In November, the FCC changed its policy regarding the foreign ownership of broadcast stations.  In its decision, about which we wrote here, it agreed to entertain applications seeking “alien ownership” exceeding the 25% limit for foreign ownership of broadcast stations that had previously been in place.  In the modern communications era, with its diversity of media outlets, the Commission determined that the risk of increased foreign ownership was outweighed by the potential for new entrants into the broadcast industry, backed by new sources of capital from outside of the United States.  The FCC did not adopt any blanket rules for permitting higher levels of alien ownership, but instead agreed to consider specific requests for a declaratory ruling on a case-by-case basis to show that foreign ownership of a broadcast station in excess of 25% was not contrary to the public interest.  Despite the invitation to file such requests, as far as we know, none have been filed – until now, and that comes from what is perhaps an unexpected source – Pandora, which is best known as an Internet radio operator.

As we wrote several months ago, Pandora has sought to acquire an FM radio station that operates in the Rapid City, South Dakota radio market.  Its application to acquire the station was opposed by ASCAP, who feared that Pandora would use its status as a broadcaster to ask for broadcaster rates negotiated by the Radio Music Licensing Committee (RMLC) for the public performance of ASCAP music.  ASCAP based its opposition principally on the contention that Pandora had not proved that less than 25% of its stock was beneficially owned or controlled by foreign entities.  Despite Pandora being a company founded in the US by US citizens, headquartered and operating almost exclusively in the US, and traded on the US stock exchanges, ASCAP contended that Pandora had not established that its ownership of a broadcast station would not violate the alien ownership rules.  How could they make such an argument? Continue Reading Pandora Files First Petition for Declaratory Ruling Under FCC’s Liberalized Foreign Ownership Rules for Broadcast Stations

The FCC has extended the time for filing comments in its ownership proceeding.  While comments on the new Quadrennial Review of the ownership rules had been set to be filed by July 7 (see our article here), the Commission has now extended the deadline until August 6 at the request of the Coalition for Smaller Market Television Stations, which wanted more time to develop additional comments, particularly on the issue of shared services agreements.  Reply comments are now due September 8.  This proceeding raises many issues, including not only shared services, but also more basic questions as to whether the FCC should make any changes to the local radio and television ownership limitations, whether it should retain the broadcast-newspaper and radio-television cross-ownership limitations, and a number of more specific issues that we addressed in our article here.

The Commission also today issued its latest statistics on ownership of broadcast stations, broken down to assess ownership by gender and minority status.  Minority ownership and similar diversity issues have been a significant issue in assessing any changes in the multiple ownership rules (see, for instance, our article here about the FCC’s call in 2012 for an analysis of minority ownership in connection with its consideration of changes to the broadcast-newspaper cross-ownership prohibition).  These new statistics may well play into some of the comments filed in the ownership proceeding.  So have your comments ready by the new filing date that has just been set.

The Supreme Court decided the Aereo case (decision here) and, if I can brag a little, the decision was pretty much what we predicted here after the oral argument – a relatively narrow decision finding that there is a public performance of the broadcast television signals retransmitted by Aereo as part of their service.  The Court looked at the service, and concluded that it effectively does what a cable system does with broadcast television stations – it takes their signals off the air and transmits them to the public, and charges a fee for doing so.  The only meaningful difference with Aereo for purposes of the decision was that it did not get the broadcasters permission to retransmit their signals.  Because its performance of the television stations’ signals was not authorized, the Court concluded that the service had violated the rights of the copyright holders, and remanded the case to the lower courts to finalize decisions which will presumably stop the retransmission of station signals unless Aereo gets permission from the TV broadcasters.

The decision was a 6-3 vote of the Court, with the dissenters adopting Aereo’s position that it was not the service that was making the performance, but each individual user, and thus the performance was a private one for which no permission of the copyright holder is necessary (akin to turning on the TV and performing its programming to yourself in your living room, or singing to your family in the car).  The dissenters, led by Justice Scalia, looked at three principal reasons for their conclusions that the majority missed the boat – (1) The statutory provisions and legislative history cited by the majority did not support the decision; (2) Aereo’s technology is different from cable as it sends one signal to one individual when the individual asks for it, as opposed to a cable system which is always sending all the TV signals to its subscribers, and (3) There was no volitional conduct by Aereo to infringe on copyrights – all the conduct actually seeking any infringing content was that of the users (going so far as to suggest that, while Aereo may not have violated the public performance rights of the copyright holders, it might still be contributorily infringing on their copyrights by encouraging the infringement by users).  The majority dismissed these complaints, for many of the same reasons that we have written about before (as summarized below). Continue Reading Supreme Court Finds Aereo Infringes on Broadcasters’ Public Performance Rights – Why the Court Got it Right

The FCC is beginning to consider the amount of annual regulatory fees to be paid by broadcasters and other entities regulated by the FCC.  These fees should be due in August or September of this year, prior to the start of the government’s fiscal year on October 1.  To begin the review process, the FCC issued a notice of proposed rulemaking setting out its proposed fees for this year, as well as highlighting a few issues for public comment concerning the computation of fees in the future.  Comments on the FCC proposals are due on July 7, with reply comments a week later.

Regulatory fees are to be paid by entities regulated by the FCC in proportion to the costs of their regulation, computed by the number of FCC employees who are tasked with administering the rules for a particular service.  Congress tells the FCC how much the FCC needs to raise from fees, and the FCC divides up that burden by the number of “full time equivalents” (FTEs) who are assigned to regulating a particular service.  The FCC spends much time in its NPRM evaluating how to assign the responsibility for various employees to a particular service in order to arrive at the proper allocation of fees.  The Commission asks for comments on these proposals which, when adopted, might affect the allocation of fees to the entities regulated by the Media Bureau (like broadcasters) and by those regulated by other FCC bureaus.  The Commission also noted a few broadcast-specific proposals. Continue Reading FCC Seeks Comments on Proposals for This Year’s Regulatory Fees

This is the summer of copyright – as seemingly every government agency with any connection to media issues is looking at music licensing and other copyright issues.  Much press was given to the House Judiciary Committee hearing held last week.  But the Congressional committee’s consideration of copyright issues is but one of the many places where issues of importance to broadcasters and digital media companies are being reviewed.  The Copyright Office is doing its own review of the music royalty landscape (see our articles here and here), and I had the privilege of participating in their first roundtable discussion of these issues in Nashville the week before last.  Also holding hearings on copyright issues is the Commerce Department in connection with their Green Paper, which we summarized here and here.  The Copyright Royalty Board is starting its consideration of the recordkeeping requirements for webcasters and other digital music users (here and here), and also has begun the proceeding to determine the rates to be paid by webcasters for the public performance of sound recordings for the period of 2016-2020 (here and here).  And there is proposed legislation on pre-1972 sound recordings (the RESPECT Act), songwriters’ royalties (the Songwriters Equity Act) and another bill proposing to limit the collection of retransmission consent fees by TV companies that also own radio stations and don’t pay performance royalties to musicians.  On top of all that, law suits are pending in various courts on these and related issues, and the Department of Justice just announced a proceeding to review the consent decrees governing ASCAP and BMI that have been in place for over 50 years. I could easily cover nothing but music issues on this blog, and still not have enough time to write about all the pending proceedings, much less any new ones that may arise as I’m trying to catch up on all that has gone before.  But let’s start with one of the fundamental issues driving a significant part of this review.

Perhaps surprisingly, one of the principal drivers of much of this review of the Copyright laws is not whether there should be a performance royalty for sound recordings paid by broadcasters to record companies and performers for music played over the air, or even issues about the amount of royalties paid to recording artists and labels in the digital world – though much of the trade press (particularly the broadcast trade press) seems to focus on these issues, and to present them as the drivers of all of these reform proposals.  Certainly these issues are alive and important – but the area where there seems to be the most passion, and the strongest lobbying effort for copyright reform of music licensing deals not with performers and labels, but instead with the amounts that songwriters get paid for their use of music – with the debate focusing on how much they get paid by digital services for music streaming, and by the record labels for making “reproductions” of their compositions. Continue Reading The Summer of Copyright and Music Licensing Part 1 – Songwriters Demand A Bigger Share

The FCC yesterday issued a Public Notice announcing a new round of EEO audits.  Letters to about 180 radio stations went out asking for evidence of their compliance with the FCC’s EEO rules.  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 – requiring wide dissemination of information about job openings and non-vacancy specific supplemental efforts to educate their communities about job opportunities in the media industry. The form audit letter was also released by the FCC and attached to the Public Notice. Responses from the audited stations are due to be filed at the FCC by July 25. Licensees should carefully review the list of affected stations contained in the Public Notice to see if any of their stations are on the list. 

The audit letter requires all stations with 5 or more full-time (30 or more hours per week) employees to provide information about their EEO programs.  Even stations with fewer than 5 full-time employees need to report the names and positions of their employees, and provide any information about law suits, EEOC complaints or similar employment actions brought as a result of  equal employment or discrimination matters.  The requirements for stations with 5 or more employees are more significant. Continue Reading Another Round of EEO Audits of Radio Stations Announced by the FCC

The FCC has just imposed a freeze on the filing of displacement applications for LPTV and TV translator stations, as well as displacement applications for Class A TV stations.  A displacement application is one that is filed to preserve a secondary station’s operations when a full-power station makes changes in its technical facilities that would disrupt the operation of the secondary station.  The Commission reasoned that Class A stations (which for the most part are primary stations) could only be displaced during the digital transition by full-power stations that could not otherwise be accommodated.  As the digital transition for full-power stations is long over, few if any Class A stations should be affected by this order.  LPTV stations and TV translators, are secondary to full-power stations and can be displaced by changes in full-power stations.  But as changes in full-power stations have been frozen by an FCC freeze order issued in 2013 in anticipation of the repacking of the television spectrum as part of the television incentive auction process (see our summary of that 2013 freeze here), there should be few changes in TV stations that will trigger the need for a displacement channel until after the TV stations are repacked, following the incentive auction.  Presumably, after the full power stations are repacked, the LPTV and TV translator freeze will be lifted, allowing these stations to attempt to fit in whatever is left of the television band after the auctions.

The FCC, in its incentive auction order (at paragraph 212 of this is a 400 page order, note that it will take time to download if you have a slow Internet connection), did lift the freeze on processing applications for changes in full-power TV stations, if only slightly.  The FCC has agreed to begin to process applications that were already pending as of the TV freeze date of April 5, 2013.  However, the grant and subsequent construction of any facilities authorized by the grant of such applications will be at the applicant’s peril, as these modifications will not be protected from interference caused by the TV repacking after the incentive auction. So, theoretically, a station could construct new facilities following the grant of one of these applications, only to have to stop using the new facilities if they create interference to a repacked station after the incentive auction.

The FCC has promised, in both the case of full-power and low power TV stations, to look at waiver requests to process other applications where the public interest justifies such processing.  But, in the recent past, the FCC has been very limited in granting waivers of the freeze (the public notice indicating that the existing full-power freeze has been waived only twice).  If that is precedent, don’t look for many other waivers of these freeze orders until after the TV incentive auctions are complete.

TV stations in markets outside of the Top 50, and stations in the Top 50 markets that are not affiliated with one of the Big 4 networks, need to begin to upload new material placed into their political files into their Online Public File as of July 1 – just a few weeks away.  David O’Connor of my firm and I conducted a webinar for television broadcasters from 7 states last week, where we discussed this new obligation for smaller TV stations, and talked about what documents are supposed to go into the political file.  We also reviewed the content of the NAB forms that are helpful in tracking the documentation that needs to go into the political file.  The slides from that presentation are available here.

 As we wrote in April, the FCC has already reminded broadcasters of this new obligation as of July 1, and there does not appear to be any potential that the obligation will be changed between now and the July 1 effective date.  Broadcasters need not upload political file contents that were placed into the file before July 1 (they should continue to be kept in the station’s paper file for the two-year required holding period).  But, starting on July 1, all new political file documents need to be placed into the station’s Online Public file accessible through the FCC website. Continue Reading A Presentation on the Obligations of Small Market TV Broadcasters to Begin To Upload Their Political Files into Their Online Public File as of July 1

The Copyright Royalty Board has extended the deadline for comments on proposals to change the recordkeeping obligations of webcasters and others who use music under the statutory license granted by Section 114 of the Copyright Act.  Some of the proposed changes include requiring that services provide ISRC codes for all songs when filing their Reports of Use with SoundExchange.  ISRC codes are unique identifiers that are supposed to be assigned to every version of a recorded song, though many webcasters (including broadcasters who stream their over-the-air programming) have contended that these codes are not readily available in the music that they play – including in music provided by sound recording copyright owners own promotional people.  The reports of use are the reports that most webcasters are required to file monthly with SoundExchange detailing all of the songs that were played in the previous month by a webcasting service.  Other issues raised in this notice of proposed rulemaking are detailed in our previous article on the proposals, here.  The new deadline for comments is June 30, 2014.  The new Reply deadline is August 11.

In the last few weeks, while I was on vacation and otherwise occupied, there have been many big developments in the broadcasting and music industries that I’ll try to write about separately – including the release of the FCC’s Order setting up the first official outline of the television incentive auction process and the Department of Justice beginning an examination of the antitrust consent decrees that govern ASCAP and BMI.  But a couple of quick FCC decisions bear mentioning here.

First, the FCC announced a change in the CALM Act, regulating loud commercials.  We wrote about the FCC’s order implementing the Act, here.  One of the FCC’s decisions in implementing the Act was that stations could comply with its provisions by meeting the standards set out in A/85 Recommended Practice, a standard adopted by the ATSC (the Advanced Television Standards Committee).  The FCC noted that such standards would be revised from time to time.  That standard has now been revised by ATSC, and stations, to remain in compliance with this safe harbor for compliance under the CALM Act, are expected to comply with the revised standard by June 4, 2015. Continue Reading Odds and Ends – CALM Act Revisions, New Effective Date for Higher FCC Application Fees, and a Case Exploring the Reach of the FCC Character Policies