Three recent FCC cases demonstrate how seriously the FCC views tower site issues – imposing fines up to $14,000 for various violations of FCC rules.  One $14,000 fine was in a case where an AM station’s tower was enclosed by a fence that was falling down and did not enclose areas of high RF radiation as required by Section 73.49 of the rules.  The station also had a main studio that was unattended on two successive days, and had no one answering the phone on those days – no one to respond to the FCC’s calls.  The FCC broke the fine down as $7000 due to the lack of fencing, and $7000 to the unattended main studio.

In the second case, the FCC, the FCC fined a station $10,000 for areas of high RF radiation that were not fenced or marked by signs when the FCC conducted its inspection, and $4000 for operating overpower.  The Commission measured the overpower operation on one day, inferred that it had been in place the previous day, and thus deemed the violation repeated.  The Commission found that the station’s tower was fenced, but that there was high RF outside the fence, leading to the fine.  The third case was one where the Commission found that the top flashing beacon on a tower was out on two successive days, even though the required steady lit obstruction lights on the side of the tower were operational.  While the licensee notified the FAA of the outage three days later (with no noted prompting from the FCC), and had the situation corrected two days after notifying the FAA, the Commission also determined that the the violation was repeated and willful, leading to a $10,000 fine.

Continue Reading Tower Lights Out, High RF Radiation, Insufficient Transmitter Site Fences – FCC Fines Up to $14,000

In less than a month, a four year cycle of radio and television license renewal applications begins with the filing, on or before June 1, of license renewals by radio stations in Maryland, Virginia, West Virginia and the District of Columbia.  To help stations prepare for their upcoming renewals, I conducted a webinar, sponsored by the Michigan Association of Broadcasters and joined by broadcasters from 9 other state associations, discussing issues that broadcasters should be considering.   Slides from that presentation, setting out the renewal process, and various issues that should be considered by broadcasters, including: public file issues, technical matters, EEO and other nondiscrimination matters.  Copies of the slides used in the presentation are available here.

In addition to those slides, we have many other resources available for a broadcaster thinking about their license renewal application.  These include the following:

  • A primer on the issues to be considered in preparing for license renewal, available here.  In that memo, there are links to the texts of the required pre-filing and post-filing announcements that broadcasters must air to inform their listeners about the filing of the renewal application
  • A memo that sets out the materials that should be kept in a commercial station’s public file, and the retention period for those materials, here.
  • A memo generally describing the requirements of the FCC’s EEO rules, here, and a second memo, reminding broadcasters of their yearly EEO public file report obligations, a sample of which is here.  Remember, FCC Form 396 report must be filed with the license renewal application, and that form requires the submission of the station’s last two years public inspection file reports
  • An advisory, here, summarizing the requirements for a station’s quarterly programs issues lists.
  • Recent blog entries on the FCC’s requirement for a nondiscrimination certification in their advertising contracts, here and here.

FCC Sources of information for the renewal filing are also available.  A version of the FCC Form 303S – the license renewal form – can be viewed here.  The form contains a good set of instructions as to what information the FCC is seeking from licensees.  The FCC also has its own webpage on license renewal, here.  Dates for radio license renewals are available here, and the dates for TV renewals are here.

Continue Reading Getting Ready for License Renewal – Slides and More Information from State Broadcast Associations’ Webcast

The advertising to children of food deemed unhealthy has been the subject of government concern for many years.  We wrote about the efforts of then-Senator Brownback to limit such ads – either by voluntary industry action or by government regulation.  These concerns led to the formation of a public-private task force to come up with voluntary actions to limit advertising unhealthy foods to children.  The FTC this week released a draft of that report – proposing prohibitions on advertising most unhealthy food to children that would be in place by 2016 (with certain additional restrictions becoming effective 5 years later).  These guidelines would apply not only to broadcast advertising, but also to marketing on the Internet and in many other media.  While the report talks about voluntary industry guidelines, the NY Times quotes some as asking just how voluntary such guidelines really would be – asking if the government might not step in to mandate compliance if industry was unsuccessful (see the Times article here, subscription may be required).  Comments on the FTC proposals are due on June 13, 2011.

The guidelines published by the FTC ask many questions about how to define what foods are considered unhealthy, and also about whether the timeline of 2016 for implementing a ban on unhealthy food advertising is reasonable (the later 2021 deadline would apply to certain restrictions on salt in food).  Advertising would be restricted for those up to 17 years of age, and extends to 20 categories of advertising including radio and TV, online ads, sweepstakes, ads in video games, and other marketing in traditional and digital media directed to children.  Broadcast programming that reaches an audience that is 30% children 2 to 11 would be deemed "targeted" to them, for children 12 to 17, the programming would be deemed targeted to children if there were a 20% representation of those age groups in the audience.  Internet ads would also use the 20% standard.

Continue Reading FTC Requests Comments on Guidelines for Advertising Unhealthy Foods to Children

How do you determine who is control of a noncommercial broadcaster governed by a self-perpetuating Board of Directors?  That question was addressed in a recent FCC decision, dismissing an application for a new noncommercial FM station that had not properly disclosed its owners on its FCC Form 340 application. In that case, the applicant had reported to the FCC that it was controlled by one individual, the head of a Monastery.  No other officers or directors or members of the applicant nonprofit corporation were listed in the application.  A competing applicant searched state records, and determined that its articles of incorporation reflected that the applicant was to be governed by a Board of Directors, and required at least three directors.  Moreover, the state filings had listed 6 directors – including two individuals who were not US citizens.  When challenged, the applicant admitted that the applicant corporation was set up in the manner set out in the state filings, but contended that the directors were all members of the same religious order, and could not challenge the decisions of their superior – arguing that this gave the superior effective control over the entity.  The FCC rejected the argument – relying on state laws that said that a company is governed by its Board of Directors – and concluding that the individuals on that board therefore had control of the applicant.  Any attempt to now list the 5 other members on the FCC application would be a major change in the control of the board (and would raise alien ownership issues because of the two directors who were not US citizens), so the application was dismissed.

This case illustrates the Commission’s general rule that, when evaluating control of nonprofit entities that don’t have shareholders or other owners, as do commercial enterprises, the FCC looks to the governing body of the entity that holds the FCC license to define where control lies.  But the rules for noncommercial entities have never been completely clear – as the FCC has for over 20 years had a rulemaking to establish rules governing changes in control of noncommercial entities.  While this proceeding has been pending, the FCC looks at these issues through an interim policy based on the rules proposed in that proceeding.  Under that policy, the FCC assumes that nonprofit boards will have periodic changes in composition.  It requires that, when a majority of the governing board changes due to these normal, gradual changes, a noncommercial broadcaster file a Form 316 short-form transfer of control – an application routinely processed by the FCC in a matter of days.  But, if there is a sudden change in control of the Board where a controlling interest changes all at once (e.g. if members of a nonprofit entity vote out a majority of the Board, or if there is some sort of mass resignation), then the company should obtain FCC approval on an FCC Form 315 "long form" application, that is subject to petitions to deny.  In the context of any application for a new station, a long-form transfer will result in a dismissal of an application for which the filing window has closed, while short-form changes will be permitted. 

We wrote about these issues when the FCC commenced its still-pending proceeding to require noncommercial broadcasters to file their ownership reports on the same biennial schedule as commercial entities. With license renewal approaching, noncommercial licensees should review their ownership, and make sure that its ownership information is correct, and that any transfers that have occurred based on these policies have been properly reported and approved. 

What should SoundExchange do with money that it collects for the performance of sound recordings, when it does not know what sound recordings were played by a particular service?  As we’ve written many times on this blog, SoundExchange collects royalties from digital music services , including satellite radio, cable radio and webcasters, for the performance of sound recordings (i.e. a recording of a song by a particular artist).  It is charged with the obligation to distribute these royalties one-half to those who hold of the copyright to the sound recording and one-half to the artists who perform on those recordings.  However, SoundExchange, according to a filing recently made with the Copyright Royalty Board, does not always know which songs were played by a particular music service.  Thus, it has had difficulty distributing all of the money it collects – currently holding $28 Million in royalties from the period 2004 to 2009 that have not been distributed.  Why?  According to SoundExchange much of the problem is that not all services report what they played and how often, and other information that is submitted is sometimes inaccurate or otherwise does not adequately identify the music that was played.  To deal with this problem, SoundExchange has asked that the Copyright Royalty Board authorize it to use proxy information to distribute these funds from 2004-2009.  The CRB has asked for comments on that proposal.  Comments are due on May 19.

What is proxy information?  Basically, SoundExchange plans to infer from the information that it does have what music was played by the services for which it has no information.  According to the SoundExchange filing, they would make these assumptions based on the type of service.  Thus, information from webcasters would be used to estimate what other webcasters were playing.  Information from background music services who did report would be used to determine what other background music services played, and so on.  The CRB, in its request for comments, asks if the proxy should be further broken down so that, for instance, noncommercial webcasters would serve as a proxy for other noncommercial webcasters, and commercial webcasters would serve as a proxy for other commercial webcasters.  The Copyright Royalty Judges are also seeking to assess whether SoundExchange has done all that it can do to get the required information, and if the proxy system is a fair way of determining distributions for the money that has not yet been awarded to rightsholders and artists. 

Does this proposal have any impact on the services themselves?  Apparently not, as SoundExchange is at this point only looking for this authority in order to distribute money collected for royalties that came in from 2004 to 2009.  It does not appear to be looking at imposing any new restrictions on webcasters or other digital music services.  Instead, it is only looking for the authority to distribute the money that it has already collected based on the information that it has available.  What should music services take away from this request?

Continue Reading SoundExchange Seeks Permission to Distribute Royalties Based on Proxy Information

The FCC is taking a close look at the video programming marketplace and gathering data that will undoubtedly shape its rules and policies in the coming years.  Its review comes in the form of a periodic assessment of the multichannel video programming industry required by the Communications Act.  By its Further Notice of Inquiry issued Thursday, the FCC expanded the scope of its periodic review of the market for the delivery of video programming and renewed its previous call for data.  Although the proceeding is technically an annual occurrence (and indeed is entitled the "Annual Assessment of the Status of Competition in the Market for the Deliver of Video Programming"), it has been over two years since the FCC last released a report on the video programming marketplace.  Moreover, that report, issued in January 2009 under then-Chairman Martin, actually reported on the state of the marketplace circa 2006 as the data was a few years old by the time the report was issued. 

So the FCC’s current proceeding actually seeks data for the years 2007 through 2010.  More importantly, the Notice of Inquiry marks a significant departure from previous reviews both in terms of the proposed structure of Commission’s analysis and the scope of the review, as this proceeding will, for the first time, include information about the online distribution of video programming to consumers.  The Commission seeks to analyze three categories of entities that deliver video programming:  1.) multichannel video programming distributors ("MVPDs", i.e. cable systems, satellite providers, and teleco providers), 2.) broadcast television stations, and 3.) online video distributors.  For each of these types of providers, the Commission proposes to examine industry structure (number and size of providers; horizontal and vertical integration; conditions affecting competition), conduct (business models; advertising and marketing), and performance (quantity and quality of program offerings; price of service; investment and innovation).

The Commission’s NOI invites comments from all interested parties, and requests data, information, and comment from entities that provide delivered video programming directly to consumers, as well as consumers and consumer groups, content creators, content aggregators, and manufacturers of consumer premises equipment.  Clearly, the Commission is casting its net widely in hopes of a thorough record for its report. Given the increasingly contentious debate over the reclamation of TV spectrum, ongoing issues regarding retransmission consent agreements, and the rise of online video programming providers, the Commission’s proceeding takes on great importance, as the ultimate findings and conclusions drawn by this report will likely be used as the basis for future actions affecting video programming providers and consumers.  Comments in the proceeding are due by June 8th, with Reply Comments due by July 8th.  Interested parties may file comments and data with the Commission either in paper or via the Commission’s Electronic Comment Filing System. 

The FCC’s indecency rules have, in recent months, twice been declared unconstitutional by the US Court of Appeals for the Second Circuit – essentially finding that the FCC’s policies imposed unconstitutional restrictions on speech as they did not give broadcasters any way of determining what was permitted and what was prohibited.  After seeking several extensions of time to determine whether to seek Supreme Court review of the Court of Appeals decisions, the FCC today released its Petition for Certiorari to the high court.  The Supreme Court need not hear this request for review though, given its previous decision on these rules (which we wrote about here), and the high publicity and public interest in this subject, the case could quite well end up on the schedule.

This appeal deals with two cases.  First, it seeks review of the decision of the Court of Appeals throwing out the fleeting expletive admonitions given to Fox network stations for the broadcast of two Billboard Music Award shows that contained expletives, one by Cher and one by Nicole Richie.  Following the precedent set by the Golden Globes case (where Bono used the "F word"), the Commission held that the use of one of these single words, even if not used in a sexual context, were inherently indecent.  The second case covered by the Supreme Court petition was for the depiction of bare female buttocks in the program NYPD Blue – resulting in $27,500 fines on a number of ABC stations.  This decision was also overturned by the Court of Appeals.

Continue Reading FCC Decides to Appeal Indency Cases to Supreme Court

The sale of a noncommercial radio station is often controversial, especially when it’s clear that the format of the station will change after the transfer.  In a decision released last week denying a Petition to Deny challenging the application for the sale of KTRU, the noncommercial radio station owned by Rice University, the FCC again made clear that they are not in the business of regulating the formats of broadcast stations.  For 30 years, the FCC has held firm to its position that the marketplace is best for deciding on what format a station should broadcast.  Thus, when Rice University students argued that the sale of their station and the loss of the diverse format that the station had programmed would harm localism and diversity, the FCC rejected the argument.  Seemingly, that decision makes sense, as we don’t want a government agency becoming a czar of the programming offered by broadcast stations.  When we see decisions from the regulatory bodies in the United Kingdom or Canada sanctioning stations that don’t stick to their legally proscribed formats, we wonder how such a system could possibly function in the US.  Can you imagine the FCC fining a station because it played too many hits on an alternative station?  Of too much rock on an Adult Contemporary station?  Once the FCC or any government agency gets into regulating formats, these sorts of decisions will follow.  Luckily, based on this decision and the prior 30 years of precedent, we won’t have to worry about such an eventuality.

The Commission also rejected other objections to the sale of KTRU. The Petitioners had challenged the noncommercial purpose and educational plan of the buyer – an argument summarily rejected as the buyer was already the licensee of another noncommercial station in the market.  The ownership of that station led to another argument – that the sale would violate ownership limits by concentrating too many noncommercial stations in the hands of one operator.  But the FCC made clear that there are no ownership limitations on how many noncommercial stations one company can own. 

Continue Reading FCC Makes Clear It Doesn’t Regulate Formats – Rejects Petition Against Sale of Noncommercial Station

SoundExchange claims on its website that webcaster SWCast.net was shut down when SoundExchange complained to its ISP that the service was not paying royalties for the use of the music played by the site.  SWCast was an aggregator of webcast channels created by other individuals, who paid the company – allegedly for the streaming and for the royalties that were due for that streaming.  According to the SoundExchange press release, the webcaster was shut down when SoundExchange "sent a letter requesting that the hosting ISP disable access to the SWCast site."  SoundExchange’s statement says that, despite repeated attempts to engage the webcaster, SWCast neither paid royalties nor filed reports of use for the songs streamed by the service, leading to SoundExchange’s action.  As far as we know, this is the first time that SoundExchange has taken such an action. 

How did this work?  While we have not seen the letter that SoundExchange sent to the ISP, we can assume that it alleged that SWCast was infringing on copyrighted materials by not paying the required royalties.  ISPs have a safe harbor under the Digital Millennium Copyright Act, protecting them from liability for the infringement of users of their services, if the ISP does not encourage the infringement, registers an agent with the Copyright Office, and agrees to take down infringing content when properly notified by a copyright holder (see our post here).  We can only assume that SoundExchange or the copyright holders themselves notified the ISP that the material streamed by this webcaster was infringing as no royalties were being paid and, to protect itself, the ISP blocked access to the site.

Continue Reading SoundExchange Claims Credit for Shutting Down Webcaster Who Was Not Paying Royalties

Last week, in a frenzy of cleaning up issues left from old license renewal applications, the FCC upheld several $9000 fines for public file violations – most in connection with the failure of licensees to have a complete set of Quarterly Programs Issues lists ("QPIs") in those files.  The broadcasters who were fined came up with a variety of arguments as to why those fines should be reduced or eliminated – which were uniformly rejected by the Commission.  What we find interesting is that, while these large fines were levied against a number of broadcasters, the FCC is at the same time asking whether retention of the public file can be justified under the provisions of the Paperwork Reduction Act.  So which is it – an important tool to keep the public informed about the ways that stations serve their public, or an unreasonable burden on those who are regulated by the FCC?

While this request for comments on the paperwork burden imposed by the public file may be nothing more than a routine review of Commission rules to justify their continuing existence under the provisions of the Paperwork Reduction Act, it is interesting that this rule – long the source of wrath from broadcasters who complain that the file is never visited except by the occasional college broadcasting student who has to do so as a class project, or by the competitor in the market looking for something to complain about (and even those visits are extremely rare for most stations) – is now up for review and comment.  Why was this rule selected for review?  Will there be other rules about which the FCC asks for comment?  Is there any justification for the burden imposed on broadcasters (which the FCC estimates at a cumulative 1,831,706 hours of work annually, but to which it curiously assigns no associated cost burden with the required tasks) when it is routine for the file to be never visited?  You have your chance to voice your comments – with the filing deadline for such comments being June 17, 2011.

Continue Reading Fines of $9000 for Public File Violations Upheld, But FCC Asks if the Paperwork Burden of the Public File is Justified