The FCC’s Media Bureau yesterday issued an order denying reconsideration of the full Commission decision from last year, synchronizing the Biennial Ownership Report filing requirement for noncommercial broadcasters with that of commercial broadcasters, and requiring that all individuals who have attributable interests in these stations obtain an FCC Registration Number (an “FRN”)(see our summary of the FCC order from last year here). Yesterday’s decision triggered a rapid objection from the Commission’s Republican Commissioners, promising to review this decision after the Inauguration when Republicans will likely control the FCC. What is the controversy?

Obtaining an FRN requires supplying the FCC with an individual’s Social Security Number (“SSN”). Last year’s order also provided that stations could obtain a “Restricted Use FRN” for attributable interest holders who did not want to provide their SSN to the FCC, but such individuals would still have to provide at least the last 4 digits of their SSN, along with other specifically identifiable information including their residence address and date of birth. While none of this information is public (it is merely stored in FCC databases that issue the FRN), many noncommercial licensees objected to the requirements, believing that members of their governing boards, who are considered attributable owners for FCC purposes, may be very reluctant to provide that information to stations or the FCC. They pointed particularly to situations like university or other stations operated by educational institutions, where board members volunteer not because they are interested in broadcasting, but instead because they hope to influence the educational objectives of the university. The fear is that having to provide this information could discourage people from serving on these governing boards of educational and similar institutions. In some cases, noncommercial station board members have no real choice about their service – the position is required by virtue of public posts such as university president or school superintendent. See our summary here of those objections. Continue Reading FCC Denies Reconsideration of Noncommercial Broadcasting Ownership Report Requirements – But Signs that New Commission May See Things Differently

In a decision released yesterday, the FCC issued a Declaratory Ruling permitting certain identified foreign companies and individuals to own up to 40% of the voting interests in Univision, and allowed aggregate foreign ownership of up to 49% of the equity of the company. This decision noted that it was based not on the new rules for analyzing foreign ownership in broadcast stations approved by the Commission in late September (see our summary here), as those rules were not yet effective as they were only published in the Federal Register last month and certain aspects still needed to undergo analysis under the Paperwork Reduction Act. Instead, the request for the ruling in this case was analyzed under the 2013 Declaratory Ruling on ownership (see our summary here), the same ad hoc analysis used to review and approve Pandora’s acquisition of a radio station in 2015. While technically, the new rules did not apply to this proceeding, it is clear that the analysis of this decision would not be much different, as the Commission specifically refers to the new rules as setting what is reasonable in its ad hoc analysis of the circumstances of this case. Thus, this decision provides a good basis for determining what issues any potential foreign investor in a US broadcast station would face, particularly when investing in a public US company.

Even though the FCC looked to the new rules for guidance, the final conditions look much like those imposed on Pandora. Univision is required to seek specific approval for any acquisition of stock by any foreign shareholder not specifically approved in this order if that investor seeks to acquire an interest (either voting or equity) of greater than 5% of the company. The company must actively monitor its shareholders to assure that no specific foreign shareholder exceeds that 5% threshold and that foreign ownership does not exceed the aggregate 49% limit. The company cannot simply rely on the address of its shareholders in making a determination as to whether or not they are foreign, but instead must use reasonable efforts as defined in the October order (and set out in our summary) to establish the citizenship and ownership of its investors. The company also must insure that its organizational documents provide that, if any foreign owner causes the station to violate one of the restrictions imposed by the Declaratory Ruling, the company can redeem the stock of the owner. The company must also have provisions providing for the right to restrict foreign ownership and the right to require disclosure of citizenship information. The decision also notes that Executive Branch agencies had reviewed the proposal and did not find any potential security issues. Continue Reading FCC Approves Up to 49% Foreign Ownership of Univision – What Guidance is Provided to Potential Foreign Investors in US Broadcast Stations?

Here we are at the start of a new year, and right away we have numerous regulatory deadlines for broadcasters. By the 10th of the month, all broadcast stations need to have placed in their public inspection files (online for TV and for those radio stations that have already converted to the online public file, and paper for the remaining radio stations), their Quarterly Issues Programs lists, documenting the issues of importance to their communities and the programs broadcast in the last quarter addressing those issues. TV stations have quarterly Children’s Television Reports due to be filed at the FCC by the 10th, addressing the programming that they broadcast to meet the educational and informational needs of children. Commercial TV stations should also add to their public file documentation to demonstrate their compliance with the commercial limits in programming addressed to children.

For TV stations, on the 1st of the year, new obligations became effective for online captioning. “Montages” of clips from TV programs, where all of those clips were captioned when broadcast, also need to be captioned when made available online. By July 1, clips of live and near-live programming must be captioned; however, they may be posted online initially without captions as long as captions are added to clips of live programming within 12 hours and to clips of near-live programming within eight hours after the conclusion of the TV showing of the full-length programming. For more on this requirement, see our article here. Continue Reading January Regulatory Dates for Broadcasters – Quarterly Issues Programs Lists and Children’s Television Reports, Ownership and EEO Comments, Copyright Issues and More

Tomorrow, the Petitions for Reconsideration of the FCC’s multiple ownership decision is scheduled to be published in the Federal Register (see the pre-publication draft here). This will start the clock on comments on those petitions. If publication occurs as scheduled, comments will be due on Tuesday, January 17 and replies on Friday, January 27 (update: the actual  Federal Register publication states that Replies are due January 24, but we believe that is probably an error, as the FCC rules require 10 days for a reply – watch for a further update). As we wrote here in connection with the comment dates on Petitions for Reconsideration of the abolition of the UHF discount, and here when we commented on the potential impact of the Presidential election of broadcast law, this may be one of the first opportunities where we will be able to assess the meaning of the changes in the membership of the FCC. We will see to what extent the new administration will be willing to roll back the decisions made by the FCC under its old leadership.

The Petitions for Reconsideration raise several issues, both for radio and TV. Questions are raised as to whether the local TV ownership restrictions continue to make sense in today’s economic world – particularly those limiting the co-ownership of any two of the Top 4 stations in a market, and limiting any co-ownership to markets where there will be 8 independently owned and programmed stations.  Attribution of stations that are subject to a Joint Sales Agreement is also questioned. Finally, questions are raised as to whether the FCC is justified in imposing new filing requirements for documents relating to joint operations between TV stations, seemingly looking to collect information in order to impose in the future some sort of restriction on any sort of shared services agreement. Continue Reading Multiple Ownership Petitions for Reconsideration to be Published in the Federal Register Setting Dates for Public Comment

There is now a vacancy in the top position at the Copyright Office, the Register of Copyrights, and the Librarian of Congress, who appoints the Register, has asked for comments on the role and qualifications for the new Register. These comments are due by January 31, 2017. While setting copyright law has thus far been the role of Congress, the Copyright Office has an important role in administering that law, and examining policy issues to make recommendations to Congress on controversial issues. We write extensively on many of these controversial copyright issues, as these issues have the potential for being transformative for the broadcast and media industries. For broadcasters, there are numerous issues, including questions raised by new performing rights organizations like GMR that seek more and more payment for the use of the musical composition by broadcast companies (see, for instance our article yesterday about the interim agreement between GMR and RMLC and its broader implications for the radio industry) and the broadcast performance royalty for sound recordings that keeps coming up year after year (sometimes referred to as the “performance tax,” which has generally been supported by the Copyright Office, see our posts here and here). For other media companies, there are many issues including questions about the protections afforded under Section 512 of the Copyright Act to companies that host user-generated content (see, for instance, our articles here and here) and the formation of a small claims copyright court that may allow more cases to be brought for copyright infringement (see our post here).

The survey about the qualifications of the new Register, available here, asks only three questions, plus a general request for additional comments. The questions are:

  1. What skills and knowledge should be required from a Register?
  2. What are the Top 3 priorities for any new Register?
  3. What other factors should be considered in the appointment of the Register?

The survey does ask for the name of the respondent, and indicates that there may be outreach to selected commenters asking for more information. Given that copyright is likely to be a hot topic in the new Congress (see our article here), this position assumes increased importance in informing Congressional decision making. If you want to have your say in setting the priorities for the person who will be setting the priorities and policy positions of the Copyright Office in the coming years, fill out the survey by January 31.

On Saturday, RMLC announced that it has reached an “interim” agreement with the new performing rights organization Global Music Rights (GMR) for a license to perform musical compositions controlled by GMR.  This agreement (available on the RMLC website here) is an interim agreement for radio stations that elect to participate, and covers only the first 9 months of 2017.  To be covered by this license, a station must make an election by January 31, and pay the first month’s assessment to GMR by that date.  GMR has promised not to sue any stations in January while stations are deciding whether to opt into this agreement.  The amount to be paid by any individual station can be ascertained by communicating with GMR at an email address furnished by the RMLC in the notice distributed on Saturday.

This is an interim agreement as it removes the threat of a lawsuit for playing GMR music after January 1 that could potentially be faced by any radio station that does not have a license.  The rates paid by any station that opts in could be adjusted retroactively, up or down, based on the results of further negotiations between RMLC and GMR, or based on the results of the lawsuits currently being litigated between the two (see our article here on RMLC’s suit against GMR, and the article here about GMR’s follow-up lawsuit against RMLC, each accusing the other of violating the antitrust laws).  It would seem obvious that RMLC believes that the amounts being paid under this interim deal are higher than justified based on the percentage of music played by radio stations that is controlled by GMR.  If it was believed that the interim fee represented a fair price, then it would seem that RMLC would have entered into a permanent license at these rates – but instead the litigation continues.  What is a station to do? Continue Reading GMR and RMLC Agree to Interim License for Commercial Radio Stations – Providing 9 Months to Reach Final Deal for Public Performance of Musical Compositions

In the last year, noncommercial broadcast stations, both radio and TV, have been filing their Biennial Ownership Reports on FCC Form 323-E every other year, on the anniversary date of the filing of their license renewal applications.  This meant that, every other month noncommercial stations in a few states had to submit those reports, with the radio stations in a state submitting them one year and the TV stations in that state the next (as the renewal terms for radio and TV are off by one year, so are the even anniversary dates of the renewal filings).  Last year, as we wrote here, the FCC decided that all noncommercial stations, both radio and TV, would file their Biennial Ownership Reports on December 1 of every odd-numbered year – at the same time as commercial radio stations file their Biennial Ownership Reports.  But, until this week, the FCC had not suspended the requirement that the noncommercial stations continue to file on the anniversary date of the due date for their renewal application, as the new rule mandating the uniform December 1 filing had not yet become effective.  The FCC on Tuesday issued a Public Notice suspending the anniversary date filings in 2017 – but all noncommercial broadcasters still will need to file a report next year – by the uniform December 1 filing deadline.

The new rule has not become fully effective because it is being appealed by certain noncommercial groups worried about the new information required for the Biennial Reports, requiring all officers and directors (or their equivalents) to get FCC Registration Numbers (FRNs), which requires that they either submit to the FCC their Social Security Numbers or, in the alternative, certain specific personal information that uniquely identifies those people.  See our post here for more details on the required information.  Even though this information is submitted confidentially to the FCC merely for purposes of obtaining the FRN, there is the fear that some of these attributable owners will be reluctant to provide that information to the FCC.  This is especially true for universities and other government-owned broadcast stations, where the attributable owners are the governing board of the school or other institution.  These members who need to be reported to the FCC are often important people in a state or community, who signed up to be on the board of the school or other institution, not specifically to be connected to a radio or TV station.  In many cases, the broadcast station may be a very insignificant part of their responsibilities.  To avoid annoying these board members, the appeal of that information collection requirement has been filed.  Continue Reading FCC Suspends Rolling Noncommercial Biennial Ownership Report Deadlines – But All Noncommercial Stations to File Form 323-E by December 1, 2017

The New York State Court of Appeals, the state’s highest court, has ruled that there is no public performance right in pre-1972 sound recordings in the state of New York. The decision (available here in a version subject to revision) was reached after the US Court of Appeals certified the question to the state court as being necessary to resolve the appeal of a US District Court decision which had found such a right to exist in a lawsuit brought by Flo & Eddie of the band the Turtles against Sirius XM Radio. We wrote about the District Court’s decision here, and the certification to the state court here. Certifying a question from a Federal Court to a State Court is a rare matter, done when a Federal Court needs guidance as to the state’s treatment of a legal issue under state law where there is no clear precedent, and where the state law issue is central to the resolution of the case. The NY Court of Appeals did not have to accept the certification, but it did to resolve this somewhat obscure issue of state intellectual property law (most of which is governed by Federal law).

The NY Court’s decision was not unanimous, as there was one dissenting Justice who would have found that a performance right does exist. The dissenting justice thought that there should be a state performance right – but a right co-terminus with the Federal right, thus applying only to digital services and not to terrestrial radio and presumably not to retail outlets, bars and restaurants and other businesses that may play music. That Justice seemed to be motivated by a desire to keep pace with current developments in the music industry, suggesting that common law should evolve with the times and, as streaming is now becoming more important to the music industry, there should be a royalty for such streams. Another justice concurred with the decision that there is no performance royalty in noninteractive services like that offered by Sirius XM, but there should be for interactive services like that offered by Spotify and Apple Music. The majority of the court disagreed with these justices. Continue Reading NY State’s Highest Court Finds that There is No Public Performance Right in Pre-1972 Sound Recordings

As we wrote here, the FCC has requested comments on a petition for reconsideration of the elimination of the UHF discount – which had counted UHF stations as reaching only half of their market in assessing an owner’s compliance with the National Ownership Rules for TV.  These rules limit an attributable owner from having an interest in TV stations that reach more than 39% of the national television audience.  Given that the deadlines that had initially been published by the Commission fell during the holidays, the FCC has extended the time to file comments.  Comments are now due on January 10, with replies on January 23.

As we wrote in our previous article on the reconsideration petition, this may be the first opportunity for the new Republican-controlled FCC to reconsider an ownership decision made earlier this year – a decision to which the two Republican commissioners dissented.  So the industry will be watching to see what the new Commission does as an indication of how it will deal with many of the rules adopted by the Democratic-controlled FCC, and how quickly it will act as an indication of what an interim Republican chairman is willing to tackle before a permanent chairman is nominated and approved by the Senate.

It’s the holiday season, and many of us are turning our thoughts to celebrating with friends and family. It is also high season for shopping, which means the airwaves, social media, websites and print pages are full of opportunities to buy, sell, and advertise. Whether you consider that to be a feature or a bug, this is the time to be especially vigilant about doing advertising right. In this post we present a few considerations to keep in mind to avoid starting 2017 with unwanted attention from the Federal Trade Commission (FTC), the Federal Communications Commission (FCC) or other regulators.

  1. Weight-loss and other health claims. The most popular New Year’s resolutions are to “stay fit and healthy” and “lose weight.” Weight-loss products and services have long been a favorite target of the FTC, and the FTC has asked for help from broadcasters and publishers to help spot false health claims before they are aired or published. (And, as the FTC notes, purveyors of false advertising claims take advantage of the good will that broadcasters and publishers have with consumers.) The FTC is just as interested in going after false health claims online and in the app marketplace. We can expect the FTC to resolve to keep watching this space in 2017.
  2. Endorsements and testimonials. Since time immemorial advertisers have recognized the power of a good word from a respected – or at least well-known – personality. But such praise has to reflect the honest opinion of the endorser, and any unexpected “material connection” – whether it is money, free merchandise, an early look at a new video game, or even the expectation of some kind of payment in the future – has to be clearly and conspicuously disclosed to consumers. Would consumers expect that Trinket the Elf who appears on the air to praise the quality of Santa’s toys is also employed by Santa? Maybe. To be on the safe side, make sure the connection is clear in any video, audio, social media, or other content that conveys Trinket’s praise.
  3. Native advertising and sponsored content. Ensuring that the format of advertising does not deceive consumers is just as important as making sure that an ad’s claims, testimonials, and other elements are true and not misleading. Over the past few years the FTC has taken a keen interest in “native” advertising, meaning ad formats that may deceive consumers because they are difficult to distinguish from editorial content. After issuing enforcement guidance in December 2015, the FTC announced an action against Lord & Taylor, alleging that the retailer paid an online fashion magazine to run an article, which Lord & Taylor reviewed and approved, that featured a picture of the dress that Lord & Taylor wanted to promote. The FCC’s sponsorship identification rules likewise insure “transparency” so that consumers are not misled as to who is trying to persuade them about a commercial product. These rules require that a sponsor be identified when a station receives valuable consideration for the airing of a program broadcast to the public. As we have written about here and here, simply providing a recorded program unduly promoting a commercial product has been found to be sufficient to trigger the FCC’s sponsorship identification rules.
  4. Use of Trademarks in Hashtags. Use of hashtags (words or phrases preceded by a pound (#) sign) has quickly become a popular social media trend and can be a great way to promote products and services online. While they are largely meant to serve as a functional tool to facilitate searches and to categorize information and conversations on social media, they can also open the door to potential legal issues. While the law in this emerging area remains unsettled, at least one court has found that use of a competitor’s trademark in a hashtag could result in trademark infringement. Likewise, use of your own registered trademark in a hashtag could present challenges when it comes to policing the mark. Hashtags are intended to generate online buzz, with the goal of having as many people as possible use them. But what if consumers use the hashtags improperly or inappropriately?   If you are planning to create a hashtag campaign, either for your own stations or on behalf of advertisers, be sure to think through their costs and benefits.
  5. Marketing to children. Children are at the center of many holiday celebrations, so it’s no surprise that advertisers want to reach them (and their parents). But advertising to children deserves some extra caution. First, if you have an app or website that is directed toward children under the age of 13, or if you knowingly collect information online from the under-13 set, then the Children’s Online Privacy Protection Act (COPPA) probably applies to you. The rules for handling children’s information under COPPA are much stricter than they are for the online advertising in general, beginning with a requirement to obtain verifiable parental consent before collecting any personal information from children. Second, children’s advertising is evolving with the marketplace in general to include greater use of social media and user-generated video platforms. This means that the need for careful handling of endorsements and native advertising applies to ads designed for children, too. Although the FTC has yet to bring an enforcement action based on native ads or undisclosed endorsements in ads that target children, the FTC has received public complaints (see here and here) urging the agency to do just that.
  6.  Music in commercials. As we’ve about here and here, contrary to what some stations might think, a station’s ASCAP, BMI and SESAC royalties do not give them the right to use popular music in their station productions – or in their commercials. Nor do they give you rights to use music in video productions used repeatedly on a station, or on a station’s website.  Broadcasters should take care to ensure that they’ve got the appropriate licenses in hand before producing a spot that includes a holiday jingle

Businesses want to put their best foot forward during the holiday season. We hope these tips will help you step into 2017 with the confidence that you have consigned any marketing legal pitfalls to the return bin.