The FCC last week proposed to fine a broadcaster for calling someone with their tape recorder running, with the intent to broadcast the taped conversation on the air.  According to the Notice of Apparent Liability issued by the FCC, the recording was stopped after the radio station announcers identified who they were, and the person who was called said that he did not want to be recorded.  What was taped was essentially the station employees calling the individual and saying hello, saying that they were from the radio station, telling the individual that he was being recorded, and the individual telling the employees to stop recording – which they immediately did.  The recording was ended before anything substantive was said, and it was never broadcast on the air. Nevertheless, the station was fined $2000 because these initial stages of the conversation were recorded with the intent to use the recording on the air.  According to the Commission, the FCC’s rules require that when a conversation is either broadcast on the air, or recorded for purposes of broadcast, the consent of the person being recorded must be obtained before the tape starts rolling. As with an over-the-air broadcast, if the tape is running when the person being called by the station says "hello,’ in the Commission’s view, the station has violated the rule – even if the tape is never used.

The station argued that this position makes the recording of telephone conversations not very entertaining, as the greetings and introductory comments in any call have to be done twice – once before the tape starts and a second time after approval for the recording has been obtained.  The FCC adopted this rule about 30 years ago, even though many states allow the recording of a telephone call as long as one party to the call consents to the recording.  Seemingly, the FCC’s rule even makes recording for news purposes by the station more cumbersome, as consent needs to be obtained before any recording is done (see the case we wrote about last year, where the Commission held that the taping of a call without permission, even in the context of the discussion of a public issue, was impermissible).  The fine was imposed in this case makes very clear that the Commission remains ready to enforce this rule whenever a complaint is filed. 

In recent days we have seen political action committees (PACs) claiming they are "prohibited" from running political ads in primary states due to "new rules" regarding "electioneering communications."  As explained below, these claims are incorrect.  What they are really doing is trying to avoid the need to reveal the identity of their contributors, following a US District Court decision in March.

Under Federal Election law, an "electioneering communication" is a broadcast, cable or satellite communication that refers to a clearly identified candidate for federal office within 30 days of a primary or 60 days of an election, targeted to 50,000 or more people in the state or district the candidate seeks to represent. For President and Vice Presidential candidates, an "electioneering communication" is one that can be received by 50,000 or more people within 30 days of a state primary or the nominating convention.

By federal statute, sponsors of "electioneering communications" must disclose the names and addresses of each donor who contributed $1000 or more to the sponsoring organization. This is is the provision that led to the US District Court decision at issue.

Continue Reading Some PACs Stop Running “Electioneering Communication” Ads to Avoid Reporting Requirements

The Radio Music Licensing Committee has announced a settlement with BMI over music royalties for the public performance of musical compositions for the period from 2010-2016.  Terms have not been announced, so we can’t provide the details, yet.  But as we wrote recently when the RMLC announced the terms of its agreement with ASCAP, we would assume that the terms would be somewhat similar to the ASCAP deal.  If no settlement had been reached with BMI, the case would have gone to a "rate court" in Federal District Court to see what the fair market value of the performance right was.  As analogous rates often form the basis for rate court determinations of fair market value, the settlement with ASCAP would no doubt have been an issue for BMI, as it would appear to set a benchmark rate for the public performance of musical compositions.  But, we will have to wait to see what the filings say before we can determine if, for sure, the rates will decrease relative to prior rates to the same extent that they did for ASCAP.

It is worth reflecting on how RMLC came to reach deals with ASCAP and BMI, and to explain why there is no reference to a SESAC deal.  I’ve already heard or seen several people suggesting that an agreement with SESAC may be next – when in fact that is not something that is imminent, as can be explained by the differences between ASCAP and BMI on one hand, and SESAC on the other.  ASCAP and BMI are both governed by anti-trust consent decrees that have been in place for over 50 years.  Under both decrees, these organizations have to enter into agreements to set royalties for all similarly-situated users of music in various categories of businesses – categories including radio, TV, websites, background music, restaurants, bars, hotels, performance venues and practically every other place where music is performed for the public.  If no agreement can be reached on a voluntary license, a “rate court” decides on the royalties. Essentially, that means that a US District Court in New York has a trial to set the rates.

Continue Reading Radio Music Licensing Committee Announces Settlement With BMI Following Settlement With ASCAP – Why SESAC is Not Included

In perhaps the most severe set of penalties that we have seen for public inspection file violations, the FCC released two sets of fines to stations that had self-reported, in their license renewal applications, that they did not have Quarterly Issues Programs lists in their public file for the entire 8 year license term.  As we recently wrote, $10,000 fines for missing Quarterly Issues Programs lists have become the new standard where a substantial number of the lists are missing.  Here, however, there were no timely filed lists at all in the public files for the stations in question – for an 8 year period. In one case, where the owner had both an AM and an FM stations, both were missing the Quarterly lists, the Commission proposed a fine of $20,000 ($10,000 for each station), and renewed the station licenses for only 4 years, not the normal 8 year license renewal term.  A similar fine was proposed for a college-owned noncommercial station, also missing the required Quarterly lists for the entire license period – and that station also received a 4 year license term. In each case, the licensee had indicated that it was doign some renewal-time recreation of missing Quarterly lists, but these efforts did not seem to result in any lessening of the penalties proposed by the FCC.  These fines and short-term license renewals show just how importantly the FCC treats these violations.

We do note, however, that where the missing lists are from but a few quarters, the FCC’s fine is somewhat reduced, witness a recent $4000 fine for lists missing for just over a year – where the violations were from the beginning of the license term rather than being of recent vintage.  But if you are missing list from some longer period of time – seemingly about 2 years – that $10,000 fine seems to kick in.  Check you files now to make sure that you don’t fall into the $10,000 trap.

FCC fines for violations of the FCC rules dealing with contests have been common in the last few years. Because of these fines, we recently conducted a webinar for the Kansas Association of Broadcasters, discussing the requirements of FCC rule Section 73.1216 which regulates the conduct of station-sponsored contests.  We also discussed what should be addressed in contest rules, issues with contests that advertisers themselves sponsor, and considerations that stations should undertake to avoid civil liability when conducting contests.  Other legal issues that should be considered in any contest or lottery promoted on a station were also covered.  The slides from our presentation, outlining the legal issues that we discussed, are available here.

What are some of the issues we discussed?  We recently wrote about fines of $22,000 for a station online contest, promoted on the air, without the station announcing all of the material rules on the air.   Even imprecise contest rules have brought fines of $4000, as did a contest not conducted according to the rules announced on the air.  Beyond these issues, broadcasters have to consider other legal liability that can arise for injuries to contestants – highlighted by the Sacramento case of a few years ago. Being careful in promoting third-party contests, like those conducted by advertisers, particularly compliance with lottery laws, is also important.  Observe the rules and be careful – as there are many potential traps for those who are not prepared. 

The over-the-air reception of television stations has taken on heightened awareness in recent years.  In the regulatory world, this prominence comes from the FCC’s consideration of taking back some of the broadcast spectrum for use by wireless broadband based at least partially on the Commission’s belief that broadcasters are not using that spectrum efficiently as many viewers,over the last few decades, receive their TV programming from satellite and cable providers.  At the same time, there have been more articles in the press and anecdotal stories about the new importance of over-the-air reception as people "cut the cord’, getting their video programming from some combination of over-the-air TV and the Internet.  Regardless of the truth of either perception, since the conversion to digital, issues about TV antennas have become more important as, in many places, an outdoor television antenna is necessary (or preferable) for decent over-the-air DTV reception.  One issue that many television broadcasters have overlooked is that of OTARD – the FCC rules on over-the-air reception devices.  As we wrote here, these rules have been interpreted to significantly limit the ability of landlords and local governments to adopt zoning rules or restrictive land-use policies forbidding outdoor TV antennas or small satellite dishes for the reception of video programming. This week, the FCC asked  if the restrictions on local authorities should also apply to common areas of housing complexes. 

The rules have traditionally been applied to restrict limitations on antennas and small dishes on property owned by the party wanting to make the installation, or property leased by that party and  even to common areas under the exclusive control of the lessee (like the portion of a driveway or parking area reserved for use by the tenant).  The FCC has allowed landlords and tenants associations to restrict the placement of OTARD devices in common areas not subject to tenant control.  But the FCC has not addressed whether local government authorities can restrict the location of antennas and dishes in these common areas.  The Satellite Broadcasting and Communications Association and DISH and DirecTV have asked the FCC to rule that, under OTARD rules, local authorities can’t pass laws restricting the location of TV antennas and small dishes in these common areas, reasoning that if the owners of the land don’t care, government should not be able to restrict the use of reception devices there, just as the government can’t restrict the installation of these reception devices on property under the control of a tenant or home owner.  This week, the FCC asked for comments whether the OTARD rules should apply to government restrictions over TV reception devices in these common areas.  Comment are due on June 7.  Reply Comments are due on June 22.

The Senate on Monday approved, after months of delay, the nominations as new FCC Commissioners of Democrat Jessica Rosenworcel and Republican Ajit Pai.  Once they are sworn in and assume their new jobs in the next few days, this will bring the FCC up to full strength with 5 seated Commissioners for the first time in a year.  Rosenworcel comes from having worked for the Senate Commerce Committee, which oversees FCC regulation.  She previously worked as a legal assistant to former Commissioner Copps at the FCC.  Pai has also worked on the Hill and at the FCC, so both have experience with issues before the Commission.

So what do these nominations mean for broadcasters?  Probably, not much in the immediate term.  With the two new Commissioners being added to the FCC, the balance of power remains in favor of the Democrats.  But, as we have seen over the years, most Commission decisions aren’t decided on a partisan basis – in fact most are unanimous.  In the recent past, there are a few decisions where the Commission has been somewhat divided, with Republican Robert McDowell tending to take a somewhat more deregulatory position, as in connection with the recent ruling on online public inspection files for TV stations.  But party affiliation is not necessarily a guide to a Commissioner’s positions, as many of the proposals for broadcast re-regulation first arose during the Republican administration of FCC Chairman Kevin Martin (see, for instance, the proposals for localism regulation and the original proposal for an online public file adopted in 2007). 

Continue Reading Two New FCC Commissioners Approved by the Senate – What Does It Mean for Broadcasters?

At this year’s NAB Convention, digital issues were much talked about.  In fact, the NAB held, for the first time, a day and a half session focusing on radio stations and their digital efforts, called the Digital Strategies Exchange.  I was on a panel called the Consultant’s Corner, and discussed legal issues that broadcasters may face as they move more and more into the digital world.  The PowerPoint slides that accompanied my presentation can be found here.

Digital issues for broadcasters go far beyond the streaming royalties for webcasting that we have written about so much in these pages.  Recent cases, like the one that we wrote about here, have imposed the FCC’s disclosure requirements on contests conducted on a station website that is even mentioned on-air.  Broadcasters need to be careful about protecting their branding, as putting a slogan or positioning statement on the Internet makes it available to people worldwide.  If a station has not been careful in picking its branding statement, the worldwide exposure can just be an alert of a potential infringement to a trademark or service mark owner. Using music online in ways other than webcasting can pose legal issues as we explained in our advisory here.  Sponsorship identification obligations like those that apply to broadcasters have been imposed on online media where companies are given any consideration for endorsements or testimonials (see our article here).  And allowing listeners to post videos or music or other content could potentially lead to liability for any copyright violations if a station does not register an agent with the Copyright Office to receive notices of infringement so that the station can take down infringing content (the Copyright Office’s instructions for doing so can be found by clicking here).  These are but a few of the issues covered in my presentation in Las Vegas.  As in any other business endeavor, make sure that you know the rules of the road to avoid the legal issues that might otherwise arise. 

The FCC just released its Notice of Proposed Rulemaking to establish the regulatory fees to be paid by each of the entities that it regulates. Each year, before the FCC collects its annual regulatory fees from broadcasters and other entities subject to its oversight, it asks for comments on the amount of those fees.  This year, as has been the case in most of the past few years, there are few changes proposed in this Notice, thought the Commission does promise to issue additional rulemakings later this year, looking to readjust fees to take into account changes in the communications industry since these fees were first imposed almost 20 years ago.  Look, for instance, for a change to be proposed in the relative fees for UHF and VHF stations, which still reflect the analog world where VHF stations were more valuable. 

But any fundamental changes in the fees won’t be effective until 2013.  Essentially, the NPRM proposes just minor changes in fees so that the FCC can collect its 2012 fees in September.  The NPRM basically makes very small adjustments in the fees for broadcast stations, which are based on population coverage, to include numbers based on 2010 census data.  The fees proposed for broadcasters are set out below.  Comments on these proposals are due on May 31, with replies on June 7.  The exact dates on which these fees will be collected will be announced after the conclusion of this rulemaking proceeding.

Continue Reading FCC Proposes Regulatory Fees for 2012