Last week, the Copyright Office published in the Federal Register the final decision of the Copyright Royalty Board on the statutory rates for Internet radio royalties – royalties paid by webcasters for the noninteractive streaming of sound recordings.  As we have made clear before, these are royalties that are paid in addition to the royalties paid to ASCAP, BMI and SESAC for the public performance of the musical compositions (see our memo on Using Music in Digital Media, here, that explains the difference between the sound recording and musical composition royalties).  The rates adopted by the CRB are the rates to be paid by any webcaster who has not elected alternative rates available under one of the many settlement agreements between SoundExchange and groups of webcasters, which were entered into under the Webcaster Settlement Acts.  The Final Decision corrects a few typos in the initial decision, but otherwise leaves the substantive holdings of the decision unchanged.  We described those holdings here.  While the publication of the final decision starts the clock running on filing an appeal, the new rates are unchanged from those that were in effect for 2010 for commercial webcasters who had not elected any available alternative set of rates.  Thus, these webcasters will continue to pay at the rate of $.0019 per “performance” (a performance being one listener listening to one song – e.g. if there are 100 people listening to a stream that plays 10 songs in an hour – there are 1000 performances in that hour) for the remainder of 2011.   The publication of these rates has, however, triggered a number of questions about the comparative royalties that different Internet radio services pay for streaming music on the Internet – rates summarized below.

As set out below in detail, there are significant differences in the royalties paid by different services for the 2011-2015 royalty period.  Broadcasters who are streaming their programming on the Internet pay lower per performance royalties than webcasters paying the statutory rate in the first years of the 5 year period, but higher rates at the end of the period. (See a summary of the Broadcaster royalty agreement here).  “Pureplay” webcasters, like Pandora, pay significantly lower per performance royalties than either broadcasters or those paying under the statutory rate, but are required to pay a minimum fee of 25% of the gross revenue of their entire business – ruling out these lower rates as an option for any service that has lines of business other than webcasting.  (See a summary of the Pureplay deal here).  The broadcaster deal and that which applies to the Pureplay webcasters were both arrived at pursuant to settlements reached under the two Webcaster Settlement Acts, passed in 2008 and 2009.  These allowed the groups covered by these agreements to negotiate with SoundExchange over the rates that would cover the industry for the digital noninteractive performances of sound recordings.  The statutory rates were arrived at by a decision of the Copyright Royalty Judges after litigation which took place last year.

Continue Reading Final Webcasting Royalty Rates Published – A Comparison of How Much Various Services Pay

The FCC recently revised its TV “white spaces” rules to facilitate the use of unlicensed communications devices on spectrum originally allocated exclusively for broadcast television.  Although there is still a long way to go before new unlicensed devices are deployed in this spectrum, the recent revision of the rules has triggered an important deadline.  As detailed in our client advisory issued today and available here, cable headends, TV translators, low power television stations, and other Multichannel Video Programming Distributor (MVPD) receive sites that are located outside a broadcast station’s standard protection zone have until April 5, 2011, to file a waiver request seeking interference protection.

Practically speaking, the vast majority of cable headends, TV translators, and MVPD receive sites that rely on the reception of an over-the-air broadcast signal are located well within the broadcast station’s standard protection zone. Thus, the April 5th deadline applies only to those unique cases in which an existing over-the-air receive site is located more than 80 kilometers (49.7 kilometers) beyond the edge of the broadcast station’s protected contour.

As the filing deadline is less than a month away, we encourage potentially affected parties to promptly review their operations. Television broadcasters, who may not themselves operate a facility eligible for a waiver, should consider if there are cable headends, TV translators, or other MVPD receive sites far beyond their contour that might benefit from a waiver request.  In such cases, the broadcaster should coordinate with the operators of those facilities to ensure a timely submission. 

See today’s advisory for further details on this upcoming deadline, as well as our earlier postings here and here for more information about the white spaces rules and the forthcoming white spaces database. 

Last week, amid the flurry of other actions taken on retransmission consent, rural radio and video accessibility, the Commission released its proposal for revisions to its regulatory filing fees, as it is required to do every two years.  The proposed fees for broadcast applications are set out below.  No other changes in any of the fees or fee categories are proposed.  According to the FCC proposal, the fees will rise by the amount of the cost of living increase since the last time the fees were adjusted – thus the cost to file FCC applications will rise by 3.5%.

Comments on the proposed fees are due 15 days after the Notice is published in the Federal Register, with replies due 30 days after that publication.  The table below sets out the fees for broadcast applications for main stations.   Proposed fees for applications for broadcast auxiliaries and other non-broadcast services are set out in the Notice of Proposed Rulemaking. 

Continue Reading FCC Proposes Revised Application Filing Fees

The FCC’s decision in its rural radio proceeding addresses numerous radio issues – some of which seem to provide a solution in search of a problem.  In an era where the President has called for agencies to review their decisions to access how they will affect businesses and job creation, some aspects of this rural radio decision appear to be moving in the opposite direction – imposing new hurdles on broadcasters trying to improve their operational facilities. While the FCC in this decision adopted largely uncontested rules that would promote the development of new radio stations on Tribal lands, the Commission also adopted rules making it harder for radio stations to move from more rural areas into more urban ones – rule that were almost universally condemned by broadcasters. The decision also restricted the ability of FM translators to “hop” from the commercial to the noncommercial band and vice versa, and adopted rules that codified the determination of how AM applications are determined to be “mutually exclusive” when filed in the same window for new or major change applications.  The changes to the procedures for consideration of AM and FM station allotment and movement are summarized below.  The other changes made in this proceeding will be discussed in a subsequent post on this blog.

Easily the most controversial of the decisions made by the Commission in this proceeding was the conclusions reached as to the movement of AM and FM radio stations from more rural areas into more urbanized ones.  We wrote about some of the concerns raised by broadcasters last week.  Many of the new rules and policies adopted by the Commission were ones feared by broadcasters – though many of the policies are still undefined, and how they are enforced may well determine their ultimate impact.  That impact may well take years to sort out.  Regardless of the ultimate impact on the actual movement of stations, there is no question that these rules will require far more paperwork from broadcasters seeking to allot new channels and from those seeking to change the cities of license of existing stations, and open more moves to challenge, making the process slower and more expensive.

Continue Reading FCC Adopts Rules Restricting Rural to Urban Radio Moves and Translator Band Hopping – And Adopts Tribal Area Preferences

Like "Super Bowl," "Olympics" and "NASCAR," "March Madness" is also a term that is protected by trademark law, and its unauthorized use in commercials could result in legal liability.  But the development of March Madness is a bit more interesting, and you can probably thank Brent Musburger for that.  The Illinois High School Association (IHSA) has been using the term "March Madness" to describe its state high school basketball tournament since the early 1940’s.  Broadcaster Brent Musburger went to journalism school in Chicago, then worked for both a Chicago newspaper and television station, where he almost certainly covered that basketball tournament and was well aware of the term "March Madness."  When he later began covering the NCAA basketball tournament for CBS in 1982, he naturally began referring to that tournament as "March Madness" as well.

As you know, the term caught on.  It ultimately led to a trademark infringement suit in 1996, and that led to a joint venture between IHSA and NCAA, called the March Madness Athletic Association (MMAA) which now holds all trademark rights to the term "March Madness."  In fact, they own 15 federal registrations containing that term, covering everything from the actual tournaments to broadcasting and webcasting the tournaments to mugs, T-shirts, towels, and even carbonated soft drinks.

Continue Reading Is it Madness to Say “March Madness” On the Air? – The Trademark Issue

Among the many items adopted by the Commission at last week’s open meeting was a Notice of Proposed Rule Making (NPRM) regarding retransmission consent agreements and the carriage of broadcast television stations by cable and satellite providers.  Retransmission consent has been a hot topic of late both in Washington and in the national press.  During the past year, a few carriage negotiations between broadcast television stations and cable or satellite operators have resulted in interruptions – or threats of interruptions – in the carriage of local stations.  As a result, both Congress and the public have paid increasing attention to retransmission consent negotiations, and the Commission’s NPRM is a effort to review some aspects of its rules governing the relationship between local broadcast stations and the cable and satellite providers that retransmit their signals.  A copy of the NPRM is available here. 

The NPRM is the outgrowth of a petition for rule making filed in March 2010 by cable and satellite providers, along with several public interest groups.  These groups jointly petitioned the FCC seeking significant changes to the current retransmission consent process.  Perhaps the most notably aspect of last week’s NPRM is not the changes the FCC proposes, but rather the changes it refrains from pursuing.  The Commission states in the NPRM that it does not believe that it has the authority to adopt either interim carriage mechanisms – to require the continued carriage of a station without a station owner’s consent while negotiations continue – or mandatory binding dispute resolution procedures for retransmission consent negotiations, both of which were proposed by the cable and satellite providers in their petition for rule making.  In both cases, the Commission found that it lacked the statutory authority to pursue the rule changes proposed by the petitioners. 

While it proposes to refrain from action on those two elements of the petition for rule making, the Commission does propose to review several aspects of its rules in an effort to, in its words, "protect the public from, and decrease the frequency of, retransmission consent negotiation impasses within our existing statutory authority."   To that end, the NPRM seeks input on strengthening the good faith negotiation rules, including whether it would be  per se violation of the good faith negotiation rules for a station to give a network with which it is affiliated the right to negotiate for carriage, or for a station to grant another station or station group the right to negotiate for carriage, such as when a station is party to a local marketing agreement (LMA) or joint sales agreement (JSA).  In addition, the NPRM proposes changes to the notice requirements of its carriage rules to require advance notice to consumers if there is the possibility that a station will be dropped from a providers’ programming line up.  This advance notice would allow consumers to make alternative plans if negotiations ultimately fail and a station’s signal is deleted from the lineup.

Continue Reading FCC to Take a Fresh Look at Retransmission Consent Rules Governing Carriage of Broadcast Television Stations

Yesterday, the FCC initiated a rule making proceeding to reinstate its prior video description rules with certain modifications, as required by the Twenty-First Century Communications and Video Accessibility Act of 2010 (Act). The proposed rules would require large market broadcast affiliates of the top four national networks and most cable operators and DBS providers to provide programming with audio narrated descriptions of a television program’s key visual elements beginning as soon as first quarter 2012.  Davis Wright Tremaine previously summarized the Act in our earlier advisory available here.

The Notice of Proposed Rule Making (NPRM) takes the first step toward restoring the video description regulations that the FCC previously adopted in 2000, but which were subsequently vacated by the U.S.  Court of Appeals for the D.C. Circuit. Now with explicit Congressional authorization, the FCC seeks to restore the video description rules by Oct. 8, 2011, as required by the Act. The FCC proposes a quick implementation, with the video description and pass-through rules beginning Jan. 1, 2012. The most significant elements of the reinstated video description rules are: 

  • Broadcast affiliates of the top four national networks—ABC, CBS, Fox, and NBC—located in the top 25 television markets must provide 50 hours per calendar quarter of prime time and/or children’s programming with video descriptions.
  • The top five national nonbroadcast networks must provide 50 hours per calendar quarter of prime time and/or children’s programming with video descriptions. The proposed rule would be applied to multichannel video programming distributors (MVPDs), including cable operators and DBS providers with 50,000 or more subscribers, and presumably then be applied to the top five networks through affiliation agreements.
  • “Live” and “near live” programming is exempt from the rules.
  • In order to count toward the requirement, the programming must not have been aired previously with video descriptions, on that particular broadcast station or MVPD channel, more than once.
  • All broadcast stations, regardless of market size or affiliation, and all MVPDs, regardless of the number of subscribers they serve, must “pass through” video description when such descriptions are provided and when the station or program distributor has the technical capability to do so.

In addition to proposing to reinstate the rules previously adopted by the FCC, the item asks many practical implementation questions about refreshing market rankings, applicability of the rules to low power television, and what constitutes the “technical capability” to pass through video descriptions. In particular, the FCC seeks to refresh the list of the top 25 DMAs, as well as update the top five national nonbroadcast networks subject to the rule. In determining the top five nonbroadcast networks, the FCC proposes to exclude from the top five any nonbroadcast network that does not provide, on average, at least 50 hours per quarter of prime time non-exempt programming, i.e., programming that is not live or near-live. The NPRM specifically seeks comment from any network that believes it should be excluded from the top five covered networks because it does not offer enough pre-recorded prime time or children’s programming.

Continue Reading FCC Initiates Rule Making to Reinstate Video Description Regulations for Television Programming

As our colleague Brian Hurh wrote recently on our sister blog, the www.broadbandlawadvisor.com, a federal district court last week granted a preliminary injunction prohibiting the mere retransmission of broadcast television programs over the Internet, without more.  The order is not only important for its confirmation of a 2008 Copyright Office decision rejecting Internet retransmission of video programming under Section 111 of the Copyright Act, it also reaffirms the “quid pro quo” of compulsory licensing – that one cannot merely retransmit programs over the Internet (or any other medium, for that matter) without acquiescing to federal regulation.  See WPIX, Inc. et al v. ivi, Inc., Case No. 1:10-cv-07415-NRB (S.D.N.Y., Feb. 22, 2011).

The order stems from a preliminary injunction sought by national broadcasting networks and local stations, Major League Baseball and several motion picture studios against a single defendant, ivi, Inc.  ivi’s business consisted of capturing over-the-air broadcast programming in several major markets and retransmitting it over the Internet to ivi subscribers across the country.  

The central issue was whether ivi could lawfully retransmit such programming over the Internet pursuant to a “compulsory license” under Section 111 of the of the Copyright Act (17 U.S.C. § 111).  In a brief but informative history of Section 111, the Court explained that the compulsory license was created to allow the then-nascent cable industry to retransmit over-the-air programming to subscribers in exchange for a statutory license fee paid to the Copyright Office.  That bargain, however, also required cable operators to willingly submit to the FCC’s jurisdiction.  According to the record, ivi refused to adhere to this bargain, instead arguing that its Internet video service was outside the purview of the FCC because it was transmitted over the Internet.  The Court flatly rejected this argument, holding that ivi not only was not a cable system eligible for a license, it could not both benefit from a compulsory license while at the same time avoid obligations under federal law.

In essence, the Court’s decision reinforces the notion that there is, and has always been, a balance between the development of new video technologies and respecting the copyrights of content owners.  Cable operators accomplished this through the Section 111 compulsory license; the Internet has yet to discover a balance of its own. 

As the next broadcast license renewal cycle is about to begin in June (see our post here about that process), the last renewal cycle still has not ended despite the fact that the last renewal application due in that cycle was to have been submitted almost 5 years ago. At the NAB State Leadership Conference held in Washington, DC yesterday, FCC Commissioner Robert McDowell provided statistics about the hundreds of renewals still pending – principally due to indecency complaints against the stations. The FCC will not grant a license renewal application when there is an indecency complaint pending, as the grant of the renewal could preclude the FCC from taking action against the licensee on the complaints filed before the renewal grant. But with indecency enforcement in a holding pattern pending the final resolution of the pending court cases challenging the FCC’s renewal policy (with no immediate end in sight to the uncertainty that surrounds that policy), these renewals are still in limbo. The Commissioner did, however, provide some good news on the indecency front, noting that the Enforcement Bureau had started weeding through all of the pending complaints, dismissing those that were clearly without merit.

The dismissal of indecency complaints that were without merit is a seemingly small, but nevertheless significant, step in weeding out the backlog of renewal applications. The Enforcement Bureau has traditionally not looked deeply into the merits of each of the pending indecency complaints while the Court challenges to the policy were pending, presumably to avoid a waste of resources were the standards to change based on the Court review. But that avoided weeding out some clearly meritless complaints – ones that complained of content that was broadcast during the 10 PM to 6 AM indecency safe harbor, or complaints that were focused on issues that were not prohibited under the FCC’s policy and precedent – such as complaints that really centered on violence, or ones that dealt with innuendo rather than the use of prohibited words or the depiction of prohibited body parts. Up until now, except when there was a sale of a station pending, there was no pressing reason for the FCC to dispose of the complaints. Stations continued to operate, and the pending complaints had little day to day impact.  But, with the renewal cycle soon to begin again, the resolution of these issues takes on some urgency.

Continue Reading As License Renewal Cycle Approaches – Dealing With Last Cycle’s Applications Held Up By Indecency Complaints

At the FCC meeting next week, the Commission will be considering an item dealing with radio stations that serve rural areas, and the ability of licensees to make technical modifications to those stations that would change the communities which they serve.  While, as we wrote last week, most of the attention of broadcasters has centered on the television issues to be considered at the meeting as the Commission is to begin an inquiry on the retransmission consent process.  The rural radio issue poses real concerns for radio operators – especially those contemplating a move of a radio station from a community outside of a metropolitan area to one in a metro.  In the name of protecting service to rural areas, the Commission may well restrict minority groups, specialty programmers, and other new entrants from bringing new services to metropolitan areas – permanently entrenching those companies who currently have major market stations as the only competition in those markets.  A proposal to protect service to rural areas may well have the impact of decreasing diversity in large markets.

In virtually every large market, there is little or no potential to add new channels for FM service both because of interference protections that need to be accorded to stations in the market and because of protections to stations outside of the market but close enough to be short-spaced to any potential station in the metro area.  In some cases, creative engineering has found ways for some of these non-metro stations to be moved into the metropolitan area, or at least close enough to provide some service to those markets.  "Move-in stations" have allowed new entrants, some with specialized programming, to provide service to large cities – when such entrants could never afford the price of an existing in-market station, even if one was for sale.  Even "rim shots", those move-ins that don’t provide full coverage of a metro area, may be very worthwhile for groups with unique formats (religion, Spanish language, and other targeted programming) trying to reach a small audience that is not otherwise going to get service in such markets.   

Continue Reading Restrictions on Moving Radio Stations From Rural to Urban Areas May Be Coming – What’s The Potential Impact?