The Copyright Royalty Board makes many important decisions, yet for the last several years, there has been a cloud over its operations, as there have been questions as to whether its members were constitutionally appointed (see our articles here, here and here). Well, the question is before the Courts again – this time squarely in front of the US Court of Appeals for the District of Columbia – a Court one step below the Supreme Court. The Copyright Royalty Board sets the royalty rates to be paid by Internet radio stations for the public performance of sound recordings, and in doing so, they have made some controversial decisions over the last few years. They also set royalties for other digital non-interactive music services, including Sirius XM, music services that come with cable and satellite television services, and background music services. The Board also oversees the distribution of funds that are collected for the retransmission of distant television signals by cable systems. It also sets the rates under Section 115 of the Copyright Act for the reproductions of musical compositions made by record companies when producing musical recordings or downloads, by digital music companies in connection with on-demand music services, and by wireless carriers in selling ringtones. 

The case before the Court involves a seemingly small matter – the appeal of Intercollegiate Broadcasting Services from the CRB decision setting default rates for Internet radio services that are not covered by one of the many Webcaster Settlement Act agreements (about which we wrote here and here). IBS essentially is objecting to the fact that the Board would not lower the annual minimum royalty fee paid by some of IBS’ smaller members below $500. But, in connection with its appeal, IBS raised the issue of the constitutionality of the appointment of the Judges, and the Court this week heard an oral argument on the issue – mentioning the rate questions only in passing while concentrating on the constitutionality of the appointment of the Judges.

Continue Reading Constitutionality of Copyright Royalty Board Argued Before the US Court of Appeals – How Will It Affect Future Music Royalty Rate-Setting?

In the last few days, the FCC proposed three fines – all involving violations of the public inspection file rule, and all amounting to $10,000.  But the facts of the three cases are radically different, and one wonders about why all ended up with the same fine.  But more importantly, the cases again raise the issue of why the penalty for public file violations is so high in relation to other fines for what would seemingly be more important issues – ones involving interference to other stations and, potentially, public safety.  We’ve raised the question before as to whether public file violations, which have a $10,000 base fine adopted in the FCC’s Forfeiture Policy Statement (which includes a schedule of base fines for various different types of violations), is really appropriate given the lower fines for what would seem to be more crucial issues – like stations operating in some way that is technically different than they are licensed, or where they don’t have operating EAS systems that can pass along crucial emergency information – offenses with lower suggested fines. Looking at the facts in each of this week’s cases show that, even among public file offenses, the fine may be the same, yet the offenses seem very different.

In one case, an FCC inspection discovered an AM/FM combination operating with a tower with some of its required lights that did not work, an EAS system that wasn’t working and which had not been working apparently for years, an FM station that was operating overpower, and a single public file for the two stations, one that was lacking any Quarterly Issues Programs lists.  With all of these violations over 2 stations, the FCC could have fined these stations as much as $42,000, but the FCC reduced the fine to $10,000 based on the licensee’s demonstrated inability to pay the higher fine.  But more interesting for this analysis was the comparative cost of each of the violations.  Under the FCC’s analysis, the public file violation was worth $10,000, while the base fine for the EAS violation was only $8000, and the fine for the tower lights was the same as that for the missing documents in the public file.  The overpower operation drew only a $4000 fine.  Why is a public file violation, which probably no one ever asked to see, a violation with a penalty as severe as those for matters that could affect public safety – tower lights and EAS?  And why is it more than double the fine for overpower operation, which could cause interference – an issue as the heart of the FCC’s reason for being?  

Continue Reading Three $10,000 FCC Broadcast Fines, All Involving the Public File, Show Differences in Enforcement

The FCC proposed a $44,000 fine on a Chicago radio station for running 11 announcements that did not contain a sponsorship identification.  This fine was not for 11 different announcements for different groups, but instead a single announcement run 11 times.  Each airing of the announcement triggered a $4000 fine (which is the amount of the FCC "base fine" for a sponsorship identification violation).  According to the FCC decision, a group called the Workers Independent News ("WIN") bought 2 two-hour programs, one one-hour program, and a number of shorter promotional announcements for those programs. 11 of the promotional announcements did not specifically state that they were sponsored.  Instead, these 11 announcements – each 90 seconds long – consisted of an interviewer, identifying himself as being with Workers Independent News, discussing a local issue with local legislator.  While the announcement did open with a mention of WIN, it didn’t specifically say that they had paid for the spot.  Presumably, the FCC feared that the spot sounded like a program element, perhaps even a news interview (even though it ran in a commercial break), and held that the mere reference to WIN without any explicit statement that the spot was paid for by that group was not enough to convey sponsorship of the ad or to meet the FCC rules requiring sponsorship identification.

The decision here shows how seriously the FCC takes the issue of being able to identify who is trying to influence listeners by providing some form of valuable consideration to a broadcast station in exchange for the broadcast of a message.  This issue is the subject of an FCC rulemaking proceeding, has previously led to fines for other stations (though rarely ones of this magnitude, even where the FCC has found whole programs or portions of programs to have been sponsored – see, for example, the cases we’ve written about here and here dealing with "video news releases"), and has become part of the proposals for the new on-line public file, suggesting that sponsorship identification information be made available for any "pay-for-play" programming in such a file.  The issue has even become important in the online world, with the FTC issuing rules that require similar sponsorship identification even in connection with social media posts for which the author has received consideration (see our summary of the FTC order here).

Continue Reading $44,000 Fine for Radio Station Not Including Sponsorship Identification in Paid Message

In an 11th hour decision released at about 5 PM on the Friday before the Super Bowl,the FCC decided that TV station WMAQ-TV in Chicago was justified in denying Randall Terry’s request to buy advertising time in the Super Bowl.  As we’ve written before, Mr. Terry is claiming that he is a candidate for the Democratic nomination for President, and as such has a right of reasonable access to broadcast stations, meaning that they must sell him advertising time.  If he had such rights, the stations could not censor the content of the ads that the candidate decided to run (see our article here about the Communications Act’s no censorship rule).  As Mr. Terry has promised to run some very graphic antiabortion ads featuring images of aborted fetuses, many stations were reluctant to run the ads, especially in the Super Bowl when families will be watching the big game.  The FCC decided that WMAQ-TV acted reasonably in denying Mr. Terry time in the Super Bowl for two reasons: (1) he had failed to make a substantial showing of his candidacy for the Democratic presidential nomination in Illinois, and (2) even if he had, he had no right to demand that his ads be placed in the Super Bowl.  Each of these prongs of the decision clarifies some issues in the law of political broadcasting that had been long-debated, but the first part of the decision leaves questions – important questions to which many stations want answers.

The first prong of the decision concluded that WMAQ-TV was justified in determining that Mr. Terry was not a bona fide candidate for the Democratic nomination for President in Illinois as he was not on the ballot there, and had not made a "substantial showing" that he was otherwise a candidate in the state (see our discussion of the requirements to be a legally qualified candidate, here).  The FCC found that the station did not need to be a private investigator and ferret out every instance of campaign activity that Mr. Terry had engaged in within the state to determine if his activity was substantial.  Instead, the station could rely on the information that Terry presented to it when he made his request.  That information essentially amounted to the fact that he had made appearances in two small towns in the state, and had some campaign literature (though there was no evidence that it was ever distributed in Illinois).  Based on those facts, the Commission denied the request – concluding that he had not engaged in campaign activities throughout a substantial portion of the state, as required by prior FCC precedent.  While this may answer the question in this case (and helped to clarify the law as to the showing that write-in candidates need to make before they can demand reasonable access to broadcast stations), it leaves several questions unanswered for stations that have or may receive Mr. Terry’s request for airtime in other states where Mr. Terry is on the ballot.

Continue Reading FCC Decides That Randall Terry Not Entitled to Run Graphic Anti-Abortion TV Ads in the Super Bowl For His “Presidential Campaign” – But Questions Remain

For an industry that some say is about to be made obsolete because of its digital competition, there are still many people who want a piece of the FM spectrum.   We’ve written much about the contest between LPFM and translator proponents seeking their piece of FM spectrum – a contest that we should see resolved by the FCC in the very near future. One topic that we have not written much about is "pirate radio," stations that operate illegally – without FCC authority.  This week, the FCC issued several orders, fining individuals up to $25,000 for operating pirate radio stations in various places around the country (see decisions here and here, and two other fines of $20,000 or more noted below).  Pirate radio has been and remains a big problem for many broadcasters and, despite the fines in cases like this, pirates seem to continue to crop up – especially in urban markets.

The pirate radio problem has always been with broadcasters.  In the past there was both the romance of the outlaw radio operator and concerns over the snake oil salesmen who were broadcasting from stations in Mexico, and there was a famous religious broadcaster who lost a battle with the FCC over the Fairness Doctrine in connection with a real radio station and then resumed operations from a boat off the coast of New Jersey.  But in the last 20 years pirates have been much more localized, low power operators, trying to reach audiences largely in urban areas. Despite a series of court decisions rejecting any First Amendment claim of pirates, and denying any claim that these low-power, local stations did not implicate the FCC’s power over interstate commerce regulation, pirates have never gone away.  In many ways, the FCC introduced the concept of Low Power FM stations in the 1990s as a way to provide an outlet for those who might otherwise be inclined to operate an unlicensed station.  In fact, one of the big arguments at the time of the initiation of LPFM was whether former pirate radio operators should be allowed to apply for LPFM stations.

Continue Reading Pirates, Pirates Everywhere – Fines Up to $25,000 for Unlicensed Radio Stations

With the Florida broadcast airwaves overrun with political ads in the last few days – the great majority of them attack ads – many ask why do broadcasters keep running those ads?  Of course, there are revenue considerations.  But as the attacks get nastier, and perhaps even go against the interest of the station owners themselves, why do broadcasters keep running these ads?  Often, it’s because broadcasters have to – under the applicable laws.  We’ve seen two stories this week that illustrate that point – one where Gloria Allred, the well-known attorney, has written to a number of television stations asking them to refuse graphic anti-abortion ads to be run during the Super Bowl sponsored by purported Democratic presidential candidate Randall Terry, and a second about an NBC-owned station in Florida apparently continued to run a Mitt Romney ad attacking Newt Gingrich, featuring NBC News footage of an old Tom Brokaw Nightly News report, even after NBC News asked the Romney campaign to stop using the clip.  The NBC station apparently recognized its obligations, while Ms. Allred ignored the station’s obligations under Section 315 of the Communications Act and the FCC’s political broadcasting rules. 

Broadcasters are sometimes in a sticky position with nasty political ads, as by law (Section 315 of the Communications Act) they are not allowed to censor a candidate ad.  What this means is that they cannot reject a candidate ad based on its content, with the possible limited exception of where the ad violates a Federal felony statute like the obscenity laws (though not the indecency rules, which are not felony statutes).  If the ads just violate someone’s property interests, or could give rise to some sort of civil liability (e.g. defamation), as we’ve written before, the broadcaster is immune from liability for running the ad by a candidate or his authorized campaign committee. The broadcaster is also immune from liability from a perceived copyright action like that alleged by NBC.  But that immunity arises only because the station cannot, under law, reject the ad.  So the only remedy for someone objecting to the content of a candidate’s ad is to seek a remedy against the campaign itself, not against any station that runs the campaign’s ad.  (See examples of suits against the candidates, but not the stations, in cases we wrote about here and here)  So, even if the copyright owner who objects to the use of its copyrighted content in an ad owns the TV station, it is still stuck running the ad if the candidate insists.

Similarly, in the case that Ms. Allred complained about – asking stations to pull the graphic anti-abortion ads sponsored by Randall Terry, she posed the wrong question – alleging that the ad would be offensive and inflammatory.  Stations can’t make those judgments about political ads – they have to run them even if they can be upsetting. The FCC has even been told by the Courts that it can’t allow stations to channel upsetting political ads (like those anti-abortion ads that Mr. Terry plans to run), into late night hours.  If a candidate wants to run ads in the middle of the day (or in the middle of children’s programs), a station can warn its audience that the ad may be disturbing and that it is being forced by law to run it, as long as such warnings are done in a neutral fashion, but it must run the ad in the form the candidate created it.  So what should Ms. Allred have argued about the Terry ads?

Continue Reading Why Broadcasters Have To Air Political Attack Ads Even If They Don’t Want To

ASCAP and the Radio Music Licensing Committee have reached a settlement on the amount that radio stations will pay to ASCAP for the use of music for the period through the end of 2016. The agreement was approved last week by the US District Court in the Southern District of New York acting as a “rate court” to consider those fees. We reported that a settlement had been reached in early December, and now we’ve seen the actual documents and can provide some details of this agreement between the commercial radio broadcast industry and ASCAP. It should result in significant savings for broadcasters from rates that they had been paying prior to January 1, 2010.

As we wrote in 2010 when RMLC and ASCAP were first trying to reach a deal on new rates, the biggest problem with the old rates was the payment structure. Rather than making ASCAP a partner of the broadcaster by cutting them in for a percentage of the broadcaster’s revenue, under the deal that ended in 2009, ASCAP was to receive a set fee each year from the broadcast industry.  That set fee was divided among all commercial radio stations not based on station revenues, but instead based on the market size and technical coverage of each station. So all similarly powered stations in a market paid the same ASCAP fee, whether they were big revenue producers or not.  And the agreement was entered into during a period where radio broadcasters thought that revenues would be ever-increasing, so that set fee to be paid to ASCAP increased each year. As the economy and broadcast revenues fell during the later years of the deal, while the set fee kept increasing,broadcasters were paying an ever-increasing percentage of their revenues to ASCAP – far more than would have been paid had the industry stuck to a percentage of revenue formula.

Well, the experiment is over, as the new deal returns to a traditional percentage of revenue deal. Music radio pays ASCAP 1.7% of “revenues subject to fee from radio broadcasting." Essentially, that is all the revenue that a station receives from advertising and promotions, less a 12% deduction (presumably to cover commissions and costs of collection). Barter revenues, and payments made to networks (as opposed to the stations themselves), are excluded from the gross revenue calculation. All revenues from HD programming (including any amounts received for brokered programming) is also included (at least for the time being – subject to reevaluation should HD revenues account for 25% of radio revenues by 2015). New Media revenues, if the arise exclusively from streaming your station on the Internet, are also included in this gross revenue calculation.

Continue Reading Details of the ASCAP Settlement with the Radio Industry – What Will Your Station Pay?

With the recent publication in the Federal Register, several new Commission rules and policies regarding communications towers and migratory birds are now on the books, however, they are not yet effective as the collection of information still requires OMB approval.  The Commission’s new rules are an outgrowth of a decision from the Court of Appeals in 2008 in which the court found the FCC’s tower registration procedures to be inadequate.  In its Order on Remand released December 9, 2011, the Commission revised its rules governing the review and registration of proposed broadcast and communications towers to provide greater opportunity for comment by the public and interested parties. In addition, while this Order does not resolve the ongoing FCC rule making regarding the impact of towers on migratory birds it does adopt interim policies regarding certain tower proposals.  The Commission’s new rules require the following:

  • Prior to the filing of an antenna structure registration for a new tower or antenna structure, members of the public must be given an opportunity to comment on the potential environmental effects of a proposal.  Thus, an applicant for a new tower that requires antenna structure registration, or a modification of a registered tower that would have a significant environmental impact, must initially submit a partially completed tower registration form (Form 854) and give local notice of the proposed tower through a local newspaper or local zoning public notice process.  After local notice has been provided, the FCC will post the partially completed registration form on its tower website for 30 days notice.  Members of the public may then file comments or to request further environmental review of the proposed tower.  The FCC staff will consider any comments received from the public to determine whether an Environmental Assessment is required for the tower. Notably, this additional period for public review and comment will be required for all towers requiring registration in the FCC’s ASR database, even if the applicant has determined that the proposed tower will not have a significant environmental impact and that a complete Environmental Assessment is not required.
  • Environmental notice will also be required if an applicant seeking to register an antenna structure changes the lighting of an existing tower to a less preferred lighting style.
  • Proposed towers that require an Environmental Assessment must file such assessments with the antenna structure registration application and the Environmental Assessment will be considered in the context of the tower registration, rather than considered with a service-specific license or permit application.  Previously, some environmental assessments were filed with the license application and considered by the FCC Bureau issuing the service license or permit (for example, by the Media Bureau as it issued a radio or television station construction permit.) 
  • Institute an interim procedural requirement that an Environmental Assessment must be filed for all proposed registered towers over 450 feet in height.  FCC staff will review the Assessment to determine whether the tower will have a significant environmental impact. This processing requirement is an interim measure pending completion of the ongoing programmatic environmental analysis of the FCC’s antenna structure registration program to determine what changes, if any, are necessary to consider the impact of towers and tower lighting on migratory birds.

Once OMB approval is received for the collection of information required by these new rules, the FCC’s Wireless Telecommunications Bureau will issue a further Public Notice establishing the date on which these new environmental notification requirements will become effective.  According to the Order, antenna structure registration applications that are pending on the effective date ordinarily will not be required to complete the new environmental notification process.  Given the new requirements for public notice and the ability for interested parties to file comments electronically through the FCC’s tower registration database, these additional procedures will add add more time to the process of proposing and building a new broadcast or communications tower.  Stations or parties interested in building new towers are advised to review the Commission’s new procedures carefully and plan on additional lead time when considering new construction.  

The FCC released a Notice of Apparent Liability proposing a $22,000 fine for a contest to win a car conducted by a cluster of five stations.  The contest (the award of a car to the entrant who produced the best commercial for the car, as voted on by website users) was conducted principally through the stations’ websites.  But the stations did promote the fact that the contest was being conducted on the air.  A disappointed contestant accused the licensee of rigging the contest by awarding the prize to a friend of a station employee for a video that was entered after the official end of the contest.  The FCC totally rejected the basis of the complaint (finding no basis for the conclusion that favoritism had been shown – especially as voting for the winner was done by website visitors, not station employees).  Nevertheless, the FCC proposed the $22,000 fine for the failure to broadcast all of the material rules of the contest on the air.  This proposed fine reinforces two principles that we have written about in previous cases:

  1. You must provide all of the material rules of the contest in on-air announcements a sufficient number of times so that a listener could be expected to hear such announcements (see our article here about what are considered the "material terms" of a contest), and
  2. The rules for a contest that is primarily conducted through a station website must still be broadcast on the air if the fact that the contest is occurring on the website is promoted over the air (see our article on a previous case reaching the same conclusion).

Here, the licensee posted the rules of the contest online, which one might think would be sufficient, as all contestants entered online, and the winner was selected through online voting.  But the FCC felt that some of the information given on the air (and in the contest rules) about entry dates was somewhat ambiguous, and decided that, once a contest by a broadcaster is mentioned on the air, all the rules must be given on the air.  As the contest was conducted by multiple stations, the fine reflects a multiple of the FCC’s standard $4000 fine for a contest rule violation. This decision seems to penalize a broadcaster for being a broadcaster, as a similar contest, had it been run by the car company instead of the station, could have been promoted and conducted in exactly the same way, and the FCC would not have penalized the station.  But according to the FCC’s interpretation of Section 73.1216 of its rule regarding station contests, a station conducting a contest on its website, but promoted on the air, needs to be careful to publicize all of the material rules on the air avoid this FCC trap for the unwary. 

One of the questions we commonly get from broadcasters and others around this time of year is whether and/or how they can use the term SUPER BOWL.  Some refer to it as a trademark while others call it a copyright.  Who is right…and how can it be used?  The term SUPER BOWL is a registered trademark owned by the National Football League. We previously discussed this issue in 2009, 2010 and 2011. 

Actually, the NFL owns at least eight trademark registrations containing the words SUPER BOWL, as well trademark registrations for the terms PRO BOWL and even SUPER SUNDAY.  Aside from these trademark registrations, the NFL also owns the copyright to the telecast of the game itself.  You may have heard that in past years, the NFL tried to stop Super Bowl parties shown on large TV screens.  This was an enforcement of the NFL’s copyright in the game.  Now, the NFL apparently no longer tries to stop Super Bowl parties unless the proprietor charges admission to see the game.  Again, this is a copyright issue.  But what do these rights mean for a broadcaster who wants to run a Super Bowl promotion or an advertiser who wants to run a campaign involving the Big Game?

 

Continue Reading Is Super Bowl Protected by Trademark or Copyright Law? Try Both.