In three cases released in the last week, the FCC grappled with the issue of when the amount of a fine (or a "forfeiture" as the FCC refers to it) imposed on a broadcaster for a violation of an FCC rule is too much to be sustained.  Clearly, the FCC wants a fine for a violation of its rules to be meaningful, so as to discourage bad behavior.  But in some cases, the fine could be so great as to impact the public service provided by a station – or to even put it out of business.  Thus, the FCC has adopted a test where it will look at the gross revenues of the licensee of the station to see if the licensee can pay the fine.  And these cases make clear that it is the entire gross revenue of the licensee – not just the revenue of radio operations that is considered in this analysis.  And, even for noncommercial or nonprofit broadcasters, these same tests apply.

One case very clearly demonstrates that the FCC is looking at a licensee’s full revenue – not just that revenue available to the broadcast station.  This case involved a school district  that submitted financial information about its noncommercial radio operations in an attempt to reduce a $7000 fine for a late-filed license renewal.  The FCC rejected that ground for reduction (though it did reduce the fine to $5600 based on the applicant’s prior history of compliance), saying that the entire funding of a licensee must be reviewed before a hardship reduction would be granted.  As no information about the district’s revenues was provided, no hardship reduction was in order.  In another case, the FCC looked at the revenues of the licensee (a church).  As these revenues were between $391,000 and $520,000 during a three year period, the FCC determined that a $7000 fine, approximately 1.5% of the licensee’s gross revenues, was not too much.  There, the Commission cited cases where fines of as much as 7.9% of a licensee’s revenues were not deemed excessive. Only in a nonbroadcast case, involving an individual who was found to have been operating an unlicensed radio transmitter on a government frequency was the FCC moved to decrease a proposed fine, reducing it from $10,000 to only $750 upon a finding that the individual had no current source of income from which the fine could be paid.  The moral is that, if you operate a broadcast station, violate the FCC rules and have money, the FCC is going to be looking for a piece of it.  One more reason to assess your operations and make sure that you are operating on the right side of the rules.

In a speech given last week, FCC Commissioner Michael Copps called for a new regime to review the public interest performance of broadcasters – suggesting that license renewal become a more rigorous exercise for radio and television operators.  In his address called "Getting Media Right, A Call to Action", given to the Columbia University School of Journalism, Copps specifically suggested a "Public Value Test" for broadcasters when they file their license renewals.  If the broadcaster passes the test, the broadcaster would get a renewal.  If the broadcaster did not pass – if it does not show that it has "earned" the right to "use the people’s airways" – then the licensee would get a one year probation period to prove that it should keep its license.  If it does not improve, then the license would be taken and given to "someone who will use it to serve the public interest."

So what would this Public Value Test look like?  The Commissioner suggested that the following factors would be reviewed: 

  1. A Meaningful Commitment to News and Public Affairs Programming – an increased commitment to news, local public affairs, election debates and issues oriented programming would be reviewed according to some quantitative benchmarks.
  2. Enhanced Disclosure – requiring broadcasters to provide more information about their programming performance, on the Internet, as the Commissioner believes that information in the public file is "laughable", and also requiring that the FCC review that information at renewal time
  3. Political Advertising Disclosure – requiring more information about the sponsors of political ads
  4. Reflecting Diversity – looking to increase the gender, ethnic and racial ownership of broadcast stations
  5. Community Discovery – requiring that broadcasters be required to, in some formal way, communicate with their communities to determine local programming needs and the interests of various groups within a station’s community
  6. Local and independent programming – requiring that broadcasters provide more local and independent programming instead of "homogenized music and entertainment from huge conglomerates – the Commissioner suggesting 25% of local programming being dedicated to local and independent programs.  More local PSAs too.
  7. Public Safety – requiring that all broadcasters have a plan to address emergencies and be either staffed during all hours of operation or be otherwise able to respond immediately to any local emergency.

 What’s likely to happen to these proposals?

Continue Reading FCC Commissioner Copps Calls For Stricter Broadcast Station License Renewal Standards – Could It Happen?

Applications to participate in the auction of 144 new FM channels are to be filed at the FCC between January 31 and February 10, 2011.  The FCC today released a Public Notice setting out the dates and procedures to be used in the auction.  Upfront payments of the minimum bids for channels in the auction will be due on March 21.  The auction itself will begin on April 27 – a postponement of about a month from the dates originally proposed as the initially scheduled dates could have resulted in the auction running through this year’s NAB Convention, making it difficult for some entities to participate.  We had written about the initial announcement of the proposed auction here.  Note that the list of channels available in the auction has changed slightly, as a few channels originally listed for sale were deleted when it was discovered that they were not vacant or were otherwise not available to be sold.  Thus, the auction will include only 144 channels, not the 147 originally proposed.  The list of open channels is available here, and this list also sets out the minimum bids established for each channel.

To freeze the FCC database so as to allow applicants in the filing window to specify a transmitter site that will be protected from new applications, the FCC will freeze the filing of all applications for minor changes to existing FM stations during the filing window.  Thus, if you need a technical change in an FM station, get that application on file before the January 31-February 10 window.  The FCC Issued a Public Notice setting out the details of the freeze.  After the window, all subsequently filed applications for minor changes in existing stations will need to protect sites specified for the new channels during the window.  The FCC also froze – effective right now – any rulemaking proposal asking for a change in the coordinates assigned to any of the channels to be sold in the auction. 

Continue Reading FCC Announces Filing Window and Minimum Bids for Next Auction for 144 New FM Stations – And a Freeze on FM Minor Change Applications

Yesterday, the House of Representatives passed the CALM Act, directing the Federal Communications Commission to adopt regulations controlling the volume of commercials on television broadcast stations, cable systems, satellite, and other multichannel video programming providers. This bill was passed by the Senate in September.  Once signed by the President, the Federal Communications Commission will be required to adopt a rule to implement the legislation within one year, and the rule is to become effective within one year after its adoption. The FCC rule is to adopt parts of the ATSC A/85 standard, which seeks to target the volume of commercials in digital programming to the volume of dialogue (or other “anchor element”) in the accompanying program. An interesting description of the issues that must be addressed in determining just what is "loud," and for controlling that volume, can be found in a recent Wall Street Journal article (here, subscription may be required). 

Congressional estimates are that the costs of necessary equipment range from a few thousand dollars to $20,000 per device, for an aggregate industry cost of tens of millions of dollars. Congress anticipated that the costs may be burdensome for small cable operators and smaller market television broadcasters, and provided that waivers may be granted for financial hardship for one year renewable terms  The Commission may also grant waivers or exemptions from the rule that it adopts for classes of broadcasters and multichannel video programming distributors under the FCC’s general waiver authority.

Continue Reading Congress Passes CALM Act to Restrict Loud Commercials

A recent FCC decision fining a station $10,000 for having an unattended main studio provides a good explanation of the staffing requirements for the main studio of broadcast stations.  While the fine in this case was evident – FCC inspectors having twice visited the main studio of a station to find no one there, and a representative of the licensee admitting to the FCC that the studio was not regularly manned as the licensee did not know that there was such a requirement – the decision explains the requirements of the FCC’s policies as to main studio staffing.   The Commission explains that the FCC requires "meaningful management and staff presence" at the main studio.  There must be both management and staff employees at the studio on a regular basis.  The decision reminds broadcasters that the management and staff employees need to report to the main studio on a daily basis, use it as their "home base", and spend substantial amounts of time there.  While the employees are not "chained to their desks", they must be at the studio regularly.  

While the decision does not specifically say so, the Commission has, in the past, said that there should be at least one management and one staff employee who use the studio as their principal place of business.  I like to think of it as the place where these employees have their desks, where they stop in every day to look at the pictures of their family that they keep there.  While the employees can go out and sell ads, produce programs, or go to Rotary meetings, while one employee is out of the office, another should be in the office, so that there is always a station employee present during normal business hours. So don’t leave that studio unattended, or you’ll risk the kind of punishment that the FCC issued here. 

The Copyright Office today announced an extension of time for the fling of comments in its inquiry into the possibe extension of Federal Copyright protection to pre-1972 sound recordings.  We provided a details of that proceeding here.  Internet radio operators and other digital music services that play significant numbers of pre-1972 sound recordings (particularly recordings first made in the United States), may want to comment in this proceeding, as the statutory royalty paid to SoundExchange currently does not appear to cover such recordings, though, should the Copyright Office recommend the extension of the law to cover the recordings, and if Congress takes actions to amend the Copyright Act as a result of this suggestion, royalty obligations could be extended to these recordings.  At the request of the RIAA, the Copyright Office has extended the deadline for comment until January 31, 2011.  Reply comments are now due on March 2, 2011.

I conducted a webinar on the FCC’s EEO rules for the Texas Association of Broadcasters on November 30, 2010.  In conducting the webinar, I reminded broadcasters of the many ways that their EEO compliance can be monitored by the FCC – either through EEO random audits, through mid-term EEO Reports on FCC Form 397 (which were filed by Texas TV stations this past April), or through the filings that are made at license renewal time (which comes up in April 2013 for Texas radio, and April 2014 for Texas TV).  In discussing the FCC’s EEO audit process, I mentioned that we were about due for another round of EEO audits from the FCC.  And sure enough, the FCC today gave notice of a new round of audits – though this time limited to Multichannel video programming distributors (MVPDs), principally cable systems.   A list of the systems to be audited in this round of EEO audits can be found in the FCC’s Public Notice about the audit, here.

The PowerPoint presentation from the TAB webinar is available here.  For more detailed information about the FCC’s EEO policies for broadcasters, you can review the Davis Wright Tremaine’s Guide to the Basics of The FCC’s EEO Rules.  For details of the annual EEO public inspection file report, which, by April 1 of each year, stations in Texas need to place in their public inspection files and post on their websites, see our most recent EEO Public Inspection File Report advisory for stations in New England, Georgia, Alabama, Minnesota, Montana and the Dakotas, which have public file reports due to be placed in their public files today. 

The FCC today started an examination of the future of the spectrum currently used by broadcast television, beginning the formal process of implementing the ideas raised in its Broadband Plan of repurposing some of that spectrum for use by wireless broadband technologies. Specifically, the FCC adopted a Notice of Proposed Rulemaking, seeking comment on a number of issues. While the full text of the FCC’s order has not been released, many of the issues for consideration can be gleaned from the comments made at the FCC meeting. In the initial presentation made about the NPRM, it was stated that the principal issues to be addressed in the NPRM were:

  • Allowing new primary allocations in the television spectrum for fixed and mobile wireless users.
  • Providing a framework that would allow two or more broadcast television stations to share a single 6 MHz channel, retaining full must-carry rights for each station, while allowing for the return of spectrum to the FCC to be auctioned for wireless uses
  • Looking at ways to increase the value of VHF television channels (channels 2 through 13) for DTV use, including proposals to allow stations operating on such channels to operate at higher power and to increase performance standards for indoor antennas

Co-primary uses could be important for many TV users, as currently LPTV and TV translator stations are secondary services, implying that such services might be preempted by new primary wireless users.  The enhancement of the VHF spectrum would be important to any attempt to dedicate significant spectrum to wireless broadband without substantial disruption to over-the-air television, as without the use of those channels (which are underutilized, particularly in urban markets, as they have proved to be very susceptible to interference and do not provide as broad coverage as VHF analog service did), the ability to repack the TV spectrum to clear portions of the spectrum for wireless would be very restricted in the major metropolitan areas where any spectrum crunch is likely to be most acute. 

As FCC Chairman Julius Genachowski stated, this was an efficient presentation on an important issue. The explanation of the proposals took far less time than each of the Commissioner’s individual statements, all of which raised important issues that will be addressed in this proceeding.   The FCC public notice about this proceeding is available by clicking here.  But an examination of each of the Commissioner’s statements (which are available through the links on their names, below) is important to understand the scope of the issues to be addressed by the FCC. 

Continue Reading FCC Adopts Notice of Proposed Rulemaking Looking to Reallocate Some TV Spectrum to Wireless Broadband

Many station owners think they can adopt any name, positioning statement or slogan for their station so long as no one else in the market is using the exact same name or slogan.  That thinking is often incorrect, and can be very costly if a name is adopted and has to be changed later because it infringes on someone else’s intellectual property rights.  Nicknames and slogans used in station advertising or promotion are controlled by trademark law.  Even a station’s call sign, which must be approved by the FCC, cannot be too similar to an in-market competitor’s call sign without running afoul of trademark law.  You may have read about recent litigation concerning the station nicknames "Bob" and "Bob FM."  In that case, there is apparent contour overlap between two separately owned stations using the same name.  But trademark law can come into play even when stations are not in the same market and do not have overlapping contours.

Trademark rights can be established in one of two ways.  The first station to use a name or slogan can establish priority within that station’s geographic market or contour.  Alternatively, one can file an application for registration of a station name or slogan at the US Patent and Trademark Office (the "PTO"), and thereby obtain nationwide rights in that name or slogan, if no one else had prior use or a prior application.  Since trademark applications can be filed on an intent-to-use basis, a station can establish priority for a mark it is not yet using.  This is why a trademark search is so important prior to using a mark. 

Continue Reading Looking for a New Positioning Statement, Slogan or Name for Your Station? – Consult a Trademark Attorney First