We wrote in December about the delays in the FCC’s proceeding to consider whether changes should be made to its multiple ownership rules. The December delays were to allow for public comment on ownership information obtained from broadcasters in their Form 323 Ownership Reports. Specifically, the public was asked to comment on the what the ownership information revealed about ownership of broadcast properties by members of minority groups, and whether proposed reforms in the ownership rules would affect minority ownership.  Comments from certain public interest groups suggested that any relaxation of the newspaper-broadcast cross-ownership rules or the rules limiting radio-TV cross-ownership would further adversely affect minority ownership, a position that seemingly made certain of the FCC Commissioners reluctant to approve any changes in the ownership rules. This week, the Commission announced another delay in any resolution of this proceeding as the MMTC (the Minority Media and Telecommunications Council) has commissioned a study of the impact of any further consolidation in media ownership on minority broadcast operators.

The study, to be conducted by the broadcast financial analysis firm BIA Kelsey, is supposed to be conducted quickly – in the next 60 days. It is also supposed to be peer reviewed to analyze its methodology and conclusions, and will probably be subject to further public comment at the FCC once it is filed in the record of the multiple ownership proceeding. So this means that there will be likely no decision as to changes in the ownership rules for at least 3 or 4 months – and perhaps longer.

Continue Reading Further Delay in Multiple Ownership Proceeding as the FCC Awaits New Study on the Impact on Minority Ownership of Any Relaxation of the Cross-Interest Rules

The limits on the ownership of broadcast stations by those who are not US citizens is being re-examined by the FCC according to a recent Public Notice. Under Section 310(b)(4) of the Communications Act, foreign ownership of a broadcast licensee is limited to 20% of the company’s stock, or no more than 25% of a parent company of the licensee. Over the years, there has been a significant body of precedent developed about applying these caps to other business organizations, including LLCs and Limited Partnerships.  But the caps remain in place, limiting foreign ownership.  While the statute gives the FCC discretion to allow greater amounts of "alien ownership", the FCC has not exercised that discretion for broadcast companies (though, for non-broadcast licenses, the FCC has many times found greater percentages of foreign ownership to be permissible). A coalition of broadcast groups last year filed a request asking that the FCC exercise the discretion provided under the Act, and consider on a case-by-case basis whether alien ownership combinations in excess of 25% should be permitted. The Commission has now asked for public comment on that proposal. Comments are due on April 15, with replies due on April 30.

Why is this important? Many broadcasters have pushed for revisions in the alien ownership limits for decades – seeing foreign investors as a potential source of capital to allow new companies to buy stations or existing companies to expand their holdings. Many minority advocacy groups, too, have thought that relaxation of the alien ownership rules would provide more sources of capital for minority owners to get into the broadcast game. Spanish language broadcasters, in particular, see broadcasters and other investors from other Spanish-speaking countries as being likely sources of new investors in broadcast companies or new buyers for US broadcast stations. 

Continue Reading FCC To Consider Allowing Alien Ownership of More Than 25% of Broadcast Licensees – Comments Due April 15

One of those stories on which I’ve been meaning to comment was the story from the week before last where trade press reports summarized a legal action being brought against a television station in Cleveland for having improperly used Arbitron information in connection with its efforts to sell local advertising time on Pandora, the Internet radio company. I don’t want to write about the merits of that proceeding (though it does highlight that stations need to avoid using Arbitron information without permission, as the company is aggressive in protecting what it perceives to be its intellectual property rights), but instead to ask a broader question about what such cross-selling indicates for the FCC’s ongoing analysis of the current media markets in connection with its review of the multiple ownership rules. The cross-selling between a traditional media company and a company like Pandora, which claims radio station-like ratings in many radio markets, or with any other new media company delivering audio or video, are outside of the FCC’s ownership prohibitions. Thus, traditional media companies, like the TV station involved in this case, can sell the new media company’s advertising, or theoretically even provide programming to the new media company, without any cross-interest implication. But a combination between a daily newspaper (no matter what its circulation) and a broadcast station is effectively prohibited under the FCC rules – even though the newspaper may have a smaller audience than the new media outlet in some markets.

As services like Pandora grow, claiming audiences for audio entertainment as large as many local radio stations, these companies could enter into agreements for cross-selling with traditional media companies, and could theoretically enter into arrangements for programming as well, with no restrictions short of those potentially imposed by antitrust laws. So a new media company can cross-sell with television stations (or newspapers, though according to an article last week, both Pandora’s partnerships with television stations and newspapers for joint sales are being phased out and replaced with their own sales forces), without any FCC regulation. A service like YouTube, serving up an amazing amount of video content each day, could enter into partnerships with daily newspapers or multiple radio station owners without triggering any of the cross-interest issues raised by a similar agreement with a television station. Any of these large scale Internet audio or video services could even buy radio or television properties without triggering any FCC concern at all. Yet, we are still arguing over whether the cross-ownership of a newspaper and broadcast station should be allowed. 

Continue Reading TV Station Sued by Arbitron for Using Ratings Data to Sell Local Pandora Ads – What Does This Say About the FCC’s Cross-Ownership Rules?

The FCC last week issued a Public Notice announcing the dismissal of approximately 3000 FM translator applications. This was as a result of its requirement that applicants from the 2003 FM Translator Window select no more than 70 total applications to prosecute (see our articles here and here), and no more than 3 in any Arbitron market where there were significant number of translator applications filed. Applications that did not meet these limits were dismissed.

The FCC is planning to move quickly on the remaining FM translator applications in hopes that they can complete the processing of the backlog of applications so that a window for the filing of new Low Power FM ("LPFM") applications can be opened before the end of this year. So what is the next step in processing these applications? The next significant step will be for the FCC to open a "settlement window" where the remaining applicants can talk to each other and try to reach agreements as to which applications should be granted before an auction. In most FCC auctions, discussions between competing applicants in the auction are strictly prohibited – and applicants who violate the "anti-collusion rules" can be severely punished. But, in authorizing auctions, Congress permitted limited settlement windows in cases involving "secondary" services like translators – leading to the need for a settlement window in connection with these translator applications. No discussion between competing applicants is supposed to occur outside of that window. So be patient but get prepared – as the time to talk to competing applicants in the settlement window should be coming soon.

In the last two days, several radio and television stations across the country had their station’s EAS systems hacked – and ended up broadcasting alerts dealing with zombie attacks that went out using the standard EAS systems and appeared or sounded to the viewer or listener to be real alerts. The FCC and others involved in the EAS program fear that other fake alerts have already been inserted into stations’ systems and may be broadcast soon – perhaps during events like the State of the Union address or other widely-viewed programs. To combat these issues, the FCC has issued the following advice to all stations:

All EAS Participants are required to take immediate action to secure their CAP EAS equipment, including resetting passwords, and ensuring CAP EAS equipment is secured behind properly configured firewalls and other defensive measures.  All CAP EAS equipment manufacturer models are included in this advisory.

 

All Broadcast and Cable EAS Participants are urged to take the following actions immediately

 

 

1.            EAS Participants must change all passwords on their CAP EAS equipment from default factory settings, including administrator and user accounts. 

2.            EAS Participants are also urged to ensure that their firewalls and other solutions are properly configured and up-to-date.

3.            EAS Participants are further advised to examine their CAP EAS equipment to ensure that no unauthorized alerts or messages have been set (queued) for future transmission.

4.            If you are unable to reset the default passwords on your equipment, you may consider disconnecting your device’s Ethernet connection until those settings have been updated.

5.            EAS Participants that have questions about securing their equipment should consult their equipment manufacturer.

Continue Reading Hackers Use EAS to Send Alert of Zombie Attack – FCC Issues Urgent Warning to Broadcasters to Secure Their EAS Systems

Earlier today, we wrote about the FCC’s reminder that TV broadcasters must, by February 4, complete the upload to their FCC-mandated online public inspection file all materials from the current renewal term that were created prior to the August 2 effective date of the online public inspection file requirement.  We noted that the FCC had not addressed the question of stations that had outstanding renewals from the last renewal term – which could potentially mandate that some stations upload as much as 16 years worth of material to their online files.  Well, today, the FCC issued another decision waiving its rules so that stations only need to post Quarterly Issues Programs lists from the current license term on their online public files – subject to some caveats.

There are certain limits on this waiver.  If the limits are not met, then all Quarterly Issues Programs lists, back to the last granted renewal, have to be posted to the online public file.  The limits include the following:

  1. The last renewal cannot have been opposed by a member of the public.
  2. The delay in the renewal cannot have been caused by issues relating to the public interest service of the station to its local service area
  3. The station must continue to keep the Quarterly Issues Programs lists from the last renewal cycle at the station in a paper public file.

This decision does not relieve stations from all obligations to post materials from prior renewal terms, as described below.

Continue Reading FCC Grants Certain TV Stations Limited Waiver from Online Public File Obligations for Documents from Prior Renewal Terms

The six months that the FCC gave to television stations to upload the contents of their paper public files to their new online public file seemed like a long time back in August, when the deadline was announced and the online public file rule became effective. But that deadline is upon us, and the FCC yesterday issued a reminder that television broadcasters (full power and Class A stations) need to have all of their required documents uploaded to their online public file by Monday, February 4.  The 6 month deadline actually falls on the weekend, so the FCC has given stations to the end of the day on Monday to come into compliance. The Commission has even offered to have people at the FCC over the coming weekend to answer questions about the uploading process for all those waiting until the last-minute to comply. 

As made clear in the public notice, no broadcasters need to upload contents of their political files that existed prior to the August 2 effective date of the rules. TV Broadcasters who are affiliates of the Big 4 networks in the Top 50 markets should already be uploading new political file material onto their online files, while other TV broadcasters have until July 1, 2014 before they are subject to the requirement that they upload their new political materials to the online file. In neither case do stations have to upload political file materials that precede the date that the obligation applies to their station. 

Continue Reading FCC Issues Reminder that TV Stations Need to Complete Online Public File By February 4 – Upload Documents Including All Quarterly Issues Programs Lists and EEO Public File Reports Since the Last License Renewal Grant

With very limited exceptions, all broadcast stations are required to participate in Emergency Alert System, and to transmit any alerts that they may receive during their hours of operation. The FCC has just proposed to issue an $8000 fine to a station that allegedly had a working EAS receiver  (unlike some of the stations we havewritten about before who were fined for EAS violations when their receivers were not connected or otherwise inoperable when the FCC inspectors came knocking). But, here, the issue leading to the fine was that, while the station could receive the EAS alerts, it could not rebroadcast those alerts without a station employee manually reducing the volume of the normal programming that was running at the time. While such a system is not prohibited, the FCC fine arose as the station was not manned during all hours of operation. During those hours when the station was not manned, their EAS equipment did not provide for an automatic override of the programming, and thus any alerts could not be passed on over the air. The lack of any automatic system for getting EAS alerts on the air during the hours when the station was operating in the unattended mode resulted in an $8000 fine, and a condition requiring that the station report in 30 days that it had come into compliance.

The emergency alerts system has traditionally operated on a "daisy chain" basis – where primary EAS stations receive alerts from governmental sources, pass on the alerts to other stations, which in turn relay that message to other stations on down the line. If any link in the chain is broken, then the alert does not reach the public listening to those stations further down the line. While thenew CAP system does not rely on this daisy chain (as it has all stations polling the FEMA – the Federal Emergency Management Agency – IPAWs alert system directly with an Internet connection), the older over-the-air daisy chain remains in place as a back-up to the Internet based system. This case shows how seriously the FCC takes violations of its requirements. Safety issues are a high priority for the FCC, so check your compliance now. 

February is almost upon us, and it brings a host of regulatory obligations for broadcasters – as well as the filing deadline for those interested in pursuing new FM channels in an upcoming auction, and a number of opportunities to comment on important FCC proceedings. The week before last, TV NewsCheck published our latest quarterly update on the regulatory issues facing television broadcasters – and these include several with February dates. Most importantly (at least in the short term), there is the obligation for television broadcasters to upload to their Online Public Inspection file all documents created before the August 2 effective date of the rules (but for documents relating to political broadcasting).   So documents that had been kept in paper – like Annual EEO Public Inspection File Reports and Quarterly Issues Programs Lists – need to be in the Online Public File by the beginning of the month. 

In the longer term, while not due in February, comments to be filed this Friday (January 25) on the television incentive auction process, will need to be analyzed in preparation for the Reply comments due on March 12 in this most important proceeding which may well define the composition of over-the-air television in the coming years. Comments on the FCC proceeding on expanding the information gathered in the Form 323 Biennial Ownership Reports are also due in February – just in time for Valentine’s Day on the 14th. 

 

Continue Reading February Legal Deadlines for Broadcasters – Online Public File, Review of Incentive Auction Comments, Filing Deadline for FM Auction, and Lots of Renewals and EEO Public File Reports

Deciding how to pay music royalties has always been difficult – trying to figure out what permissions are necessary, who has the rights to grant such permission, and how much the rights will cost. The one place where the rights were fairly simple – paying for the right to publicly perform musical compositions – may be getting more difficult. According to an article in the New York Post, Pandora may be getting a taste of that new reality, having to pay significantly more money to Sony ATV music publishers than it had previously paid for that same music when it was licensed by ASCAP and BMI. 

The rights to publicly perform musical compositions had until very recently been relatively straightforward. All a broadcaster, digital media company or other music user needed to do was to pay ASCAP, BMI and SESAC royalties (ASCAP, BMI and SESAC are often referred to as the PROs, or Performing Rights Organizations) – and the music service essentially had the rights to publicly perform virtually all the musical compositions in the world. And ASCAP and BMI were covered by antitrust decrees – so their rates were more or less known for most categories of music use – only subject to a rate court hearing once every now and then when these collection societies could not come to an agreement with the members of a particular class of music users. While SESAC is not subject to the antitrust consent decrees, and not necessarily as easy to deal with, most music services figured out a way to cut a deal with the society too.

Continue Reading Pandora Enters Settlement to Pay For Public Performance of Sony/ATV Musical Works – What’s Its Impact on Licensing for Music Services and Rights Holders?