At the NAB Radio Show, Commissioner Ajit Pai delivered an address discussing a number of topics, including a proposal for the FCC to undertake a study of AM radio and to come up with a plan to make that service more competitive. We cover many topics here on the Broadcast Law Blog, and often write about changes in service for FM radio and television, as well as the digital media, but it seems that our coverage of AM mirrors the FCC’s attention to the service in the last few years – relegated primarily to situations where struggling AMs run on a shoe string budget run into the FCC’s Enforcement Bureau because of some significant violation of the Commission’s rules. So what did Commissioner Pai propose, and is it realistic to expect real reform of the AM service?

The mere fact that the Commissioner proposed a study, and one to be completed in just over a year, is in and of itself encouraging. The NAB has been internally conducting a similar study, though no results have been released yet. The AM band has suffered from many problems, including a decrease in the quality of AM receivers as FM has become much more dominant, and the increase in background “noise” creating interference to AM service – all sorts of electronic devices that are now so common everywhere, including many of the lights now used both indoors and outdoors, create interference to the AM service that make listening, especially in most urban areas, difficult. So what can be done?

Continue Reading FCC Commissioner Proposes Review of the AM Band to Make it More Competitive – What Can Be Done?

The recent introduction of a bill by Congressman Jason Chaffetz offers proposals for reform of the operations of the Copyright Royalty Board – reforms that many in the Internet Radio industry have hailed as promising real change in the way that royalty decisions for webcasters have been made. While some webcasters seem to think that relief is at hand, in fact, the bill has simply been introduced into Congress co-sponsored by four congressmen, so it has a long way to go before it can be adopted by Congress and become the law of the land. But it is worth looking at the many issues that the Bill addresses so that webcasters know what it says so that they can rationally argue for its passage.

Most webcasters have focused on the provisions of the bill that would substitute the standards set out in Section 801(b) of the Copyright Act for the standard that currently applies – "the willing buyer, willing seller" standard. 801(b) sets out five factors to be considered in determining the rates to be set for a statutory royalty. These factors are:

(A) To maximize the availability of creative works to the public.

(B) To afford the copyright owner a fair return for his or her creative work and the copyright user a fair income under existing economic conditions.

(C) To reflect the relative roles of the copyright owner and the copyright user in the product made available to the public with respect to relative creative contribution, technological contribution, capital investment, cost, risk, and contribution to the opening of new markets for creative expression and media for their communication.

(D) To minimize any disruptive impact on the structure of the industries involved and on generally prevailing industry practices. 

In contrast, the current “willing buyer, willing seller” standard looks only at one question – what a willing buyer and willing seller would agree to in a marketplace transaction.   What is the difference between these two standards?

Continue Reading Chaffetz Bill Introduced in House of Representatives to Adopt 801(b) Standard for Internet Radio Royalty Decisions of Copyright Royalty Board – What’s It All About?

October is a very important month in the regulatory world, and broadcasters need to be aware of the regulatory deadlines that have already arisen this month, or which will come up in the next few days. This week, TV Newscheck published our latest summary of the state of many of the most significant legal issues facing TV broadcasters at the FCC and in Congress. In looking at the list, it is clear that this month is particularly important for broadcasters. For instance, this is the month that most TV stations outside of the Top 50 markets will first have to deal with the online public file – having to post their Quarterly Issues Programs Lists and Children’s Television reports on their sites. The FCC this week issued a Public Notice of increased functionality of the online public file, partially to handle these obligations. Of course, radio stations also need to have their Quarterly Issues Programs Lists in their paper public file this week – as the lack of these lists is source of many of the fines that are issued during the license renewal process.

Also this month is the start of the obligation for Internet captioning of any programming that had previously aired with captions on TV. The obligation applies to any full TV program that was captioned when broadcast over-the-air after September 30 and is then posted in full on the Internet. The FCC just issued a reminder about this obligation, emphasizing its importance.

Continue Reading Early October Regulatory Requirements – Quarterly Issues Programs Lists, Children’s TV Reports, Captioning of Internet Programs, Noncommercial Ownership Reports, EEO and Renewal Obligations

Last week, we wrote about the recently announced deal between Big Machine Records and Entercom Communications.  The day after we posted that article, Clear Channel announced another label deal – this time with Glassnote Entertainment Group, the home of bands including Mumford & Sons and Phoenix.  As with its Big Machine deal, the public releases suggest that the label agreed to lower digital performance royalties in exchange for a royalty on over-the-air performances by the company.  What impact do these deals have on the threat of a broadcast performance royalty, and why do the parties enter into these deals?

When the Entercom deal was discussed at the NAB Radio Show, the host of the session asked for a show of hands from broadcasters in the audience who were absolutely opposed to any performance royalty – and about a quarter of the hands in the room went up.  This is probably reflective of concerns that the break in the almost unanimous opposition of radio broadcasters to an over-the-air performance royalty for record labels and musicians could mean that the broadcast performance royalty (what used to be referred to as the "performance tax") would become inevitable. Will these deals embolden the recording industry to once again push Congress to move on the stalled effort to institute a performance royalty?  Perhaps not. At a Congressional hearing soon after the announcement of the original Big Machine-Clear Channel deal, Congressional Representatives were asking witnesses from the broadcast and music industries if the deal reflected a marketplace solution to the royalty issue, obviating the need for any government involvement. And that was certainly the message of the NAB at the Radio Show – these deals are unique deals by companies that can uniquely benefit from them as they have a large digital presence, not a template for universal extension to all broadcasters.

Continue Reading Another Music Royalty Deal By Clear Channel and a Record Company – Why Broadcaster Deals With Record Companies May Be a Good Thing

A deal between Big Machine Records and a broadcaster, this time Entercom Communications, was announced at the NAB Radio Show giving the record company a royalty on the broadcaster’s revenue from over-the-air broadcasting in exchange for lower royalties on digital operations. This deal follows one announced by Clear Channel back in June. Talking to broadcasters around the country, many seem confused by the deals, not understanding why they were done, how they work, or what they accomplish. More than anything, many broadcasters fear that the deals will lead to a generally applicable royalty payable to sound recording copyright holders (i.e. the record companies) on over-the-air broadcasting.  Let’s start with an explanation of how these deals work. 

While the details of these deals are not public, a session at the NAB Radio Show shed a little more light on the subject.  The session also included a promise from a Clear Channel representative that more deals are on the way. Perhaps the biggest news was at least some indication of the parameters of the financial terms of the agreements, with the President of Big Machine saying, in response to the question of whether the deal was an agreement to pay 1% of over-the-air revenues in exchange for a 3% digital royalty, that these numbers were certainly in the ballpark. If those numbers are in fact accurate, the digital royalty is substantially smaller than that paid by most webcasters, where royalties computed on the usual per song per listener basis can range from 45% of revenue to several times the total revenue of most webcasters.  

Continue Reading A Deal Between Entercom and Big Machine Records To Give the Record Company a Royalty on Over-the-Air Broadcasting

How can political attack ads get away with taking out-of-context statements of the candidates that they are attacking, and twisting these statements to convey meanings that were never intended by the candidate who first uttered the words? And how can political ads take a single line of an incredibly complex piece of legislation and use that legislation to allege that a candidate has violated some core belief that the candidate espouses on the campaign trail? Do stations have liability for these attack ads, and must they react when the candidate being attacked asks that the ad be pulled? In the fourth of our series of political broadcasting refreshers (following those on lowest unit rates, equal opportunities, and reasonable access), we’ll address the question of the no censorship provision of the rules and what rights stations have to deal with the content of political ads.

Starting with the basics, the FCC rules (stemming from Section 315 of the Communications Act) prohibit broadcasters from censoring the content of advertising that is a “use” by a candidate. Essentially, that means that the broadcaster cannot reject an ad that is sponsored by the candidate or the candidate’s official campaign committee, if that ad has the recognizable voice or image of the candidate somewhere in the course of the ad. No matter how outrageous the statement of the candidate may be, the station cannot refuse to run the ad (with the limited instance of ads that are legally obscene or which otherwise may violate some Federal felony statute). So, even if an ad by a candidate may be totally untrue in claims made about the candidate’s opponent, or even if it could give rise to other civil liability (for instance if it is defamatory or a copyright violation), the station cannot refuse to run the ad.

Continue Reading Political Broadcasting Refresher Part 4 – No Censorship – How Can Candidates Get Away With Those Attack Ads?

The FCC has released its agenda for its September meeting, and it is an important one for television broadcasters. On the agenda for the meeting to be held this Friday, September 28, is a Notice of Proposed Rulemaking to seek comments on its proposals to implement the Congressional authority to hold incentive auctions to clear part of the television spectrum so that the spectrum can be used for wireless broadband purposes (see our summary of the legislative authority here). Obviously, this will decision will be important for the television industry, as well as for companies looking to deploy additional wireless broadband and those hoping to reach consumers using wireless broadband.

This proceeding will necessarily be very complex, as it will need to design a system that will take into account many moving parts. First, it will need to take bids from those television stations that are willing to turn in their licenses, or to share spectrum with another station or move to a VHF channel – all of which might qualify the station for compensation. While keeping these bids secret, the Commission must also take bids to buy the cleared spectrum from wireless companies.  The Commission needs to determine if enough money will be received from these bids to pay for stations to turn in their licenses, to repack the remaining TV stations into a smaller television band that will free some television channels to allow for a contiguous swath of spectrum that the wireless operators can use, to pay the auction costs, and to pay for certain public safety wireless uses that are to be subsidized by the auction proceeds. The Commission will also have to design a process for repacking TV stations into a smaller television band, in many ways replicating the process that the FCC went through when it compacted the TV spectrum during the digital transition.

Continue Reading FCC To Consider Incentive Auctions for TV Spectrum This Week

In recent days, we’ve been writing about political broadcasting topics in anticipation of the November election. We provided a refresher on the basics of lowest unit charges on Monday, and equal opportunities on Wednesday.  Today, we’ll look at reasonable access – how much time must stations sell to political candidates (or give to them if they would rather meet their obligations through free time, which few stations are willing to do). Reasonable access requires broadcasters to make reasonable amounts of time available to candidates for Federal office – in all classes and dayparts on all commercial broadcast stations (noncommercial stations were exempted by Congress about a decade ago when candidates started to demand free time on these stations). With the expected onslaught of political advertising coming up in most battleground states, stations fearful of having to devote all of their commercial time to election advertising wonder just how much time is reasonable?

The FCC leaves the determination as to what is “reasonable” to the reasonable discretion of the station, as long as access is provided to all classes and dayparts on the station.  The discretion, though, is to be exercised in coordination with the political candidates themselves. For Federal candidates, stations should not put up-front limits (e.g. in a political rate card or on a political disclosure statement) as to how many spots they will sell to any Federal candidate in any specified period of time. Instead, stations are supposed to engage in a give and take with the candidate, accessing the candidate’s needs and desires and weighing them against the needs of the station to provide advertising to other clients.  After hearing the needs of the candidates, it is up to the station to reach a determination as to what is reasonable. If stations give candidates at least some access to all classes and dayparts on their stations, even if it is not as much as the candidate wants, stations have traditionally been given the benefit of the doubt by the FCC.

Continue Reading Political Broadcasting Refresher Part 3 – Reasonable Access – How Much Advertising Time Must Be Sold to Candidates?

Do you want to start a new FM station?   In what seems to have become a yearly event, the FCC has released a list of 117 new FM channels to be auctioned (a list that also includes the proposed minimum bid for each channel). The FCC also issued a “freeze” on FM applications that could impact these channels. The auction itself is scheduled to begin on March 26, 2013. If the Commission follows the schedule used in the last FM auction, we should expect that the deadline for the "short-form" application to participate in the auction (which basically contains information about the ownership of the applicant and a list of the channels in which they are interested) will be due in early 2013, likely sometime between January 1 and January 15, 2013. The upfront payment of the necessary minimum bids would then likely be due around February 20, 2013.

The channels in this auction on which new stations can be built are spread all across the country. Many are located in large western states, including multiple channels in California, Oklahoma, Arizona and Texas, among other states. If you are interested in starting a station from scratch, look through this list of channels to see if there are opportunities for a construction permit for a new station in an area of interest. If you find something that you might consider, you need to start your due diligence on each channel now, as any bidder is responsible for insuring that the channel for which they are bidding can be built and will serve the audience that you expect. If you win the auction and decide that you can’t really find a transmitter site, then you may well be on the hook for the full amount of the bid even if you don’t build the station. And, if you are successful in the auction, you will have to have an available transmitter site to specify in your "long-form" application submitted about a month after the end of the auction – an application that will specify all of the technical details of the new station. So look at zoning issues, FAA considerations, coverage questions, and even whether technical details like the rural radio order limiting move-ins of FM stations from rural to more urban areas, may limit the potential economic value of the channel in which you are interested.

Continue Reading FCC Announces Auction for 117 New FM Channels – And Freezes Certain FM Applications that Could Affect Those Channels

Now that we are in the political window, we’re doing a series on the basics of the FCC’s political broadcasting rules. On Monday, we covered lowest unit charges. Today’s topic is equal opportunities. Many think of this as a straight-forward issue – just requiring that you provide equal time to competing candidates. But the nuances are what makes equal opportunities much more complicated.

At its most basic level, stations are supposed to treat competing candidates in the same way. Most people think of the issues arising to the extent that stations need to give time to all candidates for an office when they give any candidate air time. In most cases, the free airtime given by stations is not an issue, as there are many programs and appearances by candidates that are exempt from equal time. For instance, the appearance of a candidate in a regularly scheduled bona fide news or news interview program, or in on-the-spot coverage of a news event, is exempt from equal time. As we’ve written before many times (e.g. here and here), that exemption has been broadened to include any program on a station that is editorially under the control of the station, that does not use time for a partisan purpose (but uses some good faith quasi-journalist or newsworthiness discretion as to who to include in the program), and which regularly covers issues in the station’s service area. The exemption has been interpreted to include programs as diverse as Entertainment Tonight, The Howard Stern Show, and Phil Donahue. For most station, any program that features talk (whether it be a radio morning show or a local TV program), and which from time to time interviews newsmakers, can also interview candidates without having to deal with equal time issues. Thus, concerns about giving free equal time usually only arise when a candidate appears in some scripted entertainment program (like in the days that Ronald Reagan and Arnold Schwarzenegger movies were pulled from TV stations whenever they ran for office), or perhaps in a sports program (though the recent appearances of Presidential candidates in football pre-game shows demonstrates that, even in some sports programs, the interview of a candidate may not give rise to any equal time issue). But there are other places that the equal opportunities doctrine is still important.

Continue Reading Political Broadcasting Update Part 2 – Equal Opportunities