This week, legislation was introduced in the House of Representatives to make a single use of an expletive on a broadcast station subject to sanctions from the FCC.  This parallels legislation that was introduced in the Senate this summer, about which we wrote, here.  The point of this legislation is to overturn the decision of the US Court of Appeals for the Second Circuit which held that the FCC could not levy indecency fines on stations for airing a single isolated "fleeting expletive". As we wrote when the Senate Bill was introduced, the Second Circuit decision overturning the FCC’s fines was technically based, not on constitutional issues, but instead on the fact that the FCC had not rationally defended the distinctions that it made as to when to impose fines for the use of an expletive, and when to allow the use of the expletives without sanction (as in the airing of Saving Private Ryan).  The Court also faulted the Commission for not providing guidelines as to what was indecent and what was that were clear enough to alert a broadcaster as to what was permitted and what was not.  When a decision is based on an administrative failure to rationally justify its decision, Congress can pass a law providing that justification.  Here, that would give the FCC permission to fine a broadcaster for the use of a single expletive.  If the decision was constitutionally based, finding that the regulation of the use of fleeting expletives was unconstitutional, then the ability of Congress to pass a law permitting FCC action that the Court found was unconstitutional is severely limited.

However, while not basing the decision on constitutional grounds, the Second Circuit decision did go out of its way to question the constitutionality of the FCC’s indecency enforcement, but deciding that it did not need to decide the issue of constitutionality as it had already thrown out the FCC fines.  While the Second Circuit passed on that issue, another court may well reach the constitutional question in the near future.  On September 11, the Third Circuit, the same Court which invalidated many of the FCC’s 2003 liberalized multiple ownership rules, heard arguments on the FCC’s $550,000 fine imposed on the CBS owned-and-operated television stations for the Janet Jackson breast-baring Super Bowl incident.   CBS, represented by an attorney from our firm, argued that the FCC’s indecency rules are unconstitutional.  The Court seemed engaged in the issue, according to press reports, asking many questions.  As the briefs have been filed and the arguments made, the Court decision could come at any time.  Sometimes these decisions can be released quickly, though at other times the final decision can take many months to be written.  Broadcasters will have to wait for this further clarification.

Continue Reading Congress Tries to Overturn Second Circuit While Third Circuit Hears Janet Jackson Indecency Case, and “The War” Is Censored

SoundExchange yesterday announced that it had signed agreements with 24 small commercial webcasters.  Contrary to what many press reports have stated, this is not a settlement with Small Commercial Webcasters.  In truth, what was announced was that 24 small webcasters had signed on to the unilateral offer that SoundExchange made to small webcasters, about which we wrote here.  Essentially, this is the same offer that SoundExchange made in May, which was rejected by many independent webcasters as being insufficient to allow for the hoped for growth of  these companies, and insufficient to encourage investment in these companies.  These larger Small Commercial webcasters, including those that participated in the Copyright Royalty Board proceeding, rejected that offer and instead have sought to negotiate a settlement with SoundExchange that would meet their needs.  Instead of reaching a true settlement with these companies that had participated throughout the CRB proceeding and now have an appeal pending before the Court of Appeals, SoundExchange instead announced that their unilateral proposal was accepted by 24 unnamed webcasters.  Thus, rather than negotiating a settlement, if anything this announcement shows that SoundExchange has not been willing to negotiate – as it has not moved substantively off the proposal they announced over 4 months ago.

While 24 webcasters may have signed on, it would seem that these must be entities that don’t expect to grow their revenues to $1.25 million, or grow audiences that reach the 5,000,000 tuning hour limit at which, under the SoundExchange-imposed agreement, the webcaster needs to start paying at the full CRB-imposed royalty rate.  Moreover, the agreements only cover music from SoundExchange members, excluding much independent music that many webcasters play.  For music from companies that are not SoundExchange members, a webcaster has to pay at full CRB rates.  For a small service playing major label music, the agreement may cover their needs, but for the larger companies playing less mainstream music, a different deal is needed. 

Continue Reading SoundExchange Announces 24 Agreements – But Not One a Settlement With Small Webcasters

At today’s Future of Music Policy Summit in Washington, DC, there has been much talk about issues of interest to broadcasters, including the performance right in sound recordings for terrestrial radio, multiple ownership, and many other issues. The Future of Music Coalition, whose website is here, is dedicated to bringing the voice of musicians and the public to Congress and other decision-makers in Washington. Thus, the Coalition is involved in music issues before Congress and the Copyright Office, as well as before the FCC and other agencies on issues including multiple ownership, net neutrality, and similar matters. Members of the Coalition have been involved in the Low Power FM debate. At the panel session titled "The Hill Was Alive with the Sound of Music," dealing with legislative matters affecting music that are pending or which may arise before Congress, only one issue was perceived as being likely to be considered and potentially resolved by this Congress, before the Presidential election.  That was the issue of LPFM, where bills have been introduced in Congress to eliminate the restrictions that prohibited LPFM stations from causing third-adjacent channel interference to other stations.

The panel included staffers from both the House of Representatives and the Senate, who both indicated that, while there were many other issues of importance to those in the music industry that might be considered this year, LPFM was the one issue that had a chance of actually being adopted this year, given bipartisan support for pending bills.   The pending legislation, The Local Community Radio Act of 2007, has been introduced in both the House and the Senate.  This legislation would lift restrictions on interference to third adjacent channel stations – restrictions which were adopted by Congress about 7 years ago.  We wrote about this legislation, here.

Continue Reading LPFM Set to Move?

Last Friday, the rules on over-the-air digital radio for AM and FM stations – the IBOC system or, as it is commonly known, HD Radio – became effective.  The most immediate effect of the new rules, which we summarized here, is the ability of AM stations to operate using the IBOC system at night.  The Commission determined that such operation offered more benefits than any interference it might create.  The final rules also allowed stations to begin digital operations – and multicast operations – on a permanent basis without prior FCC approval.  As these rules take effect, some stations are beginning to look to the multicast channels to provide new programming opportunities.

NPR has, in many ways, led the efforts to utilize digital radio for multicast operations.  In today’s Washington Post, there is an article about the city’s NPR affiliate, WAMU, which has recently announced plans to take its multicast operations to a new level.  WAMU had in the past programmed a substantial amount of bluegrass music, a local DC favorite.  Over time, that programming had been reduced as the station broadcast more and more talk programming.  The station had moved bluegrass to a full time Internet radio stream, and has now announced plans to move all of the remaining bluegrass and roots music programming (which had been limited to Sundays) to one of its IBOC digital multicast streams – and to include live announcers during at least some of this digital programming.  The Post article quotes the station manager as saying that the local Best Buy now knows that HD Radio is different from the service that XM or Sirius provide.

Continue Reading IBOC Digital Radio Rules Become Effective – Some Stations Lead the Way on Multicasting

Late Tuesday night, in a meeting originally scheduled to start at 9:30 in the morning, the FCC adopted an order establishing the rules governing the carriage of broadcast signals by cable operators after the February 17, 2009 transition to digital television.  While the full text of the Commission’s action has not yet been released (and may not be released for quite some time), based on the FCC’s formal news release and the statements made by the commissioners at the meeting and in their accompanying press releases, we can provide the following summary of these important FCC actions.

First, for a period of at least three years after the February 17, 2009 transition from analog to digital broadcasting, cable operators will be required to make the signals of local broadcast stations available to all of their subscribers by either:  (1) carrying the television station’s digital signal in an analog format, or (2) carrying the signal only in digital format, provided that all subscribers have the necessary equipment to view the broadcast content.  This rule reflects a compromise position offered by the National Cable & Telecommunications Association, and is regarded as less burdensome on cable systems then the FCC’s original proposal of an indefinite analog carriage obligation. 

Second, the FCC reaffirmed its existing requirement that cable systems must carry High Definition (HD) broadcast signals in HD format, and further that it must carry signals with “no material degradation”, i.e., with picture quality as good as any other programming carried by the operator.  In affirming its "no material degradation" standard, the FCC rejected a proposal by the broadcast industry that would have required operators to pass-through all of the bits in digital television broadcast signal.

Continue Reading FCC Adopts Post-Digital Transition “Must-Carry” Rules, Extends Ban on Exclusive Programming Contracts, and Opens Inquiry Into “Tying” Agreements

The FCC recently issued a Public Notice reminding television broadcasters of the requirement that, after January 1, 2008, television stations (as well as cable and satellite television systems) must, in each calender quarter, close caption at least 75% of their Pre-Rule Programming.  Pre-Rule Programming is that programming first broadcast or exhibited prior to 1998 for analog programming and prior to 2001 for digital programming.  New Programming, that produced after those dates, should already be captioned by stations.  For details of this requirement (including the different rules that apply to Spanish-language programming), see our firm’s memo on this subject, here.  Television station operators should review their programming schedules and contracts to be sure that they will be ready to meet these obligations.

The FCC Public Notice also reminds broadcasters that these requirements are different than the obligations of television broadcasters to provide emergency information visually – not closed captioned, but  visible to all.  We have written about how serious the FCC takes these emergency obligations in connection with fines that have been issued to broadcasters for providing on-air information orally without any visual presentation for the hearing impaired .  See, for instance, our entries, here and here.  With hurricane season still in full swing, broadcasters must keep these rules in mind, and remind their on-air staff to remember to comply with these obligations.

Annual EEO Public File Report Deadline – October 1

Affected States:  Alaska, American Samoa, Florida, Guam, Hawaii, Iowa, Mariana Islands, Missouri, Oregon, Puerto Rico, Virgin Islands, Washington

By October 1, 2007, radio and television Station Employment Units (SEU) in the states listed above must:  (1) prepare their Annual EEO Public File Report; (2) place it in the public inspection files of all stations comprising the SEU; and (3) post the Report on the websites, if any station in the SEU has a website.  The Annual EEO Public File Report summarizes the station’s or the SEU’s EEO activities during the previous 12 months, and provides information about the recruitment and outreach that the station conducted in the past year.  The states with the October 1 filing deadline are:  Alaska, American Samoa, Florida, Guam, Hawaii, Iowa, Mariana Islands, Missouri, Oregon, Puerto Rico, Virgin Islands, Washington. 

In addition to preparing the Annual EEO Public File Report by October 1, larger radio stations in Florida, Puerto Rico, and the Virgin Islands must also prepare and file with the Commission an FCC Form 397 Mid-Term EEO Report.  Please note, only radio station SEUs located in these three jurisdictions with 11 or more full-time employees are required to file an FCC Form 397 by October 1, 2007.

Biennial Ownership Report Deadline – October 1

Affected States:   Radio:  Alaska, American Samoa, Florida, Guam, Hawaii, Mariana Islands, Oregon, Puerto Rico, Virgin Islands, and Washington;  Television:  Iowa and Missouri

By October 1, 2007, radio stations in Alaska, American Samoa, Florida, Guam, Hawaii, Mariana Islands, Oregon, Puerto Rico, Virgin Islands, and Washington, and television stations in Iowa and Missouri must prepare and file an FCC Form 323 Biennial Ownership Report with the FCC.  Similarly, noncommercial stations in these states must file a Biennial Ownership Report on FCC Form 323-E.  Ownership Reports are filed every other year, reporting on changes in the licensee’s ownership and updating the information requested by the form.

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.  Copies of our complete reminder memos containing additional information on each of these requirements can be found here (Ownership) and here (EEO).

The FCC today issued three orders imposing fines on broadcasters – cutting no slack to anyone.  These cases demonstrate how important strict compliance with all FCC rules is to avoid fines before the current Commission.  The first decision imposed a fine of $2800 on a broadcaster for having an unfenced tower – where the broadcaster claimed that the fence was temporarily removed to facilitate the clearing of brush as required by local authorities to remove a potential fire hazard.  While the FCC seemed to recognize that the fence removal was temporary, and that it was missing for only a few weeks while weed killer was being applied at the site, the Commission still imposed the fine – requiring that access to an AM tower always be restricted, prohibiting open access even for a short period.

The second case was a decision which imposed a fine of $2000 on a broadcaster for operating from an unauthorized transmitter site.  While the broadcaster had received Special Temporary Authority (an "STA")  to operate from the site, the STA expired.  The broadcaster filed an extension request, but forgot to include the filing fee check.  The broadcaster claims that he re-filed the request, and had a canceled check to prove it, although the Commission had no record of the re-filed STA (though the FCC did acknowledge having received the check).  Finding that it had no record of the re-filed STA, and further finding that the applicant should have inquired about the failure to receive an STA extension after 180 days (the length of an STA), the Commission imposed the fine on the broadcaster.  While this case is certainly complicated by the missing extension request, given the canceled check one would assume that broadcaster must have filed something, and the FCC’s usual rule is that if an STA extension is on file, the station can continue to operate.  Of course, with an extension that was pending for 2 years, probably some inquiry was warranted.  But whether it was a $2000 mistake is a different question.

Continue Reading FCC Cuts No Slack on Fines – Temporarily Unfenced Tower, Expired STA, Former Owner – All Draw Fines

The Commission today granted a 60-day extension of time for the relocation of broadcast auxiliaries in the 2 GHz band.  The extension of time is in response to the joint petition submitted last week by Sprint Nextel, MSTV, NAB, and Society of Broadcast Engineers requesting that the Commission waive the current BAS transition completion date for an additional twenty-nine months.  A copy of the Commission’s Public Notice can be found here.  Barring this extension of time, Sprint Nextel would have been obligated to complete the relocation of all BAS facilities by September 7, 2007, which clearly would have been impossible.  The Commission’s 60-day extension of time will push the deadline back to November 6, 2007, and allow Commission time to consider the issues raised by the petitioners and whether a two and a half year extension is warranted. 

As we’re approaching the anniversary of September 11, it may be appropriate that the FCC issued an order on Friday upholding a fine imposed on a radio station that did not have an operating EAS system.  The station, while it had a system in place that was capable of transmitting the required EAS tones, had not received any EAS alerts for about a year, and had not entered any reasons for that failure in its station log at any time during the period.  The FCC initially issued an $8000 fine, but reduced the fine to $6400 based on a showing that the station did not have any history of past violations.  However, even though the station was operating at reduced power for a significant period of time due to towers damaged by a storm, the FCC refused to reduce the fine further based on financial hardship as the fine did not exceed 2% of the station’s average gross revenue during the previous three years.

The FCC will reduce fines for a variety of reasons – the most common being the past good record of the station.  In most cases, as here, a showing that the station has not previously been fined will be sufficient to demonstrate the past compliance of the station and justify some reduction in the amount of the fine.  Stations also often plead that they cannot afford to pay a fine.  The 2% of gross revenue standard announced by the Commission in this case seems to set the threshold at which the Commission will consider that plea.  To prove that a reduction of a fine is in order, according to this case, a station needs to submit financial statements showing the past three years performance, and demonstrating that the proposed fine will exceed 2% of the station’s average gross revenues.

Continue Reading Fine For EAS Violation – Financial Hardship Not Enough to Merit a Reduction