Watch what your employees are up to. That’s the message of a recent decision by the FCC, fining a broadcaster $4000 for airing a telephone call that was taped and broadcast without the consent of the caller. In the case released earlier this week, the licensee asked for forgiveness based on the fact that the employee had already left the employment of the station, and because the licensee did not know of the conduct, could not even confirm that it occurred, and did not condone that conduct if it had in fact taken place. Essentially, the FCC found that the evidence provided by the caller who complained to the FCC was so convincing that the Commission could conclude that the call had in fact been aired without the caller’s consent even though the licensee could not confirm it, and the licensee was responsible for the actions of its employees. This sends the clear message to licensees that they must carefully supervise their employees, and think twice about putting that “wild and crazy” disc jockey on the air if the licensee thinks that he won’t be restrained by the Commission’s rules.

This case is another example of the FCC’s rules against airing phone calls without the consent of the caller (or taping those calls for airing without consent), except in the limited circumstances where a caller should know from the context of the program that, by calling the station, he will be put on the air. For instance, if the caller calls on a call-in line to an on-air show where the stations employees are regularly putting callers on the air, then the station should not have problems under the rules. But broadcasters are safest if they are cautious with such phone calls – warning callers with a taped or live message that there call may be taped or put on the air before the taping or airing occurs

Continue Reading Fine for Airing Telephone Call Without Permission – Unauthorized Employee No Excuse

The appeals of last year’s Copyright Royalty Board decision on the royalties paid for the use of sound recordings by Internet radio stations continue on, and one recent filing raises interesting questions of whether or not the CRB was properly appointed.  Last week, the Department of Justice, which represents the CRB in defending its decision in the Court of Appeals, filed its brief in opposition to the briefs of the webcasters, which we summarized here.  The DOJ brief essentially argued that the webcasters’ briefs were insufficient to satisfy the requirement for a successful appeal – that the CRB decision was arbitrary and capricious or otherwise contrary to law.  Essentially, a Court need not revisit the decision and substitute its judgment as to whether the it believes that the decision was correct, but instead, to overturn a decision, the Court must find that the CRB (the expert agency) either violated the law or could not, on the fact, have logically come up with the decision that it did.  Thus, the DOJ brief made arguments that there was enough factual evidence for the CRB to decide in the way that it did, and made arguments that the webcasters had not offered contrary arguments or evidence on certain points during the CRB proceeding and were therefore barred from raising those arguments now.  Just before the DOJ brief was filed, another pleading raised the fundamental question of whether the Copyright Royalty Board was properly appointed and, if not, whether it has the constitutional authority to decide the cases that it has been considering.

This new argument about the CRB’s authority comes in a request filed with the Court of Appeals by Royalty Logic, a party to the CRB proceeding.  Royalty Logic is not a webcaster, but instead is seeking to be an alternative collection agency to SoundExchange.  Its pleading seeks supplemental briefing on the question of whether the Copyright Royalty Judges are “inferior officers” of the Federal government who, under the Constitution, can only be appointed by the President, by the Courts or by the head of a Department of the government. In a recent Supreme Court case, the Court found that certain tax court judges, who were appointed by a chief judge and not by a cabinet-level officer (the head of a “department”) violated this Appointments Clause of the Constitution. There has been much press coverage in the past few weeks as to whether this decision also applies to patent judges, and whether it could invalidate hundreds of patents approved by these judges (see the NY Times article on this issue, and listen to an NPR piece about the controversy). Royalty Logic contends that the same logic should apply to the appointment of the Copyright Royalty Judges who make up the CRB.  The Copyright Royalty Judges are appointed by the Librarian of Congress.  One question would be whether the Librarian is the equivalent to the head of a department though, technically, the Library of Congress is not even in the Executive Branch of government, but instead part of Congress.  In any event, Royalty Logic notes that the Copyright Royalty Tribunal, a predecessor agency done away with during the Clinton administration as part of their "Reinventing Government" program (one of the few agencies that was "reinvented"), had members appointed by the President.

Continue Reading Does the Copyright Royalty Board Exist – Internet Radio Appeal Proceeds and New Issues Arise

At a meeting held this week, the Radio Advertising Bureau (RAB) adopted Guidelines promoting the use of "posting" or audience delivery guarantees for the radio industry.  While these guidelines are voluntary, and no doubt some broadcasters will not adopt the practice, those who do should be aware of the political broadcasting implications.  For years, at political broadcasting seminars that I have conducted around the country, the question of how posting affects the political broadcasting obligations of television broadcasters has been much discussed. In its 1991 policy statement on Political Broadcasting, which essentially established the rules that broadcasters have followed in the years since, the Commission’s entire discussion of how audience underdelivery make good spots affected a station’s political broadcasting obligations was essentially addressed in two sentences – essentially saying that such guarantees must be made available to candidates in the same manner as commercial advertisers.  Thus, stations must offer audience delivery guarantees to political advertisers if they offer such guarantees to commercial advertisers.  The 1992 reconsideration added a few more sentences, making clear that any make-good spots provided to meet any delivery guaranty would not need to be considered in determining the lowest unit charge of the time periods in which the make good runs.  What the Commission leaves to the broadcaster, however, is to fashion a way to compensate the candidate for underdelivery when the underdelivery may not be discovered for months (when the next ratings book is released), which will usually be after the election for which the candidate purchased the spots. 

In the television industry, where posting has been common for years, stations deal with the political implications in many different ways.  First, not all purchased spots will have delivery guarantees. Under Commission rules, spots that have different rights can be considered to be spots of a different class, and each class of spots will have its own lowest unit rate.  Thus, spots with audience delivery guarantees will likely have a higher price than those that do not have the guarantees.  As the make good spots for any underdelivery of audience will be of little value if they are not available until after an election, the candidates will usually opt for the lower priced spots without the guarantees.  Alternatively, stations can offer candidates a discount off of their lowest unit rates for spots with guarantees in exchange for the candidates agreeing to waive any underdelivery make-good spots.  In a few cases, candidates agree to take any make-good spots to which they may be entitled, and use them after the election to thank their supporters or to convey policy positions to their constituents.

Continue Reading RAB Adopts Guidelines for “Posting” – Remember to Consider the Political Broadcasting Implications

The Commission today published notice in the Federal Register revising the dates for submitting comments in its rule making "In the Matter of Promoting Diversification of Ownership in the Broadcasting Services."  If you will recall, this is the rule making proceeding that seeks comment on a number of new proposals, including whether to revise the definition of "Designated Entities", possibly expanding the FM band to include TV channels 5 and 6, possibly adopting rules to allow AM expanded band stations to retain those stations or transfer them to Designated Entities, and whether Class A LPTV stations should be afforded must-carry rights on cable systems. 

Although the FCC had initially pegged the comment date at July 15th when it first published notice a couple of weeks ago, apparently that date was a miscalculation.  Thus, the dates for commenting have now been revised, and 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.  See our earlier summary of this proceeding for more information.  A copy of today’s Federal Register notice can be found here. 

With the Digital Television conversion date only eight and a half months away, the end game is beginning.  The FCC has announced that Wilmington, North Carolina will be a test market for the digital conversion, going all-digital on September 8 (or almost all digital, as the local NPR affiliate is not planning to turn off its analog signal, and one LPTV station will continue to operate in analog).  This will provide the FCC with an opportunity to determine what will really happen when the digital transition occurs in February of next year.  What will the FCC learn from this early test?  In the statement of Commissioner Copps at a recent town hall meeting held in Wilmington to address the digital conversion, some of the issues to be watched were set out.

Essentially, the Commissioner identified four different broad categories of issues that would be considered.  They are:

  • Technical issues – will the DTV signals provide adequate service to their communities?  Will the converter boxes be able to receive the signals with "rabbit ear" antennas, or will there be reception problems
  • Will consumers have received the word about the transition, or are there certain groups that will be particularly hard-hit by the transition, missing out on vital information about that transition?
  • How will various partnerships work?  The Commissioner identifies partnerships between various industry, government and community groups to distribute news about the transition, but there are also partnerships between stations and multi-channel video providers (cable and direct broadcast satellite) that need to be worked out
  • The unknown – what other issues that are not anticipated will arise?

As set forth below, many of these issues have been receiving extensive press coverage in recent weeks.

Continue Reading What Will the FCC Learn from Wilmington – The Beginning of the End of the TV Digital Transition

With the recent spate of severe weather throughout the country, a reminder about the FCC’s rules on the presentation of specific emergency information is in order.  The FCC rules requires that any specific emergency information – not a generalized warning, but a specific warning directed at a specific location – must be presented visually as well as in oral form. So if you say that there is a tornado headed to a particular community, and people in the northern portions of the city should head to their basements or an interior room, that information should be presented visually as well as through the statements of the weathercaster who is stating those words.  The nature of the emergency and any information about how to cope with it that is aurally presented must also be presented in some visual manner.  Some time ago, the FCC issued a public notice on this subject.  A correction to that notice, making clear that the emergency information need not be closed-captioned in an emergency, as long as the information is presented in a visual format, is accessible through a previous post on our blog, here.

The Commission made clear that television stations, in emergency situations, need not close caption this information about an immediate and specific emergency, but can present it open captioned, on a chalk board or white board, or in any other way that it is visually apparent to those with hearing difficulties.  The Commission recognized that closed captioning might not be available if an emergency arose outside of the normal news hours, and felt that it was more important that the information be carried than that it be closed captioned.  As the FCC has fined stations for not providing in a visual form this specific information about where there is an emergency and what steps to take to prepare for the emergency, stations should be sure that they are observing these requirements. 

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.