The FCC’s Order released at the end of August deciding the issues in its Quadrennial Review of its ownership rules is over 100 pages long. The full document, with the dissents from the Republican Commissioners, required regulatory impact statements and similar routine attachments totals 199 pages. The Order addresses many issues. For TV, it declines to change the local ownership rules, readopts the decision to make Joint Sales Agreements into attributable interests (thus effectively banning them in many markets, though making some tweaks to the grandfathering of existing JSAs), and adopts new rules for reporting shared services agreements. The Order retains the newspaper-broadcast and radio-television cross-ownership rules. It takes limited new steps to encourage minority ownership (principally re-adopting the rule that allowed small businesses to acquire and extend expiring construction permits for new stations and to buy certain distressed properties, see our article about that old rule here), but does not adopt any racial or gender preferences for broadcast ownership. It also ends consideration of using TV channels 5 and 6 for the migration of AM radio and other new audio services including those targeted to new entrants into broadcast ownership (see one of our articles about that proposal here). And it rejects most proposals to change the radio ownership rules. Today, with the NAB Radio Show just two days away, we will look closer at the radio rules, and will cover many of these other aspects of the decision in coming days.

Perhaps the biggest “ask” for changes in the rules came from numerous radio groups that requested changes in the “subcaps” that apply to radio ownership. For instance, in the largest radio markets, one owner can hold up to 8 stations, but only 5 can be in any one service (AM or FM). Some parties had hoped to be able to own more FM stations in a market, particularly given the growing levels of competition in the audio marketplace from satellite and online radio. Some AM owners looked to hold more than the current maximum number of AMs in a market as a way to provide economies of scale that might help to preserve and strengthen the struggling AM radio industry. The Commission rejected such changes. Continue Reading FCC’s Decision on the Quadrennial Review of the Multiple Ownership Rules – Part 1 – Radio Issues

On Friday, the US District Court judge who oversees the administration of the BMI Consent Decree rejected the recent Department of Justice interpretation that the antitrust consent decree required that, when BMI licensed music to music users, that license would embody the full musical work, not just a fractional interest that might be held by the songwriter who was the BMI member. DOJ’s decision stemmed from its review of the ASCAP and BMI antitrust consent decrees, which was initiated by ASCAP and BMI.  While ASCAP and BMI initiated the review looking for certain relief from provisions of the Consent Decrees that govern their operations (see our summary of the initial proposals here), in its decision, which we wrote about here, the DOJ decided that the only clarification of the consent decree that it would put forward was one that required 100% licensing by ASCAP and BMI.  100% licensing means that, if a song was licensed as part of the repertoire of ASCAP or BMI, the licensee would get rights to all of that song, even if there were multiple songwriters some of whom were not affiliated with ASCAP or BMI.  This interpretation was rejected by Judge Stanton, the Judge who oversees the BMI consent decree.  His decision can be found on the BMI website, here.

The Judge’s decision seems to be premised not on the policies and practicalities of licensing by ASCAP and BMI, but instead simply from an interpretation of the language of the BMI consent decree itself.  Moreover, the decision itself does not necessarily conclude that songs to which BMI holds less than a full right will necessarily be excluded from the BMI repertoire, only finding that “[i]f a fractionally-licensed composition is disqualified from inclusion in BMI’ s repertory, it is not for violation of any provision of the Consent Decree.”  The decision basically says that the rights conveyed by the BMI licenses to the songs in its catalog, and even the validity of the rights to even license any song in its repertoire, are not consent decree decisions, but instead decisions that are left to be determined in civil proceedings interpreting property and contract rights.  Seemingly, the Judge’s decision ends up raising more questions than it answers.  Continue Reading BMI Judge Rejects DOJ Conclusion that Consent Decree Requires 100% of Songs – What Does that Mean for Music Services?

The press has been full of reports over the last few weeks about Pandora and Amazon negotiating deals with record labels over music royalties, and some observers have expressed confusion – why don’t these services just rely on the rates set by the Copyright Royalty Board at the end of last year? The answer, as we have written many times before (see e.g. our articles here and here) is that the CRB rates apply only to noninteractive webcasters (companies that provide radio-like services where the listener cannot designate what song he or she will hear next). The services that rely on the CRB rates (which we summarized here and here) must abide by specific rules, including something called the “performance complement” which limits how frequently the service can play a particular artist or a particular song. Even the number of times that a listener can skip a song has been set by caselaw and industry practice (see our article here) – the fear being that if you allow unlimited skips the service becomes more like an interactive one.

So a service that wants to provide listeners with the ability to set up their own playlists or to choose to play songs on demand cannot rely on the license available through the CRB decision (the so-called “statutory license” – so named as the license and the CRB rate-setting process were created by a statute passed by Congress). Similarly, services relying on the statutory license cannot cooperate to allow copying of the songs that they play – so even setting up a service to allow the temporary caching of an Internet radio service so that listeners can hear it when they are offline, most likely cannot be done by simply paying the CRB-established rates. So what do music services that want to provide more functionality do? Continue Reading Pandora and Amazon Negotiating Agreements with Record Labels – Why They Don’t Just Rely on the CRB Rates?

Last week, the FCC released its order eliminating the UHF discount. Under this discount, a TV broadcaster, in determining its compliance with the national ownership limit prohibiting any owner from having attributable interests in stations serving more than 39% of the nationwide television audience, would include in its count only one-half of the audience of any market served by a UHF station. This discount originated in the analog world, when UHF stations tended to have smaller audiences as their signals were harder to receive, and yet their operational costs were higher. Three years ago, the FCC proposed to eliminate the discount, as the technical inferiority of UHF stations no longer exists in the digital world (see our post here describing the FCC’s proposed action). This decision, reached in a 3 to 2 vote of the Commissioners, will put several broadcast groups over the national cap, while others will come close to it, limiting their ability to expand into new markets. Did the video distribution marketplace demand this action?

In fact, the Commission’s majority decision really did not examine in any detail the public interest factors justifying this action. Instead, the FCC focused almost totally on the fact that, in the digital world, UHF stations were no longer technically inferior. That was essentially stipulated by all parties, and the Commission viewed the decision as simply being one that was necessary to keep up with technology – as UHF stations were no longer inferior to VHF stations, there was no reason to give owners of these stations a discount in computing compliance with the national ownership limits. The Commission also pointed to the fact that, in the days before the digital transition, it had warned TV broadcasters that an end to the UHF discount was coming. But changes in the media marketplace in the 15 years since many of these statements were made, with the rise of multichannel video program providers and over-the-top television services like Netflix that were not even imagined 15 years ago, are given only a passing reference, as pointed out by the dissenting Republican commissioners. Continue Reading Eliminating the UHF Discount and Limiting the National Ownership Reach of Television Groups Without Reviewing the Media Marketplace

September is one of those unusual months, where there are no regular filing dates for EEO public inspection file reports, quarterly issues programs lists or children’s television reports.  With the unusual start to the month with Labor Day being so late, and the lack of routine deadlines, we didn’t get our usual monthly highlights of upcoming regulatory dates posted as the month began.  While we didn’t do it early, we actually have not missed the many regulatory deadlines and important dates about which broadcasters need to take note this month.

Several are of particular importance for virtually all broadcasters.  As we wrote here and here, Annual Regulatory Fees for all commercial broadcasters are due by September 27.  Any commercial broadcaster that cumulatively owes more than $500 must file its fees by that date – and the fee filing system is already open.  Note that most noncommercial entities are excused from fee filings. Continue Reading September Regulatory Dates for Broadcasters: EAS Test, Reg Fees, Lowest Unit Rates, Incentive Auction Stage 2

September 29 will be a big day for broadcasters and other media companies when the FCC holds its next open meeting. In the tentative agenda for that meeting released on Thursday, the FCC identified several issues that deal with the media including two big items on video issues – the decision as to what to do about the Commission’s proposals to open the cable set top box to competing systems, and a new proposal designed to promote sources of independent programming for video distributors. In addition to these two items, the FCC also says that it will resolve the proposals to make the FCC’s foreign ownership rules for broadcasting more like those applicable to non-broadcast companies, easing some of the procedural restrictions that made it difficult for non-US investors to become owners of US broadcast stations.

The set top box debate is perhaps the debate that has garnered the most publicity, with the Commission proposing to allow more companies to offer a means to access cable and satellite TV programming – perhaps enabling the use of new apps to access and inventory that programming. Content owners and program distributors have worried about security issues with opening programming to access on a myriad of devices, and have also been concerned that the loosening of these restrictions could interfere with contractual rights limiting access to certain programs to certain devices and distribution channels. The FCC Chairman yesterday released this fact sheet about the proposal setting out some specifics of the proposal that will seemingly be voted on at the late September meeting, and the Chairman published this op-ed article in the LA Times explaining what he is trying to do. The matter is sure to remain controversial right through the late-September meeting, and perhaps after the decision as well. Continue Reading September FCC Meeting To Be a Big One for Media Companies – Set Top Boxes, Foreign Ownership of Broadcast Stations and Promotion of Independent Programming

It’s election season, and for the 60 days before any general election, broadcast stations are required to charge political candidates the “lowest unit rate” for comparable advertising time that runs on their stations. That means that, for each class of advertising time on any particular station, the candidate can only be charged the lowest rate at which any spots was sold to a commercial advertiser for that class of time during the particular period in which the candidate’s spots will run. That 60 day period begins tomorrow, so broadcasters should be ready to provide the candidates with these discounted rates for the next 60 days.

As we have written before, e.g. here and here, these rates apply to both Federal, state and local candidates. While state and local candidates have no right of access to broadcast stations (meaning that stations do not need to sell to these candidates, and that stations can restrict their purchases of advertising time to particular dayparts), once the decision to sell time to a state or local candidate is made, then pretty much all of the other political rules, including those dealing with the Lowest Unit Charges for advertising time, must be observed.

It is also important to remember that only legally qualified candidates have the right to lowest unit rates. PACs and other issue advertisers do not get access to these rates, even if they are buying advertising time to address some issue or candidate who will be appearing on the November 8th ballot.

For candidates, the rates provide a real benefit, as they get the ability to buy advertising spots at significant discounts. For instance, they get the benefit of all volume discounts even without buying in volume. The broadcaster is also supposed to explain to the candidate all of the terms and conditions that could affect the candidate’s buying decisions. Candidates also don’t have to contend with buying spots of different classes in packages, but instead stations must break down the value of different classes of spots that are included in any package, and consider those values in assessing the lowest unit rates for each class of time – and the candidate need only buy those classes of time that he or she wants to buy. For more about how to treat the rates in package plans, see our post here.

In setting the lowest unit rates on a station, it must be remembered that virtually no station will have just one lowest unit rate. Almost every station will have several – if not dozens of lowest unit rates – one lowest unit rate for each class of time. Even on the smallest radio station, there are probably several different classes of spots. For instance, there will be different rates for spots that run in morning drive and spots that run in the middle of the night. Each of these time periods with differing rates is a class of time that has its own lowest unit rate. On television stations, there are often classes based not only on daypart, but on the individual program. Similarly, if a station sells different rotations, each rotation on the station is its own class, with its own lowest unit rates (e.g. a 6 AM to Noon rotation is a different class than a 6 AM to 6 PM rotation, and both are a different class from a 24 hour rotator – and each can have its own lowest unit rate). Even in the same time period, there can be preemptible and non-preemptible time, each forming a different class with its own lowest unit rate. Any class of spots that run in a unique time period, with a unique rotation or having different rights attached to it (e.g. different levels of preemptibility, different make-good rights, etc.), will have a different lowest unit rate.

There are a myriad of other issues involving lowest unit charges that come up each election season. We have written about some of those issues in previous articles, for instance those that can be found here and here. Many of these issues are also covered in our Political Broadcasting Guide, here. With the rates kicking in tomorrow, don’t forget your political broadcasting obligations!

The FCC today released a series of public notices setting September 27 as the deadline for the filing of Annual Regulatory fees.  We wrote here about the FCC Order setting the amount of those fees, and reminding TV stations, even ones looking to surrender their licenses in the incentive auction, that they must still pay those fees by the upcoming deadline.  These notices also announced that the fee filing system is now up and operating, so fees can be paid at any time.  Finally, the notices talk about some of the details of the fee filing process, covering who is eligible and how exemptions from fee obligations can be obtained.

One of the Public Notices sets out instructions for requests for waivers and deferrals of the fee obligations.  Any party thinking about filing such a request needs to carefully follow the instructions and fully document the reasons for the waiver, as the failure to fully follow the rules will result in penalties and interest.  In fact, to avoid the potential for penalties and interest, the FCC suggests paying the fee and asking for a refund, rather than asking for a deferral and waiver of the fee obligations.  Continue Reading Regulatory Fees Due By September 27 – Fee Filing Guides and Instructions for Waivers or Deferrals Released by FCC

The Federal Aviation Administration’s (“FAA’s”) recently established rules to allow the commercial operation of small unmanned aircraft systems (“sUAS”) – more commonly known as “drones” – took effect on Monday, August 29, 2016.  We previously wrote about these rules (and the opportunities and risks they present for broadcasters) here and here.  For those eager to get their newsgathering drones off the ground, here are a few things to keep in mind:

Certification.  Under the new rule, all operations must be conducted by, or under the supervision of, a person who holds a “remote pilot certificate.”  The least resource-intensive way to achieve this certification is for licensed pilots (with up-to-date flight reviews) to take a free online training course.  Novice flyers without a pilot’s license are required to pass an aeronautical knowledge test and also meet certain age and security clearance requirements.  Luckily, there are resources available (here and here) to usher you through the process. Continue Reading Reminder that Broadcasters May Now Leverage the FAA’s Small Drone Rules

Right as everyone was set to enjoy the last glimmer of summer over the long weekend, the FCC issued its Report and Order on the regulatory fees for 2016.  The FCC adopted all the fees for broadcast stations as proposed in its Notice of Proposed Rulemaking (about which we wrote about here) with some adjustments to the regulatory fees on radio and television broadcasters, based on type and class of service and on the population served.  No date has yet been set, though, for when these fees will be die this month.

The fees for all categories of broadcasters are as follows:

FY 2016 RADIO STATION REGULATORY FEES
Population

Served

 AM Class A AM Class B AM Class C AM Class D FM Classes

A, B1 & C3

 FM Classes

B, C, C0, C1 & C2
<=25,000 $990 $715 $620 $685 $1,075 $1,250
25,001 – 75,000 $1,475 $1,075 $925 $1,025 $1,625 $1,850
75,001 – 150,000 $2,200 $1,600 $1,375 $1,525 $2,400 $2,750
150,001 – 500,000 $3,300 $2,375 $2,075 $2,275 $3,600 $4,125
500,001 – 1,200,000 $5,500 $3,975 $3,450 $3,800 $6,000 $6,875
1,200,001 – 3,000,00 $8,250 $5,950 $5,175 $5,700 $9,000 $10,300
3,000,001 – 6,000,00 $11,000 $7,950 $6,900 $7,600 $12,000 $13,750
>6,000,000 $13,750 $9,950 $8,625 $9,500 $15,000 $17,175

 

Fee Category

 

 Annual Regulatory Fee

(U.S. $s)
AM Radio Construction Permits 620
FM Radio Construction Permits 1,075
Digital TV (47 CFR part 73) VHF and UHF Commercial
              Markets 1-10 60,675
              Markets 11-25 45,675
              Markets 26-50 30,525
              Markets 51-100 15,200
              Remaining Markets 5,000
              Construction Permits 5,000
Satellite Television Stations  (All Markets) 1,750
Low Power TV, Class A TV, TV/FM Translators & Boosters (47 CFR part 74) 455

The Commission noted that, with the Incentive Auction underway, all broadcast television licensees must still pay FY 2016 regulatory fees if they held a license or construction permit as of October 1, 2015, as well as for payment of FY 2017 regulatory fees if they continue to hold their license or construction permit as of October 1, 2016.  It cautioned licensees to pay their regulatory fees in order to avoid delay of payments resulting from the Incentive Auction.

The FCC will release a Public Notice setting the filing deadline.  We expect it to come out any day.  As the fees need to be paid before the start of the FCC’s new fiscal year on October 1, expect that those fees will be due at some point before the end of September.