Microwave frequencies used by television stations for their TV Pick-Ups for the transport of programming, and by cable systems for their CARS relays, were the subject of an FCC order last week looking to repurpose these frequencies to provide backhaul for wireless broadband and other telecommunications uses.  The Commission’s order sets out to protect existing users, but to allow these frequencies to be used by wireless users in rural areas where there will not be interference to licensed broadcast or cable users.  Our firm’s Broadband Law Advisor Blog summarizes this order and the request for further comments in this proceeding.  Comments are due October 4 and Replies on October 25. 

Advertising from Stephen Colbert’s Super PAC was rejected by Des Moines television station WOI-TV, based on its belief that these commercials would be confusing to Iowa voters.  Colbert, the host of Comedy Central’s the Colbert Report, has formed his own Political Action Committee to run ads during the upcoming Presidential election.  The first ads ran in Iowa this past week – making fun of the amount of third party money that was being spent on political advertising in Iowa and urging voters to vote for "Rick Parry", with an "a" rather than "Rick Perry."   WOI-TV, rejected them, while the spots ran on all other stations in Iowa’s capitol city.  Are there legal issues with this station deciding not to run these ads?

Not at all.  The FCC has said many times that broadcast stations are not "common carriers," meaning that they don’t have to run all advertising time that advertisers want to run on their stations.  Instead, stations pick and choose among the ads that are brought their way, and stations have an affirmative duty to reject ads that they feel are not in the public interest.  So, while many may question whether these Colbert ads were outside of the norms applied to advertising in the public interest (as Colbert himself argued that the station runs many other ads as likely to confuse the public on many issues), the station has the absolute, non-delegable duty to decide on its own what is and what is not in the public interest – with the very narrow exception of candidate ads.

Continue Reading Colbert Super PAC Ad Rejected by Iowa TV Station – Can They Do That?

US broadcasters often complain about FCC regulations on programming, but they don’t realize how easy they have it compared to much of the rest of the world.  I recently spent several days in one of the former Soviet Republics discussing broadcast regulation with broadcaster representatives, employees of the country’s regulatory agency, and members of citizen advocacy groups.  What seemed most surprising to those in this developing capitalist country was the fact that, in the US, broadcasters can change formats at will to react to marketplace conditions.  This is not a freedom enjoyed in much of the rest of the world – even in Western Europe or in Canada.  We’ve written many times (see, for instance our article here) that the FCC does not consider format issues – even where there are citizens complaints about a proposed change in format or a sale of a station that will probably lead to such a change.  In fact, just last Friday, the FCC again reached that same conclusion, finding that it will not prevent a sale because the sale will result in a format change.  The FCC has determined that format choices are a business decision protected by the First Amendment, so broadcasters are free to change at will, without the government interfering in these programming decisions.

In the country that I visited, their regulatory agency issues station licenses with strict format restrictions.  The agency even regulates networks (both broadcast and cable) to make sure that their programming meets the needs of the communities that they are intended to serve and that the programmers comply with various regulatory and structural requirements.  Unlike in the US, where there may be penalties when a company violates the limited program restrictions that are in place (e.g. political broadcasting, children’s television obligations, indecency rules), in many countries, even the decision as to what kind of entertainment programming to offer is subject to government review.  This country is certainly not unique in regulating broadcasting in that way.  In looking at the website of Ofcom, the regulatory authority for the United Kingdom, you can see how closely formats are regulated.  One recent request for public comment (which could not be approved on an expedited pro forma basis as it was deemed to raise significant questions requiring public input before a decision could be made), proposed the following change in the format of a radio station:

Current Character of Service

A RHYTHMIC-BASED MUSIC AND INFORMATION STATION PRIMARILY FOR LISTENERS OF AFRICAN OR AFRO-CARIBBEAN ORIGIN, BUT WITH CROSS-OVER APPEAL TO YOUNG WHITE FANS OF URBAN CONTEMPORARY BLACK MUSIC AND AT LEAST 26 HOURS A WEEK OF IDENTIFIABLE SPECIALIST MUSIC PROGRAMMES (TO INCLUDE REGGAE, RnB AND HIP HOP RHYTHMIC-BASED (e.g. DANCE, CLUB etc).

Proposed Character of Service

A RHYTHMIC-BASED MUSIC-LED SERVICE FOR 15-29 YEAR-OLDS SUPPLEMENTED WITH NEWS, INFORMATION AND ENTERTAINMENT. THE SERVICE SHOULD HAVE PARTICULAR APPEAL FOR LISTENERS IN THEIR 20s AND AT LEAST 12 HOURS A WEEK OF IDENTIFIABLE SPECIALIST MUSIC PROGRAMMES.

Can you imagine a requirement that the FCC look at each proposal of a radio station to make programming changes along the lines set out above?  Some US stations make these kind of changes routinely, trying to fine tune their programming to provide the best service that they can to the public.  Stations in the US do the research to determine what programming they will broadcast, and how to insure that programming will reach the biggest and best audience – and the station’s decisions are not subject to second guessing by the government.  In some of these other countries, the government does the research to determine what format it thinks is best for the public.  While we had more regulation in the past – these systems are obviously far different from what we do in regulating formats today.

Continue Reading FCC Once Again Declines to Intervene In Format Dispute – US Broadcasters Have it Easy Compared to Much of the World

Noncommercial broadcasters get no breaks when dealing with proposed FCC fines, said the Commission’s Media Bureau in two cases released this week.  While many noncommercial broadcasters may yearn for a day when they were treated leniently if violations were discovered – getting off with perhaps an admonishment letter – those days are over, as they have been for some time. In one case released this week, the FCC specifically states that noncommercial broadcasters are no different than commercial ones when dealing with fines (or "forfeitures" as they are called by the FCC).  If the noncommercial broadcaster violates a rule, they will be treated just like a commercial broadcaster, and have to pay the same fine as would the commercial broadcaster.  

Noncommercial broadcasters have often argued that they cannot afford to pay big fines, as their budgets are limited.  Even when noncommercial stations are owned by colleges or local governments, they have limited budgets, and fines don’t figure into them.  But, in two recent cases, the FCC has rejected arguments for the reduction of proposed fines based on financial hardship, in both cases finding that the budget of the station was not important – it is the total budget of the licensee that is important in assessing if a fine is too much (see our post about how the FCC determines if a fine should be reduced because its payment would create a financial hardship on a station).  In the case cited above, the FCC said that it was the local government agency (a metropolitan school district) that was the licensee, and its financial resources should have been assessed in determining whether the proposed fine was too great.  In a second case, it was a state university that owned the station, and the FCC said that it would look to the overall finances of the university in determining if the fine was too high – not the amount budgeted for the station.  In neither case had the licensee put forward a financial showing for the full licensee organization, so the FCC rejected the requests for reductions of the fines based on financial hardship.

Continue Reading FCC Makes Clear Noncommercial Broadcasters Get No Breaks on FCC Fines, Nor on Financial Hardship Showings

When a problem arises with a station that could give rise to a fine, how long does the FCC have to act on that complaint and issue a fine?  How long must a licensee worry about that problem and whether it will result in a fine?  Does a sale cut off liability for a problem when the seller was the licensee?  Two cases released yesterday, one resulting in a fine and the other where one was canceled, help explain the Commission’s policy.  The Communications Act says that the FCC cannot issue a fine (a "forfeiture" in FCC language) if the conduct occurred more than one year ago or before the beginning of the current license term, whichever is earlier.  In these two cases, the FCC was faced with broadcasters who had problems in their last license renewal term – one filed its renewal late, and the other was missing Quarterly Issues Programs lists in its public file.  In the first  case, the FCC on the same day granted a license renewal and issued a Notice of Apparent Liability proposing to fine a station for the late-filed renewal.  In the second case, the Notice of Apparent Liability for the missing QPIs was issued 3 days after the renewal grant.  In both cases, the actions giving rise to the fine occurred far more than one year before the date of the FCC’s Notice of Apparent Liability.  In the case where the renewal grant and the Notice of Apparent Liability were issued on the same day, the FCC held that it could reach back to get the old misconduct, as the new license term had not yet begun when the NOA was issued.  But in the case where the Notice of Apparent Liability was issued three days later, the fine was thrown out, as that 3 day old license precluded the FCC from going after any conduct that was more than one year old.  So, if you get a renewal, you appear to be off the hook for conduct that occurred more than a year ago.  Three days made a $10,000 difference to this licensee. 

But selling a station does not take you off the hook – if you are within the time limits discussed above.  In the case where the fine was upheld, the licensee was no longer the station’s owner, having sold it several years before.  The company argued that, as it was no longer a licensee, it was not subject to FCC jurisdiction, and could not be made to pay a fine.  The FCC rejected that assertion, finding that, because the actions took place when the company was an FCC licensee, and because the FCC acted within the time frames set out above, the fine was proper.  So if you sell a station while an FCC investigation into one of your actions is still pending and that action could lead to a fine, you can’t totally relax and enjoy the sales proceeds, as the FCC can still come after you!

Another EEO audit was announced by the FCC today – hitting about 100 radio stations this time around. The Commission has pledged to audit 5% of all broadcast stations and cable systems each year to assure their compliance with the Commission’s EEO rules – requiring wide dissemination of information about job openings and supplemental efforts to educate their communities about job opportunities in the media industry.  Today’s Public Notice announcing the audit is here.  The list of stations subject to the audit is here.  The form of the audit letter is available here.  Responses from the audited stations are due by September 12.

All stations should review the audit letter as it provides a good outline of the documents that stations should be retaining to demonstrate their compliance with the FCC’s EEO rules.  For more information about compliance with the EEO rules, see our advisory on the basics of the EEO rules, here, and our most recent advisory on the requirements for the annual EEO public inspection file report, here.

The failure to follow FCC filing rules when a station finished construction of new facilities under a construction permit will apparently cost a radio station $7000 according to a recent Notice of Apparent Liability released by the Commission’s Media Bureau.  Before a broadcast station can make most changes to its technical facilities, it must apply to the FCC for approval, which the FCC grants by way of a construction permit.  In most cases, the broadcaster has 3 years to construct the proposed facilities.  Once construction is complete, the broadcaster must notify the FCC of that fact by filing an application for a license on FCC Form 302.  That form gives details of the construction, so that the FCC can tell that the station was built in the manner authorized by the construction permit, and in accordance with any conditions placed on construction in the permit.  In this case, the broadcaster built the new facilities that it proposed within the 3 year period, but forgot to file the Form 302 – and only did so 3 years after the end of the construction period.  Under this Notice, the late filing, and the failure to ask for special temporary authority ("STA") to operate the station after the failure to file was discovered, may cost the station $7000.

In the past, the FCC had allowed some stations to file their license application late, if construction had occurred in a timely fashion, and where the licensee provided proof of the timely construction.  In this decision, the FCC found that these cases were situations where the late filing was for an insignificant period of time – a few days or weeks at the most, not for the years that went by in the case here.  The late filing, and the fact that, as the construction permit had expired and no license had been granted, the station was deemed to have been operating without authority at the new site, warranted the $7000 fine in the FCC’s opinion.  The case not only serves as a reminder to those with construction permits to file their license applications on time after they complete construction, but also shows that while the FCC may show some flexibility in enforcing its procedural rules, it will not allow licensees to ignore them for long periods.  So be careful to meet the requirements of the rules, or look for big fines from the Commission. 

Continue Reading $7000 Fine for Radio Operator Who Builds Construction Permit But Forgets to File a License Application

What does SoundExchange do when it collects royalties from an Internet radio operator, but the operator doesn’t provide complete information about the songs that were played?  That question was raised by the Copyright Royalty Board in a Notice of Proposed Rulemaking on a proposal by SoundExchange for the distribution of such royalties, about which we wrote here.  The CRB has now agreed  to SoundExchange’s proposal to distribute this money via a "proxy system."  In other words, SoundExchange will be distributing the money pro rata based on the information that it has for the songs on which similar services did accurately report.  The CRB provided the authority for this distribution by proxy for unallocated money collected during the period 2004 through 2009, which SoundExchange reports now amounts to approximately $19.4 million (down from the $28 million reported when the CRB’s Notice was released in April). 

Why is there no information for these songs?  As we wrote when the CRB Notice was first released, there are many reasons, beyond simple failure of Internet radio services to meet the requirements for reporting set out in the CRB rules (about which we wrote here).  There are also situations where, under various settlement agreements, no reporting is necessary.  For instance, under the settlement agreement with broadcasters, no reporting is necessary for a certain percentage of songs played by each station.  Even under the CRB rules, there is a recognition that certain small webcasters (particularly noncommercial operators) can’t afford all of the software that is necessary for the recordkeeping required of large webcasters. There will always be some songs for which no information is available, thus the need for this proxy system to distribute the money.  And, as the result of the CRB action, SoundExchange now has the authority to use this system. 

When one broadcast licensee company buys another, or when there is a restructuring of a company with broadcast ownership holdings that are grandfathered under current ownership rules, there often arises a need to divest stations so that the buyer (or the new controlling parties after a restructuring) complies with the multiple ownership rules after the completion of the transaction.  Often, selling the non-compliant stations quickly so as to not unduly delay the closing of the purchase or the restructuring is difficult, as it takes time to locate a buyer for the "extra" stations and to negotiate a fair sales price.  In fact, a forced divestiture can artificially depress the sales price for the non-compliant stations that need to be spun off, as potential purchasers of the stations know that any delay of the principal transaction will impose costs on the buyer and seller in that deal.  Thus, the parties in the principal transactions often look for ways to avoid a forced sale at a depressed price.  One method is the use of a divestiture trust – letting a trustee run the stations to be divested until a suitable purchaser can be found at a reasonable price.  The FCC has permitted such trusts, but in a case decided last week, it demonstrated that there were limits on their use by denying applications that the Commission deemed interests in too many stations in one area in the hands of one company.  This case should provide guidance on the limits of the use of divestiture trusts for those who may consider them in future broadcast transactions.

The case involved radio stations in two smaller markets in Washington state, Yakima and the Tri-Cities. There, new Northwest Broadcasting had held full complements of stations, at or close to the ownership limits in each market.  New Northwest went into bankruptcy, and a receiver was appointed to run the stations.  The receiver reached a deal to sell the stations to Townsquare Media, which already held clusters of stations in these markets, also at or near the ownership limits in the markets.  Townsquare proposed to cherrypick from the New Northwest cluster a few prime stations, and then to assign the remainder (and a few stations that Townsquare had itself owned) to a divestiture trust, with instructions to sell off these stations to an independent buyer.  While the FCC decision does not explicitly set forth the terms of the trust, it appears that the beneficial interest in the sales price of the stations to be divested (and presumably any operating profit until the stations were sold) would be for the benefit of Townsquare.  In looking at this proposed transaction, the FCC’s Media Bureau determined that the proposal to use this trust would concentrate a beneficial  interest in too many radio stations in the hands of one company.  Thus, the applications were dismissed.

Continue Reading FCC Sets Limits on Use of Divestiture Trusts When Station Purchase Would Put Buyer in Violation of Multiple Ownership Rules

Just a reminder to broadcast stations in certain states of several upcoming August 1st obligations.  Specifically, on Aug. 1, radio stations in certain states must commence pre-filing or post-filing announcements (depending on the state in which they are located) in connection with the license renewal cycle.  In addition, Annual EEO Public File Reports must be prepared and placed in the public files by August 1st for stations in certain states.  And finally, noncommercial stations in certain states must file a biennial ownership report by August 1st.  Further details about these various deadlines — which again are specific to particular states and services — are below. 

First up, August 1st is the deadline for Radio Stations in North Carolina and South Carolina to file their FCC Form 303-S license renewal applications seeking a renewal of their broadcast licenses.  (See our earlier license renewal advisory here.)  Accordingly, radio stations in those two states will also need to commence their License Renewal Post-Filing Announcements on August 1st to inform their communities of the renewal filing.  Specific language for the announcements can be found on the Commission’s website here, and the post-filing announcements continue on August 16, Sept. 1, Sept. 16, Oct. 1, and Oct. 16.

Second, the next batch of radio license renewals — which will be filing their renewals on October 3rd — is Florida, Puerto Rico, and the Virgin Islands, which means that Radio Stations licensed to those three states (or rather commonwealths, territories, islands, etc., as the case might be), must begin their License Renewal Pre-Filing Announcements on August 1.  The precise language of the pre-filing announcements—which is again dictated by the FCC’s Rules—can be found here. The pre-filing announcements for these stations continue on Aug. 16, Sept. 1, and Sept. 16. 

Third, by Aug. 1, Radio and Television Station Employment Units (SEUs) in California, Illinois, North Carolina, South Carolina and Wisconsin must prepare and place in their public inspection file their Annual EEO Public File Report.  Stations that have websites must also post the Report on their website.  The Annual EEO Public File Report summarizes the station’s or the SEU’s EEO activities during the previous 12 months, and provides information about the recruitment and outreach that the station conducted in the past year.  A copy of our recent reminder advisory with more information can be found here.  In addition, Radio Stations in North Carolina and South Carolina will also be filing an FCC Form 396 EEO Report by August 1 in connection with their license renewal filing.

Finally, Aug. 1 is the deadline for Noncommercial Radio Stations in California, North Carolina and South Carolina, and Noncommercial Television Stations in Illinois and Wisconsin to prepare and file an FCC Form 323 Biennial Ownership Report with the FCC.  Please note, this filing date applies only to noncommercial radio and TV stations in the states noted above. The FCC has revised its rules regarding the reporting of ownership interests for commercial broadcast stations, as well as revised the commercial Ownership Report—Form 323. Accordingly, commercial stations now file biennial ownership reports on one unified filing date, which will be later this year.  A copy of our recent reminder to noncommercial stations about the Aug. 1 requirement can be found here.