A decision by the US Court of Appeals on the appeal of the Copyright Royalty Board decision as to the Sirius XM and Music Choice royalties for the public performance of sound recordings is one of the many year-end decisions important to broadcasters and digital media companies that seems to be flooding out from Courts and agencies in DC and elsewhere. The Court of Appeals rejected the appeal of SoundExchange, which was arguing that the royalties for both services should have been set higher by the CRB, and the Court also rejected the appeal of Music Choice, which argued that the royalties that were set by the CRB should have been lower.  We wrote about the CRB’s decision, here, when it was initially released about 2 years ago.

The proceeding involved the Preexisting Subscription Services (“PSS”) and the Preexisting Satellite Digital Audio Services (“SDARS”), services that were singled out when Congress adopted the Digital Millennium Copyright Act in 1998 by applying a different standard to those services for use by the CRB in determining the amount of sound recording performance royalties.  Instead of using the “willing buyer, willing seller” standard that applies to webcasters and any other digital music service that was not in existence in 1998, these services are evaluated under the 801(b) standard of the Copyright Act, which looks at a variety of factors including the market rate expressed by the willing buyer willing seller standard, but also at the relative financial contributions of the parties to bringing the music to the public, and the effect of royalty changes on the stability of the industries involved (see our articles here, here and here about the differences between these standards)  Using this 801(b) standard, most observers believe that royalties have been set at rates lower than have prevailed in the cases involving services subject the willing buyer willing seller standard. Continue Reading Court of Appeals Upholds Copyright Royalty Board Decision on Sirius XM and Music Choice Royalties

Two fines for EEO violations released Friday were among the rush of actions coming from the FCC last week as it tries to finish its work of 2014.  Incentive auction procedures, MVPD redefinition, online public file issues, approvals of long-pending TV company mergers and so many other actions were taken in the last week that we can’t keep up.  Now, we can add EEO violations to the list of year-end actions, as the FCC’s Media Bureau on Friday released two Notices of Apparent Liability to radio stations operators for violating the EEO rules, proposing fines of $5000 and $9000.  While, in both cases, the stations are principally faulted for their failure to engage in wide dissemination of job openings, one case cites a new issue as the issue partially underlying the EEO fine – the failure to actually provide notice of job openings to all of the recruitment sources that had requested that the station notify them when there are job vacancies. Both cases arose from station license renewal applications filed about more than 3 years ago.

Each EEO employment unit (stations under common control, serving the same geographic area and sharing a common employee) with 5 or more full-time employees must engage in the three prongs of the FCC’s EEO outreach requirements.  First, they must engage in wide dissemination of information about job openings, using a variety of recruitment sources to ensure that information about job openings at a station reach all of the diverse groups of people that may be represented within the station’s recruitment area.  Secondly, they must let groups within the community know that they can ask to be notified of job openings at the station when such openings arise (and in fact provide such notice when the openings do arise).  Finally, they must engage “non-vacancy specific outreach efforts” – activities to educate the community about broadcast employment – what people do in broadcast jobs, how they can find out about the jobs, and what sort of training or experience is necessary for jobs in the industry.  It was violations of these first two prongs of the FCC’s EEO program that got the stations in trouble in these two recent orders. Continue Reading Fines of $9000 and $5000 Imposed on Radio Stations for Insufficient EEO Outreach Efforts – Reminder to Review Your Program as EEO Mid-Term Report Cycle Begins in 2015

We recently wrote about the proposed changes in the FCC’s rules about station-conducted contests, here.  The FCC has proposed that much of the required disclosure about the material terms of these contests be allowed to be conducted online, rather than having to be announced on-air often enough so that listeners to the station are likely to have heard such announcements.  The NPRM has now been published in the Federal Register, which sets the dates for public comment.  Comments are due February 17, 2015, and reply comments are due March 19, 2015.  Be ready to file your comments in this proceeding by the deadlines to make your life as a broadcaster at least somewhat easier. 

The online public inspection file for radio is moving closer to reality at an unusually fast pace.  Yesterday, the FCC issued a Notice of Proposed Rulemaking, seeking to expand the online public file requirements that now apply to broadcast TV stations to radio (see our summary of the obligations here, and a presentation that we did on those requirements, here).  The rulemaking proposal also looks to adopt online public file obligations for cable systems, satellite television systems, and Sirius XM.  Comments will be due 30 days after the NPRM is published in the Federal Register. 

The NPRM proposes a phased-in approach to these obligations for radio.  It would first require the online public files only for stations in the top 50 Nielsen (formerly Arbitron) markets which employ five or more full-time employees.  The Commission chose these stations to begin the process, reasoning that they are subject to the EEO rules and would thus have EEO reporting obligations (which are already online for most station, albeit on their own station websites), and would have more resources to meet any obligation that the rule imposes.  The Top 50 markets were also the starting point for the roll out of these obligations for TV stations, and are likely also in areas where there is significant political broadcasting activity.  The NPRM asks whether a six month period to implement the new requirements from the effective date of any set of new rules would be appropriate. Continue Reading Online Public File for Radio – and Satellite and Cable – Moves Closer to Reality – FCC Issues Formal Notice of Proposed Rulemaking

An FCC Regional Director of its Enforcement Bureau this week issued a Forfeiture Order fining a New Mexico broadcaster $25,000 as three of his Studio Transmitter Link auxiliary stations were operating from an unauthorized location – each located about half a mile from where they were supposed to be according to their FCC licenses.  While the amount of the fine may have been increased as the licensee, when notified of the problem following an FCC inspection, filed an application to correct the coordinates, but that application was dismissed by the FCC and never re-filed – so that the same issues of unauthorized operation remained in place when the FCC re-inspected the stations a year later.  But the amount of the fines for a seemingly small problem evidences the seriousness with which the FCC is treating inaccuracies in broadcast auxiliary station licenses.

We have written about these issues before, here and here, and in another recent case the FCC proposed to fine a TV licensee $84,000 for a similar violation.  So check your auxiliaries now, and make sure that they are properly licensed to avoid the potential of a big fine from the FCC in the future. 

The FCC this week issued a Second Further Notice of Proposed Rulemaking, suggesting that certain responsibilities for the captioning of video programming be reassigned from the Video Programming Distributor (the TV station or cable system) who has the direct contact with the viewer, to the producer of the programming as that is where the captioning usually is added to the programming.  In asking questions about whether to look at reassignment of some or all of the legal obligations for captioning, the FCC also suggested that, were it to take such an action, program producers might need to register with the FCC so that complaints about their captioning could be directed to the proper location.  As the new quality captioning system is driven by consumer complaints, the FCC suggests that, if programmers are not registered with the FCC, consumers will not be able to express their concerns about the quality of captioning.  By asking about a possible reallocation of captioning responsibilities, and with captioning quality regulations about to go into effect in January, it appears as if the deadline for meeting the new rules seeking to insure the quality of captioning of video programming will be postponed – and we are now hearing that March 16 is the likely new date for the new captioning quality obligations to take effect. 

The new captioning quality obligations were to take effect on January 15 (or a later date if the requirements had not been approved under the Paperwork Reduction Act by that date).  They required that broadcasters insure that program captioning was of good quality, looking at quality goals including the following:

  • Accurate: Captions must match the spoken words in the dialogue and convey background noises, music and other sounds to the fullest extent possible.
  • Synchronous: Captions must coincide with their corresponding spoken words and sounds to the greatest extent possible and must be displayed on the screen at a speed that can be read by viewers.
  • Complete: Captions must run from the beginning to the end of the program to the fullest extent possible.
  • Properly placed: Captions should not block other important visual content on the screen, overlap one another or run off the edge of the video screen.

According to this week’s Further Notice of Proposed Rulemaking, many VPDs suggested after these quality rules were adopted in February, that it was really the program producers who insured that the captions were included in the programming, and they should be responsible for the quality of those captions.  In reaction to those comments, the FCC has now issued this further notice.  Watch for the comment date on this Further Notice (which will be set when the document is published in the Federal Register) at which time we understand that it is likely that a formal extension of the effective dates of the captioning quality rules will be issued.  So keep watching for these announcements.

The FCC issued a Forfeiture Order this week, fining a station $7000 for violations of the main studio rule. The facts of the case were set out in a Notice of Apparent Liability issued back in February, where the licensee had claimed that its studio was in a location that was shared with another broadcaster who had agreed to lease it space.  The supposed landlord, however, said that the lease agreement had expired and the licensee had no employees or equipment at the location of the studio. While the initial proposed fine was to be $17,500 for both the failure to have a main studio and to have a public file, the Forfeiture Order reduced the fine as the landlord acknowledged that the public file was at the studio location, even if there were no licensee employees there.  The decision reiterates what the FCC is seeking when it looks to determine if a licensee is in compliance with the main studio rules.

The decision recites the Commission’s policy for a main studio, stating: 

The Commission has interpreted Section 73.1125 to require broadcast licensees to “equip the main studio with production and transmission facilities that meet applicable standards, maintain continuous program transmission capability, and maintain a meaningful management and staff presence.” Specifically, the Commission has found that a main studio “must, at a minimum, maintain full-time managerial and full-time staff personnel.”

It goes on to set out that, in situations where studios are shared by different licensees, it is looking for evidence (like a written contract) that the landlord’s equipment is actually available for use by the licensee sharing the facilities.  We have written about the main studio obligations before, here.  To stay compliant, make sure that a station’s main studio is staffed during normal business hours, has at least two employees (one of whom is a management employee) who report there on a daily basis as their principal place of business, and has equipment ready and available so that the licensee’s employees can originate operations from the main studio at any time.  This licensee’s fine is a good reminder to all other broadcasters to observe these requirements. 

In a case decided last week, the FCC decided to clarify its policies on typos in FCC applications for radio stations.  While one might not think that a typo is such a big idea, in connection with FCC application filing windows, when multiple applicants may be seeking the same frequency or channel in the same general location, and only one application can be granted, it can be crucially important.  The decision cites numerous cases where applicants typed in one set of coordinates, and those coordinates were different than what could be derived from information elsewhere in the application (e.g. from the coordinates of ASR for the registered tower on which the applicant planned to locate its antenna).  To clarify its policies, the Commission stated that, in the future, any typo in site coordinates in the “Tech Box” of an application would be given full effect, even if the correct coordinates could be discerned from other information in the application if the correction of the coordinates would prejudice any other application by another applicant.  So, where there are mutually exclusive applications for the same channel, and one has a typo in its Tech Box listing coordinates that would place the proposed stations in a location that would not work for the given channel (or would be less favorable in a comparative analysis), the typo will cause that applicant to be dismissed. 

This decision was made in the context of a number of applications for new noncommercial FM stations filed in the last noncommercial FM window.  While in this case, the FCC reinstated the applications with typos as its policy on typos had been ambiguous, it made clear that the applicants would not be treated so leniently in the future.  The Commission also made clear that this policy would apply to any radio application using FCC Form 301 (the construction permit application for commercial FM stations), Form 318 (application for construction permit for LPFM stations), or Form 340 (application for construction permit for noncommercial FM stations).  Specifically, the Commission will rely on the antenna location coordinates specified in Item 3 of the FCC Form 340 Tech Box for NCE stations, in Item 2 of the FCC Form 318 Tech Box for LPFM, and in the Tech Boxes of FCC Form 301 for full-power commercial stations (for AM: Section III, Item 4b for daytime coordinates, Item 5b for nighttime coordinates, and Item 6b for critical hours coordinates; for FM: Section III-B, Item 3 for antenna location coordinates and Item 4 for proposed allotment or assignment coordinates).  The information in these application sections (or in any equivalent form adopted in the future) must be accurate, as that will be the information on which the FCC relies to process the application no matter what may be stated elsewhere in the application.  So be careful in completing your applications, or your application may face the consequences. 

The FCC adopted proposed auction procedures for its incentive auction at its meeting on Friday, and thus far has released a Fact Sheet on these procedures by which it plans to buy back spectrum from broadcasters and resell it to wireless companies for wireless broadband uses.  The tentative procedures, along with the recent “Greenhill Report” setting possible prices to be paid to television stations who are willing to surrender their channels for the FCC to resell to wireless companies (see our summary here), are setting the stage for a series of meetings with broadcasters to attempt to convince enough to participate in the auction to satisfy the FCC’s goals for the auction – goals that also became a bit clearer from Friday’s releases.  Further information on the auction procedures is expected soon in a more detailed Public Notice fleshing out the proposals outlined in the Fact Sheet so that comments can be filed by the end of January. 

The fact sheet is not the detailed notice of auction procedures that some broadcasters may be familiar with from participating in past broadcast auctions – that will apparently come soon in the Public Notice that it summarizes.  But it does provide an outline of proposed general principles that will be applied to the incentive auction.  Initially, it proposes that the FCC would set opening prices for each station – prices at which the FCC would offer to pay the licensee to give up its spectrum.  The prices would be set based on an analysis of two factors: (1) the impact that the station would have on the repacking of the broadcast spectrum after the auction because of the interference that it causes and (2) the population covered by the station.  If a station agrees to move to the VHF band instead of surrendering its licenses altogether, it would receive somewhere between a third and a half of the opening price if it accepts a high VHF channel, and between 67 and 80% of the opening price for a low VHF channel.  According to the fact sheet, the prices that will initially be offered to the broadcaster will be initially set high, and will be lowered as the auction progresses until the prices reach a point where there are just enough broadcasters willing to take the lowered offer to clear the amount of spectrum that the FCC needs to fill the demands of the wireless users.  There has also been introduced the concept of a “dynamic reserve price,” setting a limit on how much the FCC is willing to pay some stations for giving up their spectrum, which could conceivably result in the amount that they are offered being lowered even when it is known that they cannot be repacked into the amount of the spectrum that remains available in the smaller post-auction TV band.   How much spectrum must be cleared for the auction to go forward? Continue Reading Putting Details to the Incentive Auction – FCC Asks for Comments on Fact Sheet on Auction Structure, and Prepares for Meetings with Broadcasters

In 2011, licensees of FM translators who wanted to move those translators to areas where there was a need for their service thought that the FCC had done a great thing by authorizing the use of the “Mattoon” waiver (see our article here).  The Mattoon waiver allowed the processing of an FCC application to move the location of a translator as a minor change (meaning that it could be filed at any time, rather than having to wait for a window for the filing of major changes and new translator applications – the last of which opened in 2003) if the current and proposed interfering and protected contours of the stations overlapped.  Without the waiver, the rules deem a minor change to occur only when the protected 60 dbu contour of the station from the proposed and exiting sites overlap, allowing much smaller moves. But, as we have written before, the FCC now seems to be backing off the use of these waivers, and two recent decisions raise the question of whether the policy is doomed (as the Commission proposed in its AM improvement proposals, which we summarized here).

The use of the waiver in many cases eliminated the need for multiple “hops” of translators to get them from existing locations to the sites at which a broadcaster wanted to use them to provide service.  These hops would move the translator from the locations at which it was licensed to a new site, only to file another application as soon as the initial move was granted to move the translator yet again to get them to the location where a broadcaster wanted to use them to provide service.  In some cases, multiple intermediate hops were necessary to move the translator to the site at which its use was ultimately desired.  The Mattoon waiver allowed many site moves to be accomplished through a single application rather than requiring multiple hops, each of which cost the broadcaster time and money in filing multiple applications and in actually building the translator at multiple sites, and also saved the FCC the time and effort to process each of the applications necessary to approve these intermediate stops for the translator.  Continue Reading The End of the Mattoon Waiver? – FCC Decisions Confirming Its Use Only for the Rebroadcast of AM Stations and Prohibiting Intermediate Site Changes