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

Recently, we wrote about two cases seeking declaratory rulings from the FCC that non-US ownership of companies owning broadcast stations should be permitted even though that ownership would exceed the 25% standard that had been, until that last few years, the limit on such ownership. Last week, the FCC announced the filing of another such request – this one by Hemisphere Media Group looking to operate Spanish-language stations in the US. Unlike the petitions about which we wrote last month, this case does not involve a situation where the foreign owners are defined. Instead, the company is a public company, and thinks that, from time to time, its foreign ownership might exceed 25%. It seeks permission for foreign ownership to go as high as 49.99%. In many ways, this seems much more like the Pandora case (see our article here), where the FCC allowed a public company to acquire a radio station even though it could not prove to a certainty that its foreign ownership did not exceed a 25% interest in the company. Perhaps the only difference is here, the structure of the company is such that a control group of US citizens will own the company.

Comments on this proposal are due on or before August 29, with replies due by September 13. The decisions in this and the other pending cases may give us an idea on where the Commission is heading on its broader review of its foreign ownership rules (about which we wrote here). So watch for these decisions.

Last week, the FCC announced a consent decree with Sinclair Broadcast Group where Sinclair agreed to pay $9.495 million to the FCC to settle claims that it negotiated retransmission consent agreements involving stations that it did not own with MVPDs (cable and satellite companies).  Sinclair did not admit any liability – but stated that it settled the proceeding to get its license renewals granted and otherwise turn the page on the issues that were raised so that it could concentrate on ATSC 3.0 and other business issues. After the amount of the settlement was announced, there was much thrashing in the media about the meaning of such a large payment. But was there really any greater significance in this fine?

It is possible that the only real meaning that can be derived from this payment is that the FCC takes seriously its rules (about which we wrote here) and the subsequent statute (about which we wrote here) that forbids one TV station from negotiating a retransmission consent agreement on behalf of another non-commonly owned station in the market. The rules prohibit joint negotiations unless such stations are “directly or indirectly under common de jure control.” The allegations in the order announcing the settlement were that Sinclair had negotiated or coordinated negotiations with stations in its market with which it had a relationship (e.g. an LMA or a JSA), but which it did not own – presumably meaning that the FCC concluded that these relationships did not constitute de jure control of these other stations. Sinclair did not admit liability. It does not seem as if this is a common issue, nor one where a large payment like the one made here is likely to affect operating practices of other stations. Instead, it seems to be a one-off fine, making clear the FCC does not see stations are being under common control unless they are commonly owned. We’ll see if there is other enforcement in this area – but we expect it is not one where there will be seeing multiple cases raising similar issues.

Everyone who has a computer, smartphone, or other Internet-connected device has probably spent at least some time perusing photos or videos of cute pets or babies, or of the latest amazing (or sometimes amazingly stupid) things that people do. Broadcasters, in particular, with an audience to reach both through their over-the-air facilities and on their websites and mobile apps, may well want to share the content that they have found online. But, a recent spate of lawsuits filed against radio broadcasters for using photos on their websites without permission makes clear that this can lead to issues if done without permission. There have even been claims made against TV stations for taking video found online and repurposing it over-the-air or online as part of their locally-produced programming. Just because someone has posted photos or videos on a social media site does not give anyone else to take those photos and use them in other media. When an individual posts something on a social media site, what they have done is to give that site the right to use the material that they have posted in accordance with the rules of the site on which they have been posted – but the mere fact that a photo or video has been posted on one of these sites does not give others the rights to take those photos and videos and use them elsewhere.

When I make a statement like this in one of the many seminars that I have done on digital media issues, people are always quick to jump up and say – “but isn’t the Internet all about sharing?”  While in some ways it is, it really is more a medium for the dissemination of content in one way or another.  And just because a creator of content wants to share that content in one fashion does not mean that the content can be reused by others in a wholly different context. Continue Reading Beware – Using Online Photos and Videos in Radio and TV Productions and on Websites Can Bring Lawsuits for Copyright Infringement if Rights are Not Secured in Advance

One last minute reminder for broadcasters – by this weekend, they need to have reprogrammed their EAS equipment with a new alert code to recognize alerts associated with nationwide EAS tests. This is supposed to be done by July 30, 2016 (the FCC set the date in paragraph 41 of last year’s FCC order reviewing on EAS, as published in the Federal Register here). By that date, all EAS participants must:

  • use equipment capable of processing “six zeroes” (000000) as the national location code pertaining to every state and county in the United States; and
  • use equipment capable of processing a National Periodic Test (NPT) event code for future nationwide EAS tests, including the nationwide test scheduled for September 28, 2016.

As we wrote in our article yesterday about August regulatory dates for broadcasters, there is also a deadline of August 26 to register all stations in the FCC’s new ERTS database, so that they can report on the results of the nationwide test to be held in September. So be ready for all of these FCC deadlines.

 

The websites of the Library of Congress and the Copyright Office, which include the site used by the Copyright Royalty Board, will be down for maintenance this weekend. This includes the portal for filing cable and satellite royalty claims, which will be unavailable 5 p.m. ET, Friday, July 29, through Sunday, July 31. Claims by broadcast TV stations and others for royalties for the carriage by satellite TV and cable systems of programming to which they own the copyright are due on August 1 (technically the claims are due by the end of July but, as July 31 is Sunday, that deadline defaults, according to the CRB site here, to August 1). To avoid the possibility of an untimely (and therefore invalid) filing, filers should consider printing and filing a paper claim, following the instructions on the fillable PDF form on the CRB website. For last minute filers, consider this warning.

As we enter the last full month of summer, when many are already looking forward to the return to the more normal routines of autumn, regulatory obligations for broadcasters don’t end. Even if you are trying to squeeze in that last-minute vacation before school begins or other Fall commitments arise, there are filing deadlines this month, as well as comment deadline in an FCC proceeding dealing with broadcasters’ public inspection file obligations. Some of the August regulatory obligations are routine, others are new – but broadcasters need to be aware of them all.

On the routine side of things, by August 1, EEO Public Inspection File Reports need to be placed in the public inspection files of radio and TV stations in California, Illinois, North Carolina, South Carolina, and Wisconsin, if those stations are part of an Employment Unit with five or more full-time employees. For Radio Station Employment Units with 11 or more full-time employees in Illinois and Wisconsin and Television Employment Units with five or more full-time employees in North Carolina and South Carolina, FCC Form 397 Mid-Term Reports need to be submitted to the FCC by August 1. These Mid-Term Reports provide the FCC with your last two EEO public file reports, plus some additional information. In the past, they have sometimes triggered more thorough EEO reviews and, in some cases, even fines. Yesterday, we wrote about the kinds of issues that can get a broadcaster into trouble when the FCC looks at your EEO performance, so be sure to stay on top of your EEO obligations. We wrote more about the Form 397 Mid-Term Reports, here. Continue Reading August Regulatory Dates for Broadcasters – New Fees, EAS Registration Requirement, EEO Obligations and More

An FCC decision fining a cable company $11,000 for not adequately recruiting for job openings should be viewed as a warning to broadcasters as well as well as MVPDs – failure to recruit for job openings by disseminating information about those opening through diverse sources will likely result in a substantial fine under the current rules being enforced by the Commission’s Media Bureau. As the Commission has held before (see our article here), simply recruiting through online sources will not be enough to avoid the imposition of a fine. In this case, the FCC specifically points out that approximately 30% of the cable system’s service area did not have Internet access, so people in that group were likely not exposed to information about the station’s job openings. As the Commission requires that job openings be publicized so as to reach all groups within a system’s (or a broadcast station’s) recruitment area (which is related to its core service area), the decision found that the failure to recruit so as to reach this significant portion of the local population, together with the failure to complete one year’s EEO public inspection file report, merited a fine of $11,000.

One of the interesting aspects of this decision is the emphasis that the Media Bureau continues to put on the distinction between online recruiting and other more traditional means of reaching out to potential job applicants (e.g. using employment agencies, sending notices to community groups, using college job offices, etc.). Even though Commissioner O’Rielly has suggested that the Commission allow recruiting to be done solely using online sources (see our article here), as that is much more in tune with the way that job seekers today look for potential employment opportunities, the Commission continues to insist on station’s using these more traditional outreach efforts regardless of their success rate. In fact, the FCC has never revisited its 2003 EEO order that presumes that the local newspaper is a source that can reach most groups within a community, when it no doubt can be proven that, in today’s world, the circulation of online job sites is significantly greater than that of almost any newspaper. Commissioner O’Rielly notes that the FCC itself has recognized the reach of the Internet through actions such as the requirements that broadcast and MVPD public files be moved online, and that disclosures about contest rules can be made online. Yet, in the EEO world, online recruitment, unless tied with the use of other more traditional outside sources, will bring a fine. Certainly, it is an issue that the FCC needs to revisit – and one that perhaps will be revisited in appeals of decisions like this one, or in response to the calls of Commissioner O’Rielly and others. Continue Reading $11,000 FCC EEO Fine for Recruiting Solely Through Online Sources – Time to Revisit the FCC Rules?