The only significant legal issues that were potentially standing in the way of the broadcast incentive auction are slowly being removed. So far this week, the US Court of Appeals in Washington, DC has denied two requests for stays of the commencement of the reverse auction, scheduled to begin on March 29 with the submission of commitments to accept the FCC’s payout offers by stations interested in surrendering their channels to the FCC or moving from UHF to VHF channels. The Court denied one stay request outright, but it did note that another applicant, Latina Broadcasters, had made a showing sufficient for the Court to order some relief for that applicant. The Court ordered that the licensee be allowed to participate in the incentive auction on a provisional basis – presumably meaning that they can bid but, if their appeal of being thrown out of the auction is denied, they would not get the benefit of any payments that would otherwise have gone their way from any surrender of their license in the auction.  (See our article here about previous actions in this case)

The FCC has now issued a statement that the inclusion of Latina in the auction will not delay the March 29 deadline for auction participants to make their binding commitments about auction participation. A letter to the Court, referenced in the FCC’s statement, contains a cryptic statement that “a short delay would result from Latina’s inclusion in the auction,” perhaps indicating that other aspects of the auction may be delayed somewhat, but the FCC’s notice makes clear that the March 29 deadline will hold. This is of course subject to Court action on the final unresolved request for stay of the auction – a request by Videohouse, Inc., another LPTV licensee claiming that it should have been treated as a Class A station and included in the auction. The Court actions thus far let the FCC proceed with the auction, and the Commission has gone ahead with advancing the auction process itself, sending out letters to all auction applicants including the SecureID tokens necessary for applicants to participate in the auction itself. Continue Reading Incentive Auction Moves Forward – Two Requests for Stay Denied and SecureID Tokens Distributed to Reverse Auction Participants

Two months ago, I wrote here about the risks of publishing ads or engaging in promotional activities that refer to the Super Bowl” without approval of the NFL. Now, with the NCAA Basketball Tournament about to begin, broadcasters, publishers and other businesses need to be multiply wary about potential claims arising from their use terms and logos associated with the tournament, including March Madness,® The Big Dance,® Final Four® or Elite Eight,® each of which is a federally registered trademark.

The NCAA Aggressively Polices the Use of its Trademarks

It has been estimated that, last year, the NCAA earned $900 million in revenue associated with the NCAA Basketball tournament. Moreover, its returns from the tournament have historically grown each year. Most of this income comes from broadcast licensing fees. It also has a substantial amount of revenue from licensing March Madness® and its other marks for use by advertisers. As part of those licenses, the NCAA agrees to stop non-authorized parties from using any of the marks. Indeed, if the NCAA did not actively police the use of its marks by unauthorized companies, advertisers might not feel the need to get a license or, at least, to pay as much as they do for the license. Thus, the NCAA has a strong incentive to put on a full court press to prevent non-licensees from associating their goods and services with the NCAA tournament through unauthorized use of its trademarks. Continue Reading It’s March Madness! Know the NCAA’s Rulebook or Risk A Foul Call Against the Unauthorized Use of Its Trademarks

How far can a court go in ordering broadcasters to comply with the terms of a contract?  By trying to get a court to enforce a contract signed with a broadcaster, is the suing party infringing on a licensee’s control over its broadcast station license? These questions are addressed in a letter that the FCC released this week, sent to a federal district court in connection with a dispute between two big TV companies over the termination of a Joint Sales Agreement between TV stations in Georgia.  In the case, Media General is seeking to enforce a JSA against a TV station in Augusta that had been owned by Schurz Communications, which was recently acquired by Gray Television.  As a condition of the sale of Schurz to Gray, to obtain FCC approval, the parties agreed to terminate the Augusta JSA.  Media General sued, and on February 26 it obtained an injunction from a Georgia state court barring Gray from operating the station or selling the station’s spectrum in the upcoming incentive auction.  The FCC’s letter states that it believes that the courts cannot order the relief that Media General seeks without infringing on the licensee’s rights to control the station.

While there have been procedural developments in the underlying dispute dealing with the court that will hear the case, it is the substance of the FCC’s letter that is important.  The FCC’s conclusion was based on two findings.  First, it found that Media General could not enforce the JSA because its termination was a requirement of the FCC in connection with the sale of Schurz – so a court cannot order the station to violate the FCC’s own order.  But more fundamentally, the FCC determined that Media General’s efforts infringed on the obligation under Section 310 of the Communications Act that the licensee (now Gray) maintain control over its station unless the FCC has approved a transfer of that control.  In the FCC’s eyes, control includes control over the programming of the station – which would be infringed by the JSA.  It also includes control over the ultimate disposition of the station, which would be infringed by any order forbidding its participation in the incentive auction.  According to the FCC, an element of control of a station is being able to decide whether or not to sell it.  While the FCC acknowledged that Gray and/or Shurz might be liable to Media General for monetary damages and penalties for any breach of the contract provisions, Media General could not get a court to make the station comply with these alleged obligations.  This is not the first time that the FCC has made such a pronouncement. Continue Reading FCC Says No to Court’s Enforcement of Contractual Rights that Limit Broadcast Licensee’s Control Rights – What Does this Mean for Broadcast Contracts? 

The FCC yesterday released an order fining a public broadcaster $10,000 for failing to prepare and place in its public file 13 consecutive quarterly issues programs lists. The licensee had pleaded that the radio station fine should be reduced given that the public file failure began when it acquired the station from a local college that was about to shut the station down as it was not financially viable for the college. After its rescue from being shut down, the station had a significant drop in staffing and budget. The licensee suggested that, given the circumstance, and as a first-time offender who did not mean to violate the rules, it should be assessed a lower fine. The FCC rejected those arguments, finding that without making a showing of financial hardship (which the licensee apparently did not do even after having been prompted by the FCC staff several times), there was no reason to lower the amount of the proposed fine.

It was interesting that the FCC did not discuss in its decision its recent line of cases (about which we wrote here) where it has shown some degree of leniency to noncommercial, student-run radio stations affiliated with academic institutions who have failures in meeting their FCC paperwork burdens. While those cases were explicitly limited to student-run radio stations who were first-time offenders on paperwork issues (see the larger fine we wrote about here when the violation dealt with technical issues), the situation would seem analogous to this station which the licensee said was staffed by “a handful of employees and volunteers” and run on “an eviscerated budget being raised virtually on a day-to-day basis.” Nevertheless, the case shows that, if you are a struggling station run on a shoe-string budget and hit with an FCC fine, be sure to prove your financial hardship – especially if that showing is requested by the FCC staff – or expect to be hit with a full FCC fine.

The FCC’s proceeding on revitalizing AM radio is headed into its second phase, looking at further steps that it can take to assist the oldest broadcast service adapt and thrive in the new media world. In the Fall, the FCC adopted certain policy and rule changes to help AM stations, most notably allowing wider use of FM translators to rebroadcast AM stations through waivers allowing translators to change channels and be moved up to 250 miles to serve an AM station (see our articles here and here for more details). Now the proceeding moves on to consideration of additional proposals on which the FCC seeks comments. The comments are due on March 21. Proposals to reduce the protections afforded to “clear channel AM stations” and the end of dual-band operations by certain stations that were given expanded band channels (at the top end of the AM dial between 1610 and 1700 AM) have received a fair amount of comment in the trade press, but there are other proposals as well. What are some of the issues that the FCC is considering? A brief summary of some of the proposals is set out below.

Lessening of AM station protections. The FCC offered three proposals for a lessening of interference protections afforded to AM stations. To some, lessening of the interference protections between AM stations might seem to be a backward step in improving the service (and a step that is in many ways undoing the FCC’s last major review of the AM rules 25 years ago, where the focus was on minimizing interference between AM stations). But, in each of these cases, the FCC now sees the major culprit in the decreasing popularity of AM stations as not the interference between AM stations, but instead the interference that comes from environmental background “noise” from all of the electronic gadgets that are now part of everyday life. To overcome that background noise, the FCC’s underlying rationale in most of these proposals is to make it possible for more local AM stations to increase their power. While the power increases might lead to increased interference between AM stations, it is the FCC’s premise that most of the interference would be in areas far from the station’s primary service area – and increased power in the center of service areas would make up for the losses by helping the stations to overcome the background noise. Of course, even with the proposals, not all AM stations will be able to increase power, so the stations that suffer interference in their outer coverage areas may not be the same stations that receive benefits from the service improvement in their core markets. Here are the areas in which the FCC proposes to decrease protections between AM stations. Continue Reading Comments on FCC Proposals for More AM Revitalization Efforts Due March 21 – What Questions are on the Table?

In the last day or two, some broadcast trade press reports may have given the impression that the FCC’s new online public file rules for radio may now be “effective,” suggesting that Top 50 market stations with 5 or more full-time employees need to start uploading their new political documents into the file (the first documents that will need to go into these files – see our article here about the filing requirements).  That impression is incorrect.  While the FCC’s order was published in the Federal Register earlier this week, that publication has little practical effect, as the information collection aspects of the rule don’t go into effect until the Office of Management and Budget approves them following  a Paperwork Reduction Act review.  Comments on the OMB review can be filed with the OMB through March 28.

These information collection requirements are basically anything that needs a station to spend time and process paper – the guts of the new rule for taking your paper files and putting them online.  The Notice itself states plainly that the “information collections” triggered by the new rules still must be reviewed and approved by the Office of Management and Budget, a process that is likely to take at least two more months.  The FCC has not yet opened its new public file database for document uploading, nor has it scheduled the training sessions it plans to offer in advance of the actual compliance deadline.  So everyone who panicked when they saw the reports yesterday that the rule was effective can relax, as there is still time to adjust to the new reality and prepare for the online public file.

March appears to be another busy month on the FCC’s regulatory calendar.  While March is one of those months where there is not the usual assortment of EEO public file reports, quarterly issues programs lists or children’s television reports and noncommercial ownership report obligations (see our Broadcasters’ Regulatory Calendar here for some of these dates), it is a month with many other significant regulatory dates.  For instance, this month brings the scheduled start of the TV incentive auction as stations make binding commitments as top whether they will accept the FCC’s opening bids in the reverse auction.  It also brings deadlines for comments in a number of other proceedings that may affect broadcasters, including the FCC’s proceeding on AM radio revitalization and the Copyright Office’s look at the safe harbor for user-generated content.  In addition to comment periods, the lowest unit rate periods that apply during the 45 days before a Presidential primary are in effect in many states, plus March brings other deadlines including those for the first filing date for monthly SoundExchange Reports of Use under the new Internet radio royalty rates.  All make for a month where broadcasters need to watch regulatory developments very closely.

So let’s start with the incentive auction.  As we wrote just a few days ago, March 29 is the deadline for TV broadcasters to make a binding commitment to accept the FCC’s initial offer to buy their spectrum.  TV broadcasters who filed applications to participate in the Incentive Auction back in January were merely leaving the door open to their participation.  The March 29 deadline is the real legally binding commitment to surrender their spectrum at the price that the FCC has offered for their stations.  To make sure that broadcasters understand what they are doing, and how to make their commitments, as we wrote in our article, the FCC has set up an online tutorial on the system and will be holding a workshop about the process.  So if you have a TV station interested in taking advantage of the FCC’s offer to buy out your frequency, this is the month that the commitment needs to be made. Continue Reading March Regulatory Dates for Broadcasters – Including Incentive Auction Commitments, New Webcasting Royalties, and Comments on AM Revitalization and Copyright Safe Harbor for User-Generated Content

The FCC yesterday released a Public Notice dealing with the upcoming March 29 commitment deadline for TV broadcasters who filed their applications back in January indicating a possible intent to participate in the incentive auction to surrender their TV channel so that the FCC can use it to repack the TV band to free spectrum to sell to wireless broadband users. In the Public Notice, the Commission made clear that station’s actual commitments to accept the FCC’s initial offers to give up their spectrum (either by abandoning their channel entirely by going out of business or sharing with a channel with another broadcaster, or by moving from a UHF to a VHF channel) will need to be filed between 10AM on March 28 and 6 PM (Eastern Time) on March 29. The January applications said that a broadcaster might be interested in giving up its current channel – filings made before the upcoming March 29 deadline make that commitment binding.

Yesterday’s notice announced that the FCC will be making available its “Initial Commitment Module” of the Incentive Auction software system at 10 AM on March 24 during a “preview period” for review by TV broadcasters. That is the piece of software on which the broadcaster makes its commitment to participate in the auction at the FCC’s initial offering price. Starting on Monday, February 29, the FCC will be making available an online tutorial to allow broadcasters to familiarize themselves with how the software will work. In addition, today the FCC announced that it will hold a workshop for broadcasters on March 11, starting at 10 AM Eastern Time, providing information on how to make these commitments.  These actions come while the FCC battles with some LPTV stations claiming that they should have been considered Class A TV stations and included in the auction – a legal battle that seems to be the last potential legal speedbump that could in any way derail the upcoming auction. Continue Reading FCC Announces Previews for TV Broadcasters of Incentive Auction Initial Commitment Software; Denies Auction Stay Request from LPTV Applicant

The FCC today issued a Public Notice announcing its first EEO audit for 2016.  Letters to about 280 radio and television stations went out on February 24 asking for evidence of their compliance with the FCC’s EEO rules.  In today’s notice, the FCC released the form audit letter and list of stations that will be audited. Responses from the audited stations are due to be filed at the FCC by April 11. Licensees should carefully review this list of affected stations which was released with the Public Notice to see if any of their stations have been selected for the audit.

The Commission has pledged to audit 5% of all broadcast stations and cable systems each year to assure their compliance with the Commission’s EEO rules – including the requirements for wide dissemination of information about job openings and non-vacancy specific supplemental efforts to educate a station’s community about job opportunities in the media industry.  We recently summarized FCC EEO issues here, reminding broadcasters of the possibility of being audited.  We also wrote about the start of the obligations for the filing of FCC Form 397 EEO Mid-Term Reports – which started last year for radio groups with more than 11 full-time employees and will extend to TV licensees with 5 or more full-time employees in a few months, and are filed on the 4th anniversary of the filing deadline for the station’s license renewal – which will give the FCC another chance to review station EEO performance.   Continue Reading FCC Announces First Round of 2016 EEO Audits for Radio and TV Stations

 

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.

Broadcasters are of course Federal licensees, and marijuana is still a controlled substance, illegal for sale to the public under Federal law.  While the current administration in Washington has said that enforcing marijuana laws against those who comply with state law is not an enforcement priority, it gave that advice provided a cannabis business observes very strict guidelines.  Strict Federal laws against any sale of marijuana remain on the books, and any search of the DOJ website provides numerous examples of legal actions brought against companies and individuals that don’t fit within those guidelines.  Plus, all it takes is a change in enforcement priorities by the Federal government and even dispensaries that are legal under state law can be closed by Federal actions.  And even if the priorities don’t change, the Department of Justice suggestions to Federal prosecutors don’t stop individual prosecutors from taking actions, especially if the cannabis-related business is found to have violated some other law or if it is acting outside of the strict limits that the DOJ set out in suggesting prosecutorial restraint.  Promoting a business that is not legal under Federal law is dangerous.  Continue Reading The Murky State of Rules on Broadcast Advertising of Marijuana Products in States Which Have Legalized its Sale or Use