Last year, Congress considered limits on direct to consumer (DTC) prescription drug advertising (about which we wrote here), but this effort stalled.  A recent letter from two Congressional leaders of the Energy and Commerce Committee suggest that Congress is looking at these issues once again.  This advertising has become important to television networks, and to drug manufacturers anxious to distribute information about their latest products to consumers.  Congress held a hearing in May to consider issues about this advertising.  One concern was whether ads could be misleading when they featured celebrities (a particular concern was when Robert Jarvic, the inventor of the artificial heart who is not an medical doctor, was seen in a drug commercial, which some felt implied that he was giving medical advice). Other concerns include the potential for advertising to build up large demands for new drugs, quickly exposing these drugs to large populations, when a slower roll out would give the companies and the medical community more time to discover any unanticipated side effects.  An article about these concerns is available to Wall Street Journal subscribers, here.  The Congressional letters, which can be accessed here, address both of these issues.

The letter, from Congressmen Dingell and Stupak, both from Michigan, ask several drug companies and the Pharmaceutical Research and Manufacturers of America (the trade association for Pharmaceutical companies), if they were planning to update their guidelines on direct to consumer advertising to address the issue of celebrity advertising.  Also, the letter asked if the companies and the association would back a voluntary two year moratorium on advertising for new drugs, presumably while new guidelines are worked out.  FDA guidelines already require a statement on the major risks of the drug and information on where consumers can learn more about the risks of the drug (suggesting a combination of 4 datapoints in each ad – a toll-free telephone number, a website, a recent print publication – all dealing in more detail with side effects and cautions – and a recommendation to "ask your doctor" about the effects of the drug).  The Congressional Research Service of the FDA has prepared a good  history of regulations in this area and a summary of the issues.  Watch upcoming Congressional actions to see if even more disclosures will be necessary.

David Oxenford of Davis Wright Tremaine’s Washington DC office will speak at the Iowa Broadcasters Association Convention in Des Moines on June 12, 2008.  Dave will be conducting a seminar on the FCC’s political broadcasting rules with Bobby Baker, head of the FCC’s Office of Political Broadcasting.

DWT’s Political Broadcasting Guide, which summarizes many of the FCC’s political broadcasting rules, can be found here. 

David’s PowerPoint Presentation used during the seminar can be found here.

Affected Stations:  

  • Radio Stations in Michigan and Ohio
  • Television Stations in Arizona, Idaho, Maryland, Nevada, New Mexico, Utah, Virginia, West Virginia and Wyoming, as well as the District of Columbia

Just a reminder that by June 1, 2008, radio stations in Michigan and Ohio, and television stations in Arizona, Idaho, Maryland, Nevada, New Mexico, Utah, Virginia, West Virginia and Wyoming, as well as the District of Columbia, must prepare and file electronically an FCC Form 323 Biennial Ownership Report with the Federal Communications Commission (FCC).  Similarly, noncommercial stations in these states must file a Biennial Ownership Report on FCC Form 323-E by that date.

Ownership Reports are to be filed every other year, reporting on changes in the licensee’s ownership and updating the information requested by the form. Ownership information must be provided for all attributable owners of the licensee.  The timing for the filing of the Biennial Ownership Report and the preparation of the Annual EEO Public File Report is based on the anniversary of the filing of the station’s license renewal.  In turn, the renewal cycles are organized by state and type of service, and are staggered based on the FCC’s prearranged schedule. Periodically, we will remind groups of stations as to their upcoming deadlines, and stations should be vigilant to make these required filings.  A copy of our complete reminder memo containing additional information on this filing deadline can be found here. 

June 1st marks the deadline for two FCC EEO requirements.  First, by June 1st, radio and television stations located in Arizona, the District of Columbia, Idaho, Maryland, Michigan, Nevada, New Mexico, Ohio, Utah, Virginia, West Virginia, and Wyoming, must prepare their Annual EEO Public File Reports.  Specifically, stations or Station Employment Units (SEUs) in those states (and DC) with five or more full time employees (30 hours or more per week) must:  (1) prepare their Annual EEO Public File Report; (2) place it in the public inspection file of each station comprising the SEU; and (3) post the Report on the websites, if any station in the SEU has a website, all by June 1.  The Annual EEO Public File Report summarizes the hiring and EEO activities conducted by the station or SEU during the past 12 months.  The Report provides information about the full time job positions filled in the last year, the recruitment sources used to fill those positions, and the outreach activities that the station or SEU performed during the year.  In preparing their Annual Reports, stations are encouraged to carefully review their EEO activities and take the time to organize their records.  Stations should have appropriate documentation to back up each of the recruitment sources used for each job opening, as well as for each outreach activity.  This annual report is also a good time for the station or employment unit to assess the success of its outreach and the efficacy of its recruitment sources, and to make any adjustments necessary to improve EEO compliance in the coming year.  A copy of our longer EEO advisory can be found here. 

Second, in addition to preparing the Annual EEO Public File Report by June 1, larger radio stations in Michigan and Ohio (those with eleven or more full-time employees), and television stations in the District of Columbia, Maryland, Virginia, and West Virginia must also prepare and file electronically with the Commission an FCC Form 397 Mid-Term EEO Report.  The Form 397 provides the FCC with copies of the SEU’s two most recent Annual EEO Public File Reports, and is an important part of both the station’s compliance with the EEO rules and the Commission’s monitoring procedures.  While normally the Annual Report is simply prepared and placed in the station’s public file and on the website, at the mid-point of the license term stations must actually provide the FCC with copies of its two most recent Reports.  Notably, June 1st marks the first time that television stations will have filed the Form 397, as television renewals are staggered from radio renewals.  Following the renewal anniversaries, television stations in other states will follow later this year and next.  And again, only radio stations or SEUs located in Michigan and Ohio that have 11 or more full-time employees, and television stations in DC, Maryland, Virginia, and West Virginia with five or more full-time employees are required to file an FCC Form 397. 

UPDATE  5-29-2008-  Please note, the Commission has revised the dates for submitting comments in this rule making proceeding.  Comments in the proceeding are now due on or before June 30, 2008, and Reply Comments are due on or before July 14, 2008.  This means that interested parties have a couple of weeks less than initially thought to prepare and file comments in this proceeding, so start drafting now.  A copy of the Federal Register correction notice can be found here. 

The FCC has published its Further Notice of Proposed Rulemaking on its efforts to encourage diversity in the broadcast media in the Federal Register, thus setting the dates for public comments.  The FCC is seeking comment on a number of ideas – some to restrict the definition of the Designated Entities that are eligible to take advantage of the rules promote diversity to minority groups and perhaps women, others to expand the universe of media outlets available to potential broadcast owners – including proposals to expand the FM band onto TV channels 5 and 6, and proposals to allow certain AM stations, which were to be returned to the FCC after their owners received construction permits for expanded band stations, to retain those stations or transfer them to Designated Entities.  There are numerous other issues to be considered that we summarized in detail here.  Check out the details, and file your comments, which are due on June 30. 

The Federal Register publication also sets the effective date for the Diversity rules that the FCC did adopt.  These rules will become effective on July 15.  We summarized the new rules here.  While many of these new rules are relatively uncontroversial, allowing certain limited exceptions to the multiple ownership rules for companies that help minority ownership, some have imposed new obligations that, in some cases, are not easily defined.  For instance, while no one would argue with the proposition that parties who discriminate based on race or gender should be penalized, the FCC adopted some rules that may need further clarification.  For instance, the FCC adopted new rules to require certifications that there has been no discrimination in all FCC applications seeking approval for the sale of a station (FCC Forms 314 and 315).  The FCC also adopted rules prohibiting dictates by advertisers that their advertising not run on urban or Spanish formatted stations (‘no urban, no Spanish" dictates).  Yet, on neither of these rules did the FCC provide any specificity as to what they were prohibiting, or what the Commission would look at in enforcing these rules.  Watch for potential requests for reconsideration or clarification of these and perhaps other rules – which are due on June 15. 

Last week, the US Senate passed a resolution of disapproval, which seeks to overturn the FCC’s December decision relaxing the multiple ownership rules to allow newspapers and television stations to come under common ownership in the nation’s largest markets (see our summary of the FCC decision here).  This vote, by itself, does not overturn that decision.  Like any other legislation, it must also be adopted by the House of Representatives, and not vetoed by the President, to become law.  In 2003, the last time that the FCC attempted to relax its ownership rules, the Senate approved a similar resolution, but the House never followed suit (perhaps because the decision was stayed by the Third Circuit Court of Appeals before the House could act).  In this case, we will have to see whether the House acts (no dates for its consideration have yet been scheduled).  Even if the House does approve the resolution, White House officials have indicated that the President will veto the bill, meaning that, unless there is a 2/3 majority of each house of Congress ready to override the veto, this effort will also fail.

The reactions to this bill passing the Senate have been varied.  The two FCC Democratic Commissioners, who both opposed any relaxation of the ownership rules, each issued statements praising the Senate action (see Commissioner Copps statement here and that of Commissioner Adelstein here).  The NAB, on the other hand, opposed the action, arguing that the relaxation was minimal, that it was necessary given "seismic changes in the media landscape over the last three decades" (presumably referring to including the economic and competitive pressures faced by the broadcast and newspaper industries in the current media environment), and that it ought not be undone by Congressional actions.   

Continue Reading Senate Resolution of Disapproval on Multiple Ownership – What Does it Mean?

In recent months, the broadcast industry has experienced one of the most active periods of regulatory activity in recent memory. Since November, the FCC has adopted enhanced disclosure obligations concerning the public interest programming of television broadcasters and requirements for an on-line public inspection file; rejected most calls for increased deregulation of broadcast ownership (allowing only the cross-ownership of broadcast stations and newspapers in the largest markets); established specific prohibitions against advertising practices that involved “no Spanish, no urban dictates”; placed mandatory disclosure obligations on television broadcasters in connection with promotion of the DTV transition; proposed rules that could favor low power FM stations over improvements in full-power broadcast services and existing FM translator licensees; and proposed sweeping regulation of broadcasters which could potentially require specific amounts of nonentertainment programming by all stations, restrict the flexibility of broadcasters’ location of their main studios, require 24-7 live staffing for all stations that operate on that basis, and perhaps even evaluate the music selection process of radio operators. Rumored to be in the offing are proposals to regulate embedded advertising, to adopt enhanced rules on sponsorship identification in connection with video news releases and payola-like practices, and perhaps even expand EEO reporting requirements (as the FCC recently asked for public comment on the employee-classification information for its long-suspended requirements for the filing of FCC Form 395 – the Annual Employment Report in which stations categorize all their employees by their employment duties, race and gender). And Congress has not been idle, with proposals introduced for the adoption of a performance royalty on over-the-air radio for the use of sound recordings, hearings about potential restrictions on prescription drug advertising, and a proposal to roll back the limited ownership reform adopted by the Commission in December.

With all this activity in a six month period under a Republican administration with a Republican majority on the FCC, during a time of great turmoil in the broadcast industry itself, as television prepares for the digital transition and broadcast revenue growth is slow or nonexistent (based on a variety of factors including general economic conditions and competition from the plethora of new media choices), many broadcasters are wondering what’s going on? And some fear even more changes could come about in any new administration that may come to Washington after the November elections, no matter what the result of that election. The one candidate with the most experience in the regulation of broadcasting, Senator McCain who has chaired the Senate Commerce Committee which regulates the broadcast industry, has by no means been a captive of the broadcast industry – leading efforts to enhance the use of LPFM and at one point pushing a spectrum tax proposal for television broadcasters for the use of the digital spectrum.

Continue Reading Broadcasters and the Regulatory Pendulum – Swinging Toward More Regulation

In a decision released late on Friday, the FCC upheld a $9,000 fine on a noncommercial television operator who broadcast underwriting announcements which, in the opinion of the Commission, were too much like commercials and thus were impermissible on a noncommercial station.  Under the Commission’s policies governing the noncommercial nature of noncommercial stations, it is permissible to air an underwriting announcement acknowledging a commercial entity that makes a financial contribution to the station.  And it is permissible to state the nature of the business, where it is located, and to air the slogan of the company.  What is not permissible is when the underwriting announcement contains "calls to action," qualitative or comparative claims, price information, or other inducements to do business with this particular company.  In this case, the Commission felt that the announcements crossed some or all of these lines.

In the initial Notice of Apparent Liability in this case, released in late 2004, the text of the announcements at issue are set out.  In last week’s order, phrases such as "planning a special occasion?" as the intro line to an announcement about an Ice cream store were deemed to be calls to action, and the description of the ice cream cakes that the store made as "tastefully decorated" were deemed to be qualitative.  Similarly, statements about a real estate company that "we’re all about family" and "we love selling real estate" were deemed to be comparative in nature, trying to distinguish this particular agent from other competitors.  In only one of ten ads, one for a school supply store, did the Commission overturn its previous determination, finding that an announcement for "creative learning materials" was arguably descriptive and not qualitative.

Continue Reading FCC Fines Noncommercial Station for Enhanced Underwriting Announcments that Were too Commercial

In a case just released by the FCC, a broadcaster was fined for enforcing a non-compete agreement that was entered into when a broadcaster sold one of its stations in a market in and agreed that it would not compete in the same format if it ever acquired another station in the same market.  The agreement had prohibited the Seller from competing with the Buyer in a news-talk format.  After the closing of the sale of the station, the Seller acquired another station in the market and adopted a format that a local court found was covered by the non-compete clause in the contract.  The local court issued an injunction against the continuation of the news-talk format.  At that point, the Seller filed a complaint with the FCC, arguing that, by obtaining the injunction, the Buyer had engaged in an unauthorized assumption of control of the station covered by the injunction, without FCC approval.  The FCC agreed with the Seller, and fined the Buyer $8000 for exercising control over the station that Seller had bought.

The FCC’s reasoning in this case, citing a similar letter decision from 2006, is that the restriction on format impedes a licensee’s control over its own programming, and restricts its ability to adjust its operations to account for changing market conditions.  The Commission concluded that, barring the licensee from utilizing a particular format, even for the limited period of the non-compete agreement, was contrary to the public interest.  By obtaining the injunction to prevent the Seller from using the news-talk format, the Buyer had impermissibly exercised control over the station that it had already sold.  In fact, the Commission went further, and found that the exercise of control over the programming, personnel or finances of the station would be a violation of the rules. 

Continue Reading Format Noncompete Agreements Can Lead to FCC Fine

The FCC today released a Notice of Proposed Rulemaking asking for public comment on its proposed Regulatory Fees for 2008.  These fees are paid annually by most commercial entities that are regulated by the FCC for the privilege of being regulated.  Noncommercial broadcasters are exempt from the fees.  The fees are normally paid in August or September, during a period of several days that will be established by the Commission after receiving comments on this proposed fee schedule.  The fees for broadcasters are, as they seemingly always do, increasing.  The Commission is also asking for comment on one specific change in how broadcast fees are collected, asking if it should collect fees from AM station licensees who have expanded band stations for both the expanded band station and the in-core channel, if the licensee is still operating both.  Currently, fees are only paid once by expanded band licensees. 

Broadcast fees are based on Class of Service and the population covered by a station.  For AM stations, the proposed fees are to increase from $400 per station for the least powerful stations in the smallest market to $450, and from $7275 for high-powered stations in the largest markets  to $7925.  For FM stations, the least powerful stations in the smallest markets are proposed to increase from $575 to $600.  For high power stations in big markets, the increase is from $9125 to $10,200.  For TV stations, the fees range from $1875 for a UHF station in the smallest markets, up to $69,400 for a VHF station in the largest markets, up from $1750 and $64,300 last year. 

Continue Reading FCC Proposes 2008 Regulatory Fee Schedule