Tomorrow’s FCC meeting was to consider the proposal to allow AM stations to use FM translators on a permanent basis (see our post here).  However, it is not going to happen – the FCC released a Public Notice today removing that item from the agenda for tomorrow’s meeting.  While a number of other items were also withdrawn from the agenda, most of them were decisions on specific cases which are not routinely decided at open meetings, and most of these matters were decided on circulation (i.e. voted on by the Commissioners without a meeting).  Two more general items, one dealing with a simplification of AM proof of performance procedures and another with requests for reconsideration of the FCC’s noncommercial comparative standards, have also been decided on circulation (and we will report on these decisions when the decisions are released).  But the item on FM translators for AM stations was pulled from the agenda, and has apparently not been decided by the FCC.

Rumors that this item would be pulled circulated last week at the NAB Radio Show.  We have always expressed concerns that this item would be held up by pressure put on the FCC by LPFM advocates who fear more demand for FM translators from AM stations will make it harder for LPFM applicants to find open channels.  We have no idea if this is in fact the reason for the deletion of the item from tomorrow’s agenda, and will have to wait to see when the matter reappears for final consideration.

Today, the National Music Publishers Association ("NMPA"), DiMA, the RIAA and other music publishing groups issued a press release announcing a settlement of certain aspects of the current Copyright Royalty Board proceeding to determine the royalties due under Section 115 of the Copyright Act for the mechanical royalty for the reproduction and distribution of the musical work (i.e. the composition – the words and music of a song).  According to the Press Release issued by the parties, this agreement covers interactive streaming and limited-time downloads, setting a royalty of 10.5% of revenue, less any amounts due for performance royalties (to ASCAP, BMI and SESAC, which also reimburse composers of music).  While many press reports (at least some of which have already been pulled) have concluded that this is a settlement of the Internet Radio royalties proceeding – that is wrong.  The Internet radio royalty proceeding involves Section 114, not Section 115, of the Copyright Act.  Section 114 deals with a royalty paid to the performers, not the composers.  Section 114 compensates performers and the copyright holders in the performance for the public performance of their works, not for the mechanical royalty for reproduction and distribution covered by Section 115.  And Section 114 covers non-interactive streaming – where users cannot dictate the songs that they want to hear – unlike the services, on-demand streams and limited time downloads, involved in this settlement which allow users to select the songs that they want to hear.  So don’t believe what you read – the Internet radio royalties are still very much a subject of dispute, and services like Pandora are not yet saved by any sort of settlement. 

According to the press release, the one benefit to Internet radio under this agreement is that the parties conclude that there is no royalty due to the music publishers for any copies made in the transmission of non-interactive streaming.  The Copyright Office recently began a proceeding to ask if such royalties were due (about which we wrote here).  So, even  were the Copyright Office to determine that there was a Digital Phonorecord Delivery (a "DPD") made during the Internet radio streaming process, at least for the length of this agreement (assuming that it is approved by the Copyright Royalty Board), no royalty will be assessed.  We will write more about this settlement once we have seen the full terms – but wanted to post this notice to alert readers that, contrary to press reports, the Internet Radio proceeding has not been settled. 

David Oxenford spoke to the South Dakota Broadcasters Annual Convention at Keystone, South Dakota on September 29, 2008.  He addressed issues including the FCC localism and sponsorship identification proceedings, the digital television transition, the broadcast performance royalty and FCC enforcement issues. 

At the Radio and Records Convention, held in conjunction with the NAB Radio Show in Austin, Texas on September 18, David Oxenford spoke on a panel about the issue of whether a performance royalty should be paid by broadcasters for their over-the-air use of sound recordings.  Also on the panel were Dennis Wharton (NAB Executive Vice President for Media Relations), Ann Chaitovitz (Executive Director of the Future of Music Coalition) and musician Matt Nathanson. 

On August 26, David Oxenford of Davis Wright Tremaine’s Washington DC office made a presentation to the Christian Music Broadcasters Board of Directors and Managers Meeting in Nashville.  David talked about many issues of importance to broadcasters, including the FCC’s localism proceeding, issues about the relationship between translators and LPFM stations, the FCC proceeding on sponsorship identification, and the pending proposals for a performance royalty on over-the-air broadcasters.

A copy of the PowerPoint presentation that David used will be posted here soon.

 As the digital television transition continues to progress, the FCC has been pursuing not only broadcasters who have been slow in building out their digital facilities, but also consumer electronic manufacturers who have not done enough to facilitate the transition. In a letter released this week, Chairman Martin has by letter urged consumer electronics retailers to stock inexpensive converter boxes that will pick up digital signals and allow analog television sets to broadcast those signals, keeping those sets from becoming obsolete. Also, the FCC recently entered into a consent decree agreeing to a fine for Sling Media for not including a digital television tuner in some of its equipment, reminding all consumer electronics manufacturers, including those who install them as an adjunct to their technology, of the need to include such tuners in their equipment.

The issue of the digital converter boxes is an interesting one. When NTIA started issuing coupons to consumers to subsidize their transition to digital, it was hoped that the $40 coupons that consumers would receive would come close to covering the entire cost of the converter box necessary to keep an analog set operational. In fact, in most cases, the boxes have cost more than $40, requiring the consumer to pay at least some of the cost of the box. What has been particularly frustrating has been the announcement that Echostar, the satellite television provider of the Dish Network, had manufactured a highly rated box that would be available at $40, and would also include the ability to “pass through” analog signals – to continue to receive analog as well as digital signals – a particularly important property in markets where there are LPTV or TV translator stations that will continue to operate in analog after the February 17, 2009 deadline for the digital conversion of full-power television stations (see our post here on that issue). However, as the Chairman’s letter makes clear, that box and boxes like it are not available in most consumer electronics stores. Thus, the Commission has urged retailers to stock such devices in these final months before the digital cut-off so that no one is left behind. 

Continue Reading FCC Tackles Equipment Manufacturers for Not Including DTV Tuners in Their Devices

Failing to meet the obligations set out under the law for required sponsorship identification on Federal political ads could, theoretically, cost candidates significant amounts of money – if stations decide to hold the candidates to the letter of the law. Under the terms of the Bipartisan Campaign Reform Act (“BCRA”), Federal candidates airing television commercials that refer to a competing candidate must specifically state, in the candidate’s own voice, that he or she has approved the ad, while a full-screen image of the candidate appears on the screen. In addition, the name of the sponsoring candidate’s campaign committee must appear in text on the screen for at least 4 seconds at 4 percent of screen height, with sufficient color contrast to make the text readable. If the proper identification is not contained in an ad, the candidates forfeit their right to lowest unit rates for the entire pre-election period (45 days before a primary or 60 days before an election), even with respect to future ads that comply with the rules. In recent days, representatives of Democratic Congressional candidates have reportedly filed complaints that argue that Republican competitors have not complied with the rules in several cases, as their written disclosures did not air for the full four seconds. The challengers argue that television stations must take away LUR for these candidates. While the statute say that the candidates forfeit their rights to such rates, the law is unclear as to whether stations are obligated to deny that rate to candidates after the right has been forfeited – and these cases could resolve this issue.

Television stations undeniably have the power to charge full rates to candidates whose ads have not complied with the requirements of the campaign statute. However, many stations have been reluctant to do so for minor infractions such as the ones identified in this complaint. Why wouldn’t television stations want to charge more money? For several reasons. First, denying one candidate lowest unit rates will no doubt trigger a fly-specking of every commercial by the competitor who filed the complaint against the first candidate, to try to trigger a forfeiture of the second candidate’s right to Lowest Unit Rates, and adjudicating such complaints will no doubt make the station’s political sales process much more difficult and costly to administer. In addition, there is the question of whether, for a minor violation, a station really wants to give the other candidate a political advantage – especially if the candidate who gets charged more more wins the election and gets to vote on laws that may effect business in the future. But can stations legally continue to charge the lowest unit rate even when a candidate has not complied with the legal requirements for sponsorship identification?

Continue Reading What Happens if a Federal Candidate’s Commercial Does Not Have Proper Sponsorship Disclosure?

Broadcasting and Cable magazine today reported that the FCC is looking to back off some of the requirements for the "enhanced disclosure" of television broadcaster’s public interest programming (see our summary of the new requirements of FCC Form 355, here).  B&C reports that the FCC may lessen or at least better explain some of its new reporting requirements to try to avoid having these rules being struck down by the Courts as being arbitrary and capricious, or to avoid further proceedings which might be ordered by the OMB were it to determine that the rules violated the Paperwork Reduction Act.   We have speculated as to the likelihood that these rules, requiring substantial new burdens on television broadcasters, would have difficulty surviving OMB review.  How could these burdensome rules, which the FCC has effectively stated have no regulatory purpose as the Commission has no requirements for any percentages of any particular type of programming (see our post here) possibly be justified under a Paperwork Reduction Act analysis – much more paper for no specific regulatory purpose simply does not seem to provide any justification for the new rules?  A Paperwork Reduction Act analysis focuses on the burden on small entities.  The new enhanced disclosure rules do not exempt small broadcasters.  B&C suggests that an exemption for noncommercial stations may be one of the changes to be made by the FCC – certainly a welcome change but hardly enough to help small market commercial TV operators who will be hardest hit by these rules. 

We would certainly not be surprised by the FCC lessening the burden that they have imposed on television broadcasters.  We have seen Commission staffers in public forums express surprise at the descriptions of the burdens that these rules place on television broadcasters.  And we have noted the slow pace with which these rules have been rolled out – having been adopted in December, the text of the decision coming out in January, and they still are not effective.  We will all have to watch closely to see if this press report is accurate and the FCC in fact reconsiders its Enhanced Disclosure requirements.  Stay tuned. 

It’s been a week since Wilmington, North Carolina became the first television market in the country to have virtually all of its television stations convert to digital – ceasing their analog operations.  The FCC, NAB and local stations all concentrated great resources in Wilmington in order to ensure that the transition was smooth and, while most observers believe that disruption was minimal, there are some who remain concerned about the results of the Wilmington experiment, and whether it can be replicated in other television markets.  While the FCC ramps up its efforts to promote the digital television transition around the country, one Commissioner has suggested several other steps that should be taken (including leaving an analog lifeline for those people who don’t get the message), and Congress is set to weigh in on the issues over the next two weeks.  All in all, the push is on for the February 17, 2009 transition to digital.

One of the most thought provoking commentaries on the transition comes from Harry Jessell, editor of TV Newsday.  In a commentary published last Friday, Jessell computes that the complaints in Wilmington amounted to about 5% of the television households in that market.  If that pattern was to be repeated in all markets around the country, Jessell computes that there would be about 1.7 million homes that will miss the transition and be without TV service on February 18.  Jessell further figures that this is a best case number, as all of the publicity showered on Wilmington will not be available in the remainder of the country, and there will likely be more technical problems in other markets with more irregular terrain than Wilmington (which is mostly flat coastal plain) and where TV towers are in different locations.  Jessell suggests several steps – including staggered cut-off dates to avoid overloading national DTV hotlines, more education on antenna issues (one of the major issues in Wilmington), and more "soft-tests" (stations ceasing analog operations for limited periods to see if their viewers are ready for the transition). It is a commentary worth reading.

Continue Reading Digital Television Conversion is a Reality in Wilmington NC – Publicity Ramps Up Around the Country While Issues of Readiness are Raised

Each election season brings new issues for broadcasters. In recent years, broadcasters are more and more frequently dealing with requests for political uses of the a station’s website. For the most part, unlike a broadcast station that is subject to the full panoply of the FCC’s political rules, those rules largely don’t apply to station websites (some FEC rules, will not be discussed here, may apply to websites). About the only informal pronouncement to come out of the FCC on the use of a station website is that, if the website is sold to one candidate as part of a package with broadcast spot time, then the same offer should be made to competitors of the candidate. This is not an application of FCC’s the rules to the Internet, but instead just a restatement of a long-standing FCC policy that, if one advertiser gets extra benefits that come with the purchase of ad time, and those benefits would be of value to a candidate, they should also be offered to the candidate, and that equal opportunities demands that all candidates for the same office be treated alike.

While the freedom from reasonable access, lowest unit rates, and equal time may seem like a boon to broadcasters, that freedom comes with a price. For instance, the “no censorship rule,” which forbids a station from editing the content of a candidate’s spot or rejecting that spot based on its content (unless that spot violates a Federal felony statute), does not apply to Internet spots. Because candidate spots broadcast on a station cannot be censored, the station has no liability for the content of those spots. So the station is immune for libel and slander, or copyright violations, or other sources of potential civil liability for the content of a candidate’s broadcast spots. But since these spots can be censored or rejected on the station’s website, a station could have theoretical liability for the content of the Internet spot even though the broadcaster could run the exact same spot on the air without fear of any liability. For instance, just recently, according to the Los Angeles Times, CBS asked You Tube to remove a McCain spot attacking Senator Obama as the spot used a copyrighted clip of a Katie Couric commentary without permission. Had that spot been running on a broadcast station, the station would have been forbidden from pulling the spot (and would have no liability for the copyright violation).

Continue Reading Political Advertising Rules for Station Websites – Opportunites and Pitfalls