On Monday, the President signed into law a bill adjusting the reimbursement dates of the Low Power Television grant program by which LPTV and TV translator stations can seek a $1,000 grant in order to ensure that they are able to continue to receive and rebroadcast the signals of primary full-power television stations once the full-power stations complete the transition to digital television.   In late 2007, the government announced the start of the LPTV Digital-to-Analog grant program designed to help translators and low power television stations continue their analog broadcasts after the February 17, 2009 conversion of full-power television stations to DTV.  Specifically, the LPTV Digital-to-Analog Conversion grant program will provide funds to eligible translators and LPTV stations that need to purchase a digital-to-analog converter box in order to convert the incoming signal of a full-power DTV station to analog format for retransmission on the analog LPTV station.  The program has been funded with a total of $8 million, which is available in $1,000 grants to eligible LPTV stations.  As a result of the recent change, funds granted through the LPTV Digital-to-Analog grant program will available beginning in fiscal year 2009 (Oct. 1, 2008 – Sept. 30, 2009), rather than in fiscal year 2011.  In addition, the recent bill also extends the availability of funding through fiscal year 2012.

Any low-power television broadcast station, Class A television station, television translator station, or television booster station that meets the following three criteria may apply for the grant to defray the cost of the digital-to-analog converter box:

  1. It is itself broadcasting exclusively in analog format;
  2. It has not purchased a digital-to-analog conversion device prior to February 8, 2006; and
  3. It is (or will be) re-transmitting the off-air digital signal of a full-power DTV station.

Applications for this grant program are being accepted until February 17, 2009.  Priority compensation will be given to eligible LPTV stations licensed to 501(c) non-profit entities or LPTV stations serving a rural area of fewer than 10,000 viewers.  Thus, priority is given to stations owned by translator associations and others that might not otherwise be able to afford the costs of converting the signals that they receive from analog to digital, and which might, without the grants, go off the air.  More information on how to apply for such grants is available on the NTIA’s website here.   

Continue Reading Dates for Reimbursement Under the LPTV Digital-to-Analog Grant Program Revised

Last week, we wrote about one issue that was addressed at last week’s Senate Judiciary Committee hearing on music royalties – the standards used to derive the royalties, and expressed hope that there was at least some interest in compromise on behalf of the Senators and industry representatives.  However, another issue which came out of those hearings suggests that compromise may not be so easy if the parties really believe what they say – as there is a fundamental distinction in both how the parties view the health of the Internet radio business, and how they view the relationship between royalties and the music business generally.  One can only hope that the gulf that was evident was just due to public posturing as, if it was not, there may well be an insurmountable differences between the parties that cannot be bridged in any settlement negotiations over the royalties that Internet radio pays for the use of sound recordings.

The gap became evident from the opening statements of the first panel – comprised of two Senators interested in the issue- Senator Wyden on behalf of the Internet Radio Equality Act stating that it was necessary to avoid having the high royalties decided by the Copyright Royalty Board destroy a fledgling technology, while Senator Corker of Tennessee talked about the importance of music to radio and the exhaustive process that the CRB had gone through in arriving at the royalties that it approved.  But in the day’s principal panel, the issues became crystal clear, as John Simson of SoundExchange talked about the "vibrant" business of Internet radio, citing an analyst’s report that Internet radio would be a $20 billion advertising market by 2020, and the statement of an employee of CBS that Internet radio was a great business and that CBS was going to "own it."  Speaking next, Joe Kennedy, CEO of Internet radio company Pandora had a dramatically different perspective – talking about an industry analyst who stated that the royalties that would result from the CRB royalties would exceed the revenue of the Internet Radio industry, and that, for Pandora, the failure to find a compromise solution to the CRB-imposed royalties would mean that his service would "die."  He pointed to Pandora’s position as the largest of the Internet radio companies in terms of listenership, the $25 million in revenue that it expects to make this year, and how $18,000,000 of that would go just to the SoundExchange royalties – 75% of its revenue to this one expense. 

Continue Reading Senate Hearing: The Search for Compromise on Music Performance Royalties – Part Two: The Issue of Perspective

Last week, an article in the Wall Street Journal focused on the enforcement of the trademark that the United States Olympic Committee has in the word "Olympics."  Thus, anyone who wants to call some sort of competition an "Olympic" contest, or anyone who uses any derivation of that word, is asking for potential issues should the USOC get word of that use.  What the article did not address was the issue that this raises for broadcasters and advertisers.  Just as the trademarked term "Super Bowl" can cause problems for companies that use it in advertisements without permission of the NFL, advertisers should refrain from the use of the term Olympics in connection with promoting their products.   Companies have paid huge rights fees to get the exclusive rights to use the Olympics in their advertising campaigns, usually getting exclusive rights in a particular product category.  These companies and the Olympic committee do not like to see local advertisers appropriating the use of the Olympics name (or the interlocking circles that comprise their symbol) in someone else’s ad.  So, just as electronic stores promote the sale of their big screen TVs before the Super Bowl by talking about the "Big Game" rather than using the trademarked phrase, advertisers must use care and avoid any trademark infringement by trying to tie their products to the Olympics during this upcoming event. 

The Federal Communications Commission voted 3-2 on to issue an order imposing regulatory controls on the Internet. The ruling concerns a network management technique used by Comcast for its high-speed Internet service that had the effect of giving slightly lower priority to some peer-to-peer (P2P) upload sessions so that the latency-sensitive applications of the vast majority of its Internet customers would remain uninterrupted. The Commission ruled that the practice—which Comcast previously announced would be phased out this year—violated the Commission’s “network neutrality” policy guidelines and amounted to discriminatory “blocking” and “monitoring” of Internet content, as well as “interference” with consumers’ “right to access” lawful Internet content. While not fining Comcast, the Commission instead orders Comcast to report on the technique, submit a compliance plan for terminating it by year-end, and describe to the FCC and the public the specifics of what new management techniques will be implemented. Noncompliance, warns the Commission, will be subject to future injunctive relief and additional enforcement actions.   Additional details of the FCC’s announcement, and specific concerns about this ruling, can be found in our firm’s advisory bulletin about this decision.  The Press Release on the FCC action can be found here.

While the full text of this decision is not yet available, the New York Times ran a story summarizing its effects.  The statements of the Commissioners on this decision are also available.  The dissents approach the issues from somewhat different perspectives.  Both express the hope that these kinds of objections could have been resolved by industry organizations – Commissioner McDowell’s statement going into great detail about the lack of notice and precedent for the decision, and the potential impact that the decision will have on network management practices and voluntary decisions of Internet management organizations.  Commissioner Tate raises questions of what the decision will do to attempts to design technological systems that can sniff out adult content for purposes of protecting children from such content.  It’s interesting that the FCC’s own proposed rules for portions of the 700 mhz band include such requirements for the monitoring of adult content.

Continue Reading FCC Finds Comcast Internet Management Technique Violates Net Neutrality Policy

Tuesday, the Senate Judiciary Committee held a hearing on the sound recording performance royalty, titling the hearing  "Music and Radio in the 21st Century: Assuring Fair Rates and Rules Across Platforms" (a webcast of which can be accessed here).  While the hearing was ostensibly to search for a way to come up with a uniform system of determining music royalties across various digital media platforms (though the broadcast analog performance royalty snuck into the discussion from time to time), in reality it appeared to be two things – a search for compromise and a demonstration of the dramatically different perspectives from which the recording industry and the digital radio industry approach the topic.  While one might assume that the dramatically different approaches would mean that no compromise was possible, there were a few areas of commonality that perhaps reflect the potential that, at some point, common ground can be found.  We will review the hearing’s discussions in multiple parts – today dealing with the issue of the standard to be used in assessing royalties for the public performance of sound recordings and, in a subsequent post, we will summarize the differing world views of the participants and why the dramatically different ways that they see the business make for difficulty in compromise.

But first, a summary of the issues that were to be discussed at the hearing. Essentially, the hearing was to discuss two bills addressing different aspects of the royalty issues.  Senator Feinstein of California, who chaired the hearing, was looking for any common ground that might exist that would allow for movement on the Perform Act that she has introduced.  That act would attempt to do two things – (1) assure that a common standard was used to assess sound recording royalties in all digital media and (2) adopt standards that would require digital services to use some form of security or encryption that would make "stream ripping" more difficult.  The first goal of her bill, looking for a common standard, was an attempt to avoid some of the problems that have been evident in the royalty proceedings that have thus far been held before the Copyright Royalty Board which have resulted in dramatically different royalties – ranging from 6 to 8% of revenue for satellite radio companies and a similar royalty for digital cable music services (see our posts on those rates here and here) derived under an "801(b) standard" (after section 801b of the Copyright Act) , and the royalty for Internet radio that has been estimated to range between 75% and 300% of gross revenues of those services, derived from a "willing buyer, willing seller" royalty standard.  The Perform Act would subject all to a single standard – and it currently proposes a new standard – "fair market value."

Continue Reading Senate Hearing: The Search for Compromise on Music Performance Royalties – Part One: The Issue of Standards

The FCC has released a Public Notice announcing its approval of the XM and Sirius satellite radio merger.  The public notice is only two pages long, with a four page appendix providing very brief summaries of the conditions imposed on the two companies which a majority of the Commissioners found sufficient to protect consumers from harm from the merged entity.  The full text of the decision, providing the full reasoning of the Commission on its approval, has not yet been released.  Until it is, the impact for broadcast ownership and the treatment of broadcast consolidation set by the precedent of this decision remains unclear.

The conditions placed on the merger and outlined by the decision include some surprising ones beneficial to broadcasters, including that the merged company not use its terrestrial repeaters to originate local broadcasts and that the company not enter into exclusive agreements precluding the broadcast of local sporting events by over-the-air broadcast stations.  The decision also imposed price caps on the service for three years, and set out conditions to open the manufacturing of satellite radio receivers to more companies and prohibiting any restriction on combining the radio receiver with other audio devices including digital radio receivers.  No condition requiring that satellite radio receivers be capable of picking up over-the-air digital radio ("HD Radio") was imposed, though the FCC promised to issue a Notice of Inquiry to review that issue.  Specific programming channels will be made available for noncommercial educational use and for leased access.  The FCC also made clear that satellite radio will be subject to the FCC’s EEO rules.

Continue Reading FCC Releases Public Notice of Decision Approving XM-Sirius Merger – Precedent for Broadcast Ownership Not Yet Clear

The New York Times ran an article about how certain African-American radio hosts were acting as cheerleaders for the Obama campaign, and contrasting that to past elections where talk radio hosts like Rush Limbaugh gave a boost to Republican candidates on their programs.  How is it that these programs can take political positions without triggering requirements that opposing candidates get equal time?  Under FCC rules, unless a candidate’ recognizable voice or image is broadcast by a station, there is no right to equal opportunities.  In the past, until the FCC abolished the Fairness Doctrine by declaring it to be unconstitutional, even without a candidate appearance, the station would have had an obligation to give both sides of a controversial issue of public importance, such as an election, free time to respond to on-air statements by an announcer.  When the doctrine was abolished, stations were free to air pointed programs taking positions on issues, giving rise initially principally to the conservative commentators, and more recently to their more liberal counterparts such as those heard on Air America radio.

The abolition of the Fairness Doctrine also allowed broadcasters to editorialize, even endorsing candidates for political office without having to give the opponent of their favored candidate equal time, just like print media can do. Similarly, a station can take a position on a ballot issue, or on another controversial issue of public importance in their communities without having to provide time to those with opposing viewpoints – allowing stations to fully participate in their communities political life.  Under the Fairness Doctrine, stations even had to give time to those with viewpoints opposed to parties who bought time on a controversial issue if the opponents could not themselves afford to buy time.  The occasional discussion of reviving the Fairness Doctrine ignores these issues.

Continue Reading No Candidate, No Fairness Doctrine and No Equal Time

The FCC’s Notice of Inquiry and Notice of Proposed Rulemaking on Sponsorship Identification issues (which we summarized in our firm’s advisory and about which we wrote here), which deals with a host of issues including embedded advertising and product placement, was published in the Federal Register late last week, starting the clock on the filing of comments.  Comments on this wide-ranging proceeding are due on September 22, and replies on October 22.  With the broad range of issues that are discussed in this proceeding, from proposed rules on the size and length of textual sponsorship identifications in television advertising to sponsorship identification requirements for live-read radio commercials, there is something on which almost every broadcaster will want to comment.

A recent New York Times article helped bring the proceeding to the attention of the general public.  The article writes about television stations which are paid to have morning show hosts place coffee cups with identifiable logos (in this case cups of McDonalds coffee) on the desk of the news anchors of a morning news program.  Under some of the proposals identified in the Notice of Inquiry in this proceeding, some sort of identification (perhaps a crawl or superimposed message) of the sponsor for the placement of those cups would be required concurrently with the visual images of the cups on the screen.  The same would be true of the appearance of a product in any scripted comedy or drama, and perhaps even when feature films are run on TV in which the filmmaker was paid to include specific products in the movie.   Adoption of any of these suggestions could certainly change to face of broadcast television, particularly as it adapts its advertising practices to deal with Digital Video Recorders and other technological advances.  For broadcasters to retain their flexibility in such matters, they should file comments on or before the September 22 filing deadline. 

Congress years ago tried to regulate indecency on the Internet through the Child Online Protection Act, through regulation of content that was harmful to minors.  Because of the sweeping nature of the restrictions, the Courts have repeatedly invalidated the law.  We wrote in March 2007 about a Federal District Court decision invalidating the law (this post also details the provisions and prohibitions of the Act).  Now, the Third Circuit Court of Appeals has upheld the District Court ruling, finding that the law violated the First Amendment rights of website operators, as the government had not shown that the Act’s restrictions were the least restrictive means of accomplishing the government’s objectives – protecting children.  According to the Court’s findings, voluntary filters would accomplish the same ends, and allow adults to view adult material which might be harmful to children under the Act’s definition but which is not legally obscene and is therefore constitutionally protected .  Our law firm’s  Advisory Bulletin on the Third Circuit’s decision can be found here.  The Third Circuit decision is available here.

The Third Circuit Court of Appeals today released a decision overturning the FCC’s fine of CBS Television for its Super Bowl broadcast of the notorious Janet Jackson halftime show and her "clothing malfunction."  The decision is available here.  Our partner Bob Corn-Revere argued the case.  Full details on the decision are contained in our firm’s Advisory Bulletin which was just issued.  But essentially, the court found that the FCC had not sufficiently justified its departure from prior precedent that any "fleeting" content would not result in a fine by the FCC, nor had the FCC justified its decision finding that the conduct of CBS was "willful," as the Court questioned whether the independent actions of Janet Jackson and Justin TImberlake could be attributed to CBS.  The decision was remanded to the FCC with the instruction that it could not fine CBS but that any further decision could be only declaratory in nature – setting policy for the future. 

If the FCC decides to wade back into the indecency area, it will have to deal with two decisions finding its rulings arbitrary and capricious.  We wrote about the Second Circuit decision throwing out the "fleeting expletive" fines arsing from slips of the tongue during the Golden Globes, the Billboard Music Awards and other programs (see our last post on that case here).  Of course, the FCC has asked the Supreme Court for review of the Golden Globes case, so we’ll all have to stay tuned for more information about what action that Court will take, and what the FCC will do with respect to these decisions.