As summarized by Brian Hurh on our sister site broadbandlawadvisor.com, yesterday the FCC’s Consumer and Government Affairs Bureau released a Public Notice seeking comments to refresh the record on closed captioning that was last addressed in the Commission’s 2005 and 2008 Closed Captioning NPRMs. As recognized by the Commission, much has happened since those proceedings, both technologically and regulatory. As directed by the recently enacted 21st Century Communications and Video Accessibility Act (which we blogged about earlier here, and discussed in DWT’s Advisory here), the FCC’s rules must be revised to extend closed captioning to the Internet within 6 months of the Advisory Committee’s report on closed captioning, which must be released by October 2011. As we noted earlier, the Advisory Committee must be formed by December 8, and hold its first meeting by April 2011.

The revised closed captioning rules will necessarily require a new closed captioning rule making proceeding, and presumably, the Commission is gathering information now to determine what the forthcoming rule making proceeding will look like. Some of the issues that the Commission seeks to refresh include:

  • Whether to establish quality standards for non-technical aspects of closed captioning, including whether different quality standards should apply to live and pre-recorded programming;
  • The need for mechanisms and procedures over and above the "pass through" rule, and whether there should be a per violation forfeiture amount for non-compliance;
  • Whether the FCC should revise its rules to disallow the use of electronic newsroom technique for certain DMAs;
  • How the section 79.1(d)(12) exemption for channels producing revenues of less than $3 million should apply to digital mulitcast, specifically, the ramifications of treating each multicast stream as a separate channel for purposes of the exemption.

Comments are due November 24.  Reply comments are due December 9.  Comments can be submitted to the FCC in paper, or electronically via the FCC’s Electronic Comment Filing System. 

The NAB Radio Board today voted to adopt a Terms Sheet to offer to the musicFirst Coalition which, if agreed to by musicFirst and adopted by Congress, will settle the contentious issue of whether to impose a sound recording performance royalty (the "performance tax") on over-the-air broadcasters.  If adopted, that will mean that broadcasters in the United States, for the first time, will pay a royalty to artists and record labels, in addition to the royalties paid to ASCAP, BMI and SESAC that go to the composers of the music.  What does the Term Sheet provide, and what will this mean for broadcasters, webcasters and others who pay music royalties?

The Term Sheet sets out a number of points, including the following:

  • A 1% of gross revenue sound recording royalty to be paid to SoundExchange
  • A phase-in period for the 1% royalty, that will be tied to the number of mobile phones that contain an FM chip.  A royalty of one-quarter of one percent would take effect immediately upon the effective date of the legislation adopting it.  The royalty would rise in proportion to the number of mobile phones with enabled FM chips.  Once the percentage of phones with FM chips reached 75%, the full royalty would take effect.
  • The 1% royalty could only be changed by Congressional action.
  • The royalty would be lower for noncommercial stations and stations with less than $1.25 million in revenue – from a flat $5000 for stations making between $500,000 and $1.25 million in revenue down to $100 for those making less than $50,000 per year.
  • Broadcasters would also get a reduction in their streaming rates – but only when FM chips in mobile phones exceed 50% penetration.  The reduction would be tied to the rates paid by "pureplay webcasters" (see our summary of the Pureplay webcasters deal here), but would be set at a level significantly higher than pureplay webcasters, rising from $.001775 in 2011 (if FM chips were quickly deployed) to $.0021575.
  • Future streaming royalties would not be set by the Copyright Royalty Board but by a legislatively ordered rate court – presumably a US District Court similar to that which hears royalty disputes for ASCAP and BMI.
  • An acknowledgment by AFTRA that broadcasters can stream their signal on the Internet in their entirety – apparently agreeing to relieve broadcasters from any liability for the additional amounts due to union artists when commercials featuring union talent are streamed
  • An agreement that broadcasters can directly license music from artists and reduce their  liability for the new royalty by the percentage of music that the broadcasters is able to directly license
  • Agreements to "fix" issues in Sections 112 and 114 of the Copyright Act in making the provisions of these laws regarding ephemeral copies and the performance complement consistent with the waivers that major record labels gave to broadcasters when the NAB reached its settlement with SoundExchange on streaming royalties last year.  See our post here on the provisions of those waivers.
  • musicFirst would need to acknowledge the promotional effect of radio in promoting new music, and would need to work with radio in attempting to secure legislation mandating the FM chip in mobile phones.

[Clarification – 10/26/2010 – Upon a close reading of the Terms Sheet, it looks like the phase in of the 1% royalty and the delay in the streaming discount only kick in if Congress does not mandate active FM chips in cell phones.  If the mandate is enacted, then the full 1% royalty and streaming discount is effective immediately. Given the opposition of much of the wireless industry to a mandated FM chip, this may represent a recognition that the legislation requiring the active FM chip will not be enacted in the near future]

What does this all mean?

Continue Reading NAB Radio Board Adopts Proposal for Settlement of Performance Tax Issue – Where Do We Go From Here?

So what Washington issues should be keeping broadcasters up at night? At the Connecticut Broadcasters Association Annual Convention in Hartford on October 14, and the Kansas Association of Broadcasters Annual Convention in Wichita on October 18, I presented my Top 10 list of issues for broadcasters – dealing with issues both practical and policy-based.  The PowerPoint presentation from Connecticut is available here, and that from Kansas is available here.   At these sessions, we discussed a variety of legal issues of importance to the industry, including the need for broadcasters to consider the upcoming license renewal cycle.   As we wrote a few weeks ago, that cycle begins with stations in Virginia, Maryland, DC and West Virginia in June 2011, and will continue across the country for the next few years, with radio stations in Kansas filing renewals in February 2013, and radio stations in Connecticut filing on December 1, 2013.   Television stations in each state will have applications due a year later. To be sure that stations are prepared for the renewal, they should be checking their public inspection files to make sure that they are complete, and should be preparing quarterly programs-issues lists detailing the programming that they broadcast to serve the public interest. A copy of Davis Wright Tremaine’s most recent advisory on the Quarterly issues programs list is available here. The most recent Quarterly Programs Issues List should have, by October 10, have been placed in the public files of all stations around the country, covering issue-responsive programming that was broadcast in the last quarter.  The DWT Advisory covering all of the other materials that should be in the public inspection file, and the retention period for that content, is availablehere.

We also discussed compliance with the FCC’s EEO rules, and how important such compliance is – and how each station’s EEO performance will be evaluated at license renewal time or if the station is randomly audited in the FCC’s EEO random audit process. We wrote about some of the complaints of certain public interest organizations about how they felt that the FCC had not been aggressive enough in EEO enforcement, here. With the scrutiny given to this issue, broadcasters should be observing their obligations carefully. DWT’s advisory on EEO compliance is available here, and our most recent reminder on the annual public inspection file reports for broadcasters is available here.  A PowerPoint presentation from a seminar that I just completed for the Washington and Oregon Broadcasters Associations will be posted on our blog shortly, which will highlight some of these EEO obligations. 

Continue Reading Top Ten Legal Issues to Keep Broadcasters Awake At Night – Presentations to Connecticut and Kansas Broadcasters Associations

My station received a cease and desist letter for a third party political ad.  What should we do?  This is a question we hear more than ever these days from both broadcasters and cable operators.  As we previously advised, this is not unexpected following the Supreme Court’s decision in Citizens United, which allowed third party money to be used freely for political advertising on behalf of candidates for federal office.

Of course, if the ad is a "use," meaning that it contains the recognizable voice or image of the candidate sponsoring the ad, Section 315 of the Communications Act provides absolute immunity to broadcasters and cable operators for anything said in the ad.  But most of the cease and desist letters relate to third party ads attacking candidates that are not "uses" exempt from censorship under Section 315.  (The purely negative use of a candidate’s voice or image is not a protected "use.")

Continue Reading What to Do With Cease and Desist Letters About Political Ads

FCC Chairman Julius Genachowski announced today that the FCC is ready to move forward with preparations for incentive auctions in anticipation of receiving Congressional authority for such auctions at some point in the future.  In a speech at the Spectrum Summit held today at the FCC in Washington, DC, Genachowski invoked President Eisenhower, FDR, and the transcontinental railroad, among other historical figures and events, to emphasize his belief that America is at a critical time in its history and that ensuring a steady flow of spectrum for wireless use in the next five to twenty years will be crucial to the growth and prosperity of the United States of America.  This is potentially welcome news for wireless carriers eager for new spectrum, but also a clear warning to television broadcasters that as far as the FCC is concerned it is not a matter of if, but rather when, the FCC will have the authority to conduct incentive auctions to facilitate the recapture of television spectrum and the repacking of the television channels. 

Since the release of the National Broadband Plan in March, which advocated the reclamation and re-purposing of 120 MHz of spectrum currently allocated for free over-the-air broadcast television, the FCC has quietly proceeded to meet with broadcasters and prepare for the possibility of incentive auctions.  Now, following on the heels of the recent TV White Spaces order, which we wrote about recently here and here, Genachowski has announced that the Commission will consider a Notice of Proposed Rule Making at its November 30th open meeting "that would lay essential groundwork for implementing incentive auctions quickly should Congress act."  According to the Chairman’s speech, the forthcoming item will explore a licensing framework that would allow stations to "voluntarily" share channels and examine new ways to improve the digital television reception of VHF channels in hopes of making that spectrum more attractive as a home for relocated television stations. This last issue is particularly interesting, given that the Engineering Forum held by the Commission in June explicitly explored the issue of improving VHF reception and found that there was little or no way to improve the reception of digital stations operating on VHF channels.  But the Commission will have to find someplace to move broadcast stations, and it will undoubtedly explore all options in the effort to meet the challenge of freeing up spectrum. 

At a recent seminar held by the Federal Communications Bar Association, an economist from the FCC described how the process would work.  Essentially, broadcasters would make a bid for what they would accept to do one or more of the following (i.e. "how much would it take before you’d…"):  1.) share a channel with another broadcast station, 2.) move to a VHF channel, or 3.) cease broadcasting altogether.  Then, new entrants would make offers as to what they would bid for new spectrum.  The Commission would compare and reconcile the two elements, consummate the transactions, and then repack the television spectrum to accommodate the amount and location of the new spectrum sold.  This is a grossly simplified version of what the FCC, auction experts, and economists anticipate the incentive auctions will look like, but it was clear that the FCC has given incentive auctions a lot of thought and is eager for the opportunity to put the theory into practice.  It will be interesting to finally have the FCC put this theory on paper and present it for public comment in the forthcoming NPRM.  It will also be interesting to see how the FCC will conduct a rule making in the abstract, as it is almost guaranteed to not have any statutory authority for the type of auctions it will be seeking to draft regulations to govern. 

The Commission’s recent Notice of Proposed Rule Making proposing a framework and time line for the transition of Low Power Television stations to digital operations — which we wrote about last month here — was published in the Federal Register today setting December 17, 2010 as the deadline for Comments and January 18, 2011 as the deadline for Reply Comments.  Interested parties should start preparing their comments now.  One continuing issue commenters should be aware of is the possibility of a television spectrum incentive auction or some other reclamation of television spectrum.  In seeking comment on the timing of the transition of LPTV stations to digital, the Commission has asked whether it makes sense for LPTVs to transition sooner rather than later and possibly face the need to reshuffle if the spectrum is compressed or otherwise reconfigured in the future, or alternatively, if LPTVs wait until the spectrum is settled before a DTV transition is mandated.  Comments on that issue and any others responsive to the Commission’s NPRM are welcomed from all interested parties.  Comments can be filed in paper with the Commission or electronically through the ECFS filing system.  The proceeding has been designated as MB Docket No. 03-185.

The NAB Radio Show in Washington two weeks ago was a upbeat reflection of the present state of the broadcast industry.  But sandwiched around that conference, in the last three weeks, I have spoken at three digital media conferences – and as someone who has grown up on over-the-air radio, and based a career on representing radio stations, the discussions at these conferences raised many questions about the future of the radio industry. At the Radio and Internet Newsletter (RAIN) Summit East in DC, prior to the NAB Radio Show, I gave a summary of the royalty issues facing Internet Radio operators. At the Future of Music Policy Summit in DC the next week, I spoke on a panel on the Future of Radio. And at the Digital Music Forum West in Los Angeles last week, I moderated a panel on music licensing issue for digital media companies. At each of these conferences, the focus was on the digital media, not on over-the-air broadcasting, and many times the question was raised as to whether traditional radio was still relevant in the digital age. I’m not sure how many times I was asked, when I told someone that I am a lawyer who represents radio stations, what I plan to do next when my clients are extinct? Even in media-related industries, many seem to regard radio broadcasters as old-school – a throw back to some other entertainment era. Yet, what surprised me was how these same people who questioned the relevance of radio were all able to talk about what songs were or were not being played on the local rock station, or about the crazy thing some local DJ said that morning and the contests running on radio stations in their market, or about the story on NPR that kept them in their car seats when they were sitting in their driveway at home the night before.

At each of these conferences, in listening to the discussions of the issues facing all the new media (like how to make money), the dark view of radio seemed overblown.  Radio still seems to be a vital medium, especially if it can emphasize the advantages that it has. Harnessing the power of radio with digital media creates platforms that neither has on its own. In many ways radio, of all the traditional media, is best able to use its place in the media landscape to expand in the digital world. Radio has always excelled in reaching niche audiences, in much the same way that the Internet now does. By playing to its strengths, whether that be music, news, talk or sports, or some combination thereof, radio can expand its connection and provide broader and deeper services to its listeners, and serve its audiences like never before.  And all the digital media companies seem to recognize this potential, but seem to be discounting radio’s ability to capitalize on its advantages. 

Continue Reading Reflections on the State of Radio – A Month of Discussions at The Radio Show, State Broadcasters Meetings and Digital Media Conferences

In the waning days before the mid-term election, we have received many questions about the applicability of the political broadcasting rules to state and local candidates.  In particular, we have seen a number of letters from attorneys representing candidates who are running for state and local offices (everything from Governor to county commissioner or school board representative), who claim that an attack by an opposing candidate is unfounded and that a broadcast station must pull that ad from the air.  Just as is the case with Federal candidates, ads by state candidates cannot be censored by a station.  Thus, except in certain very unusual situations (where the language of the ad would violate some Federal criminal statute, e.g. if it is obscene), a station must air the ad as it was created.  It cannot be rejected because the station disagrees with the content or the tone, and it cannot be pulled even if the opposing candidate believes it to be defamatory.  Because the station cannot censor a candidate’s ad, they have no liability for the content of the ad, i.e. they cannot be held responsible for any defamatory content that it may contain, even if they are on notice of that content.  They cannot censor an ad by a candidate or a candidate’s authorized campaign committee – whether that candidate is running for a Federal, state or local office.

Note that, as we have written many times, this is in contrast to those situations where a candidate complains about an attack ad sponsored by a non-candidate group.  In those cases, the station does have the option of whether or not to run the ad (the no censorship provisions of Section 315 of the Communications Act do not apply).  Thus, if the station is on notice that there is potentially defamatory content in an ad, it must do some investigation of that ad, and make an informed decision about whether or not to allow the ad to continue to run.  If it does not investigate, and continues to run an ad that is defamatory after receiving notice of that fact, in some extreme cases, it could face liability for that defamatory content.

Continue Reading Political Broadcasting Reminder – State and Local Candidates Subject to Lowest Unit Charge, No Censorship and Equal Opportunities Rules

Dave Oxenford this week conducted a seminar on legal issues facing broadcasters in their digital media efforts.  The seminar was organized by the Michigan Association of Broadcasters, and originated before a group of broadcasters in Lansing, but was webcast live to broadcasters in ten other states.  Dave addressed a variety of legal issues for broadcasters in connection with their website operations and other digital media platforms.  These issues included a discussion of service marks and copyrights, employment matters, music on websites, the use of social media, privacy, and sponsorship disclosure.  The slides used in the Lansing presentation are available here.    During the seminar, Dave also mentioned that stations with websites featuring user-generated content, to help insulate themselves from copyright infringement that might occur in the content posted to their website by their audience, should take advantage of the registration with the Copyright Office that may provide safe harbor protection if a station follows the rules and takes down offending content when identified by a copyright holder.  The Copyright Office instructions for registration can be found here.   

One of the most common issues that arise with radio station websites is the streaming of their programming.  In August, Dave gave a presentation to the Texas Association of Broadcasters providing  a step-by-step guide to streaming issues, with a summary of the royalty rates paid by different types of streaming companies.  That summary to Internet Radio issues is available here.  Additional information about use of music on the Internet can be found in Davis Wright Tremaine’s Guide to The Basics of Music Licensing in a Digital Age.   Dave also presented this seminar at the Connecticut Broadcasters Association’s Annual Convention in Hartford on October 14.

Continue Reading David Oxenford Conducts Webinar for State Broadcast Associations on Legal Issues in the Digital Media World – Including a Discussion of Ephemeral Copies of Sound Recordings

Last week, the Department of Commerce’s Internet Policy Task Force asked for comments on the relationship between the protection of copyrighted content on the Internet and the effect of such protections on technology innovation and the expectations of consumers.  The purpose of the inquiry is to develop a report to be circulated among the various government departments that have power over the enforcement of copyrights and the development of rules and regulations that deal with copyrighted materials – to essentially develop government policy in this area.  While the request for comments dwell on the concerns about copyright infringement that are raised by many Internet applications, the proceeding will obviously be controversial among media companies.  Many of these companies are concerned about the unauthorized use of their content on various websites, while other media companies (or divisions of the same media companies who are concerned about the unauthorized use of content) are concerned about too tight restrictions on the use of copyrighted content and how that will impact various websites, especially those that feature user-generated content.

As we have written before, the Digital Millennium Copyright Act allows Internet companies to allow users to post material on their websites, without fear of liability, if they take certain precautions – including adopting terms of use warning users that they need to observe the intellectual property rights of others, not otherwise encouraging infringing uses, registering with the Copyright Office to provide a contact person at the website operator that a copyright owner can contact if they believe that their content is being used improperly, and taking steps to take down improper content if the website operator is notified of the infringing use.    This Commerce Department’s notice asks if this "safe harbor" provision has served the public interest, or if adjustments to this regime should be made.  Obviously, many websites that have grown businesses based on user generated content (e.g. many of the social networking and video-sharing sites) and will be very concerned with a proposal to alter their safe harbor and require them to take on a greater burden of reviewing content for potential copyright violations, while many content owners, who have complained about the inability to monitor all of these sites, may be looking for these reforms.   Obviously, there will be conflicting views on these proposals.

Continue Reading Department of Commerce Seeks Comments on The Relationship of Protecting Copyrighted Content and Innovation in the Internet Economy