stations are confused about this controversy and what it is all about. The 5 questions below, and the links at the end of the questions, try to shed some light on the issues. Stations need to carefully consider their options, and seek advice where necessary, to determine what they will do by January 31 with respect to the interim license that GMR has offered to stations. The questions below hopefully provide some background on these issues.

 What is GMR and why isn’t the music they represent covered by the other organizations like BMI, ASCAP, and SESAC?

 GMR is a new performing rights organization. Like ASCAP, BMI and SESAC, they represent songwriters and collect royalties from music users for the public performance of these songwriter’s compositions. They will collect not just from radio, but from all music users – they have already reached out to business music services that provide the music played in retail stores, restaurants and other businesses and no doubt have or will license other companies that make music available to the public. Most songwriters represented by GMR used to be represented by ASCAP or BMI, but these songwriters have withdrawn from ASCAP and BMI and joined GMR, allegedly to attempt to increase the amounts that they are paid for the use of the songs that they have written. For radio, these withdrawals became effective on January 1 of this year, when the old license agreements between ASCAP and BMI and the commercial radio industry expired.

What does a station need to, in order to protect itself while negotiations are going on?

Because the penalties for playing a song without a license can be as much at $150,000 per song, stations either need to purge all GMR music from their stations or sign a license agreement with GMR. If you decide to purge their music from your stations, don’t forget about music that may appear in commercials or syndicated programming. Also remember that we are talking about the musical composition, not the recording of the song by any particular band or singer. Even the broadcast of a high school band playing a GMR song at half time of some football game, or the broadcast of a local middle school choral concert, could trigger the royalty obligation to GMR. Continue Reading Background on the GMR/RMLC Dispute – 5 Questions on the Basics of the Controversy

The FCC yesterday released its tentative agenda for its January meeting, to be held on January 31. This will be the first meeting of the post-Chairman Wheeler era, and the two Republican commissioners will be in the majority for the first time in 8 years. There is a single item on the tentative agenda – the abolition of the requirement that broadcasters maintain a paper public file, open for public inspection, containing letters and emails from the public about station operations.  The order also deals with the obligation of cable operators to maintain information about their headends in their public file. We wrote in more detail about the FCC’s proposal to abolish this requirement, here. On January 31, we may see the first deregulatory actions of this new Republican-majority Commission. It will be worth watching to get our initial indication of how the regulatory treatment of broadcasters may change under the new Administration.

The FCC today announced that it is extending, by one week, the time in which to file comments on the Petitions for Reconsideration of the FCC’s decision on media ownership rules. The challenges, about which we wrote here, deal with issues including the local television ownership limits, the newspaper-broadcast cross-ownership rules, the attribution for multiple ownership purposes of television stations subject to joint sales agreements, and the counting of radio stations in a local ownership compliance analysis when those stations are located in “embedded markets.” The new deadline for comments on the reconsideration petitions is now January 24, with reply comments now due February 3.

 

Late Friday, the FCC’s Media Bureau issued an order (at this time available in Word format only, here) clarifying its public file rules for political ads – both ads from candidates and from third-party groups.  The FCC’s clarifications require broadcasters who run candidate or issue advertising to include information about not only the candidates mentioned in an ad, but also any Federal issues that the ad addresses.  On sponsorship identification, the FCC focused on third-party ads, requiring that broadcasters make an inquiry as to the complete set of executive officers or the complete board of directors of any sponsor.  The FCC went on to admonish a number of stations for violating the rules but, as the rules were just clarified, only admonished these stations rather than issuing any fines. This decision was in response to complaints filed by the Campaign Legal Center and the Sunlight Foundation alleging the public file omissions of these stations – complaints that we wrote about here.

The FCC’s order interprets Section 315(e) of the Communications Act, which sets the rules for the disclosures required for political ads.  Under that Section, any political ad that deals with a legally qualified candidate, an election for a Federal office, or with any political issue of national importance, must disclose a variety of information.  That information requires that, in connection with any request for political time, the station must disclose in its public file (1) whether or not the request was accepted, (2) the class of time purchased, (3) the price at which it was sold, (4) the name of the candidate that the ad addresses or the election to which it is directed or the issue discussed, (5) if the ad was bought by a candidate’s authorized committee, the name of the committee and its treasurer, and (6) if the ad was not placed by a candidate’s committee, the name of the sponsor and, where the sponsor is not an individual, the name of the sponsor’s chief executive officers or its executive committee or its board of directors, plus the name, phone number and address of a contact person at the committee.  These requirements were clarified in several respects by the FCC’s order. Continue Reading FCC Clarifies Public File Obligations for Identifying Issues and Sponsors for Political Ads – Admonishes Numerous TV Stations for Violations

At the beginning of each year, we publish our broadcaster’s calendar of important dates – setting out the many dates for which broadcasters should be on alert as this year progresses.  The Broadcasters Calendar for 2017 is available here.  The dates set out on the calendar include FCC filing deadlines and dates by which the FCC requires that certain documents be added to a station’s public file.  These dates just recently changed for noncommercial broadcasters as the FCC suspended its requirement that noncommercial stations file Biennial Ownership reports every other anniversary of their license renewal filing (see our post here). Instead, their reports will be due on December 1 deadline which is the deadline for all stations, both commercial and noncommercial, to file these Biennial reports. That deadline is included on this calendar. In some states there are political windows even in what seemingly is an off year for elections (two governors and several big-city mayoral races are particularly noteworthy). The date for the beginning of the lowest unit rate window for the November general election is on the calendar, but stations need to check locally for primary dates and for any special elections that may be held in their service areas. Also included are some copyright deadlines, including dates to make payments to SoundExchange for Internet streaming royalties.

While the dates on this calendar may change, and new ones may be added, this at least gives you a start in planning your regulatory obligations. And, remember, you should always talk to your own attorney to make sure what dates are important to you.