In a pre-Christmas surprise that most broadcasters could do without, identical bills were introduced in Congress on Tuesday proposing to impose a performance royalty on the use of sound recordings by terrestrial radio stations.  Currently, broadcasters pay only for the right to use the composition (to ASCAP, BMI and SESAC) and do not pay for the use of sound recordings in their over-the-air operations of the actual recording.  This long-expected bill (see our coverage of the Congressional hearing this summer where the bill was discussed) will no doubt fuel new debate over the need and justification for this new fee, 50% of which would go to the copyright holder of the sound recording (usually the record label) and 50% to the artists (45% to the featured artist and 5% to background musicians).  The proponents of the bill have contended that it is necessary to achieve fairness, as digital music services pay such a fee.  To ease the shock of the transition, the bill proposes flat fees for small and noncommercial broadcasters – fees which themselves undercut the notion of fairness, as they are far lower than fees for comparable digital services.   

While, at the time that this post was written, a complete text of the decision does not seem to be online, a summary can be found on the website of Senator Leahy, one of the bills cosponsors.  The summary states that commercial radio stations with revenues of less than $1.25 million (supposedly over 70% of all radio stations) would pay a flat $5000 per station fee.  Noncommercial stations would pay a flat $1000 annual fee.  The bill also suggests that the fee not affect the amount paid to composers under current rules – so it would be one that would be absorbed by the broadcaster. 

Continue Reading Bill Seeking Broadcast Performance Royalty Introduced In Congress

The FCC today adopted a Report on its Localism proceeding, accessing the evidence that it gathered in its three year long investigation of whether broadcasters were adequately serving the interests of their local communities.  We wrote long ago about some of the specific issues that the FCC was reviewing in this proceeding – everything from the public interest programming of broadcasters to their music selection process to their response to local emergencies.  Among the report’s conclusions were findings that not all broadcasters were adequately assessing the needs of their communities or serving the public interest through coverage of local news and other local events.  Because of these perceived weaknesses in broadcaster performance, the FCC adopted a Notice of Proposed Rulemaking, much as we expected in our post here, tentatively concluding that re-regulation of the broadcast industry was necessary, bringing back some form of ascertainment and some specific quantifiable requirements for public interest programming. 

As in the case of the Multiple Ownership order adopted today (summarized here), the full text of the FCC Report and the Notice of Proposed Rulemaking has not been released.  Instead, only a short Public Notice, and the statements of the Commissioners at the meeting, are available to determine what was done.  From these notices, it appears that three tentative conclusions were reached.  They are, as follows:

  • More Low Power TV stations should be able to get Class A status, meaning that they are no longer a secondary service that can be "bumped" by a new full power television station or by changes to the facilities of a full-power station
  • Each licensee should be required to establish a community advisory board made up of specific groups of community leaders, with whom the station would meet on a regular basis to assess the needs of the community
  • The FCC’s license renewal standards should contain specific quantitative requirements for public service programming

While these may sound like noble decisions, there are many details and much history that the Commission needs to address before these proposals become final FCC rules.

Continue Reading FCC Adopts Localism Report and Starts Rulemaking to Consider Adopting New Public Interest Obligations for Broadcasters

The FCC today adopted Commissioner Martin’s proposal for limited multiple ownership relaxation, adopting a presumption in favor of approving the common ownership of a broadcast station and a daily newspaper in the Top 20 television markets (we wrote about that proposal here).  But the grant of such combinations would not be automatic, but instead would be considered on a case-by-case basis, so opposition to any merger could be submitted to the FCC.  Under the rules announced today, newspaper-television combinations would not be entitled to the presumption in favor of grant if they involved one of the Top 4 ranked television stations in a market, or if there would be fewer than 8 independent media voices (full power TV or significant daily newspapers that are not commonly controlled) after the combination.  As for the other multiple ownership rules, from what was said at the meeting, no change at all will be made.  We addressed some of the many multiple ownership issues before the Commission that were apparently either not addressed or will not be changed in our post, here. 

As the full text of the decision has not been released, details of how the Commission addressed every issue are not available.  From the comments of the Democratic Commissioners who dissented from the decision, changes were being made to the standards adopted today throughout the night and as early as an hour before the meeting was held (see Commissioner Copps’ impassioned statement against the new rules, here, where he details the last minute revisions).  Given the last minute nature of the final order, it may be a while before the full text is released.  However, from statements made today and from the Commission’s press release, some details of the decision are known.  They are summarized below.

Continue Reading FCC Adopts Changes in Newpaper-Broadcast Cross Ownership Rules – No Relief For Broadcasters Under Other Ownership Rules

The FCC’s political broadcasting rules can seem impenetrable and ever-changing, yet the same basic rules have been in place for well over a decade, with only minimal changes in the sponsorship identification and public file requirements mandated by the Bipartisan Campaign Reform Act of 2002. With a little attention, memorization, and a guide to the rules, the basics of the political rules can be deciphered.  We have put together a Guide to the Political Broadcasting Rules, to help explain these basics.  Our Guide presents information in a Question and Answer format, in Sections explaining various topics involved in the political broadcasting area.  These Sections are:

• The Basics—Speak the Language
• Preparing for an Election—What to Worry About in Pre-election Periods
• Reasonable Access—Deciding Which Candidates Can Buy Time
• Equal Opportunities—Treating Competing Candidates Alike
• No Censorship and Third-Party Ads—What Responsibility Do Stations Have for Content
• Lowest Unit Charges—How Much Money Can You Charge for Political Spots
• Sponsorship Identification and BCRA Requirements
• Public File and Disclosure Statements
• Conclusion—Questions and Resources

The rules essentially require broadcasters to sell rock-bottom priced spots to transient advertisers, who are often the least familiar with broadcast sales practices, yet demand the most time and attention from station sales representatives. Consequently, broadcasters end up getting the least money for spots that take the most time to sell.   And these spots often cause the most heartache, since there is always the threat of FCC enforcement action or  worries about the cost of attorneys to help avoid getting the rules wrong.   Our guide is meant to provide some basic guidelines to help broadcasters identify the most common issues that arise during the election season.  For the complete guide, click here.

As we wrote earlier this week, the FCC is to consider at its meeting next Tuesday a Report on the results of its "Localism" proceeding, and a Notice of Proposed Rulemaking seeking public comment on the findings contained in the Report.  From rumors going around Washington today, that Notice may ask for comments on tentative findings that would roll back of much of the broadcast deregulation of the last 25 years.   Rumors are that the Commission will be issuing "tentative conclusions" determining that the FCC should re-impose specific ascertainment requirements of some sort (requiring that broadcasters regularly meet with specific types of community leaders to get their input on station programming).  Also, the Commission will tentatively conclude that there should be quantitative programming requirements – that each station do a specific amount of local programming and perhaps specific amounts of news, public affairs other types of programs each week. If a licensee does not meet the requirements, the station’s license renewal application would not be granted routinely by the FCC’s staff, but instead would be subject to an additional level of scrutiny by the full Commission. The Commission is also apparently proposing that it return to the old rules that all stations have a manned main studio during all hours of operation. There is reportedly also a proposal that stations report to the FCC about how they decide what music they play.

Staring in the early 1980s, the FCC did away with many of the specific, detailed programming requirements that had previously bound broadcasters.  These requirements were quite burdensome, especially for small stations and stations in small markets with limited staffs.  Rather than spending their time on broadcast operations, station staff had to make sure that their operations met programming standards imposed from Washington, dictating the government’s ideas of what was good for the station’s audience, even if the station might feel, because of its format or the demographics of its audience that a particular type of programming did not serve the needs of its community.  In the mid-1980s, the FCC concluded that these rules were no longer necessary, as it was concluded that there was enough media diversity that the marketplace would dictate that broadcasters serve their audiences with appropriate content that met the needs of that audience as, if they did not, some other broadcaster would.  The economic incentive of the fear of the loss of audience to a competitor who better served the public was deemed enough to insure that the broadcaster acted responsibly.
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Continue Reading Moving Forward Back to 1980 – The FCC Set to Conclude that Specific Public Interest Obigations are Required for Broadcasters

The FCC has released its agenda for its December 18 meeting – and it promises to be one of the most important,and potentially most contentious, in recent memory.  On the agenda is the Commission’s long awaited decision on the Chairman’s broadcast multiple ownership plan relaxing broadcast-newspaper cross-ownership rules (see our summary here).  Also, the FCC will consider a Further Notice of Proposed Rulemaking on Localism issues (pending issues summarized here) following the conclusion of its nationwide hearings on the topic, as well as an Order and Further Notice of Proposed Rulemaking on initiatives to encourage broadcast ownership by minorities and other new entrants (summary here).  For cable companies, the Commission has scheduled a proposed order on national ownership limits.  And, in addition to all these issues on ownership matters, the FCC will also consider revising its sponsorship identification rules to determine if new rules need to be adopted to cover "embedded advertising", i.e. product placement in broadcast programs.  All told, these rules could result in fundamental changes in the media landscape.

The broadcast ownership items, dealing with broadcast-newspaper cross-ownership, localism and diversity initiatives, all grow out of the Commission’s attempts to change the broadcast ownership rules in 2003.  That attempt was largely rejected by the Third Circuit Court of Appeals, which remanded most of the rules back to the FCC for further consideration, including considerations about their impact on minority ownership.  The localism proceeding was also an outgrowth of that proceeding, started as an attempt by the Commission to deal with consolidation critics who felt that the public had been shut out of the process of determining the rules in 2003, and claiming that big media was neglecting the needs and interests of local audiences.

Continue Reading FCC Meeting Agenda for December 18 – Potentially One of the Most Important in Recent Memory – Multiple Ownership, Localism, Minority Ownership, Product Placement and Cable TV National Ownership Caps

The FCC’s Emergency Alert System ("EAS") is the bane of many broadcasters.  Failing to have operational EAS equipment, or otherwise failing to comply with the requirements of the rules, including failures to conduct the mandatory tests of the system, are among the most common causes of a fine following an FCC field inspection.  To help ensure compliance with the EAS rules, the FCC has issued a series of booklets outlining the EAS obligations not only for broadcasters, but also for cable systems, satellite radio and wireline video providers.  These booklets can be found here.  As the FCC rules require that these booklets be maintained at the location of normal duty operator for a station or systems, all media companies that are subject to the EAS rules should download and post the appropriate booklet at their control points.

The new booklets cover new requirements imposed on broadcasters in connection with their digital operations.  These operations, along with services provided by satellite radio and telephone company video providers, were only recently made subject to the EAS rules (see our post here).  These booklets provide the first full summary by the FCC of the application of the rules to these services.  Thus, operators need to be sure to not only print out and post these booklets, but read them carefully to make sure that their operations are in full compliance.  Do it today! 

(Update – 12/11/2007 – the FCC today issued an order upholding a fine of $8000 to a cable operator who had EAS equipment that was not installed at the time of an FCC inspection.  This demonstrates how costly EAS violations can be)

With a possible decision looming on December 18 on the Chairman’s proposal to loosen the newspaper-broadcast cross-ownership rules (see our summary here and here), the FCC this week granted two applications involving the sales of the Tribune Company and of the Clear Channel television stations, where the decisions focused on the application of the multiple ownership rules – and where the Commission granted multiple waivers of various aspects of those rules – some on a permanent basis and many only temporarily.  And, in the process, both of the Commission’s Democratic Commissioners complained about the apparent prejudgment of the cross-ownership rules and one complained about the role of private equity in broadcast ownership.  Both decisions are also interesting in their treatment of complicated ownership structures and, at least under this administration, evidence the Commission’s desire to stay out of second guessing these structures. 

In the Clear Channel decision, the Commission reviewed the proposed ownership of the new licensee by an affiliate of Providence Equity Partners.  As there were no objections to the proposed sale, the FCC approval process was somewhat easier than it might have been – though the Commission did seem to be somewhat troubled by the fact that Providence was already a shareholder with an interest attributable under the multiple ownership rules in Univision Communications, which had stations in a number of markets in which the Clear Channel television stations operate.  The Commission approved the sale, giving Providence 6 months to come into compliance with the ownership rules – and conditioning the initial closing of the Clear Channel sale on Providence meeting divestiture requirements that it had promised to observe in connection with the Univision acquisition, and had not yet complied with (in fact the Commission recently asked for comments on a proposal by Providence to come into compliance in the Univision case by simply converting their interest in Freedom Communications, which has interests in Univision markets, into a nonvoting interest which would not be attributable under Commission rules)

Continue Reading Ownership Waivers All Around – FCC Approves Sales of Tribune and Clear Channel TV

At last Tuesday’s FCC meeting, the Commission adopted a controversial order, over the objection of two Commissioners, that could limit the processing of some applications for improvements by some full power FM stations, and would restrict translator applications, all in the name of encouraging Low Power FM (LPFM) stations to provide outlets for expression by groups that cannot get access to full-power radio stations (see our summary of that action here).  In recent weeks, two ideas have received some publicity providing an alternative outlet for these prospective local broadcasters – and both provide a simple solution (one more immediate and ad hoc than that other), but both leading to the same result – why not just extend the FM band by using TV channel 6?

The current FM band begins at 88.1 MHz, a channel that is actually immediately adjacent to TV Channel 6.  The FCC has for years restricted operations of noncommercial FM stations (which operate from 88.1 to 91.9 on the FM dial) in areas where there are Channel 6 TV stations in order to prevent the radio stations from creating interference to the reception of the TV stations.  That’s while you will often find fewer noncommercial stations, or ones with weaker coverage, in communities that have TV Channel 6 licensees.  TV stations use an FM transmission system for their audio.  Thus, you will also find that most FM receivers (especially ones without digital tuners) will pick up the audio from TV channel 6 if tuned all the way to the left of the dial.  The short-term solution to expanding the FM band came from one broadcaster who noted that fact.

Continue Reading Who Needs LPFM? – Why Not Just Expand the FM Dial?

The New York Times recently published an article about NBC’s owned and operated station in New York City acceptance of advertising for liquor.  While ads for beer and wine have been a staple on broadcast stations (though see our discussion of the limits on that advertising, here), ads for other alcoholic beverages ads have been less frequent.  Many broadcasters have for years believed that such ads were prohibited by the FCC or some other government agency.  In fact, alcohol ads have not been prohibited by law, but instead by voluntary actions of trade associations representing broadcasters and the alcoholic beverage industry .

Until the early 1980s, the National Association of Broadcasters had a voluntary code of conduct for broadcasters, suggesting good standards and practices for broadcasters: limiting some broadcast content while encouraging broadcasters to air other programming perceived to be in the public interest.  Among the conduct that the Code prohibited was the advertising of hard liquor. While the NAB Code was not mandatory for broadcasters, in filing many routine applications for new stations and for the acquisition of existing stations, the FCC in the past had requirements that the potential broadcasters explain how their programming would serve the public interest.  Most applicants would shorthand their compliance plans by simply promising to abide by the NAB code, in effect binding themselves to the code through those representations made to the FCC.  The Code was in place until the early 1980s, when the Department of Justice became concerned that code provisions suggesting maximum commercial loads and similar matters functioned as a restraint of trade in violation of the antitrust laws, and the NAB Code was abandoned.

Continue Reading Will You Drink to That? – Advertising Liquor on Broadcast Stations