National Association of Broadcasters President David Rehr today announced his decision to leave the Association, leaving the NAB without a leader at a time when the Association is facing an incredible number of challenges in Washington. One can only hope that the NAB acts quickly to replace Rehr with someone prepared to aggressively address the needs of an industry hobbled by the current economic climate, and challenged by regulatory issues that could further undermine the ability of radio and television operators to compete in today’s media marketplace. The potential broadcast performance royalty, which could require that radio operators pay musicians and record labels for the rights to play their music on the air, is but one of a number of fundamental challenges that need to be addressed very shortly by broadcaster’s representatives in Washington – perhaps in the next week or two when the House of Representatives Judiciary Committee may take up the "performance tax" issue (as the NAB has called it in their arguments on Capitol Hill).

What else will a new NAB President have to contend with?  In addition to the performance royalty, there seems to be a perception in many quarters that broadcasting is no longer the special medium that it once was that demands regulatory deference because of the public interest service that it provides.  Because of the lessening of some of Washington’s regard for broadcasters,  there are many issues now before the FCC, Congress, the courts, and other agencies in Washington – all of which could have a serious impact on broadcasters – including:

 

  • The final days of the DTV transition
  • The FCC’s implementation of their White Areas order allowing wireless users to use parts of the TV spectrum – and the appeals and other attempts to overturn or modify that decision
  • The reauthorization of SHVERA, to continue to allow satellite companies to beam local television signals into local markets – where parties are raising all sorts of extraneous issues about carriage rights and retransmission consent, possible changes in TV market boundaries, and changes in the rights of satellite carriers to import distant signals.
  • The FCC’s localism proceeding, which could impose new obligations on broadcasters at a time when broadcast competition has never been so intense – when the marketplace should dictate how broadcasters best serve their communities
  • Potential Congressional effort to bring back the Fairness Doctrine in some form or another
  • A number of FCC proceedings that could affect new methods of advertising meant to combat technological changes – like embedded advertising and product placement that are meant to partially overcome the effects of DVRs.
  • Congressional attempts to regulate advertising and programing – including potential efforts to restrict prescription drug ads, ED treatments, violent programming and programming that promotes unhealthy foods
  • FCC attempts to reign in technical changes in FM stations to allow them to take steps to increase power and to move into larger markets
  • Congressional moves to remove restrictions on LPFM stations on channels that are third-adjacent to full power facilities – and to potentially give these new stations rights to replace existing FM translators

Continue Reading NAB President David Rehr to Leave – What’s Next for His Replacement?

A recent stir was created when a Midwestern television company was reported to have signed a contract with a state government agency, promising to market the agency and its programs throughout the state.  This promotion was to include a segment in the company’s televised news promoting the effects of the work of the agency.  Questions were immediately raised about whether this was prohibited by FCC rules.  But, when the news pieces ran, the company was very careful to state after these segments that they were sponsored by the station and the state agency.  As the FCC has no rules about what can be included in the "news" (and probably could not consistent with the First Amendment), the only real issue was one of sponsorship identification.  As the licensee did here, if the sponsor of the story is identified, making clear to the public who was attempting to persuade them on the issue addressed, there should be no FCC issues.

This is different from the issues that have arisen previously at the FCC, where there have been fines levied against television stations and cable systems for airing programming that was sponsored, but for which no sponsorship identification was provided (see our posts here and here).  This includes the video news release or VNR issues, where the FCC has fined stations for using news actualities provided by groups with a financial interest in the issue that was being addressed, but without identifying the fact that the material was provided by the interested parties.  Where a program addresses a controversial issue of public importance, the disclosure rules are more strict, requiring that the station not only disclose that it received money to air a story – but to also disclose anything that it got from the interested party – including tapes or scripts.

Continue Reading Selling Stories In a Broadcast Station’s News Programs – Remember the Sponsorship Identification

We’re not even in what most would consider election season – except for the two states with off-year governor’s contests and those other states with various state and municipal elections. Yet political ads are running on broadcast stations across the country.  Republican groups have announced plans to run ads attacking certain Democratic Congressmen who are perceived as vulnerable, while certain Democratic interest groups have run ads about the positions of Republicans on the Obama stimulus package and the President’s proposed budget.   In addition to these ads targeting specific potential candidates, there are issue ads running across the country on various issues pending before Congress, or likely to be considered by Congress in the near term. These ads often have a tag line “write or call your Congressman and tell him to vote No” on whatever bill is being discussed. While these are not ads for political candidates that require lowest unit rates or specific equal opportunities, they do give rise to political file issues.  Stations need to remember to observe these requirements and put the required information into their public file to avoid FCC issues.

Under provisions of the Bipartisan Campaign Reform Act, when a station runs an ad addressing a “Federal issue”, the station must keep in its public file essentially all the same information about the ad that it would maintain for a candidate ad. The station must identify the spot and the schedule that its sponsor has purchased, the identify of the sponsor (name, address and list of principal executive officers or directors), the class of time purchased, and the price paid for the ads.  Federal issues are ones that deal with a Federal election or with any issue to be considered by Congress or any Federal government agency.

Continue Reading Remember FCC Public File Obligations When Running Issue Advertising

In a decision fining a noncommercial radio station $7200 for failure to have several year’s worth of quarterly issues programs lists in its public inspection file, the FCC specifically stated that it does not have a reduced scale for fines for noncommercial broadcasters.  Instead, noncommercial station licensees, like the college that was involved in this case, have to justify a reduction in the amount of a fine based on financial hardship by providing a financial statement for the licensee itself – not just a showing of the budget for the radio station.  Thus, a college or university station that is in violation of an FCC rule, and which is issued a Notice of Apparent Liability, cannot justify a reduction in the fine merely by saying that the station cannot afford the fine – they will have to show that the institution itself is unable to pay the fine that the FCC imposes. 

This case is but one of a number of noncommercial stations that have received fines in recent days.  Just yesterday, another noncommercial station owned by a college was fined $7000 for not having timely filed its license renewal application.  The college’s explanation that the regulatory failure was due to "poor administration" of the station didn’t fly – as the FCC is clearly not going to reduce a fine because the licensee was not paying attention to the actions of its agents.  These cases and others like it demonstrate that the FCC is going to hold noncommercial stations to the same level of scrutiny as commercial operators.  The days when noncommercial broadcasters could count on being treated by the FCC with a lighter regulatory touch are over.  And many college, universities and other nonprofits that had not paid attention to the actions of their broadcast stations need to pay attention now, as in these days of tightened budgets, nonprofit groups can hardly afford the costs of paying an unexpected FCC fine. 

In a decision released today, the US Supreme Court upheld the FCC determination that fleeting expletives in the televised broadcasts of the Golden Globes and Billboard Music Awards violated the FCC’s indecency rules.  In this case, called Federal Communications Commission v Fox Television Stations, Inc., the Supreme Court overturned the decision of the Second Circuit Court of Appeals, which had found the FCC decision to be arbitrary and capricious. The Supreme Court, in a 5-4 decision, determined that the FCC had adequately justified its departure from prior decisions in determining that it could sanction a station for a single "F-word" or "S-word" broadcast on that station outside of the 10 PM to 6 AM safe harbor.  However, the Supreme Court specifically declined to rule on the constitutionality of the indecency finding, as the Second Circuit had not made its decision on that ground.  The Supreme Court sent the case back to the Second Circuit for further consideration, recognizing that the constitutional issues with the FCC’s enforcement policy might well be back before it again, "perhaps in this very case."

Thus, this decision was made on a very narrow basis – that the FCC had justified its decision to change its prior policies to find that a single fleeting expletive was actionable.  Decisions of administrative agencies like the FCC are given great deference by the Courts, as long as the agencies provide a rational basis for their decision, and as long as their decisions do not violate their statutory mandate or the constitution.  Here, the Court found that the Commission had provided a rational explanation of its departure from prior precedent., and had otherwise provided an explanation of its decision, so the Court was willing to find that the FCC had the power to make the decision that it did, overturning the Second Circuit’s conclusion that the decision had not been rationally justified. 

Continue Reading Supreme Court Upholds FCC Process in Deciding Fleeting Expletives Were Indecent, But Sends the Case Back to Court of Appeals to Decide Constitutionality

Last month, we warned readers that the FCC application fees were going up.  And today is the day that the new fees take effect.  So, if you are planning an FCC filing today or at any time in the future, remember to pay those higher fees – or face the risk of having your application bounced by the FCC for insufficient payments.

And, while we are on the subject of fees, the agenda for next month’s FCC meeting calls for a Notice of Proposed Rulemaking on the regulatory fees that stations pay each year in August or September to cover the costs of FCC regulation.  While this is, in most years, a somewhat routine process of authorizing the year’s fees with only minor tweaks from previous years, this year it could be different.  Commissioner Robert McDowell has been questioning why the FCC collects more money than it needs to operate – and is now essentially a profit-making enterprise.  (See his speech, here, at pages 4 and 5)  So watch for that discussion next month.

 

We recently wrote about the agreements between SoundExchange and various groups of webcasters, which became effective under the terms of the Webcasters Settlement Act.  These rates act as a substitute for the rates set by the 2007 Copyright Royalty Board decision  setting Internet radio royalties for the use of sound recordings in the period from 2006-2010.  The deal with broadcasters set lower rates than the CRB for 2009 and 2010, and also waived certain requirements otherwise applicable to webcasters, limiting the number of songs from the same artist that can be played in a given period of time (see our posts here and here).  There is also a deal that SoundExchange unilaterally advanced to certain small webcasters which allows for a percentage of revenue royalty, but limits the amount of listening to these webcasters allowed at these rates, and imposes significant recapture fees if a webcaster sells its service to another company that would not qualify as a small webcaster (see our post here).  April 30 is an important date under both deals, as it is the date by which small webcasters must elect the deal, and the date by which all broadcasters who elected the broadcaster deal earlier this month are to pay any back royalties which they owe for streaming from 2006 through the date of the agreement.

In talking to Internet radio operators, both broadcasters and small webcasters, many seem to be unaware of the records that need to be maintained to remain in compliance with the requirements of the deals.  Both the small webcasters agreement and the NAB-SoundExchange settlement require "full census" reporting of  all songs played by the service, which will include information for every song – including the name of the song that was played, the featured artist who performed the song, the album on which the song appeared, and the label on which the album was released.  In addition, the webcaster must report on the number of times each song was played, and how many people heard each transmission of the song.  Only very small broadcasters and "microcasters" under the small commercial webcaster deal, are totally exempt from these requirements.  Under their deal, broadcasters need not provide all the information for up to 20% of their programming, but this percentage of the broadcast week that can avoid full reporting will shrink every year (see our post here for details).

Continue Reading Internet Radio Royalty Reminders – April 30 is the Last Date to Elect Small Webcaster Agreement and for Broadcasters to Pay Past Fees, and Don’t Forget the Recordkeeping Obligations

Rural communities – do their radio stations need government protection? The FCC seems to think so, proposing a series of new rules and policies that restrict the ability of the owners of rural radio stations to move their stations into Urban areas. These rules would make it harder for entrepreneurs to do “move in” applications – taking stations from less populated areas and moving them to communities where they can serve larger populations in nearby cities. The Commission states that it is making these proposals to attempt to live up to its obligations under Section 307(b) of the Communications Act to ensure a “fair, efficient and equitable” distribution of radio services to the various states and communities in the country. While this may be a noble goal, one wonders if it is a solution in search of a problem. Are there really rural communities that have an unmet demand for missing radio services – and which can economically support such services? And do these proposals conflict with other goals of the new Commission, by effectively decreasing the opportunities for minorities and other new entrants from acquiring stations in major markets – by taking away move-in stations that are often the only stations that these broadcast station owners can afford in urban markets?  These are questions that the FCC will need to resolve as part of this proceeding. 

A Section 307(b) analysis is done by the FCC when it faces conflicting proposals, specifying different communities of license, for new AM stations or requests for new FM allotments. It is also required when an applicant proposes to move a station from one community to another, as the applicant must demonstrate that the move to the new community would better serve the objectives of Section 307(b) than would the current location of the station. In the past, the 307(b)  analysis looks at several factors, or “Priorities.” These include:

 

  1. Service to white areas – when a proposed station will serve “white area,” an area where residents currently receive no predicted radio service (no “reception service” in FCC parlance). 
  2. Service to gray areas – when a proposed station will serve areas that currently receive only a single reception service
  3. Provision of a first local “transmission” service – where the proposed station will be the first station licensed to a particular community, and thus the first station that has the primary responsibility to serve the needs of that community
  4. Other public interest factors – usually meaning which proposal will provide the service to the most people (with service to “underserved areas,” i.e. those that receive 5 or fewer “reception services,” getting somewhat more weight).

Continue Reading FCC Proposes to Encourage Rural Radio By Making it More Difficult to Move Radio Stations to Urban Areas

Last week, the FCC fined yet another broadcaster for violations of its contest rules, issuing a fine of $4,000 to a station that had not disclosed to its listeners all of the material terms of a contest that it conducted on the air. In this case, the station promised a give-away of three cars, but in reality it was only awarding to winners a two-year lease for the cars, not actual ownership of the vehicles.  This is another in a series of recent fines for contests, so stations should be aware of the attention that the FCC is giving these issues. And this case should again remind broadcasters that they must disclose any practices that may affect the odds of winning of potential contestants – including any benefits that certain listeners, like members of loyal listeners clubs, might get that would improve their chances of winning a contest (see our post here on the Commission’s discussion of what are the material terms of a contest). 

I recently attended a seminar put on by a noted broadcast program consultant, who was running through a series of great ideas for broadcasters to better connect with and retain their audience. In giving suggestions about how to build up a database of loyal listeners with whom the station could be in regular contact, the consultant suggested that stations tell their loyal listeners that they will get advance notification of the time to call in for certain station contests and give-aways, i.e. they would be alerted in advance when the station was getting ready to do a contest that would award a prize to a caller at a certain time.  While that certainly may provide an enticement to join the listener club, if that advance notice is not revealed to all potential contestants – both in written rules and, more importantly, in those rules that are announced on the air – those contestants who are not members of the listener club may well complain about the conduct of the contest. Reveal all aspects of the contest that might affect the odds of winning or the ease of entry – or, in addition to the prize given to the contest winner, the FCC may be getting its own award – in the form of a fine.

The dates and minimum bids are set – and the next auction for new FM stations is a go for September 1, 2009. Applications to participate in the auction are due during the period June 16 to June 25, and must be filed electronically at the FCC, specifying on which of the 122 available channels an applicant is interested in bidding. Full, detailed auction instructions can be found in the FCC’s Public Notice, and the list of available channels and the minimum bids for each is available here. To give time for applicants to prepare their applications, the Commission has also initiated a variety of freezes on the filing of certain FM applications.

A freeze on any application or Petition for Rulemaking seeking a change in the channel of any channel proposed for use in this auction has been imposed effective immediately. Applications that shortspace any of the reference points for any of these stations are also barred. A subsequent freeze on the filing of any minor change application by an FM licensee will also be imposed during the June window. These freezes are to give applicants for channels the opportunity to evaluate which channels are worth bidding for, and to specify specific transmitter sites for certain channels (different than the reference coordinates) which will be protected during the auction process. Thus, applicants who see the potential for an increase in value of one of these channels that may come through the location of the station at a particular transmitter site can specify that site, protecting it and the value that they see. 

Continue Reading Rules for September Auction for New FM Stations Set – Application Filing Deadline Is June 25