In a very unusual, if not unprecedented case, the FCC announced a Public Forum on the license renewal application of WWOR-TV to assess the service provided by that station to the citizens of New Jersey.  While the FCC has in the past held evidentiary hearings on license renewal applications, those hearings were trial-type, adversarial proceedings held on specific issues before administrative law judges – not amorphous public proceedings on general questions about the service provided by the station.  This proceeding seems much more akin to the "localism" hearings that the FCC has been holding around the country (including the most recent held in Washington on Halloween), only in this case it is not conducted to come up with some general policy guidelines, but instead it is to assess whether a broadcast license worth hundreds of millions of dollars should be renewed.  While the revocation of a license for failure to serve the public interest under the license renewal standards that have been in effect for the last 11 years is unprecedented, this process may be one that other stations could face were proposals of certain Congressional and FCC proponents of license renewal reform to get their way.

As we wrote here and here, some have suggested that the FCC’s license renewal process should be fundamentally reformed.  There have been suggestions that license renewal, which once occurred every three years for broadcast stations but now comes up but once every eight years, should return to that shorter cycle.  And some have suggested that the license renewal process should have more "teeth" to assess a broadcaster’s performance (see, for instance, the statement of Commissioner Copps at the FCC Localism hearing in Portland, Maine in June). These teeth have been suggested to include everything from specific quantitative showings of public interest programming by the broadcaster, to local public hearings to assess the level of that service for some or all broadcast stations.  How the FCC would have the resources to conduct hearings for any meaningful number of broadcast stations is unclear – but the suggestion has been made by various proponents of license renewal reform. 

Continue Reading FCC Sets Unusual Public Forum to Assess License Renewal of New Jersey Television Station

The Copyright Royalty Board today announced that it is taking comments on a settlement to establish royalties for the use of sound recordings to be paid by companies that are planning to provide audio services to be delivered with satellite and cable programming.  In contrast to the "preexisting subscription services" who were in existence at the time of the adoption of the Digital Millennium Copyright Act in 1998, who recently reached a settlement agreeing to pay 7 to 7.5% of gross revenues for royalties (see our post, here), this settlement is with "New Subscription Services" which did not offer these kinds of subscription services in 1998.  This settlement does not apply to subscription services provided through the Internet.  The covered "new subscription services" have agreed to pay the greater of 15% of revenue or a per subscriber fee that will escalate over the 5 years that the agreement is in effect.  Given that these new services will be providing essentially the same service as the Preexisting Services, why the difference in rate?  Perhaps, it is because the difference in the law.

As we wrote earlier this week, the Preexisting Satellite Service pay royalties set based on the standards of Section 801(b) of the Copyright Act, which takes into account a number of factors including the interest of the public in getting access to copyrighted material, the relative contributions and financial risks of the parties in distributing the copyrighted material, the stability of the industry, and the right of the copyright holder to get a fair return on their intellectual property.  By contrast, the new subscription services who entered into the settlement just announced, who weren’t around at the time of the drafting of the DMCA, use the "willing buyer, willing seller" standard also used for Internet radio.  And, because of the applicability of the willing buyer willing seller standard and the apparent uncertainties of the litigation process using it, these new services apparently decided to agree to a royalty double that of the preexisting services, even though they provide essentially the same service.

Continue Reading Another Proposed Settlement of Another Copyright Royalty Board Proceeding – New Subscription Services

This afternoon, FCC today released a Public Notice regarding the recent NCE FM filing window during which the FCC accepted applications for new noncommercial FM radio stations.  By this Public Notice, the Commission has opened a 60-day settlement period for parties to resolve any technical conflicts between their applications, either by making technical amendments or by reaching a settlement with the other parties.  Instead of providing lists indicating the applications filed in response to the window that are Singletons (i.e., don’t have any conflicts and can go straight to processing), dismissed outright,  or mutually exclusive with other applications as it has done in the past, the FCC instead leaves it to the applicants to figure out which category they are in and to identify any other mutually exclusive proposals that might be blocking their proposal.

This, of course, can only be accomplished if the FCC makes the applications available in their databases, which it started to do this afternoon.  Thus, the next step is for applicants to check the FCC’s CDBS database and see if their application is either:  1.) Dismissed, 2.) Accepted for Filing, or 3.) Tendered for Filing.  Dismissed is self-explanatory.  Accepted for Filing means that there were no initial conflicts and that the application will progress through the normal processing procedures, hopefully to be granted in due course.  These applications will appear as accepted for filing in the FCC’s daily public notices some time next week and move on from there. 

In the event that the database reflects that an application is Tendered for Filing, this indicates that there is a conflict with at least one other application that was filed during the NCE FM window.  The next step in that case is to have your consulting engineer study the situation and see what the conflict is.  Once you have a sense of the conflicts you are facing, you can start to assess whether there is an engineering solution that might allow your application  to be granted, whether you could settle with the other applicants, or if your application could win on the basis of preferential service or a comparative point analysis.  The 60-day period for technical amendments and joint settlements starts today and will expire on January 7th.

The Copyright Royalty Board has asked for comments on proposed royalty rates for the use of sound recordings by "Preexisting Subscription Services."  In adopting the Digital Millennium Copyright Act, Congress divided digital music services into various categories, each of which are assessed different royalties for the use of sound recordings. Preexisting subscription services were those digital subscription music services in existence as of the date of the adoption of the DMCA. Basically, these were the digital cable music services that were in operation in 1997.  In the proceeding now being resolved by a settlement between Music Choice (the one remaining service that was in existence in 1997) and SoundExchange, the companies propose a royalty of 7.25% of gross revenues of the service for the period 2008-2011, and 7.5% of gross revenues for 2012. A $100,000 minimum payment is due at the beginning of each year.  Comments on the settlement are due on November 30.  As set forth below, this settlement sets the stage for the upcoming decision on satellite radio royalty rates – as these two services are both governed by a royalty-setting standard that is different than that used for Internet radio.

The Copyright Royalty Board announced the proceeding to set the royalties for Preexisting Subscription Services at the same time as they initiated the proceeding to set new royalties for Satellite Radio Services – which were also considered to be preexisting services at the time of the adoption of the DMCA – not because they were actually operating, but as their services had been announced and construction permits to construct the satellites had been issued by the FCC.  No settlement has been reached with the satellite radio services (except as to limited "new subscription service" that XM and Sirius provide in conjunction with cable and satellite television packages where, according to the CRB website, a settlement has been reached), and a hearing was held earlier this year to take evidence on what the rates for those services should be.  As we’ve written before, SoundExchange has requested royalties that would reach 23% of a satellite radio operator’s gross revenues.  The satellite radio case has been completed, briefs filed, and oral arguments were held in October.  A decision in the case is expected before the end of the year.

Continue Reading Copyright Royalty Board Asks for Comment on Music Choice Royalty – Satellite Radio is Next

The FCC’s proposal to allow FM translators to rebroadcast the signals of AM stations as a fill-in service has been published in the Federal Register setting the dates for comment.  Comments in the proceeding will be due by January 7, 2008, with Reply Comments due on or before February 4, 2008.  As we wrote back in August (available here), the Commission’s rule making proposes to allow FM translators to rebroadcast the signal of AM stations – and potentially to originate programming during those nighttime hours when a daytime-only AM station is not permitted to operate.  The proposal is to permit AM stations to operate FM translators in an area that is the lesser of a circle 25 miles from their transmitter site or within their 2 mv/m daytime service contour.  In proposing the changes in its rules, the Commission raised a number of questions on which it seeks public comment, including whether the proposal is in the public interest, whether there should be a cap on the number of translators an AM station can employ, and whether an extension beyond the AM station’s 2 mv/m contour should be permitted.  Please see the FCC’s Notice of Proposed Rule Making or our earlier blog entry for further information.  Comments can be filed with the Commission in paper or electronically via ECFS, and should refer to MB Docket No. 07-172.

As the Commission held its last localism hearing in Washington on Halloween night, FCC Chairman Kevin Martin’s views on how the FCC should insure that stations are responsive to their communities became somewhat clearer.  In his opening statement, the Chairman outlined a set of actions that could be taken by the FCC to insure more service to the public.  While emphasizing the importance of efforts to encourage new entrants into broadcast ownership, the Chairman’s proposals to add new regulatory requirements, including requiring that a station be manned during all hours of operation, may well have the result of making it more difficult for any new entrant (or for existing smaller operators) to profitably operate their stations.  In addition, he has offered proposals that would seemingly require cable and satellite carriage of in-state television stations not in a system’s DMA – a proposal sure to cause concern to stations in DMAs that straddle state lines.

The Chairman’s statement includes the following proposals:

  • Requirements for uniform filings by broadcasters quantifying their public service – presumably their news and information programming and the public service announcements that they provide
  • Requiring that stations have manned main studios during all hours of operations (not just during business hours)
  • Allowing flexibility for LPFM stations to be sold, but adopting new rules to insure that such stations are used for local programming, not something provided from a network or other programming source
  • Providing television viewers the ability to get an in-state television stations on cable and satellite even if the county in which they reside is "home" to a DMA with stations in another state
  • Capping the number of applications accepted from the 2003 FM translator filing window – which might result in the dismissal of hundreds of applications that have effectively been frozen for 4 years

Continue Reading Shape of Things To Come: New Public Interest Obligations, Changes in TV DMAs and More Flexibility For LPFM

Joining Fred Thompson and Stephen Colbert (see our stories here and here), Presidential candidate Barack Obama appeared briefly on Saturday Night Live last night and delivered that iconic line – "Live From New York, It’s Saturday Night!"  But does his appearance trigger equal opportunities for television stations that aired the program and, if so, would any candidate actually request that time?  Unlike the Thompson and Colbert appearances, Obama was on broadcast television, not cable, so the question of whether equal opportunities applies to cable networks was not implicated.  And, unlike the appearances that candidates have made on talk shows (see our discussion of the broad exemption from equal opportunities given to news interview programs, here), it would be difficult to argue that the Obama appearance was in the context of a news interview program. 

But, would any candidate request the equal opportunities to get 10 or 20 seconds of equal time?  What kind of message could an opposing candidate get out in that limited amount of time (and I must admit that I didn’t have my stopwatch working, so it could have been even less time) – and how much more publicity would such a request give to Obama (and Saturday Night Live)?  And such a request could raise the issue of who is a legally qualified candidate – as no registration papers for the Presidential primaries have been filed yet in most states – though the standard for legally qualified candidates for President are not as black and white as they are for other political candidates (see our discussion of this issue in our entry on the short-lived Colbert candidacy).  So, in this case, we can really stayed tuned – at 11:30 eastern time on Saturday night – to see what comes next…..

At its Oct. 31 open meeting, the Commission adopted an Order declaring exclusive access and service clauses in video contracts between cable operators and multiple-dwelling units (MDUs) — think apartment buildings — to be unenforceable.  According to the FCC, such exclusive contracts can be harmful, and it expects that the rule change will result in greater choice for consumers and competition among video services providers.  The Commission launched a further proceeding to determine whether it should take similar action against exclusivity clauses entered into by Direct Broadcast Satellite television providers, private cable operators, and other multichannel video programming providers.  The further proceeding will also explore whether the Commission should prohibit other types of exclusive arrangements in the provision of video services.  It is unclear when this order will become effective.  The text of the decision has not yet been released, but once the new Order become effective, the rules will apply to existing as well as future contracts as the FCC did not provide any transition or grandfathering period for existing agreements.  Given Chairman Kevin Martin’s sense of urgency for this issue, the FCC is likely to release that text as soon as possible.  Representatives of various interest groups, including cable operators, have indicated publicly their intention to challenge the order in court.  For more details about the Commission’s action please see DWT’s recent bulletin. 

At the same Oct. 31st meeting, the Commission also adopted a Second Report and Order extending a number of cable franchising rules that previously applied only to new video competitors to incumbent cable operators.  Earlier this year, the Commission had adopted rules streamlining the local cable franchising process for new video entrants (i.e., telephone companies) and clarifying that certain payments often demanded by local franchise authorities would be considered franchise fees and therefore counted against the 5 percent franchise fee cap.  By its Second Report and Order adopted this week, the Commission decided to extend many of these rules to incumbent cable operators as well.  According to Chairman Martin, extending these rules to incumbent cable operators will help level the playing field between new entrants in the video delivery market and existing operators.  For more details about the Commission’s Second Report and Order, please see DWT’s recent bulletin on the issue. 

The Commission’s Further Notice of Proposed Rulemaking (“Further NPRM”) regarding the next generation Emergency Alert System (“EAS”) has been published in the Federal Register, setting the date for Comments as December 3, 2007 and the date for Reply Comments as December 17, 2007.  This summer, the Commission adopted a Report and Order extending its EAS Rules to wireless services, and adjusting the rules to better serve the needs of persons with disabilities and non-English speakers.  The Report and Order also expanded the base of EAS participants, included state-level and geographically targeted EAS alerts, and improved coordination with state and local governments.  A copy of the FCC’s Report and Order and the Further NPRM can be obtained here. 

The Further NPRM raises additional questions regarding how the EAS rules can be adjusted to ensure that non-English speakers and persons with disabilities are reached by EAS messages.  In addition, the Further NPRM seeks input regarding whether local, county, tribal, or other state governmental entities be allowed to initiate mandatory state and local alerts, and if so, what standards or requirements be imposed in initiating an EAS message.  Finally, the rulemaking seeks comment on options for ensuring that the EAS operates as designed in an emergency, and posits several options for measuring performance.  Comments can be filed with the Commission in paper or electronically via ECFS, and should refer to EB Docket No. 04-296. 

This afternoon the Commission announced that it will hold its sixth and final public hearing on media ownership issues in Seattle, Washington on Friday, November 9, 2007.  The hearing will be held from 4 to 11 PM at the Town Hall in Seattle, and will conclude the Commission’s tour around the country to gather information on media ownership to assist it in reworking its media ownership and cross-ownership rules.  A copy of today’s public notice is available here.  More importantly, the timing of this final public hearing seems consistent with Chairman Martin’s publicly announced target of wrapping up the Commission’s reconsideration of the multiple ownership rules by the end of the year. 

The Chairman apparently remains undeterred by congressional calls to slow the rule making process down.  Yesterday, the Senate Commerce Committee announced that it would hold a hearing on media ownership on Tuesday November 6th, and today the House Energy & Commerce Committee has followed suit by announcing that it will hold its own hearing on the issue on December 6th.  While these hearings may put more pressure on the Commission to refrain from enacting new rules this year, by concluding its ownership tour next week, the Commission appears to still be aiming for a December action on the issue.  And according to at least one news article, the Chairman is aiming to publicly outline his media-ownership proposals by November 13th, in theory to advance those proposals before a vote at the next FCC Open Meeting tentatively set for December 18th.  Stay tuned.