Last week’s letter from the FDA detailing its position that there should be no change in marijuana being classified as a Schedule I drug under Federal law reinforces the fact that, under Federal law, the drug is still illegal – no matter what certain states may do to legalize or decriminalize its use. As the FDA’s decision emphasizes that the sale and distribution of the drug is still not permitted under Federal law, we thought that we would rerun the advice that we gave to broadcasters – Federal licensees – about running advertising for marijuana. As we said in February when we first ran this article, advertising for marijuana is still a concern.  Here is what we said in February:

Broadcasters, like other federally regulated industries, continue to be leery about advertising for marijuana, even in states where cannabis dispensaries have been legalized for medical or even recreational use.  This week, the NY Times ran an article about companies trying to provide ways for dispensaries to use electronic payment systems, as federally regulated banks and credit card companies often refuse to deal with these businesses.  This is despite guidance given by the Department of Justice to banks about how to handle funds coming from such organizations.  Where the federal regulator (the FCC) has provided no advice whatsoever, broadcasters as regulated entities need to be very restrained in their desires to run ads for these dispensaries that appear to be legal under state laws. Continue Reading FDA Continues to Schedule Marijuana as a Schedule I Drug – Doing Nothing to Clarify the Still Murky State of Broadcast Advertising

As the leaders of the FCC’s Incentive Auction Task Force said in opening a post on the FCC’s blog last week, “Who says nothing happens in Washington in August?”  Bidding in the initial stage of the FCC Incentive Auction’s forward auction phase begins on Tuesday, August 16th, and with it, the longest pre-auction run-up period in FCC history is finally over!

As noted previously on this page, most analysts do not expect the forward auction to generate enough revenue in this stage to close the Incentive Auction at the current 126 MHz spectrum clearing target.  (It would take over $88 billion, including funding reimbursements to TV stations that have to change channels after the auction.)  No one knows for sure, however, and the bidders themselves are subject to the gag order imposed by the FCC’s anti-collusion rules, so they can’t talk.  But unlike in the reverse auction, where the FCC provided virtually no bidding information to the public, the agency has set up an online Public Reporting System (the “PRS,” accessible at https://auctiondata.fcc.gov/public/projects/1000), which will provide information on the progress of the forward auction after the end of each bidding round.

In particular, the PRS “Dashboard” page will provide information regarding the progress of the forward auction toward meeting the so-called “final stage rule,” and the “Product Status Stage 1” page will show, for each category of license in each market in the just-completed round, the aggregate demand and the supply, the price at the end of the last completed round, and the price for the next round, among other things.  This will give us the ability, at least in general terms, to tell how the auction is going.  Nothing like an FCC auction to inject some excitement into the dog days of August!

While the trade press has been full of reports that the FCC has voted on an order addressing the issues raised in its Quadrennial Review of its multiple ownership rules, and that the decision largely left those rules unchanged (including the broad ban on the cross-ownership of daily newspapers and broadcast stations), no final decision on the review has yet been released. However, we did see on Friday that, in the FCC’s list of matters pending before the Commission for approval “on circulation” (i.e. to be voted on without being considered at an FCC open meeting) the ownership item was removed from the list of pending items, seemingly confirming that the decision has in fact been voted on and is thus no longer circulating for approval. If the press reports are to be believed, there has been no major change in the rules despite much last minute hope for some relaxation of the newspaper cross-interest rule. The rules are thus likely to be those indicated by the Chairman in his blog post in late June, which we summarized here. Even if the most significant rules (e.g. local ownership rules for radio and TV – the “duopoly” rules, and the newspaper-broadcast cross-ownership rules) remain unchanged, that does not mean that the broadcast community should ignore the upcoming decision, as there are bound to be other issues addressed in the order that may be of significance.

In connection with the newspaper cross-ownership rules, while the press reports indicate that the rules will remain in place, there are reports that there will be some sort of waiver allowed, seemingly where economics justify the combination. If this is akin to the “failing station” waiver used to justify the ownership of 2 TV stations in markets where such ownership would normally not be allowed, some have wondered, given the economic state of the newspaper industry, if such a waiver would ever be used as it will be a rare case where a last-minute broadcast combination will rescue a failing newspaper. But we will need to see what the details are of the waiver standard to be applied. Continue Reading Preparing for the FCC’s Soon to be Released Decision on Changes to its Multiple Ownership Rules

In recent days, there have been a number of broadcast trade press articles about new regulations that have gone into effect for e-cig advertising. We wrote about the FDA proceeding which dealt with these rules here. There appears to be much confusion over what the new rules require, and what is effective now and what will become effective after an FDA rulemaking to determine the specifics of the requirements for e-cig advertising. Right now, as set out in an FDA blog post, there are new restrictions on the sale of e-cigs to those under 18. Also, requirements were already in place that prohibit the promotion of e-cigs by making health claims, and they have not changed. As we said in our prior article, saying that e-cigs are better for your health than regular cigarettes, or that they can help you kick the smoking habit, are prohibited.

In addition, new rules will take effect in two years that will require that e-cig ads have new warnings – specifically “WARNING: This product contains nicotine. Nicotine is an addictive chemical.” The FDA will, during that two year period, adopt rules that specify how that message will be conveyed in various advertising media. There have been trade press articles that have suggested that the e-cig ads will require tags containing 6 different specific health warnings. In fact, as we made clear in our earlier article, those warnings apply not to e-cigs, but to cigars, and are consistent with a prior settlement agreed to by the cigar manufacturers.

So the rules that are now effective do not appear as onerous as some recent articles may have suggested. Nevertheless, these rules are being appealed by some e-cig manufacturers, and at least one senator has put out a statement condemning their effect on the business of the e-cig industry. But, for now, stations should work with their advertisers to make sure that they comply with the current rules – avoiding pitches to those under 18, and avoiding health benefit claims, to keep those advertisers out of hot water with the FDA.

In a decision released last week, the FCC made clear that stations that have long periods in which they are not operated (perhaps being put back into operation for a day or two every year to avoid the automatic cancellation of their licenses) are not operating in the public interest, and are putting their license in jeopardy. In last week’s decision, the station had been essentially silent for most of the last 4 years of its license renewal period (sometimes forgetting to ask for FCC permission to stay silent – which is required whenever a station is silent for 30 days). The FCC decided to fine the licensee $5000, and give it a short-term renewal, renewing the license for only two years (instead of the normal 8), while allowing it to be sold to another operator.

That decision is consistent with another decision about which we wrote here, where a similar fine and short-term renewal was issued to a broadcaster whose station had been silent for extended periods. These cases serve as a warning to broadcasters who may be facing economic difficulties who think that they can simply stop operating until someone comes along to make them an acceptable offer to buy their station. The FCC seems to be saying that you can’t just sit around with a silent station and wait – you need to move quickly to do something with your station to get it back on the air to avoid penalties and, in an extreme case, perhaps the loss of your license.

With the national presidential conventions complete, and most of the state primaries for Congressional, state and local offices either behind us or to occur in the next few weeks, the most concentrated period for the purchase of political advertising on broadcast stations is now upon us, to peak in the late October/early November frenzy. 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), there are always new advertising practices and opportunities that throw some new wrinkle into how those rules are applied. At a number of political advertising seminars that I have conducted this past year, and in discussions with broadcasters, one of the new wrinkles this year that has not captured the attention that it deserves is the political broadcasting issues raised by programmatic buying of advertising time.

In the last year or two, 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, where most of it can be done from a computer with a few clicks of a mouse, anywhere at anytime. While programmatic buying is becoming more and more common in broadcast circles, is difficult to easily say exactly what it is, as what is called “programmatic buying” comes in so many different flavors. Not only does the concept mean different things in different systems, it is also being provided by all sorts of different companies, from rep firms, to broadcast technology companies, to companies that have specialized in specific types of advertising – like remnant ad sales (i.e. sales of unsold advertising inventory that broadcasters may have). And some station owners are signing up with multiple providers – sometimes at the same station. Continue Reading Programmatic Advertising Buying and the FCC’s Political Broadcasting Rules

A few weeks ago, we wrote here about the risks of using in advertising and promotions the Olympic trademarks, symbols or marks that may suggest an association with the Olympic Games.  The Olympic Committee recently demonstrated just how serious it is about its marks, sending a letter to non-Olympic sponsor companies, warning them  that they “may not post about the Trials or Games on their corporate social media accounts,” and may not  use the “USOC’s trademarks in hashtags such as #Rio2016 or #TeamUSA” (presumably to protect the investments of Olympic sponsors).  According to ESPN, which obtained a copy of the letter, it goes on to say that a “company whose primary mission is not media-related cannot reference any Olympic results, cannot share or repost anything from the official Olympic account and cannot use any pictures taken at the Olympics.”  Apparel company Oiselle tested the waters earlier this month by posting a photo of athlete Kate Grace after winning the 800 meters at the trials, and was promptly contacted by USOC with a request to remove the pictures (the company opted to leave the pictures up but blurred any Olympic imagery).  So while media companies have some wiggle room to cover the news from Rio, non-media companies are essentially on an Olympic-sized lockdown.

This restrictive stance did not go unnoticed by comedian Stephen Colbert, who earlier this week took the Olympic Committee to the mat with a biting parody that pokes fun at the Committee’s militant protection of its trademarks.  Colbert’s routine, available here, cleverly turns the Olympic rings into five interlocking CBS symbols and introduces the show’s new summer sponsor, MUSA TEA.  After explaining that the tea is brewed “from the freshest mint in Morocco’s Musa mountains,” he encourages fans to share with family and friends by using the hashtag #TEAMUSA. Continue Reading Stephen Colbert Brews Up a Parody on Aggressive Protection of Olympic Trademarks

The DOJ yesterday issued its long-awaited review of the ASCAP and BMI antitrust consent decrees. We wrote about the issues raised by the DOJ in its initial inquiry here. The questions that had been advanced in DOJ’s initial notice included (1) whether to allow music publishers to partially withdraw their catalogs from one of the PROs (Performing Rights Organizations) to negotiate directly with some class of music users (principally a review to determine if certain big publishers could negotiate digital rights directly, while allowing ASCAP or BMI to continue to license less lucrative and more difficult-to-administer music users like bars, restaurants and retail establishments), (2) whether to strengthen the payment and enforcement rights of the PROs (including questions of how services should be paying before rates for a class of user are established, and whether rate courts were appropriate for all disputes over rates), and (3) whether the PROs should be allowed to license more than just the public performance rights (perhaps getting into licensing mechanical rights, as their Canadian counterpart SOCAN and their US competitor SESAC are now doing – see our article here). The DOJ’s report decided to hold off on addressing any of these questions, and instead focused solely on one issue – requiring that the PROs offer full-work licensing on all songs within their catalogs (which the DOJ raised in a second request for comments about which we wrote here).

Already, there has been much angst within the PRO and publishing worlds about this decision, while there has generally been relief among the users of music that there were no fundamental changes in the way that music is licensed through the PROs. But just what are the issues with full-licensing of musical works?

The concept is basically that, when a user pays ASCAP or BMI for the right to use their catalog, the user should get all of the rights they need to publicly perform all of the songs in that catalog. Most users probably already assumed that they were getting all of those rights when they paid the PROs their monthly fees. But the DOJ discovered that there was a basic conceptual question about just what the user was getting when they paid their license fee – and that question could prove even more problematic were the DOJ to agree to some of the requested more fundamental changes in the consent decrees, such as allowing partial withdrawal of catalogs by publishers. The question is whether a user gets all the rights to the songs that are listed in a PRO’s catalog, or merely the “fractional interest” that is owned by the songwriter or publisher who is a member of that PRO. Continue Reading DOJ Recommends No Changes in ASCAP and BMI Consent Decrees, And Requires Full-Work Licensing – How It Affects Music Users

My law firm has long provided legal advice to companies that operate communications towers, and the lawyers involved in that practice area have alerted me to the following development which will require the marking and lighting of many towers not currently covered by such rules.

Broadcasters and tower companies have long relied on FAA rules that generally don’t require the lighting of towers under 200 feet in height except when these shorter towers may interfere with the flight path of an airport. So the vast majority of these short towers used by broadcasters (sometimes simply for mounting auxiliary antennas) and by other wireless users have not been lit. That apparently will change under the FAA Extension, Safety, and Security Act of 2016, passed by Congress earlier this summer and signed into law on July 15. Under provisions of this act, the FAA is required to adopt rules to require the marking and lighting of freestanding structures with heights of between 50 and 200 feet which are located in rural, undeveloped areas. The act refers to towers that will need to be marked and lit as “covered towers.” The new marking and lighting requirements will apply not just to new towers, but also to existing towers (after a one-year phase in period after the FAA’s new rules become effective).

So what is a “covered tower”? Essentially, the Act sets out the following definitions:

  • Size.  The Act defines “covered towers” as self-standing or guy wire-supported structures:
    • 10 feet or less in diameter;
    • More than 50 and less than 200 feet tall; and
    • With “accessory facilities” mounted with antennas, sensors, cameras, meteorological instruments, or other equipment.
  • Location.
    • To be a “covered tower,” the structure must be located:  (i) outside the boundaries of an incorporated city or town; (ii) on undeveloped land; or (iii) on land used for agricultural purposes.
    • “Undeveloped land” means “a defined geographic area where the [FAA] Administrator determines low-flying aircraft are operated on a routine basis.”
  • Exceptions.  The following are not “covered towers”:
    • Structurers adjacent to a house, barn, electric utility station, or other building;
    • Structures within the curtilage of a farmstead (for those not familiar with land-use terminology, a “curtilage” is the developed area of a farm immediately surrounding a house or other dwelling where residents have an expectation of privacy – it does not include surrounding fields) ;
    • Structures that support electric utility transmission or distribution lines;
    • Wind-powered electrical generators with rotor blade radius exceeding 6 feet; or
    • Street lights erected by government entities.

The new law was apparently adopted at the urging of rural flying groups, including those involved in crop dusting, members of which apparently have high rates of accidents. That is why there is the emphasis on rural towers – and the exclusions for those in developed areas where such planes are unlikely to be flying. Continue Reading Rural Towers Under 200 Feet May Need to Have Lights Under New FAA Authorization Law

Jonathan Cohen, one of my partners at Wilkinson Barker Knauer LLP, has been closely following the incentive auction by which the FCC is looking to clear a significant part of the television band and take that spectrum, slice it up into different size blocks, and resell it to wireless companies.  He has been guiding numerous companies through its complexities. We’ve written much about the auction on these pages, and now Jonathan offers these observations about the auction. – DDO

With the FCC’s Incentive Auction poised to move into its next phase with the August 16th start of active bidding in the forward auction, where companies looking to provide mobile broadband services will bid on licenses carved out of the spectrum vacated by TV broadcasters, we thought it might be helpful to address a few of the myths that seem to be floating around about the auction.

Myth:      In the initial stage of the reverse auction, broadcasters were greedy, demanding that the government pay $86.4 billion for their spectrum.

Reality:   This line of thinking demonstrates a fundamental misunderstanding of the way the Incentive Auction was designed to work. In each round of the reverse auction, the FCC makes price offers to TV stations, who decide whether or not to accept them. Not the other way around. The FCC decided to set opening price offers at very high levels. The highest opening “go off-air” price offer was $900 million (for a station in New York City), but nine-figure opening offers were plentiful, including to a station in Ottumwa, Iowa (DMA #200). These high prices apparently encouraged a lot of stations to make the initial commitment to accept its opening price offer, which led the FCC to try to clear 126 MHz of spectrum in the initial stage – the most the rules would allow. Under the FCC’s auction design, as prices decline, a TV station can reject the FCC’s offer at any point, but the FCC can continue to reduce its clearing price offers to a station still in the auction only as long as it was still feasible to repack that station given all the other stations that would remain in operation after the auction. At the 126 MHz clearing target, only channels 14-29 are available in the repacked UHF band, and this apparently caused the auction prices for many stations to “freeze” at high levels (once it was determined that a station could no longer be repacked), resulting in the $86.4 billion total clearing cost announced at the end of June. For all we know, however, a great many TV stations that are now possible “winners” in the reverse auction might have been willing to keep accepting price offers below their frozen prices. It was the auction design – freezing station’s buy-out prices when that station could no longer be repacked – that set the prices, not the broadcasters. Continue Reading Debunking a Few Myths about the FCC’s Incentive Auction