Last week, I listened in to presentation by RAIN News providing an excellent overview of the digital music industry (their Whitepaper setting out the findings reported during the presentation is available here).  One statement in that presentation suggested to me today’s topic – the use of music in podcasts.  In the RAIN presentation, a statement was made that most major podcasts are spoken word, but no explanation of that fact was provided. One of the biggest reasons for the lack of music in podcasts has to do with rights issues, as the royalties paid to SoundExchange and even to ASCAP, BMI and SESAC don’t apply to traditional podcasts meant to be downloaded onto a digital audio recording device like an iPhone or any other smartphone.  We wrote a warning about this issue a couple of years ago, but as the popularity of podcasts seems to once again on the rise, the warning is worth repeating.

The rights that a broadcaster or digital music company gets from ASCAP, BMI and SESAC (commonly called the “PROs” or performing rights organizations) deal with the public performance of music.  The PROs license the “musical work” or “musical composition” – the lyrics and the notes that make up the song.  They do not license particular recordings of the song.  As we have discussed before in other contexts, a public performance is a transmission of a copyrighted work to multiple people outside your limited friends and family (see our discussions here and here).  SoundExchange’s royalties also deal with public performance – but it is licensing the public performance of the sound recording – the words and music as recorded by a particular artist.  And SoundExchange only licenses such performances where they are made by a non-interactive service – where the user cannot determine what songs it will hear next (and where the service meets certain other requirements – see our article here for some of those additional requirements).  Podcasts don’t fit within the SoundExchange limitations, and while there has been some debate about whether the PROs have any licensing role in the podcast world (see this article), additional rights from music publishers (who usually control the musical composition copyright) are also needed. Continue Reading Beware of Music in Your Podcasts – SoundExchange, ASCAP, BMI and SESAC Don’t Give You the Rights You Need

Last month, we wrote about the FCC issues facing broadcasters in 2015.  Today, we’ll look at decisions that may come in other venues that could affect broadcasters and media companies in the remaining 11 months of 2015.  There are many actions in courts, at government agencies and in Congress that could change law or policy and affect operations of media companies in some way.  These include not just changes in communications policies directly, but also changes in copyright and other laws that could have a significant impact on the operations of all sorts of companies operating in the media world.

Starting with FCC issues in the courts, there are two significant proceedings that could affect FCC issues. First, there is the appeal of the FCC’s order setting the rules for the incentive auction.  Both Sinclair and the NAB have filed appeals that have been consolidated into a single proceeding, and briefing on the appeals has been completed, with oral arguments to follow in March.  The appeals challenge both the computation of allowable interference after the auction and more fundamental issues as to whether an auction is even permissible when there is only one station in a market looking to give up their channel.     The Court has agreed to expedite the appeal so as to not unduly delay the auction, so we should see a decision by mid-year that could tell us whether or not the incentive auction will take place on time in early 2016. Continue Reading What Washington Has in Store for Broadcasters and Digital Media Companies in 2015 – Part 2 – Court Cases, Congressional Communications and Copyright Reform, and Other Issues

In a Public Notice issued yesterday, the FCC asked for comments from the public on whether broadcast stations should be able to enforce “Last In, First Out” (“LIFO”) pricing against political candidates in election races.  During the 45 days before a primary election or the 60 days before a general election, for advertising buys by a political candidate’s authorized campaign committee, a station cannot charge more than the lowest price charged to the station’s best commercial advertiser for that same class of advertising time.   What the Commission asks in its Public Notice is whether the practice of stations of deciding that particular classes of advertising time are effectively sold out discriminates against candidates – as candidates routinely buy their advertising time late in an election cycle.  These issues come up often, particularly late in any political window as demands on the advertising inventory of stations can become very tight as an election approaches.

So what does this petition ask?  First, let’s take a step back and look at how lowest unit charges work in broadcast (and cable) political advertising.  An easy example would be where a candidate wants to buy a fixed position advertisement on a radio station during its morning drive program.  For that ad, a candidate can be charged no more than the lowest price that the station charged to any commercial advertiser for a similar fixed-position spot that runs in that same time period.  Different classes of time have different lowest unit rates.  That means that, in that same morning drive program, there might be a lowest rate for these fixed position adverting spots that are guaranteed to run at the time that they are scheduled, but a lower price for spots that can be preempted by higher priced spots.  If there are different make-good rights associated with a class of preemptible time (e.g. one type of spot must be “made-good” by the station within a week if it is preempted, while another might just need to be made-good within the next month), both of those classes could have different lowest rates.  See more about lowest unit rate here and here.  Continue Reading Comments Sought by FCC on Political Broadcasting Lowest Unit Rate Implications of Last In First Out Pricing

As in any month, February has many impending deadlines for broadcasters and media companies – many routine regulatory obligations as well as some that are specific to certain proceedings.  First, let’s look at some of the routine filing deadlines.  On February 2, license renewal applications in the second-to-last filing window of this renewal cycle are due to be submitted to the FCC by TV stations in New York and New Jersey.  The last TV stations to have to file in a regular renewal cycle will be due on April 1, for those TV stations in Pennsylvania and Delaware.  After these stations complete their renewal filings, it will be another 5 years before another set of routine license renewals are to be filed.  Stations in Pennsylvania and Delaware should be broadcasting their pre-filing announcements on February 1 and February 16 (and there are also post-filing announcements that need to be run by the New York and New Jersey stations, as well as those in New England that filed their applications by December 1). 

Radio and TV stations in New York and New Jersey, as well as in Arkansas, Kansas, Louisiana, Mississippi, Nebraska and Oklahoma, should be placing EEO Annual Public File Reports in their public files (online for TV and paper for radio, with links to the reports on their websites) by February 1 if they are part of an employment unit with 5 or more full-time employees.  By February 2, noncommercial TV stations in Arkansas, Louisiana, Mississippi, New Jersey, and New York should file with the FCC their Biennial Ownership Reports, and noncommercial radio stations in Kansas, Nebraska, and Oklahoma should be filing those same reports on February 2.  Commercial radio and TV stations in the entire country will be filing their Biennial Reports in December of this year.  A guide to many of the regular FCC filing deadlines can be found in our Broadcasters Calendar available here. Continue Reading February Regulatory Dates for Broadcasters – TV Renewals, EEO Reports, Lots of TV Incentive Auction Activity, OTT MVPD and Contest Comments, and Last-Minute January Deadlines for Webcasting

Yesterday, we wrote about a case involving an applicant for a new commercial FM station, where the FCC clarified its policies on reasonable assurance of transmitter site availability – holding that an applicant in an auction process can amend to a new site if it is found that its originally specified site is not available for its use.  That policy does not apply to applications for LPFM stations or noncommercial FM stations, which are not settled by an auction but instead through the application of a point system. That point system analysis can be preempted in a proceeding between mutually exclusive applicants for the same noncommercial radio station if one applicant is preferred on 307(b) grounds  (Section 307b of the Communications Act being a section that requires that the Commission make a “fair, efficient and equitable” distribution of broadcast service, which the FCC has interpreted to mean that it must evaluate the coverage area of proposed new stations and determine if any would bring new services to underserved populations so that the new service, in and of itself, is in the public interest and outweighs any point system analysis).  A Court of Appeals decision released last week clarified the application of the 307(b) policy. 

The noncommercial case involved an appeal of a “points system” grant favoring one applicant over another.  The loser complained that it would provide service to a substantially greater population, including a great number of people who did not currently receive two or fewer noncommercial services.  Under the FCC’s policies, an applicant will receive a 307(b) preference that will preempt a points system analysis, but only if it meets certain specific coverage requirements (see our discussion of the FCC’s analysis of which competing applicant for the same noncommercial channel will be preferred here).  In this case, the requirement at the center of the argument was one that says that, to be qualified for a 307(b) preference, the applicant’s proposed new station must propose a coverage area providing service to at least 2,000 people that don’t already receive two noncommercial radio services, and the population in the area currently receiving fewer than two noncommercial services must constitute at least 10% of the people to be served by the applicant.  Here, the applicant appealing its loss covered over 28,000 people who received only one noncommercial service, while the winning applicant would provide a second noncommercial service to fewer than 5,000 people.  But, as the area receiving only one noncommercial service constituted less than 10% of each applicant’s service area (about 9.6% of the loser’s coverage and about 5.5% of the winner’s), no applicant was preferred on the 307(b) criteria, and the winner was preferred on other comparative criteria. Continue Reading FCC Standards for Comparing Service by Mutually Exclusive Applicants for New Noncommercial Radio Stations Clarified by Court of Appeals

The FCC seems to be making another statement – releasing one decision upholding two very large fines against major cable programmers for improper use of EAS tones in ads for a movie, while just two days later releasing another decision approving a consent decree with a broadcaster imposing a penalty and monitoring conditions for using those tones in a radio show.  The first decision was by the full Commission.  It upheld a preliminary decision by its staff that we wrote about here, imposing fines of $1,120,000 against Viacom and $280,000 against ESPN.  The new case was against a Univision radio station in New York – agreeing in a consent decree to a $20,000 penalty.

The new case arose at a Spanish language station, where DJs in a comedy sketch on a morning radio show played the EAS tones repeatedly while joking about men who gain weight, and once even joking that playing the tone was illegal.  The FCC was alerted to the use of the tones by a radio listener who apparently was scanning the radio band, heard the tones and tried to determine what the emergency was – eventually figuring out that the alerts were not really part of an emergency at all.  The $20,000 penalty was combined with the FCC’s imposition of a requirement that the station prepare a compliance manual for its employees about the EAS system, conduct training programs, and report to the FCC about its compliance with the plan and the EAS rules for the next three years – including any EAS noncompliance at any of its stations. Continue Reading More Big Penalties for Use of EAS Tones in Non-Emergency Programming

Last week, there were two decisions that clarified FCC processing policies for new broadcast stations – one dealing with applications for commercial stations, and the other with applications for noncommercial FM stations.  The commercial case made clear that an applicant for a new FM station in the auction process need not have reasonable assurance of the transmitter site that it specifies in its application at the time it files the application, as long as it amends to an available site before the application is granted.  The second, a decision of the US Court of Appeals, upholds the grant of a new noncommercial FM station as a result of a point system analysis, and clarifies the 307(b) preference and when it can be decisive in noncommercial comparative cases.

In the commercial case, a bidder who lost a broadcast auction complained to the FCC that the winning bidder for a new FM station did not have “reasonable assurance” of the availability of the transmitter site that it specified after it filed its “long-form application” on Form 301 after being the successful bidder in an FCC auction for the new channel.  The long-form application, filed shortly after the conclusion of a broadcast auction, is supposed to contain the complete engineering showing of the applicant specifying the technical facilities for the new station that it plans to construct.  The facilities that are specified in this application are reviewed by the FCC staff to make sure that they comply with all FCC technical rules. In this case, the tower site proposed in the Form 301 was apparently owned by one of the owners of the petitioner, and the high bidder did not approach the tower owner for permission to specify her site in the application.  Nevertheless, the FCC agreed to grant the application after the winning applicant amended its application to specify an available site. So what was the issue? Continue Reading Two Decisions Clarifying the Processing of FCC Applications for New Commercial and Noncommercial Broadcast Stations – Auction Applications and Reasonable Assurance of Transmitter Site Availability

In odd numbered years like 2015, most broadcast stations don’t think about the FCC’s political broadcasting rules. But they should – and we have been receiving many calls from clients about the perhaps surprising number of elections that are taking place this year.  These include many races for state and local political offices, everything from school boards and city council to state legislative positions, plus the odd special election to fill vacancies in Congress or some other office.  As we have written before, most of the political rules apply to these state and local electoral races as well as to the few Federal elections that are taking place to fill open Congressional seats.

Candidates for state and local elections are entitled to virtually all of the political broadcasting rights of Federal candidates – with one exception, the right of reasonable access which is reserved solely for Federal candidates. That means that only Federal candidates have the right to demand access to all classes and dayparts of advertising time that a broadcast station has to sell. As we wrote in our summary of reasonable access, here, that does not mean that candidates can demand as much time as they want, only that stations must sell them a reasonable amount of advertising during the various classes of advertising time sold on the station. For state and local candidates, on the other hand, stations don’t need to sell the candidates any advertising time at all. But, once they decide to sell advertising time to one candidate in a state or local race, almost all of the other political rules apply.  Continue Reading Reminder – Political Broadcasting Rules Apply Even to State and Local Elections

This week, several notices of the intent to audit the records of several webcasters and other digital music services were published in the Federal Register, indicating that SoundExchange was planning on having the royalty payment records of these services reviewed.  Notices were sent to services including Live365, iHeartMedia and CBS).  Those notices have prompted several calls asking what this is all about.  We have written before about these audits (see our article here).  It is a somewhat routine process, where each year SoundExchange picks several webcasters whose records it will have reviewed.  Under the rules adopted by the Copyright Royalty Board, SoundExchange can elect to audit a webcaster (or other digital music service – and some of the notices this week were for services that were not webcasters – one to a background music provider or what is referred to as a “business establishment service”, here).  SoundExchange can, and usually does, elect to review three years of records.  They can only review any service once for the same time period, so effectively a service can be audited only once every three years.

Under the rules, an independent CPA is to do the audit.  Once the audit is complete, it must be provided to the music service for comment.  Then, it is up to SoundExchange and the service to work out what to do if there are discrepancies identified by the audit with which the service does not agree.  The rules do not provide for any independent adjudicator to referee what happens if there is a disagreement.  SoundExchange pays for the audit, unless the audit determines that the service underpaid by 10% or more, in which case the costs can be transferred to the service. Continue Reading SoundExchange to Audit iHeart, CBS and Other Webcasters and Digital Music Services

Last week, the Copyright Royalty Board asked for comments on a proposed settlement agreement between Sirius XM and SoundExchange, and some articles about that announcement have not been entirely clear about what the deal covers.  It has nothing to do with webcasting royalties for 2016-2020, which are still being litigated (see our article here about the proposals of the parties in that case).  Nor does it have to do with the royalties payable for Sirius’ primary satellite radio service, which were just upheld by the Court of Appeals (see our article here).  Instead, these royalties have to do with a very narrow part of Sirius’ business – providing music channels packaged and sold to consumers along with video services like cable and satellite TV.

Some who closely follow these issues (and the coverage of CRB issues on this blog) may think that the rates for these services were set at the same time as the Sirius rates for their satellite music service, as the CRB at that time set the rates that were applicable to Music Choice, which also offers a music service bundled with cable or satellite video programming (see our articles on the recent decision on the appeal of the rates, and the article on the CRB decision itself here).  Even though Music Choice offers pretty much the same service, their rates are different – as Music Choice was classified as a “preexisting subscription service” in the Digital Millennium Copyright Act, while the service that Sirius provides is classified as a “new subscription service” paying at a different royalty rate set by the CRB using a different royalty standard.  How did this happen? Continue Reading Copyright Royalty Board Announces Settlement between Sirius and SoundExchange for New Subscription Services Packaged with Cable and Satellite Video – How Different Royalty Standards Result in Different Royalty Rates