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

In a recent article in Silicon Valley Insider, TargetSpot’s CEO, Doug Perlson, suggests that the financial savior of Internet Radio might be payola – taking money from record companies or artists to play their songs.  Putting aside any issues of the financial benefits of such a plan, and the creative and aesthetic issues that pay for play may raise, and since this is a blog written by lawyers, we’ll deal with the legal implications.  And as lawyers, we’re forced to play the spoilsport.  As set forth below, such a scheme can be done legally (just as it could be on terrestrial radio with the proper disclosures).  But, while there has been no legal enforcement of such activities, careful Internet radio operators would best be advised to be careful about just taking the money and playing songs, but instead should make some disclosure of the nature of the service that they are providing.

The payola statute, 47 USC Section 508, applies to radio stations and their employees, so by its terms it does not apply to Internet radio (at least to the extent that Internet Radio is not transmitted by radio waves – we’ll ignore questions of whether Internet radio transmitted by wi-fi, WiMax or cellular technology might be considered a "radio" service for purposes of this statute).  But that does not end the inquiry.  Note that neither the prosecutions brought by Eliot Spitzer in New York state a few years ago nor the prosecution of legendary disc jockey Alan Fried in the 1950s were brought under the payola statute.  Instead, both were based on state law commercial bribery statutes on the theory that improper payments were being received for a commercial advantage.  Such statutes are in no way limited to radio, but can apply to any business.  Thus, Internet radio stations would need to be concerned.

Continue Reading Payola on Internet Radio – Legal?

A recent proposal to increase the power levels at which HD Radio stations operate – to improve coverage and, perhaps more importantly, building penetration so that people can receive digital channels inside buildings – has been the subject of a cautionary study released by National Public Radio.  That study was summarized in a story in the NPR magazine Current (an executive summary can be found here, and the entire 280 page study is here).  The study agrees that an increase in power suggested by the recent proposal would increase HD Radio coverage and significantly increase building penetration, but it would do so only at the cost of causing interference to existing analog stations – in some cases significant interference.  Such interference would be especially troublesome in receivers in cars, where radio broadcasters have long concentrated some of their most important programming to capture people in the place where competing entertainment options are most limited.   

The NPR study does suggest that there could be ways to limit the interference using directional antennas or lessening power but using digital boosters that could be tuned slightly off-center on their frequencies to protect adjacent channel stations.  HD radio operates on the sides of a station’s analog channel (thus its original name – "IBOC" for In-Band On-Channel), thus potentially causing interference to adjacent channel stations.  By suppressing the signal on the side of the signal nearest to the adjacent channel station and sending the digital bits out of the other side of the channel, some of this interference could be minimized.  Yet systems capable of such protections have not yet been fully developed.

Continue Reading NPR Study Suggests Concerns With Increase in HD Radio Power

When we first started this blog over two years ago, one of our first posts to receive a comment (proving that at least someone was actually reading what we wrote) dealt with the FCC’s proposal to allow AM stations to be rebroadcast on FM translators, a change of the Commission’s long-standing prohibition on using FM translators for anything other than rebroadcasting FM stations.  While some commenters expected this proposal to be rushed through the FCC, we cautioned that the process might not be so fast, as there were parties who would be opposed to more uses of FM translators, including LPFM advocates who fear that more use of FM translators will preclude opportunities for new LPFM stations.  Well, it looks like the long wait for a decision to allow the use of translators for AM stations may soon be over, as the matter is listed as a possible topic for consideration at the FCC’s September 25 meeting.  This is only a list of possible agenda items, and even were it to make it to the agenda, it can always be removed.  But even being listed as a possible item for consideration does seem to be a positive development indicating that the FCC’s analysis of the matter has neared completion. 

As we have written, the FCC has already allowed some AM stations to begin broadcasts on FM translators pursuant to Special Temporary Authority.  But any STA is by its nature temporary, and can be revoked at any time.  AM broadcasters would welcome the certainty that any permanent decision will bring.  Of course, applications for new FM translators can only be filed during a window for such filings, and as the last translator window is still tied up in questions about how many applications by each party should be processed, AM licensees looking for FM translators must find existing translators (or construction permits from the last window) in order to take advantage of any rule change that the Commission may make.  Nevertheless, any change will immediately provide an important benefit to at least some AM broadcasters.

More than 8 years ago, a group of television station owners (the Network Affiliated Stations Alliance or "NASA") who operated stations affiliated with the major television networks filed a request with the FCC, petitioning the Commission to rule that certain provisions in network affiliation agreements that limited the ability of stations to preempt network programming should be prohibited.  While some of these issues were raised in the Commission’s localism proceeding, the parties have now reached an agreement to resolve many of the issues.  The Commission last week released an order approving that agreement and clarifying some of the legal issues as to what provisions can be contained in network affiliation agreements.  These clarifications not only help to clarify the clauses that can be contained in affiliation agreements, but also give broadcasters insights as to what kinds of provisions can be included in any agreement by which one party provides programming to a broadcast station licensee, including agreements such as LMAs.

 The Commission’s Order sets out standards governing the network-station relationship that insure that the licensee maintains control over programming and other basic operational decisions of their station.  From this basic principal, the following specifics were adopted:

  • Station licensees have an unfettered right to reject network programming that they believe is contrary to the public interest, "unsatisfactory" or "unsuitable
  • Stations can preempt network programming when the licensee thinks there is some other programming which is of greater national or local importance.
  • If a preemption is done for one of these reasons, the affiliation agreement cannot impose monetary or non-monetary penalties or limit the amount of such preemptions
  • Affiliation agreements cannot give networks the right to "option" time in the future unless they make a commitment to fill that time with programming.   This is important in a multichannel digital context, as it prevents networks from tying up time on a second or third channel that they might or might not use.

Continue Reading Setting the Standards for the TV Network-Affiliate Relationship – Guidance for LMAs and Other Programming Relationships

The FCC recently issued a Notice of Inquiry, asking if it should consider mandating that XM Sirius receivers also be able to receive HD Radio or to play material from other audio sources.  This proceeding was promised as part of the FCC’s approval of the XM-Sirius merger, as a potential way of ensuring that competition in the audio entertainment marketplace remained robust after the merger.  While the Commission required that XM Sirius allow manufacturers to build receivers that could incorporate HD Radio or other audio entertainment technologies (e.g. MP3 player, Internet connectivity, etc), it did not require that any receiver contain such technology.  This proceeding asks if any sort of requirement along these lines should be adopted.  It also seeks information generally about the audio entertainment marketplace.

Specific questions posed by the FCC in this proceeding include:

  • Would a mandate promote lower prices and more choices for consumers of audio entertainment?
  • Should it be expected that audio devices with multiple audio entertainment capabilities will be developed without an FCC mandate?
  • Would an XM Sirius radio with HD Radio capability promote dissemination of state-level EAS messages?
  • How well has HD Radio been developing on its own?
  • Would multi-function devices facilitate the development of HD Radio?
  • Are such devices necessary for the development of HD Radio?
  • What other public interest benefits, if any, would result from such a combinations?
  • What technological issues would there be in multifunction devices (e.g. manufacturing cost, battery life, size and weight, interference, etc.)?
  • If a requirement was adopted, how long would any required phase-in period need to be?
  • Should any requirement cover all radios, or just certain types (e.g. in-car, portables, home receivers, etc)?
  • Does the FCC have the authority to adopt any such mandate?

That last issue, the FCC statutory authority to adopt rules in this area, is a general question considered in several other recent FCC proceedings (for instance, see out post here).  Just because the FCC might think that something is a good idea does not mean that it can adopt rules in an area.  Rules requiring that equipment manufacturers take certain actions have run into problems in the Court of Appeals in the recent past as the FCC has only limited jurisdiction over such manufacturers, so any mandate here will need careful justification or perhaps even a specific statutory mandate.

Continue Reading FCC Begins Inquiry on Mandate for HD Radio on XM Sirius Receivers

Last week, the FCC released a Public Notice asking for comments on whether it should begin a Section 403 investigation into the use of Arbitron’s Portable People Meter ("PPM").  A coalition of broadcast groups, the "PPM Coalition," principally comprised of broadcasters providing service to minority communities, sought the investigation as a way of delaying the implementation of the PPM technology next month in a number of large broadcast markets.  In their request, which can be found on the Minority Media and Telecommunications Council website, the PPM Coalition argues that the investigation is justified based on the Commission’s objectives (and various administrative and legislative mandates) to improve minority ownership in broadcasting.  The PPM Coalition contends that methodology problems in PPM implementation result in artificially low ratings for minority owned stations.  These parties argue that, if the system is implemented, a number of minority-programmed stations will disappear.  Arbitron has argued that the Commission does not have the jurisdiction to regulate ratings services (who are obviously not FCC licensees) or the methodology that they use.  Comments on the request for an investigatory hearing are due on September 24, and replies on October 6 (two days before the PPM system is to be implemented in eight markets).

Section 403 of the Communications Act gives the Federal Communications Commission the power to conduct investigations of any complaint of any violation of its rules or of provisions of the Communications Act, or to explore any other matter relating to the provisions of the Act.  Such investigations are often conducted before an Administrative Law Judge, but can be conducted before the Commission itself, and allow the FCC to use full discovery techniques (e.g. document production requests and depositions) and to conduct an evidenciary hearing.  In the past, the process was used much more frequently.  It has been used both to investigate specific complaints of possible misconduct by individual licensees, and to conduct broader inquiries into business practices in a regulated industry to decide if FCC regulation was necessary.  For instance, in the 1960s, there was an investigation into network practices to determine if those practices required FCC action to regulate the network-affiliate relationship.  In recent years, the power has been rarely used, and when used has tended to relate to specific allegations of misconduct to determine if the FCC should bring some sort of enforcement action against a regulated entity.

Continue Reading FCC Seeks Comment on Whether to Begin Investigation of Arbitron PPM – How Far Does FCC Regulatory Power Extend?