The Commission has announced the next in its series of media ownership workshops, this one to address financial issues facing the media industry.  The workshop, part of the Commission’s 2010 quadrennial review of its ownership rules, will be held on January 12, 2010 at the FCC, and will address, in the FCC’s words:  "the current financial and economic conditions and marketplace factors affecting the media industry and how the FCC should take these into account as it conducts its review process."  While the Commission has not identified the forum participants, today’s Public Notice states that the session will consist of two panels, one to hear from smaller broadcasters in smaller markets, as well as the financial institutions that serve them, and the second to address larger broadcasters in larger markets and the institutions that serve the larger broadcasters.

Given the seemingly increasing pressures on the broadcast industry, it would seem critical that broadcasters actively participate in both this workshop and the Commission’s 2010 review of its ownership rules to ensure that the FCC has an accurate picture of the state of the media landscape as it reviews its ownership rules.  This forum, and indeed the rule making proceeding as a whole, is meant to examine whether and how the FCC’s media ownership rules affect the financial health of broadcasters, the consideration that lending institutions give to the rules when making funding determinations, and how to consider the financial conditions when setting Commission policy in this area.  A copy of today’s Public Notice announcing the upcoming forum can be found here. 

On December 1, 2009,  FTC revised Guidelines went into effect updating policies dealing with advertising using testimonials and endorsements, specifically affecting celebrity endorsements and sponsorship disclosure.  These revised guidelines directly impact the established practices of broadcasters and new media companies.  These revised endorsement and testimonial guidelines effectively ban the old standard “results not typical” disclaimer so commonly in use in connection with a great deal of testimonial advertising, confirm independent liability for the “endorser” (including celebrities) for false product or service claims, and expand and clarify the need for disclosure of “material connections”, that is consideration (money and other “freebies”) received by new media companies in connection with reviews or other online coverage of products or services.  It is vital that media companies, in particular new media, understand the key provisions of these guidelines to make sure that they don’t become a target of any FTC enforcement action.  The FTC has indicated that for now at least, its focus will be on enforcement in the new media world (bloggers, social media, viral campaigns) and other “non-traditional” advertising (celebrity guests on news and entertainment shows, endorsements by media personnel such as on-air DJ’s).

Like all FTC Guidance concerning advertising, the revised guidelines are specific regulations, but instead they set out standards (in essence a safe harbor) that outline how the FTC will review advertising to determine if it is “false and deceptive” or otherwise misleading to the consumer in violation of Section 5 of the FTC Act.  The revised guidelines provide specific examples as to how they will apply to insure sufficient disclosure so that the listener has all the background necessary to be able to evaluate the strength of the endorsement for him or herself.  For broadcast advertising, the new guidelines make clear that endorsers can themselves be liable for misleading statements made during a product pitch.  So a radio announcer paid to try a diet plan or some other product and to report about its results on the air needs to be sure not only that his statements are truthful, but that the “results” claimed are in line with what the advertiser can actually prove for the product through clinical study and research.  The radio pitchman cannot turn a blind eye to claims that are inherently incredible.  In the past, a simple disclosure that "your results may vary" or "these results are not necessarily typical" was sufficient.  Today, that disclaimer is no longer enough.  Instead, the new guidelines state that any testimonial about the results of using a product be accompanied with a disclosure of the results that a typical user can expect to get from the product.  So the announcer must be informed as to what results can be expected by the typical user, and that these results are objectively verifiable, so that the proper disclosure can be made.  As the announcer (or the station) can now be liable for statements made in such testimonials, stations should take care to be prepared to make the required disclosures. 

Continue Reading New FTC Guidelines on Endorsements and Sponsorship Disclosure – Broadcasters and New Media Companies Beware

The new FCC Form 323 Ownership Report is now available in the FCC’s electronic filing system.  Thus, after many delays, licensees can prepare and file the form that is due from licensees of commercial broadcast stations by January 11.  The Commission also reminded broadcasters that it will be conducting a Tutorial on the new Form on Wednesday, December 9 at 2 PM Eastern Time which can be accessed through the FCC’s website. 

We last wrote here about the FCC’s announcement of the impending availability of the form, and the decision to allow broadcasters to obtain temporary FCC Registration Numbers (FRNs) for principals from whom Social Security Numbers cannot be obtained by the January 11 filing deadline.  Thus, with the form in the database, and the Social Security Number issue temporarily resolved, broadcasters need to be preparing these forms and filing them by January 11.  The FCC has promised vigilance in enforcing this requirement – so be ready for the upcoming deadline.

Only a day after asking over-the-air television broadcasters to justify their existence and why some or all of their spectrum should not be reclaimed by the FCC to be used for wireless broadband (and giving interested parties only until December 21 to not only justify their existence, but also to come up with technical means by which the spectrum could be more efficiently used, business plans for their future use of the spectrum, and a survey of the competing needs for that spectrum – see more detail below), the FCC issued another request for comments, asking how current video devices could be made more accommodating to Internet video.  These comments, also due on December 21, seemingly bring consumer electronics manufacturers and multi-channel video providers into the FCC’s rapidly-expanding evaluation of the video industry and its future.  As the comments filed in connection with these two requests will no doubt lead to proposals to be included in the FCC’s February report to Congress on strategies for broadband deployment, these quickly prepared filings could help determine the future of the video industry for the foreseeable future.

The new proceeding, looking for a "plug and play" model of consumer video devices that can access conventional television delivery systems and the Internet, starts with the statement that Internet video is "tremendously popular" and a prediction that, as it expands, new applications for such video will be found.  The Commission says that it sees Internet video as one way of spurring broadband adoption.  How to best promote the plug and play model for consumer video devices that can access the Internet is the crux of the comments that the FCC seeks.  The Commission first asks whether there are currently video devices that allow televisions to view not only the programming provided by multichannel video providers (e.g. cable and satellite), but also Internet video that may be available through an Internet service provided by that same MVPD, stating that it was not aware of such devices.  Next, the Commission asks what would be necessary to develop such devices, and what rules the Commission could adopt to possibly require capabilities in set top boxes and other devices to provide this universal access to video programming of all sorts.  The third area of inquiry from the Commission asks about standards that could be adopted to make Internet video and video from other sources interact with all other home audio and video equipment, including DVRs, to bring about the "digital living room."  And finally the Commission asks what stands in the way of plug and play devices that will work with all networks by which video is delivered.

Continue Reading In Less Than 3 Weeks, Let’s Provide Detailed Analysis on Fundamentally Changing the Television Industry – Comments Sought on Encouraging Internet Video in Addition to Repurposing TV Spectrum

The new FCC Form 323 Ownership Report is expected to be available in the FCC’s CDBS electronic filing database by Wednesday, December 9, according to a Public Notice released by the FCC yesterday – so that commercial broadcasters should have a month to prepare the form in time for the January 11 filing deadline.  As we’ve written before, the form and filing deadline have been much delayed as the Commission struggled to work out kinks in its electronic filing process.  In the Public Notice issued yesterday, the Commission also announced that stations can file their ownership reports on the new form even if each attributable owner of the company has not yet received an FCC Registration Number (an "FRN"), which requires the provision of a Social Security Number (for individuals) or a Taxpayer ID Number (for business entities).  Seemingly, the FCC has recognized that there has been much consternation among shareholders, officers and directors of broadcast companies about providing their Social Security Numbers to companies in which they have interests to in turn be provided to the FCC so that an FRN can be obtained.  So that licensees can have more time to deal with these issues, the provision for a temporary FRN has been adopted.  The FCC Public Notice also indicates that the FCC will host a workshop on December 9 at 2 PM Eastern time to help the public with issues as to the filing of this report.

The Social Security Number issue has perhaps created the most concern about this new form.  While the allowance for the temporary FRN will take some immediate pressure off broadcasters, these temporary numbers should not be viewed as a permanent reprieve from obtaining FRNs from all attributable owners.  The Commission in the revised Questions and Answers on the Form 323 makes clear, the temporary FRN for those holders of attributable interests in broadcast stations is a temporary measure.  Licensees are cautioned that they should use their best efforts to obtain these numbers (or to have the attributable owners, on their own, register for the FRN).  Even if that cannot be accomplished by the January 11 deadline, the licensee has an obligation to keep trying and to amend its filing when it finally obtains the required information as to the permanent FRN of each person or entity holding an attributable interest in the company .  The FCC seems to leave the door open to enforcement actions if a licensee does not obtain that information in a reasonable (though not defined) period of time.

Continue Reading New Form 323 Ownership Report Expected to be Ready This Week – And FCC Provides for Temporary FRN Without Social Security Number

The 2010 political broadcasting season is almost upon us, with Texas leading the way.  With the first 2010 primaries on March 2, candidates in Texas are already in windows during which they need to file the paperwork to qualify for a place on the primary ballot.  Once they qualify for that ballot spot, they become "legally qualified candidates" in the eyes of the FCC, triggering reasonable access (for Federal candidates) and equal opportunities requirements.  Soon after, broadcast stations in Texas need to start according lowest unit rates to candidates (Federal, state and local) in the primary – such rates to start on January 16.  To help broadcasters prepare for the primary and the rest of the election season, David Oxenford and Bobby Baker, the head of the FCC’s Office of Political Programming, conducted a webinar for the Texas Association of Broadcasters on December 2, 2009, originating from the TAB offices in Austin.  The PowerPoint slides used in the presentation is available here.  The Davis Wright Tremaine Political Broadcasting Guide that forms that basis of the TAB’s political guide can be found here.

Texas will have an unusually active political season, with a primary election for Governor, where the State’s sitting Governor’s re-election is being challenged in his own party by one of the state’s US Senators.  Races for the Texas State legislature will also likely be a hotbed of activity as the state will be electing the legislators who preside over Congressional redistricting after the 2010 census – a process that was particularly controversial in Texas after the last census.  Given the likely level of activity, broadcasters in Texas need to immediately start planning for the 2010 election and the obligations that it imposes on broadcasters.   And broadcasters in the rest of the country should similarly be preparing, as these same issues will be arising for them very soon, and advertising sold now could well have an impact on their political rates later in 2010 (see information about the webinar that David and Bobby conducted for 13 other state broadcast associations here). 

The FCC has wasted no time in pressing ahead with the discussion of whether the spectrum currently used by local broadcast television stations is being put to the greatest use and whether it should be "re-purposed" for the so-called broadband effort.  This afternoon, the FCC issued a Public Notice soliciting comments by December 21st regarding the demand for spectrum, the factors the FCC should review when considering the re-purposing of TV spectrum, and potential approaches to increasing spectrum availability and efficiency.  Although the Public Notice asks broad, far-ranging policy questions, the comment date for the "specific data" that the Commission seeks to obtain from interested parties is less than three weeks away, which hardly seems adequate for a proper, informed discussion on an issue of this magnitude.  The specific topics of discussion identified by the Commission and details about how to submit comments can be found in the Commission’s Notice. 

Among the issues broadcasters will undoubtedly address (and indeed have already begun to address in other forums) is the fact that the forthcoming spectrum crisis — which seems to have become a given in certain circles — has not been well substantiated.  Related to that is the notion that broadcasters already have the ability to lease any "excess" digital television spectrum and use the capacity to provide broadband access, mobile services, or virtually anything else under the sun.  Stations will likely suggest that this mechanism will allow the wireless broadband market to tap this spectrum without further government intervention, if and when the demands of the wireless market require it.  Other issues sure to be of discussion is the value of local broadcast stations, the usefulness of free over-the-air broadcasting, the future of broadcast journalism, and the service stations provide to the public, just to name a few.   It will be challenging, to say the least, for commenters to quantify and address any of these significant questions within just 19 days. 

Having just completed the DTV transition six months ago, it seems that broadcasters have barely been given a chance to operate on their digital spectrum and to explore the options afforded by the transition in terms of high-definition, multicasting, data casting, broadband access, and mobile TV, just to name a few, before having to rush to defend its use, or lack thereof.  The Commission’s rush to solicit comments is clearly guided by its need to develop a broadband plan early next year, however, the issues raised by today’s Public Notice are among the most significant it has ever attempted to address, certainly with respect to broadcasting and mass media.  It goes without saying, but there is much, much more to be said about these issues, so stay tuned.   And see our earlier blog entries (including here) for further thoughts on the matter. 

A year after the FCC issued its order adopting the "White Spaces" proposals (about which we wrote here and here), to allow wireless devices to operate in unused portions of the television band on a non-interference basis, the FCC took its first steps toward actual implementation of that order by issuing a request for Proposals from entities wishing to be considered for the position of Database Manager.  This Database Manager will play a very important role in the implementation of the White Spaces order, as it will identify all of the current operators in the TV band that the new wireless devices will have to protect while operating in a given region.  In its White Spaces order, the FCC concluded that not all of these devices could, on their own, adequately sense where there were TV stations or other spectrum users that needed to be protected.  Thus, the White Spaces devices need to be able to communicate with the database to be maintained by the Manager, to make sure that they are operating on clear portions of the television spectrum.  White Spaces devices need to protect not only full power TV stations, but also Low Power TV stations and TV translators, as well as the path between a full-power TV station and any translator that rebroadcasts that station.  Cable system headends which pick up TV signals must also be protected, as well as land mobile users who use portions of the TV band.  Certain regular users of wireless microphones also need to be protected – so the database will need to be very detailed to give the White Spaces devices access to information about all of these existing users who must be protected.

In its Request for Proposal, the FCC has asked that proposed Database Managers provide extensive information by the January 4, 2010 filing deadline.  Information requested includes the following:

1. The entity must demonstrate that it possesses sufficient technical expertise to administer a TV band database. It must demonstrate that it has a viable business plan to operate a database for the five-year term the rules. To the extent that the proponent will rely on fees from registrations or queries, the proposal should describe the fee collection process.

2. The entity must describe in detail the scope of the database functions that it intends to perform, such as managing a data repository, performing calculations to determine available channels, and/or registering fixed unlicensed devices and licensed services not listed in the Commission’s databases, or how it will have functions performed in a secure and reliable manner by another entity. The entity must also describe how data will be synchronized between multiple databases if multiple databases are authorized and how quickly this synchronization of data will be accomplished.

3. The entity must provide diagrams showing the architecture of the database system and a detailed description of how each function operates and how each function interacts with the other functions.

4. If the entity will not be performing all database functions, it must provide information on the entities operating other functions and the business relationship between itself and these other entities. In particular, it must address how the Commission can ensure that all of the requirements for TV band database administrators in the rules are satisfied when database functions are divided among multiple entities, including a description of how data will be transferred among these various related entities and other databases if multiple databases are authorized and the expected schedule of such data transfers (e.g. real-time, once an hour, etc.)

5.  The entity must describe the methods that will be used by TV band devices to communicate with the database and the procedures, if any, that it plans to use to verify that a device can properly communicate with the database. It must include a description of the security methods that will be used to ensure that unauthorized parties can not access or alter the database or otherwise corrupt the operation of the database system in performing its intended functions. In addition, the entity should describe whether and how security methods will be used to verify that Mode I personal/portable devices that rely on another device for their geographic location information have received equipment authorization, interfaces, protocols) that will be used by TV band devices to communicate with the database and the procedures, if any, that it plans to use to verify that a device can properly communicate with the database. It must include a description of the security methods that will be used to ensure that unauthorized parties can not access or alter the database or otherwise corrupt the operation of the database system in performing its intended functions. In addition, the entity should describe whether and how security methods will be used to verify that Mode I personal/portable devices that rely on another device for their geographic location information have received equipment authorization.

Continue Reading FCC Starts Next Step of TV White Spaces Deployment – Issues RFP for Database Manager to Track Interference Concerns

The FCC issued a Public Notice today, extending the date for the filing of the new Form 323 Biennial Ownership Report until January 11, 2010.  As stated in the Notice, the Commission has yet to finish testing the new form in its electronic filing system, so it is not yet ready to be used.  Given the delay (as we wrote on Friday, the Commission had hoped to release the form for use last week), the Commission’s Media Bureau decided to extend the filing date.  However, as we discussed in in more detail in our post last week, the substantive issues apparently have not changed.  Commercial broadcast station licensees will still need to have FRN numbers for all of their attributable owners – which can be obtained now as the FCC electronic registration process for the FRN is separate and apart from the Form 323 itself (this is the process that will involve submitting the social security number of all of your attributable owners).  So licensees should start that process now – as these forms will be complicated for many licensees to complete the first time around, and should not be something left to tackle in the first few days of the New Year right before the new due date.  

See last Friday’s post for more information, and links to our memo on the new Form and the FCC’s Frequently Asked Questions page. 

The FCC last week did an about face on a fine for a violation of the EAS rules, canceling a fine issued to a broadcaster who had violated the rules and instead issuing only an admonition.  This case resulted when a local primary EAS station, KWVE, one monitored by other stations and cable systems for test messages and alerts, ran the wrong EAS test – running a required monthly test in lieu of the weekly test that was supposed to run.  The problem was compounded when the on-duty operator somehow stopped the test in the middle.  By doing so, the End of Message ("EOM") code was never sent or received, so some stations that were passing through the alert simply continued to run audio from the primary station, including the religious programming that the station featured and a commercial message from that station.  One viewer of a cable system that picked up the test complained to the FCC, and the FCC issued a fine in the amount of $5000 – the fine which was vacated last week.

The initial fine had resulted in criticism from many diverse broadcast groups and associations – including many state broadcast associations and engineering groups.  This station was volunteering to act as the primary station for the area – taking on additional EAS responsibilities to initiate tests and otherwise be responsible for potentially originating and relaying important emergency information.  Here, as a result of an inadvertent error, the station made a one-time mistake.  The protesting groups argued that the Commission’s fine set a bad precedent, one which would discourage stations from volunteering for responsibilities under this and possibly under other programs which could benefit the public, if the result was that the stations were subjecting themselves to substantial liability for even the tiniest, inadvertent infractions.  And, of course, this error took place in the course of a test – and what’s the purpose of a test but to discover issues with training or execution that need to be corrected in the event of a real emergency.  If everyone was already perfect, you wouldn’t need to conduct tests.  The Commission decision this week, to back off the fine and just issue a warning  was seemingly a correct one – and should be applauded.