In light of the recent decision upholding the FCC’s right to sanction licensees for violations of the FCC’s Indecency rules for "fleeting expletives" in the Golden Globes and Billboard music awards, i.e. isolated profanity on the airwaves, the Supreme Court also remanded the Janet Jackson case to the Court of Appeals.  The one sentence remand (see page 2 of the list of orders) was so that the Court of Appeals could consider the impact of the fleeting expletives case on the Court of Appeals decision throwing out the FCC’s fine on CBS for the fleeting glimpse of Jackson’s breast during the Super Bowl half-time program.  The Third Circuit Court of Appeals that heard the Janet Jackson case had reached a decision very similar to the Second Circuit’s decision in the Golden Globes case – finding that the FCC had not justified its departure from a policy of not fining stations for fleeting instances of prohibited speech or pictures, where the words or pictures were isolated and their broadcast was not planned by the station.  Given that the Supreme Court has remanded the case to the Court of Appeals, the lower court will now need to consider the same constitutional issue that the Second Circuit will consider in the Golden Globes case – while the FCC may not have violated administrative procedures in justifying its actions, are the FCC’s indecency rules so vague and enforced in such a haphazard manner that they chill free speech or are otherwise unconstitutional?  Based on an analysis of the various concurring and dissenting opinions in the Golden Globes case, the Supreme Court might well decide the constitutionality issue against the FCC.  Could the final ruling in these cases have an impact far beyond the indecency question?

Two of the Davis Wright Tremaine attorneys involved in some of the indecency cases have written this memo, summarizing the Supreme Court decision in the Golden Globes case – pointing out how Justice Thomas seemed to imply that the constitutional basis of the FCC decision was suspect – even though he sided with the majority in finding that the FCC was justified in its administrative decision to find violations.  Justice Thomas seems ready to come down against the FCC on the constitutional issue were it to be squarely presented, questioning whether the Red Lion decision, justifying lesser First Amendment protections for broadcasters than other media outlets based on frequency scarcity, has continuing vitality.  Were this precept underlying the regulation of broadcast content to be undermined, the justification for much FCC content regulation could be in doubt.

Continue Reading Janet Jackson Case Sent Back to Court of Appeals – Could There Be An Even Greater Impact on Broadcast Regulation?

Last month, the FCC released its proposal to restrict the movement of FM stations from rural areas into larger markets (which we summarized here).  The proposals that the FCC has put forward would greatly restrict the ability of broadcast owners to move stations to cover larger population areas – in many senses reversing the decision of the FCC just two years ago granting stations more flexibility to change cities of license and otherwise improve their facilities (see our posts here and here).  As we pointed out in our summary of the proposals, if adopted, these new rules could impair diversity – making it harder for minorities and other new entrants to acquire stations in larger markets, as move-in stations often provide the only opportunities for such groups to acquire stations at reasonable prices.  The FCC order advancing these changes has now been published in the Federal Register, setting the date for the filing of public comments on these proposals.  Comments are due to be filed on July 13, with replies due by August 11.   Broadcasters interested in these issues should start to prepare those comments now, providing the Commission with sufficient information to show the public interest benefits of these station moves.   

In a speech to the Free Press Summit, Acting FCC Chairman Michael Copps suggested that broadcast license renewals should no longer be a "postcard", but instead should be a real test of the broadcaster’s service to the public interest – and should happen every three years, rather than on the eight year renewal cycle that is currently provided for by the law.  While the Chairman acknowledged that many suggest that the old media are in troubled times and may well be supplanted by new forms of communications, "If old media is going to be with us a while still…we still need to get serious about defining broadcasters’ public interest obligations and reinvigorating our license renewal process."  In other words, while broadcasters may be dying, we should regulate them while we can.

First, it should be pointed out that the broadcast license renewal is no longer a postcard, and really hasn’t been for almost 20 years.  The current renewal forms require certifications on many matters demonstrating a broadcaster’s service to the public and its compliance with the rules, and additional documentation on EEO performance and other matters.  TV broadcasters also have substantial renewal submissions on their compliance with their obligations under the Children’s television rules.  Issues of noncompliance with the rules resulted in many fines in the last renewal cycle, demonstrating that this is not a process where the FCC is without teeth.  Yet most of these fines were for paperwork violations (e.g. not keeping detailed records of EEO outreach or quarterly issues programs lists demonstrating the public interest programming broadcast by a station), not for any substantive claims that station licensees were fundamentally unqualified and should forfeit their licenses.  In fact, the Acting Chairman’s speech recognizes that most broadcasters do a fine job serving their communities, yet he believes that more regulation is necessary to police those that don’t.  But is this the time to be imposing additional regulatory burdens on all of the industry, for the actions of a few.  Will the overall public interest be served by such actions?  .

Continue Reading Even Though Old Media May Be Dying – Let’s Regulate Them While We Can – Broadcast License Renewals Every Three Years?

The House of Representatives Judiciary Committee today approved a bill that would impose, for the first time, a royalty on radio broadcasters for the public performance of sound recordings in their over-the-air broadcasts.  if this bill were to be adopted by the full House of Representatives and the Senate, and signed by the President, broadcasters would have to pay for the use of sound recordings (the actual recording of a song by a particular musical artist) in addition to the royalties that they already pay to ASCAP, BMI and SESAC for the public performance of the underlying musical composition.  While, from the discussion at the hearing today, the bill is much amended from the original bill (about which we wrote, here) to try to address some of the issue that have been raised by critics, the Committee made clear that there were still issues that needed to be addressed – preferably through negotiations between broadcasters and the recording industry – before the bill would move on to the full House for consideration.  It was, as Representative Shelia Jackson Lee of Texas stated, still a "work in progress."  In fact, the Committee asked that the General Accounting Office conduct an expedited study of the impact of this legislation on radio and on musicians – but it did not wait for that study before approving the bill – despite requests from some royalty opponents that it do so. 

While I have not yet seen a copy of the amended bill that Congressman John Conyers, the Chairman of the Committee, said had been completed only a few hours before the hearing, the statements made at the hearing set out some details of the changes made to the original version of the bill.  First, changes were made to reduce the impact on small broadcasters – reducing royalties to as little as $500 for stations that make less than $100,000 in yearly gross revenues.  Interestingly, Representative Zoe Lofgren pointed out that, in a bill that means to address the perceived inequality in royalties, a small webcaster with $100,000 in revenues would be paying $10,000 in royalties – 20 times what is proposed for the small broadcaster.  And the small broadcaster who would pay $5000 for revenues up to $1.25 million in revenue would be paying 1/30th of the amount paid by a small webcaster making that same amount of revenue.

Continue Reading Broadcast Performance Royalty Passes House Judiciary Committee – A Work In Progress

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.