A few weeks ago, we wrote about just how outmoded the FCC’s prohibitions on the cross ownership of newspapers and broadcast stations were in an era when newspapers seem to be going out of business at an alarming rate.   We quoted a DC trade press reporter who had mused that the newspaper-broadcast cross-ownership rule could well outlast the newspaper itself.  According to a report in Bloomberg News today, the Commission may well be revisiting the issue, according to statements made by Chairman Copps, in light of the economic turmoil in the newspaper industry.  But what would a review of the issue bring from the FCC?  That is unclear from the article – and unclear from the prior statements of the Acting Chairman.

In late 2007, Acting Chairman Copps was active in his opposition to the Commission’s very limited relaxation of the cross-ownership prohibitions.  See our summary of the FCC debate on that relaxation, here.  But would he take the same position today in light of the current economic climate for newspaper publishers?  As the Bloomberg article pointed out, House of Representatives Speaker Nancy Pelosi has suggested that the Justice Department might want to relax antitrust review of newspaper combinations given their economic plight.  Other legislative fixes have been suggested – including allowing papers to operate as non-profit, tax-exempt entities to which charitable contributions could be made.  With these kinds of legislative efforts underway, perhaps a change in direction at the FCC is indeed possible.  One more issue to watch in the coming months. 

The FCC today released a Public Notice announcing that, after many false starts, it is making effective the new schedule of higher application fees on April 28.  We wrote about the on-again, off-again effectiveness of these new fees which, this time, seem quite clearly to be about to become effective.  The schedule of new fees can be found appended to the FCC’s order adopting the fees, here.  Common application fees include a $940 fee for the submission of an application for a minor technical change to a broadcast station (FCC Form 301), or for a transfer of control (FCC Form 315) or assignment of license (FCC Form 314).  The fee to submit an ownership report (FCC Form 323) will be $60 per station, and a request for Special Temporary Authority will be $170.  To avoid having applications rejected for insufficient fees, be sure to be prepared for the new fees for any application submitted on or after April 28.

According to a recent article from the Des Moines Register, a station in Iowa recently fired two employees who, during what they thought was a break in programming, got into a heated, profanity-laden exchange which, luck would have it, ended up on the air as their mikes were live.  Fearing an FCC fine, the station owner fired the duo, hoping to mitigate any fine that the FCC might impose.  We will have to wait to see what impact the employers action will have on any action the FCC might take.  But the action demonstrates two things – first, mistakes happen and will happen whenever there is live programming.  Even clear station policies that absolutely ban such actions and make clear that they are a firing offense (as were apparently in place here) can’t stop human beings from messing up.  Second, the case reminds all on-air employees that they need to respect a microphone, and need to assume that a mike that can pick up sounds is in fact doing so.  Even Presidents seem to have had problems remembering that fact, but these live-mike slip ups can lead to FCC indecency fines.

The action also reminds us that, with the new administration now in place, we don’t know how the new FCC will enforce the indecency policy.  We are waiting for decisions on several court appeals of FCC indecency cases, and on the appointment of new FCC Commissioners.  Until we see the decisions in those cases, and find out who the new Commissioners are and how aggressively they want to enforce the rules, we will likely not know how cases like this one will be treated in the next few years. 

In the last 5 days, the US Court of Appeals in Washington, DC has held two oral arguments on appeals from decisions of the Copyright Royalty Board – one from the Board’s decision on Internet Radio Royalties and the other on the royalties applicable to satellite radio.  The decisions were different in that, in the Internet Radio decision, the appellants (including the group known as the "Small Commercial Webcasters" that I represented in the case) challenged the Board’s decision, arguing that the rates that were arrived at were too high.  In contrast, at the second argument, SoundExchange was the appellant, arguing that the Board’s decision set royalties for satellite radio  that were too low.  But, in both arguments, an overriding question was whether the Judges on the CRB were constitutionally appointed and thus whether any decisions of the Board had any validity.  While the question was expected and specifically raised in the webcasting proceeding (see our post here when that issue was first raised), the discussion at the satellite radio argument was somewhat of a surprise, as the issue had not been raised by either party, and the Appeals Court judges were not even the same judges who had heard the Internet radio argument.  Yet one of the Judges raised the issue, unprompted by any party, by asking if the Copyright Royalty Judges were properly appointed and indirectly asking if their decision would have any validity if the constitutional issue was found to exist.

Will the Court decide the constitutionality issue, and what would it mean?  No one knows for sure.  One of the issues raised by the Court in the Internet radio case was whether the issue had been raised in a timely fashion.  In both cases, the possibility of requiring additional briefing on the issue was also raised by the Court, though no such briefing has been ordered – yet.  Even if the Court was to find that the Board was not properly appointed, there are questions as to whether the existing decisions should nevertheless be allowed to stand, while blocking new decisions until a new appointment scheme is found.  Alternatively, Congress might have to intervene to resolve the whole issue and, if it was to do that, would Congress simply ratify the current decision, or would there be new considerations that would affect any Congressional resolution?  The issue raises many questions, and we’ll just have to wait to see what the resolution will be.

Continue Reading Two Court of Appeals Arguments on Sound Recording Music Royalty Rates – And the Real Question is Whether the Copyright Royalty Board is Constitutional

The FCC today released another Public Notice announcing the random audit of the EEO performance of a number of broadcast stations – listing both radio and television stations that have to respond, with stations spread throughout the country.  The FCC has promised to annually audit 5% of all broadcast licensees to assess their compliance with the FCC’s EEO rules.  These rules require the wide dissemination of information about job openings at their stations and "supplemental efforts" to educate their communities about employment opportunities at broadcast stations, even in the absence of employment openings.  The FCC’s audit letter requires the submission of two years worth of the Annual Public File reports that stations prepare each year on the anniversary date of the filing of their license renewal applications.  These reports are placed in the station’s public file and posted on their websites (if they have websites).  The FCC’s public notice about this audit emphasizes the requirement for posting the Annual Report on a station’s website, perhaps confirming rumors that we have heard about the FCC’s staffers browsing station websites to look for these reports.

Stations are given until May 4 to complete the audit responses and submit them to the Commission.  Note that information needs to be supplied not just for the station named on the list, but also for all other stations in the same "station employment unit," i.e. a group of stations under common control, that serve the same general geographic area, and which have at least one common employee.  As recent audits have led to significant FCC fines (see our story here about fines issues just before the holidays), broadcasters who are listed on this audit list should take care in preparing their responses.  The audit notice should also remind other licensees who are lucky enough to avoid having been selected for inclusion on this audit list to review their EEO programs for FCC compliance purposes, as they could very well find themselves not so fortunate when the next FCC audit is announced.

Continue Reading FCC Launches New Round of EEO Audits – Highlights the Requirment for Posting Annual Report on Station’s Website

On Friday, the FCC released its further Report and Order addressing the termination of analog service between now and June 12th, and revising the current DTV Consumer Education Requirements.  Despite the apparent success of the February 17th turn-off of approximately one-third of the analog television stations in the country, the FCC has now ratcheted up the DTV Consumer Education requirements at the eleventh hour.  The FCC has expanded and revised its rules significantly, so stations should review the Commission’s Order carefully and adjust their efforts and the content of their spots, crawls, etc., as necessary.  These new requirements will go into effect starting April 1st.  The full copy of the FCC’s Order is available here, and a summary of the new DTV education requirements is as follows:

First, in one of the few moves to reduce the burden on stations, the FCC has eliminated the requirement for most stations to continue broadcasting DTV transition educational information after they have terminated analog service and are operating in digital only.  Thus, stations that have completed construction of their full-authorized, post-transition digital facilities and are operating exclusively in DTV do not need to continue with the general DTV Consumer Education announcements.

Second, for those stations that have not yet terminated analog, the FCC has expanded the DTV Education requirements in order, in the FCC’s words: “to ensure that consumers will receive the information they need to make proper preparations for the digital transition of the stations on which they rely for television service.”  Specifically, beginning April 1, 2009, the stations must comply with the following rules:

1. Loss Area Notices– If the FCC’s Signal Loss Report — available here  — predicts that 2 percent or more of the population in a station’s Grade B analog service contour will not receive the station’s digital signal, then the station must air service loss notices to inform viewers of exactly where (i.e. which communities or what sections of the market) an analog signal is received today, but won’t receive a digital signal after the transition. These notices are in addition to the existing consumer education requirements. The FCC estimates that there are 213 stations still operating in analog that will lose more than 2 percent of the current population when they switch to digital-only. Thus, stations should review the FCC’s Signal Loss Reports and determine how best to convey information about "loss areas" (if any) to their viewers. For stations needing to air information about loss areas, the notices must be no shorter than 30 seconds and must be aired at least once per day between 8 AM and 11:35 PM. These spots are in addition to other on-air informational requirements.

2. Antenna Information– All stations must include information about the use of antennas as part of their consumer education campaign, including information concerning a station’s change from the VHF to UHF bands, and the need for additional or different equipment to avoid loss of service. Antenna info can be included in existing DTV consumer education efforts, such as in news programs and longer format pieces. Information must be provided at least once per day, in a message lasting at least 15 seconds, with at least three of those messages a week airing during prime time. 

Continue Reading FCC Adds More DTV Consumer Education Requirements

We reported on the settlement under the Webcaster Settlement Act between the NAB and SoundExchange on Internet Radio Royalties. As provided in the Webcaster Settlement Act, that settlement has now been published in the Federal Register, and thus it is available for broadcasters who are streaming their signal on the Internet, or who are streaming other programming on the Internet, to claim coverage under that settlement. To do so, broadcasters who are already streaming must file a notice of Intent to Rely on this settlement, available here, with SoundExchange, by April 2, 2009 – thirty days after the Federal Register publication occurred. Broadcasters who are not now streaming, but who start in the future, must file the election notice within 30 days of the start of their streaming, or they will be bound by the rates established by the Copyright Royalty Board in their 2007 decision (see our post here). The publication sets out several other details of the settlement, set forth below.

The rates: The rates, which represent some savings under the CRB rate for the years between 2007 and 2011, are set forth below.  These rates are "per performance", meaning that the rate is paid on a per song, per listener basis.  If you play 10 songs in an hour, and each song is heard by 10 people, you have 100 performances.  There are companies that provide services to track and report on performances.  See our post, here, for details.  There are also limited exceptions to the full "per performance" reporting, summarized below.  The rates under this agreement are as follows:

 

2006 ……………………………….. $0.0008

2007 ……………………………….. 0.0011

2008 ……………………………….. 0.0014

2009 ……………………………….. 0.0015

2010 ……………………………….. 0.0016

2011 ……………………………….. 0.0017

2012 ……………………………….. 0.0020

2013 ……………………………….. 0.0022

2014 ……………………………….. 0.0023

   2015 ……………………………….. 0.0025

Continue Reading Details of the Broadcaster SoundExchange Settlement on Webcasting Royalties

Perhaps not surprisingly, the FCC has suspended the re-start of the 100-day DTV Countdown Clock, which was to begin tomorrow.  In the FCC’s own words:

"We find that it could be confusing for viewers to see a 100-day countdown beginning on March 4, only to see a different clock in the event that we revise the requirement soon thereafter. Therefore, we temporarily waive the Option Two requirement to air countdown information until the effective date of the relevant rule adopted in the pending rulemaking proceeding…"

Accordingly, those stations following Option Two of the FCC’s DTV consumer education rules should NOT re-start the 100-day countdown clock until further notice.  A copy of the FCC’s public notice can be found here.  Option Two of the consumer education rules is the option that most stations have elected to follow, and includes, among other things, an average of 16 spots per week along with 16 crawls, tickers, snipes, etc. per week.  All other consumer education requirements besides the 100-day countdown clock remain unchanged (at least for the moment).

 

The FCC has released a public notice asking for comment on the procedures that it plans to use for a new FM auction now scheduled to be held in September.  The channels to be included in that auction, and the proposed minimum bids for those channels, can be found on a list released by the Commission, here.  Parties who are interested in bidding for any of these channels will be able to submit short form applications indicating the channels in which they are interested at some point to be determined in the future – probably late Spring or early Summer, so that the FCC can process those applications and receive the necessary upfront payments from parties interested in the auction in time for the auction itself to begin in September.  Thus, parties who are interested in any of these channels should start their due diligence process now, and determine which channels may be of interest, and which channels can actually be built in such a way as to cover areas that an applicant may want to serve, so that they can be ready to file their applications, probably in May or June.

Applications, when filed, will not need to specify a specific transmitter site but, once the auction is over, winning bidders will need to quickly identify and file complete applications containing specific transmitter sites for which they have reasonable assurance.  Thus, they should begin preparations for the auction now.  Applicants who have identified a site can specify that site in their applications to protect it from subsequent applications.  Thus, FM broadcasters should also anticipate a freeze on the filing of any FM technical applications at some point in late Spring in anticipation of the auction, in order to give applicants a stable technical situation so that they can identify usable transmitter sites. 

Continue Reading FCC to Hold Auction for New FM Stations in September

At the end of last year, we wrote about the decision of the Detroit newspapers to go to a 3 day a week publication schedule, and asked the question that we had heard posed by a writer for one of the communications trade publications – "will the FCC rules limiting the cross-ownership of broadcast stations and daily newspapers outlive the newspaper itself."  In the last few weeks, that question has become even more relevant.  The FCC’s decision to relax the cross-ownership restrictions in December 2007 drew widespread condemnation from many big-media opponents, and even attempts to overturn the decision, even though its direct effect was limited to the nation’s largest markets.  One now wonders whether, with the current economic condition of newspapers and broadcast stations, the rules should not be revisited, for purposes of further relaxing those rules, not tightening them.

In the last few weeks, we’ve seen a major newspaper in Denver stop its presses for the last time, and companies owning papers in many major markets, including Minneapolis, Philadelphia and New Haven, all declare bankruptcy.  At the same time, papers in San Francisco and Seattle have warned that they may also shut down if there are not significant savings found or new buyers.  Even venerable papers like the New York Times have been the subject of shut-down rumors, and the Wall Street Journal and other papers in the Rupert Murdoch empire have been said to be dragging down the profits of the News Corporation. 

Continue Reading Will the Newspaper-Broadcast Cross Ownership Rules Outlive the Newspaper?