Recently, it seems like you can’t read a broadcast industry newsletter without seeing an article about employment reductions or layoffs at some station – sometimes the whole newsletter seems to be dominated by such reports.  In this climate, broadcasters need to consider the employment law issues that can arise in such situations.  The Davis Wright Tremaine Employment law practice group has published an Advisory, available here, which provides advice – both legal and practical – for such downsizing a workforce in any industry.  Read the memo, and consider such issues, as legal issues in an employment context can bring civil penalties which can add to a broadcaster’s economic distress in these tough times.  In addition, violations of employment laws need to be reported both on a broadcaster’s Mid-Term EEO report (FCC Form 397, see our bulletin on the last group of stations required to file such reports, here ), as well as on their license renewal applications.  So act carefully if faced with these wrenching employment decisions. 

The digital television conversion end game is upon us, and everyone seems to be getting a little testy.  Seemingly, not everyone is convinced that the consumer education efforts have prepared the public for the transition, and thus Washington seems to be preparing for problems.  But, in a last minute attempt to solve some of the potential issues, both Congress and the new Administration have stepped into the breach to put pressure on broadcasters and the FCC to be prepared to deal with the February end date for analog TV.  Congress passed legislation authorizing the FCC to allow some television stations in each market to continue to operate in analog after the end of the transition to tell consumers who didn’t make the switch what to do (an analog "life line service").  At the same time, Congress urged the FCC to mind the transition and not start off on new regulatory battles, causing the cancellation of this week’s FCC meeting.  In this event-filled 10 days, the new Obama administration also stepped into the DTV transition, a potentially significant issue that will face the new administration less than a month after taking office, pushing broadcasters, cable companies and direct broadcast satellite companies to pay for and establish phone banks to provide assistance to consumers stranded by the transition.

The cancellation of the Commission’s meeting was perhaps the strangest of these matters.  The FCC was prepared to hold a meeting later this week, with a full schedule of items to consider, including various items related, in one way or another, to the digital transition.  Included were a series of fines to broadcasters, consumer electronics stores, and others for not doing everything required by the rules to facilitate the digital transition.  The Commission was also planning to start the rulemaking process to authorize digital "fill-in" translators, i.e. low powered TV stations rebroadcasting a main station on other channels within the main station’s service area to fill holes in digital service.  Plus, the FCC was to deal with the Chairman’s proposals for a free wireless Internet service on channels being vacated by television stations as part of the transition.  Yet, Congressman Henry Waxman, the new chair of the House Energy and Commerce Committee, and Senator Rockefeller, the newly appointed Chairman of the Senate Commerce Committee ( the committees with responsibility over the FCC) wrote a letter to the FCC saying that it should concentrate its efforts on the transition, and not take up issues on which the new administration may want a role (perhaps the wireless service).  After receiving the letter, the December meeting was canceled (the first time in memory that the FCC did not have a monthly meeting as seemingly required by Section 5 of the Communications Act). 

Continue Reading Congress Throws an Analog Lifeline While Telling FCC to Deal With the DTV Transition and Cancel Meeting, While New Administration Pushes for Phone Banks for Consumer Complaints

In a Sunday column, George Will revisited conservative commentators’ biggest fear – the return of the Fairness Doctrine.  Will went into depth on the history of the doctrine, the growth in the number of broadcast outlets in recent years, and growth in talk programming since the doctrine was abolished, all to argue against its reimposition.  This column prompted a response on MSNBC’s Countdown Program the next day, ranking Will third on Keith Olbermann’s Worst Person’s segment – not for Will’s argument against the return of the Fairness Doctrine, but for his even bringing up the issue of the possible return of the Doctrine.  Olbermann in effect accused Will of inciting unfounded fears of the doctrine’s return, citing President-elect Obama’s statement that he did not favor its return, and claiming that the Democrats in Congress otherwise were not pushing for its reimposition.  So what’s the truth here?

As always, the truth always seems to lie somewhere in between these two extreme points of view.  The President-elect has indeed stated that he did not favor the return of the Fairness Doctrine and, while there have been no major efforts to reinstate the Doctrine yet announced, there is a proposal in almost every Congress for its return (see, for instance, our post on Congressman Kucinich’s proposal to reimpose the Doctrine made two years ago and another post about the suggestion in support of its return made by Congressman Dingell six months later).  Other Congressional statements have also not ruled out an effort to bring it back, including a statement by Senator Schumer  of New York who, when asked about the Doctrine, asked: who could be against Fairness?  While we won’t see the Doctrine return in what little is left of this year, who knows what efforts could be made next year to try to resurrect it – though the changes in the media landscape since the FCC declared the doctrine unconstitutional, as outlined by Will and about which we have written before, would seem to make its justification almost impossible on constitutional grounds (e.g. there is seemingly little scarcity that would justify the rule applying only to broadcasters and not any other medium).  But a simple matter of probable unconstitutionality has never stopped Congress from considering legislation before, so who knows what we might see considered this year – though, as Olbermann and Will’s comments demonstrate, it seems as if neither end of the political spectrum really want the Doctrine to return.

As the Obama administration fills its top level government posts, all eyes are now turning to the next levels of government appointments which, at some point, will include a new Chair of the FCC and potentially other new FCC Commissioners. We wrote about our hopes for an Obama administration at the FCC immediately after the election, and now other voices in Washington are weighing in. And, as one might expect, with so many different perspectives, the advice is far from consistent. As we wrote in our analysis, the appointment of the FCC Chair is crucial as it is the FCC Chair, far more than the President or the White House, who sets the tone for Communications policy. This is made clear by the extensive regulations either adopted or proposed for broadcasters by the current Republican FCC, seemingly at the direction of the current chairman, regulations that would not have been expected from a Republican administration.  In light of the economic challenges facing broadcasters, as evidenced by today’s news that two television companies – Tribune and Equity – declared bankruptcy, and another, NBC, has announced a cut back in prime time programming, replacing it with a prime time, 5 day a week Jay Leno program. 

So what should the transition team look to accomplish at the FCC?  In one of the most perceptive articles that I’ve seen recently, Harry Jessell in TV Newsday has urged the new Commission to simply do nothing on broadcast regulation for the next year. The current state of the economy and its ramifications for the advertising that is the lifeblood of the broadcast industry simply leaves no room for broadcasters to have to bear new costs for new regulations.  Broadcasting and Cable magazine has echoed that sentiment last week.  Recently, not only have we seen the economy and the state of the broadcast industry been reflected by the actions announced by Tribune, Equity and NBC today, but we’ve seen numerous mainstream press articles about the economic peril in which the entire broadcast industry finds itself.  In one recent article, radio’s dramatic decline in revenues was highlighted, even as the industry’s listenership remains high (as confirmed by BIA’s recent prediction that radio revenues will decline by 7% in the coming year, coming after declines this year – perhaps the first two year decline in revenues in radio history). I recently attended the Radio Ink Forecast 2009 conference in New York.   While the conference is off the record, I don’t think that I’d be betraying any confidences to state that there was much concern about the short term health of the radio industry. 

Continue Reading As the FCC Transition Progresses, The Broadcast Industry Shows Economic Strains – Tribune and Equity Declare Bankruptcy and NBC Cuts Programming Costs By Putting Leno on at 10 PM, Five Days A Week

Yesterday, it was announced that CBS would be operating Yahoo’s Launchcast Internet Radio operations.  This is ironic as the industry seems to have now come full circle, as Yahoo’s Internet Radio operations include the interests that they received when they purchased Mark Cuban’s Broadcast.com, which had a substantial part of its business in the streaming of terrestrial radio stations.  While Yahoo long ago stopped streaming the broadcast signals retransmitted by Broadcast.com, it is ironic that a traditional broadcast company has now taken much of the control of not only the Internet radio operations of Yahoo, but also those of AOL and Last.FM (see our post on the AOL deal here).  Explicitly blamed for Yahoo’s decision to turn its Internet radio operations over to CBS was, according to press reports, its concerns over the Internet radio royalties as set by the Copyright Royalty Board last year, a decision about which we have written extensively.  How will this transaction affect the debate over those royalties?

Initially, this action once again shows that assumptions about the state of the Internet radio industry that colored the perception of the Copyright Royalty Judges in their determination of the royalty rates were incorrect.  While not explicitly part of the grounds of the CRB decision on the webcaster’s royalty, there was much testimony in the CRB proceeding that suggested that Internet radio brought customers to portal sites, and that higher royalties were justified by the value that these visitors added to the portals when the listeners engaged in other activities at the portal.   Yet, that model now seems in tatters, as both AOL and Yahoo have turned their operations over to CBS.  This seems to emphatically demonstrate that the economics of Internet radio operations, whether stand-alone or as part of portals, simply do not justify the royalties that were imposed (see our discussion of the Pandora economic and the royalties here).

Continue Reading CBS to Run Yahoo Launchcast Internet Radio – How It Impacts the Royalty Debate

Today FCC Chairman Kevin J. Martin released a tentative agenda for the scheduled December 18, 2008 Open Commission Meeting.  The tentative agenda, available here, contains a number of items that the Chairman has circulated to the other Commissioners for consideration at the upcoming Open Meeting.  Whether these items actually make it to the agenda for that meeting remains to be seen, as the formal agenda for the meeting will not be released until one week before the meeting.  Of particular interest to broadcasters are the following items:

  • Program Carriage and Program Access–  A Report and Order modifying the program carriage rules and procedures and a Further Notice of Proposed Rulemaking seeking comment on the practices of programmers and broadcasters.
  • DTV Translators–  A Notice of Proposed Rulemaking proposing a new digital television translator service for analog loss areas.
  • DTV Consumer Education Notice of Apparent Liability–  An omnibus Notice of Apparent Liability against various companies for apparent violations of the Commission’s DTV consumer education requirements.

It is unknown whether the Notice of Apparent Liability for Forfeiture (FCC-speak for a fine) will include broadcast television stations, retailers, multi-channel video providers, or some combination of all three, but the fact that the FCC intends to fine parties for failing to comply with the FCC’s DTV education rules is a strong indication of how seriously it is taking the DTV transition.   

On October 13, 2008, David Oxenford conducted a session at the Kansas Association of Broadcasters Annual Convention, held in Wichita.  The session, called "What Else Can Washington Do For You?" focused on regulatory and legislative developments that affect broadcasters. 

A copy of the PowerPoint presentation used at this session will be available here soon.

On October 3, 2008, David Oxenford moderated a panel at the Digital Music Forum West in Los Angeles.  The panel, titled Digital Rights and Clearances, discussed what rights were necessary for the use of music by online digital services, in movie and video production, and for other purposes.  Panelist included,  Kevin Arnold, CEO, IODA; Richard Conlon, VP, New Media & Strategic Development, BMI; Maurice Russell, VP, Bus. & Licensing, Harry Fox Agency; Patrick Sullivan, President & CEO, RightsFlow LLC; Les Watkins, SVP, Business Affairs, Music Reports; Bob Kohn, Co-Founder, Chairman & CEO, RoyaltyShare, Inc.
 

A video of this panel can be viewed here.

Last week, the FCC granted a brief extension of time in which to file comments on the proposed increase in power for the HD Radio operations of FM stations.  We wrote about the request for comments here and here.  Comments will address the requests of those who want higher power for their digital operations in order to increase building penetration of the HD radio signals (which have proven difficult to receive in some brick and steel buildings) and otherwise fill in coverage areas, and will also include submissions of those who are concerned about the potential interference to adjacent channel stations. The later includes NPR Labs, which produced a set of maps, available here, computing the potential interference that higher power HD operations could cause to a number of stations.  Especially for stations which rely on coverage beyond their protected service areas, and which operate close to adjacent channel stations that run HD operations, the proposed increase could have a substantial impact.   With the proposal for shared time operations that has now been highlighted by the Ion Media applications about which we wrote here, the diversity that comes from such fringe stations will have to be balanced against the diversity that can come from multicast digital channels.  Comments are now due on December 5, with reply comments due January 12.

 

This week, an interesting concept has been advanced in a series of applications filed with the FCC.  Ion Media Networks, the successor to Paxson Television, has proposed to transfer some of its broadcast stations to a new company, Urban Television LLP, to be owned 51% by Robert Johnson, the former owner of BET, and 49% by Ion itself.  But, when we say that they are transferring "some" of its stations, we don’t mean that any of its stations are being transferred, but instead only that a piece of its stations are proposed to be transferred.  Ion proposes to continue to own and operate stations in every market where it currently operates, but proposes to sell digital multicast channels to Johnson. Unlike any LMA or other programming agreement, the proposal is to actually take one 6 MHz television channel and break it up so that Ion continues to program one channel with its programming and the Urban Television will program the other channel with its programming, and become the actual license of that portion of the spectrum.  The FCC has accepted the applications and issued a Public Notice, giving parties 30 days to file comments on the proposal. 

It is not unheard of for two licensees to share the same channel – though where it is currently occurs most frequently is in connection with noncommercial broadcasters who share a single radio or TV channel, they divide it by time, so that one licensee operates, say midnight to noon and the other operates from noon to midnight.  Obviously, in these shared-time arrangements, both broadcasters are not operating on the same channel at the same time.  This new proposal, though, does not come out of the blue.  The idea of allowing a broadcaster to sell a digital channel to a different company, has been proposed before, for both Digital Television and Digital HD Radio channels when the original station is multicasting, as a way to increase diversity of ownership.

Continue Reading Splitting a Television Station License – Ion and Robert Johnson Propose a Unique Concept for Increaing Media Ownership