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

According to Politico, Ted Cruz’ campaign has demanded that TV stations pull certain PAC ads which he claims distort his voting record on immigration issues. This kind of claim from a political candidate about the unfairness of attack ads is common. Here, Cruz’ representatives apparently don’t threaten lawsuits against the stations for running the ads, but suggest that it is a violation of the stations’ FCC obligations to operate in the public interest to continue to run the ads. What is a station to do when such a claim is received?

We have written many times about this issue. Much depends on who is sponsoring the attack ad. If the ad is sponsored by the authorized campaign committee of another candidate, and features the voice or image of the sponsoring candidate, the station cannot do anything. As we wrote in detail here, a station cannot censor a candidate ad. Once it has agreed to sell time to a political candidate or his or her authorized campaign committee, the station must run the ad as delivered by the candidate without edit (with the very limited exception of being able to add a sponsorship identification if one is missing, or when running the ad would constitute a felony, e.g. running a spot that is legally obscene – not just indecent but obscene, meaning that it has no redeeming social significance). Because the station is required to run the ad as delivered by the candidate, the station has no liability for the content of the ad. So, if the candidate being attacked complains, the station can do nothing to edit, censor or pull the attacking candidate’s ad without violating the “no censorship” provisions of Section 315 of the Communications Act. The candidate being attacked has a remedy against the ad’s sponsor, not against the station. Third party ads, however, are different. Continue Reading Ted Cruz Demands Takedown of PAC Ad Attacking His Voting Record – Issues that Broadcast Stations Need to Consider When Threatened by Candidate Wanting an Ad Pulled

The text of the Copyright Royalty Board decision on Internet Radio Royalties for 2016-2020 was released last Friday. While it is 203 pages long, the basis for the decision is relatively simple. As required by the Copyright Act, the Copyright Royalty Judges looked at all of the evidence presented to determine what rate a willing buyer and a willing seller would agree to in a marketplace transaction. In looking at that evidence, they decided that the best evidence for that rate was two deals actually done in the marketplace – one deal between Pandora and the independent record label organization Merlin and another between iHeartRadio and Warner Music. As these were deals for the very rates to be decided by the Judges – the rates for the public performance of sound recordings by noninteractive streaming companies – the Judges determined that these two deals best evidenced the value put on streaming royalties by actual players in the marketplace. Looking at the per song per listener rates specified in those deals, and making a few adjustments based on other consideration included in the deals (particularly in the iHeart deal), the Judges arrived at a per song per listener rate for each deal, and determined that they set the bounds of the reasonable rates for nonsubscription webcasting. Taking into account that approximately 2/3 of the music played by webcasters is from major labels like Warner as opposed to that from the independent labels such as those that were part of the Merlin group, the Judges gave the rates from the iHeart deal greater weight in determining where within the zone of reasonableness the rates should fall. Thus, the Board determined that the rate for nonsubscription, noninteractive services should be $.0017 per performance (i.e. per song per listener). This is the rate that they published back in December (about which we wrote here).

While the basis for the decision seems relatively simple, the process to get to that decision was not – and it took 203 pages for the Judges to discuss all of the issues that they weighed in coming to their conclusions. While some of those pages were dedicated to discussions of the rates for noncommercial webcasters and the terms of the payments to be made by webcasters (topics we will try to cover in a later post), the bulk of the decision was a discussion of how the Judges weighed the arguments of the parties in the case in reaching their conclusion. While no summary can cover all of the issues that went into this consideration, some of the issues covered in this decision are discussed below. Continue Reading Looking at the Decision of the Copyright Royalty Board on Internet Radio Royalties for Commercial Webcasters – What are the Issues that the Judges Considered?

The full decision of the Copyright Royalty Board on Internet Radio royalties, excluding confidential information, has now been made public and is available here.  In December, we wrote about the rates and terms of the royalties that webcasters pay to SoundExchange for the public performance of sound recordings as set by the CRB decision, and about some of the ramifications of that decision for various classes of webcasters.   The rates were adopted by the Copyright Royalty Board after a long hearing held last year, and after argument by the parties appearing in the case. We’ll have more details on the decision and the Board’s reasoning in the coming days, but the 203 pages of the decision are now available for your review.  A little light weekend reading….

The FCC’s new contest rules for broadcasters, allowing the disclosure of material terms on the Internet rather than reading them on the air, becomes effective upon the publication in the Federal Register of their approval by the Office of Management and Budget. OMB approval has been obtained, and the Federal Register publication is scheduled to take place on Friday, February 12, 2016 (see the pre-publication notice here).  So the long-awaited effective date is here! For more information about the FCC’s rule changes, see our article here.

Upon this publication, broadcasters can start publicizing the material terms of contests on their websites. Broadcasters need to remember that they need to plug on the air the fact that the rules are available on the website. It is required that the broadcaster mention that the rules are available on their website the first time that the contest is mentioned on air, and a reasonable number of times thereafter. And broadcasters need to make sure that, when an audience member goes to the website, they can find the rules though a clearly marked link or tab.

In posting the material terms, broadcasters need to be careful that the terms are clear, and cover all of the issues that anyone entering the contest needs to know. See our articles here and here about cases where the FCC has talked about what it considers to be the material terms of a contest. And stations need to be careful to follow the rules that are posted. See our articles here, here, here and here about stations that got in trouble for not following the rules that they set for their contests. So follow the rules, and get ready to eliminate some of that on-air clutter from your airwaves by moving this information online!

In a Public Notice released yesterday, the FCC announced that all Form 398 Annual Children’s Television Programming Reports, which report on the amount of educational and informational programming directed to children was broadcast by any TV station in the prior quarter, need to be filed in the FCC’s new Licensing and Management System (LMS). The FCC is migrating all TV broadcast filings to this new system, and the next Form 398, due by April 10 to report on programming broadcast by stations in the first quarter of this year, must be filed in this system.  While LMS has been available for stations to use for these reports since last June, beginning with the reports due in April, no more reports can be filed in the FCC’s old KidVid Filing System.

The Notice was also interesting as it stated that broadcasters need to check their online public files to make sure that these reports are timely uploaded into the file. While the FCC is supposed to automatically link the form as filed with the Commission to the station’s online public inspection file, the notice states that station licensees need to manually upload the report to the online public file if the link is not made within 10 days of the end of the calendar quarter. So if the new system does not quickly upload the report to your public file, you need to do it yourself. Continue Reading FCC Announces that All Quarterly Children’s Television Reports Need to be Filed in New LMS Filing System Starting March 31 – And that Stations Need to Make Sure that these Reports Reach the Online Public File By April 10

In Washington DC this week, many in the communications world are commemorating the 20th anniversary of the passage of the Telecommunications Act of 1996. Five years ago, we noted the changes that the Act made in the broadcast regulatory world – changes that are still being debated 20 years later. To show how little things change, I thought that I would republish the article that I wrote 5 years ago. There, I talked about some of the changes made in 1996 in the broadcast ownership rules that were still being debated in 2011, and suggested that they might be resolved by the review of the multiple ownership rules that was then about to begin. Of course, that didn’t happen (see our article here about the FCC’s decision to push most of the ownership decisions into the current Quadrennial Review of those rules. So we can again make the same claim – that perhaps some of these issues will be resolved by the current ownership rule review that is supposed to be decided this summer (though that date may well slip – see our predictions for the FCC’s actions on broadcast issues for this year, here).

Our article from 5 years ago also talked about calls then being made by one FCC Commissioner to roll back some of the 1996 reforms lengthening the license term for broadcasters. Those calls seem to have gone unheard so perhaps that one issue may have been resolved – at least for the time being.  It also discussed the proposals for the repurposing of the TV spectrum for wireless uses, which has led to the Incentive Auction that the FCC is about to conduct. 

But other issues remain on the table.  So here is a look back at what I wrote 5 years ago on the 15th anniversary of the Act:

On February 8, 1996, the Telecommunications Act of 1996 was signed into law by President Bill Clinton.  While the Act had significant impact throughout the communications industry, the impact on broadcasters was profound, and is still being debated.  The Act made changes for broadcasters in several major areas:

  • Lengthened license renewals to 8 years for both radio and TV, and eliminated the “comparative renewal”
  • For radio, eliminated all national caps on the number of radio stations in which one party could have an attributable interest and increased to 8 stations the number one party could own in the largest radio markets
  • For television, raised national ownership caps to having stations that reached no more than 35% of the national audience, with no limits on the number of stations that could be owned as long as their reach was under that cap.
  • Allocated spectrum that resulted in the DTV transition

Obviously, the DTV spectrum began the profound changes in the way television is broadcast, and led to the current debate as to whether over-the-air television should be further cut back in order to promote wireless broadband (see our recent post on the FCC’s current proceeding on this issue).  While the other changes have now been in effect for 15 years, the debate over these provisions continue.  Some argue that the renewal and ownership modifications have created too much consolidation in the broadcast media and lessened the broadcaster’s commitment to serving the public interest.  Others argue that, in the current media world, these changes don’t go far enough. Broadcasters are under attack from many directions, as new competitors fight for local audiences (often with minimally regulated multi-channel platforms, such as those delivered over the Internet) and others attack broadcasters principal financial support – their advertising revenue. Even local advertising dollars, traditionally fought over by broadcasters and newspapers (with some competition from billboards, direct mail and local cable), is now under assault from services such as Groupon and Living Social, and from other new media competitors of all sorts.  With the debated continuing on these issues in the current day, it might be worth a few looking back at the 1996 changes for broadcasters, and their impact on the current broadcast policy debate. Continue Reading On Its 20th Anniversary, Looking Back at How the Telecommunications Act of 1996 Changed the Broadcast Regulatory Landscape

In an order released last month which has not received much attention, the FCC clarified its requirements for the filing of Biennial Ownership Reports. Much of the order deals with fixes to the report itself that will, for the most part, make the completion of the report administratively easier in terms of the physical data that needs to be entered into the form. However, certain new information-collection requirements call for broadcasters – both commercial and noncommercial – to start gathering information now from their attributable owners, including members of their governing boards, in order to enable the completion of the forms when they are next due to be filed, on December 1, 2017. We earlier wrote here about the FCC’s proposals in this proceeding (including the dazzling use of acronyms for various kinds of identification numbers assigned to attributable owners).

One of the principal purposes of the Biennial Ownership Reports is to gather information about the ownership and control of broadcast stations that will allow the FCC to slice and dice that information to use it to make decisions about issues like minority ownership in broadcasting and the concentration of broadcast ownership and control. Thus, the Biennial Reports gather information about race and gender of those with attributable interests in broadcast stations, and also about the interests those interest holders have in other stations. As we have written before, there have been complaints from some who have tried to analyze the information collected in the Biennial Reports that the data cannot be easily manipulated, particularly to track the ownership and control of individuals across multiple companies. Partially, this was attributed by the FCC to the failure of applicants to be able to get from all of their attributable owners information necessary to obtain an FRN (FCC Registration Number). That FRN was to be used to uniquely identify each holder of an attributable interest and track those individuals or entities through all of their media interests. In the past, there had been concerns that some interest holders were reluctant to provide the information necessary to get an FRN. The FCC has tried to remedy some of those concerns, and backed up their remedy with a suggestion that they will sanction interest holders who fail to provide the required information. Continue Reading FCC Order on Biennial Ownership Requirements – All Broadcasters, Commercial and Noncommercial, Need to Start Collecting Information from Attributable Owners and Directors for Next Year’s Filing

In a decision released earlier this week, the FCC dismissed an application for a new noncommercial FM station based on a change in the majority of the applicant’s board of directors within a one-year period after the application was filed.  The change was deemed a major change in ownership, which the FCC rules says requires the assignment of a new file number – essentially meaning that the application is treated as a new application received after the filing window for the new FM stations was closed and was therefore dismissed.  The decision was one made by the full Commission which reversed a decision of its Media Bureau.  The Bureau had granted the application following a settlement with other mutually exclusive applications. The full Commission decision to instead dismiss the application was not made without some angst, as two of the Commissioners concurred in the decision but urged the FCC to change its rules before the next noncommercial filing window to avoid a similar result in the future.  But the decision does raise some questions about just what constitutes a change in control of a noncommercial broadcaster.

In this decision, the FCC found that two changes in the majority of the members of the board of directors of the applicant, where a majority of the board members changed in a period of less than one year, constituted a major change in ownership of the applicant requiring the assignment of a new file number to the application and its dismissal.  The decision contrasted this case with those of other noncommercial applicants in another new application filing window.  In that other window, the FCC granted blanket waivers of the major change rule to applicants that had a change in a majority of their boards over a much longer period of time while their applications slowly made their way through the Commission’s processes.  It was the difference between the relatively sudden changes in ownership in less than a year in the case decided this week as opposed to the more gradual changes in the other cases that seemed to make the difference in the outcome.  But the two Commissioners who separately commented on the case asked if this distinction really should make any difference, especially as the changes did not appear to be the result of any takeover of the organization, but instead were merely changes that occurred in the normal course of operation for this volunteer organization. Continue Reading Changes in the Board of Nonprofit Corporation Doom FCC Application for New FM Station – Addressing Control Issues in Noncommercial Broadcasting

Last week, we wrote about the FCC’s decision to require that radio stations move their public inspection files online.  Commercial stations with 5 or more full-time employees that are located in Top 50 markets need to make the transition to the online file later this year once the FCC gets its new rules approved by the Office of Management and Budget following a Paperwork Reduction Act review.  Other radio stations will need to come into compliance, unless they get a waiver of the new rules, by March 1, 2018.  Our initial article about the decision was based on the FCC’s press release on the decision and comments made at the FCC meeting at which the obligation was adopted.  The FCC has now released the full-text of the decision (available here) and that order contains many new nuggets of information about the new obligations about which stations need to be aware.

The text of the decision does a good job of summarizing the obligations of radio broadcaster’s current public inspection file obligations (as well as those of the other entities that were also addressed by the new rule – cable systems, DBS operators, and Sirius XM for their satellite radio service).  For each of these services, the FCC addressed a number of issues.  Some of the radio questions addressed by the order include those set forth below. Continue Reading FCC Releases Order on Online Public Inspection File – Answering Questions about Compliance with Radio’s New Obligations