The full decision of the Copyright Royalty Board setting the royalty rates to be paid to SoundExchange by Sirius XM and Music Choice from 2013 through 2017 has now been released.  We wrote about the initial release of the summary of the decision before Christmas.  The final decision is interesting in many respects. First, it is the first decision to be released since two of the original three Copyright Royalty Judges left the bench. The decision, as released was actually two decisions – one signed by the new Chief Judge and an acting judge who filled in for Judge Wisniewski, the Board’s economic expert, when he had to retire for health reasons. The second decision, reaching the same result but based on different reasoning, was signed by the Board’s lone holdover, Judge Roberts, a long-time fixture at the Copyright Office before joining the Board. In addition, the decision seems to reject some premises that had long been used to justify royalty rates in other proceedings – and thus may give some insights on approaches to be used in the webcasting royalty proceeding that will begin in 2014 and conclude in 2015. The majority decision also, for the first time, gives at least some weight to direct licensing deals for the public performance of sound recordings by a noninteractive service. Finally, the decision provides explicitly for carve-outs from the established royalties for music on which no royalties need to be paid, including music that is directly licensed, and for pre-1972 sound recordings.

Before looking at the decision, it needs to be noted that these royalties are theoretically decided not just for Sirius XM and for Music Choice, but also for other services that fit into their class of service as defined by Sections 112 and 114 of the Copyright Act. Thus, the Music Choice decision applied theoretically to all "Preexisting Subscription Services" (or a "PSS") and the Sirius XM decision to all "preexisting satellite digital audio services" (or, as used in the decision, "SDARS" – satellite digital audio services). The "pre-existing language means that these services were either in existence or authorized by the FCC (for the SDARS services) at the time of the adoption of the Digital Millennium Copyright Act in 1998.  Of course, since 1998, all of Music Choices then-existing competitors in the cable audio business have gone out of business with one exception, and the second SDARS service – XM Radio – has merged with Sirius. So, effectively, these rates apply only to very few companies.

Continue Reading Full Text of Copyright Royalty Board Decision on Sirius XM and Music Choice Royalties Released – The Basics of the Decision

A recent article in the Chicago Tribune demonstrates that the FCC’s Equal Opportunities requirements, as embodied in Section 315 of the Communications Act, apply to candidates for state and local elective office as well as to those for Federal office. We have written before about this obligation of stations to provide Equal Opportunities (sometimes referred to as “Equal Time“) to all competing candidates for the same office, yet many stations seem to be confused about their obligations as they apply to state and local political races – such as a race for mayor. While the reasonable access provisions of the FCC rules (which we summarized here), require that stations must make available time to Federal candidates (and Federal candidates only) if they request advertising time for their campaigns, if stations voluntarily make time available to a state or local candidate, then equal opportunities apply to all of the competing candidates in that same state or local race. In the case written about in the Tribune, a former Chicago Bear, an on-air host of a sports program, was forced off the air when he decided to run for mayor of a Chicago suburb and his opponent indicated that he would seek equal time from the station if the candidate continued to do his program.

This case also demonstrates several other aspects of the political rules. First, the local election is not until April, yet the station recognized that the equal opportunities rule kicks in as soon as you have a legally qualified candidate – one who has filed the necessary paperwork to run for an office. The application of the equal opportunities rule is not limited to the 45 days before a primary or the 60 days before a general election (those windows apply only to the application of the lowest unit charges that have to be made available to candidates – state and local as well as Federal candidates). See our summary of the lowest unit charge obligations here.  Once a candidate is qualified, even outside of the “political window”, equal opportunities apply.

Continue Reading Sportscaster Running for Mayor In Chicago Suburb Taken Off the Air – Illustrating that the Equal Opportunities Rule Applies to State and Local Candidates

As we wrote last month, the FCC has issued an order attempting to resolve the remaining issues between FM translators from the 2003 FM translator window, whose processing has been frozen for over 5 years, and LPFM stations. As part of the Commission’s order, it decided that translator applicants would be limited to 3 applications in any "Appendix A market" – essentially the Top 150 Arbitron markets and a handful of other markets with high numbers of translator applicants – and 70 applications nationwide, of which at least 20 must be outside of the Appendix A markets. To move the processing of these applications forward, so that the FCC can get to its goal of clearing out the translator applications so that it can open a window for the filing of new LPFM applications in October, the FCC announced in a Public Notice released just before Christmas that translator applicants with applications pending that would be in excess of either the in-market cap of 3 application or the national cap of 70 applications, need to make elections as to which applications they will pursue during a window from January 10 through January 25. If only it were so simple.

The election is not a simple one – as it goes far beyond simply submitting a list of applications that an applicant seeks to prosecute. Instead, the applicant must meet the other criteria set out by the FCC in its order last month, and information demonstrating such compliance. For applicants seeking to prosecute more than 50 applications, or more than one application in any market, the applicant must show that each of the applications they are pursuing do not have 60 dbu overlap with any other application that they are pursuing, or with any translator authorization that they currently hold. For applicants seeking to prosecute more than 50 translator application (with those applications in excess of 50 having to be outside of the Appendix A markets), the applicant must also show that, at the transmitter site that they propose, there will be an opportunity at their proposed site for at least one LPFM station to operate on another frequency in the upcoming LPFM window. For those seeking to prosecute more than one application in an Appendix A market, the applicant must show that any additional applications will not preclude the use of LPFM opportunities identified through the use of the "grids" that the Commission adopted for measuring LPFM opportunities in their March order on this issue. These are not easy showings to make, so applicants looking to take advantage of these relaxations in the application caps need to get started on their engineering reviews immediately.

Continue Reading Processing of 2003 FM Translators Continues – January 25 Deadline to Select Applications to Meet Application Caps

As the ancient Mayans appear to have been wrong, and 2013 is indeed happening, we have once again published our broadcaster’s calendar to remind broadcasters of the dates that they need to keep on their radar to make sure that they remain in legal compliance in the coming year.  Like seemingly every year, it is a busy one, with ongoing radio and television license renewals still being filed and processed by the FCC, as well as the normal regulatory deadlines – EEO public file reports, quarterly programs/issues lists, children’s television reports, noncommercial ownership reports, regulatory fee filing deadlines, and children’s television reports. While not a major election year, there are at least two governor’s elections, several big city mayoral races, and several recently vacated Senate seats (including the Massachusetts seat that is not mentioned on the calendar as that soon-to-be vacant seat has only recently become evident), so there will be lowest unit rate issues to be considered in a number of states.  There are also special regulatory deadlines coming up this year, including new obligations for captioning of TV programming repurposed to the Internet, an FM auction in April (with filing deadlines in February), and a Low Power FM window expected in October.  We’ve also included in the calendar reminders about the filing dates for SoundExchange royalties for audio streaming. And don’t forget your obligations to ASCAP, BMI and SESAC, which are not included on the calendar.

While the calendar is not exhaustive, it gives the broadcaster a place to begin in planning their regulatory compliance for 2013.  Check out our broadcaster’s calendar, and be ready for the regulatory obligations in the year ahead.

The Copyright Royalty Board has announced the royalties that will be paid for the public performance of sound recordings by Sirius XM for the period 2013-2017. The decision also covers the "Preexisting Subscription Services", i.e. Music Choice in connection with its cable radio service delivered with listener’s cable television packages. The full text of the decision is not released yet, as the parties have an opportunity to request that certain portions be redacted to protect private business and competitive information. The parties can request such redactions through December 19, so the decision may be Christmas reading for many. However, the Board did announce the rates as follows:

Section 112 Rates: The Judges adopted the Parties’ Stipulation regarding the rates and terms for the Section 112 rates, which will require a minimum fee advance payment of $100,000 per year, with royalties accruing during the year recoupable against the advance. The parties agreed that the value of the royalties allocated to the Section 112 license holders is 5% of the total royalty obligation, with the remaining 95% going to the Section 114 license holders.

Section 114 Rates: The Judges determined that the appropriate Section 114(f)(1) rates for Preexisting Subscription Services for 2013-2017 are 8% of Gross Revenues for 2013 and 8.5% for 2014 through 2017.

The Judges determined that the appropriate Section 114(f)(1) rates for Preexisting Satellite Digital Audio Radio Services for 2013-2017 are 9% of Gross Revenues for 2013, 9.5% for 2014, 10.0% for 2015, 10.5% for 2016 and 11.0% for 2017.

Both decisions represent modest, incremental raises in the current rates (see the description of the last CRB decisions on satellite radio rates here, and on cable radio here).  These decisions are made under the 801(b) factors, from Section 801(b) of the Copyright Act, that Internet radio currently is seeking, through the Internet Radio Fairness Act ("IRFA"), to have applied to the decisions as to the royalties paid by webcasters (see our summary here). We will not know how the standard was applied in reaching the decision to raise rates, and what guidance this decision provides for webcasters and their rates, until the full decision is released (see our summary of the arguments of the parties in this case, here).

Continue Reading Copyright Royalty Board Releases New Rates for Sirius XM and Cable Radio – They are Going Up, Full Reasoning of the Decision to Come

The care and feeding of the broadcaster’s public file is a hot topic once again. For many years, the public file was often overlooked, being visited most often by competing broadcasters looking for dirt on their cross-town rivals, or by college journalism students assigned a project by their professor requiring the review of local stations’ files. But, with the debate that occurred earlier this year over the online public file for television stations, the file has received much publicity, being the subject of review and analysis in the popular and academic press, as well as in the broadcast trade journals. This week, the FCC issued a reminder about the obligations of a television broadcaster for complying with the public file rules (see that reminder here). In the past two weeks, I’ve conducted two seminars for broadcast groups on the public file obligations of stations. The first was a webinar for 20 state broadcast associations and their members, organized by the Michigan Association of Broadcasters. The PowerPoint slides used in that presentation are available here.

The slides set out information about the importance of the file, and provide some description of the required contents of the file, and the retention period for documents that need to be contained in the file. Radio stations have the obligation to place all of the required documents in their local, paper files and maintain them there for the appropriate period of time. TV stations, with the advent of the FCC-hosted public file (see one of our previous posts on the mechanics of the online file here), actually have a somewhat easier time in meeting some of their obligations – as the FCC itself will post to the file all documents that stations are required to file with the FCC – including renewal and technical applications, ownership reports, children’s television reports, coverage maps, the station license and the Public and Broadcasting procedure manual. Radio stations need to find all of these documents and manually place them into their files. TV stations need only upload other information that is not filed at the FCC – like Quarterly Issues Programs lists, annual EEO Public File Reports, and certifications as to the station’s compliance with the Children’s television commercial limits. Beyond these basics, in the seminars that I recently conducted, several other interesting questions were raised.

Continue Reading The Care and Feeding of the Broadcaster’s Public Inspection File – An FCC Reminder and a Compliance Seminar

The CALM Act, meant to end the dreaded "loud commercial," is set to go into effect tomorrow, December 13. We summarized the requirements for compliance with the Act here. Basically, TV stations must adopt certain practices set out in a series of standards known as A/85 Recommended Practice, adopted by the ATSC (the Advanced Television Standards Committee). As we advised stations, the rules initially required any station needing more time was supposed to ask for a waiver of the rules by October 12. In an Order released on Tuesday, the FCC granted two waivers, and also decided that any other station needing more time could request a waiver as late as the compliance deadline date.

In the order, the Commission granted two waiver requests – one for just a month and a half as the cable system simply had a misunderstanding of what they needed to do to achieve compliance, and the second until the end of May because a TV station was in the middle of a studio move, and promised to install the new compliant equipment at the new studio. The Commission also reminded stations that there are two kinds of waivers available – automatic waivers, upon request, for small stations (those with under $14 million in annual revenue or in a TV market from number 150 to market 210) and small cable systems; and other waivers for stations facing specific problems, including financial hardships. Those who do not qualify as small stations would need to demonstrate the specific hardship justifying the waiver. So any stations or systems seeking a waiver have a last chance to do so, by Thursday.

Continue Reading Compliance Deadline for CALM Act December 13 – FCC Allows Waiver Filings Until that Deadline

As personal marijuana use becomes decriminalized in the states of Washington and Colorado, we once again repeat our warning to broadcasters who may be looking to pot sales as a new source of advertising revenue – remember that the Federal government still thinks that the drug is illegal. The US Attorney’s Office in Seattle has reportedly issued a statement reminding residents in Washington State of that fact, and told Washingtonians that the Department of Justice plans to enforce Federal law on all Federal properties in the state. How does this affect broadcasters? 

Broadcasters are Federal licensees. Thus, there still is a concern that advertising for an activity that is considered a felony under Federal law might present problems if a license renewal is challenged or a complaint is filed.  It is Federal law, of course, that governs the issuance and renewal of FCC licenses. No FCC official has been willing to say that advertising medical marijuana is permissible (and, as we wrote last year, a US attorney in California threatened to prosecute media outlets advertising medical marijuana clinics and to possibly seize property used for such advertising). As Washington state officials discuss how to license stores to sell pot under its new laws, some broadcasters may eye these stores, once authorized, as a potential new source of advertising revenue.  Especially with license renewal now underway for radio stations in Colorado, and soon coming up for TV stations in Colorado and for broadcasters in Washington, now is probably not the time to press the limits of advertising a product with such an ambiguous legal status. 

Continue Reading Legalized Marijuana – Why Broadcasters Should be Wary

The FCC’s multiple ownership proceeding was going to be decided at last, before Christmas, or at least that was what was suggested by many news reports as recently as early last week. Published reports suggested that a draft proposal was circulating at the FCC, and that it was expected to be acted on in December – perhaps at or before next week’s open meeting. That timetable now seems to be out the window, as the FCC has asked for additional comments on the summaries of the information gleaned from the FCC Form 323 Ownership Reports as to minority and female ownership of broadcast stations released late last month. The summary of those reports showed low levels of minority ownership in many parts of the broadcasting world. As the Third Circuit’s remand of the last multiple ownership order (which we summarized here) was based in part on the Commission’s failure to address the impact that its minor liberalization of the newspaper-broadcast cross-ownership rules would have on minority ownership, this request for additional comments seems addressed, at least in part, to addressing that perceived deficiency.

The request for comments gives a short deadline, with comments due the day after Christmas, and Replies on January 4. This indicates that there still is a push to get the ownership proceeding resolved early next year. With this push on, it seemed like a good time to review some of the more controversial issues likely to be addressed in the upcoming order.

 

The area where the most arguments seem to be centered, and the one most likely to be impacted by the data on minority ownership, is the cross-ownership rules. In the Notice of Proposed Rulemaking in this proceeding (see our summary here), the Commission proposed dropping the remaining restrictions on radio-television cross-ownership, and relaxing the newspaper-broadcast cross-ownership restrictions, which the FCC attempted to do in 2007, only to be rebuffed by the Third Circuit. We have observed how some pundits in Washington have mused that the newspaper-broadcast cross-ownership restrictions may well outlive the daily newspaper, and that seems to be the debate now, as advocates of relaxation argue that combinations will help economically challenged newspapers, while also promoting more news on broadcast stations in such combinations. Opponents, on the other hand, fear that combinations will lessen minority ownership in markets – either by foreclosing opportunities for minority buyers, or by buying minority-owned stations. 

Continue Reading Multiple Ownership Decision Delayed – What Issues Are Being Debated?

An Australian radio team was reported to have called the hospital where Princess Kate – Catherine, the Duchess of Cambridge – was being treated.  This prank has now apparently had tragic consequences, in that the nurse from whom the team received information has seemingly committed suicide. Even before the unexpected terrible outcome was known, it was very clear that this broadcast was not the type of gag that US broadcasters should imitate.  Beyond the personal consequences that resulted from this event, the prank itself would be a violation of FCC rules if done by an American station, and would lead to an FCC fine.

The radio team, by pretending to be the Queen of England and Prince Charles, apparently managed to talk to a nurse on the floor where Kate was being treated, and they received inside information about the Princess’ medical condition. The tragic result was the suicide of the nurse after the prank was revealed.  Since then, the radio team has apparently been suspended by the station.  Even if this situation had not resulted in the tragedy of the death of the nurse, broadcast stations in the United States should not  try to repeat such a stunt, or one anything like it. As we’ve written many times before, the FCC rules prohibit broadcasters from putting a phone call on the air, or even recording a call for future broadcast, unless the caller is first told that he or she is going to be recorded, and consents to the call being broadcast. Unlike other laws that deal with the recording of telephone calls for other purposes – where having consent to recording from only one party to a conversation is permissible in many states – the FCC demands all across the US that broadcasters have two-party consent to calls even before the person on the other end of the call says "hello." As we have written before, the FCC imposes significant fines for any violation of the rule, no matter how well meaning, even if the call is done in a news context. 

Continue Reading Tragic Australian Radio Prank – US Broadcasters, Don’t Try This At Home