In the broadcast world, if you stick around long enough, what was once big and then faded away will no doubt come around once again.  Whether its the resurrection of prime time games shows that faded in the 50s to become big again today, or the regulatory landscape – it all comes around again.  In comments made to an oversight hearing of the US House of Representatives yesterday, Chairman Martin stated that there is an item circulating through the FCC proposing to require that broadcasters file in their license renewal applications more detailed information about the types of public interest programming they provide.   Until the mid-1980s, broadcasters had to specify the percentage of their programming that was comprised of news, public affairs and "other" public interest programming, as well as the number of public service announcements that the station broadcast.  These specific requirements disappeared in the "deregulation" of the 1980s, but from the statements made yesterday, they may now be making a return if Chairman Martin and the Democratic Commissioners can agree on a set of rules to be imposed on broadcasters.

We’ve written about various proposals to require specific, quantifiable public interest obligations of broadcasters in the context of the recent digital radio order.  We also wrote about the long-outstanding proceeding to quantify public interest obligations of television broadcasters that was mentioned in a recent decision denying a license renewal challenge (and implying that a decision was coming soon).  Whether the Chairman’s mention at yesterday’s hearing of the upcoming "item" was a reference to these two proceedings, or to some entirely new effort to re-regulate broadcasters, remains to be seen.  But the "post-card" renewal that was adopted in the 1980s, which has continued to grow in size and complexity over the intervening years, may well grow significantly in the near future.

Continue Reading Detailed License Renewal Requirements to Return?

The FCC on Friday announced the time and location for the fifth of its planned six multiple ownership hearings.  The hearing will be held in Chicago on Thursday, September 20.  Exact times, location and topics will be announced later.  The public notice does indicate that the meeting will begin in the afternoon and continue through the evening – so the Commissioners look like they are expecting a full day.  As we have written before, this would seem to mean that the last hearing will not be held until late in the year (and a final localism hearing is also expected as well), so any decision in multiple ownership proceeding could not take place until the information from the hearings is reviewed and digested – so that puts a decision into 2008, at the earliest.  With that being an election year, does anyone really expect a potentially controversial decision to come out in the midst of a likely contentious political season?

In 2000, after the last transfer of the Presidency from one political party to another, a multiple ownership ruling was released by the lame duck Democratically-controlled FCC in January, just before the new administration was inaugurated.  Could we be looking at a rerun in late 2008 or early 2009?

As reported in Digital Music News and other publications on Friday, Clear Channel Communications dropped its waiver of music royalties from its on-line agreement signed by musicians submitting songs to the Company in hopes that their music would be played on the Company’s radio stations.  In writing about this decision, most publications attribute the decision to the petition filed with the FCC by the Future of Music Coalition and other public interest groups arguing that the waiver requests constituted a form of payola – the giving of something of value (the waiver of the right to receive a royalty) in exchange for the playing of music.  However, on close inspection, that would appear to be a misunderstanding of the royalty, as there would seem to be no royalty that would be affected by the waiver in connection with the playing of this music by radio stations, and therefore there would be no payola over which the FCC has any jurisdiction.

According to the Future of Music petition, Clear Channel’s promise to play new music was made in connection with the payola settlement that it and other companies entered into with the FCC, and was apparently contained in a side letter filed with the FCC, as it was not spelled out in the settlement agreements themselves. See our analysis of the settlement agreements, here.  The side letter promised that the Company would dedicate a certain amount of radio airplay on the Company’s radio stations to new local music.  However, such play would not implicate any music royalties – so a waiver of royalties would not confer any benefit on the Company.  Broadcast stations pay no royalty for the use of a sound recording – thus the waiver that Clear Channel requested was without any value as there was no royalty to waive.  While broadcast stations do pay a royalty for the composition (the underlying words and music of a song), stations play flat fees to ASCAP and BMI that are a function of the station’s market size and power – not a function of how many songs are played.  Thus, as there is no sound recording royalty and a flat fee for the composition royalty unaffected by any waivers, the waiver did not confer any benefit to the Company in connection with its broadcast operations.  Thus, there where would appear to be no payola issue over which the FCC would have any jurisdiction.

Continue Reading Music Waivers Dropped Amid Payola Allegations – What’s the Impact for Future Waivers for Webcasters?

In March, we wrote about the concurring opinion of Commissioner Copps in connection with the sale of Univision Communications, where the Commissioner asked whether it was in the public interest to allow the sale of broadcast companies to private equity firms.  That theme has now been picked up by Congress, as Congressman John Dingell, Chairman of the House Energy and Commerce Committee, and Ed Markey, Chairman of the Telecommunications Subcommittee, jointly sent a letter to the FCC asking for answers to a series of questions about the impact of private equity ownership of media and telecommunications facilities.  The letter, here, cites the Univision case, the acquisition of Clear Channel and the sale of a number of Radio One radio stations to private equity firms, and suggests that these firms may be more interested in cutting expenses and maximizing profits to the detriment of the public interest.  The letter asks a number of questions about whether the FCC has adequate information about such ownership to assess its impact on the public interest.

The questions posed by the letter include the following:

  • Whether the FCC currently tracks ownership of media properties by private equity companies.
  • Whether the FCC has assessed the impact of private equity ownership on localism and, if it has not, should it
  • Whether the FCC has adequate information to assess the impact of media ownership by these companies on multiple ownership considerations
  • Whether the Commission’s Equity-Debt Plus rules need to be revised to take account of private equity ownership
  • If the ownership of these entities is sufficiently public and transparent for the Commission to review that ownership.

The letter was addressed to Chairman Martin, and he was given until July 20 in which to respond.

Continue Reading Congress Asks FCC to Answer Questions about Private Equity Ownership of Media Properties

Monday, July 16th is the first business day after the effective date of the new Internet Radio royalties set by the Copyright Royalty Board.  As we wrote earlier this week, the Court of Appeals has denied the requested stay of the effective date.  And, while a bill was introduced in Congress this week to provide for a legislative stay, that will not be acted on by Monday, nor will action occur on the broader Internet Radio Equality Act.  Thus, many webcasters are asking what they should do on July 16.  Some have suggested that they should stop streaming, while others have wondered what will happen if they don’t pay the higher royalties.  This decision is one that each webcaster should make carefully, in consultation with their counsel and business advisers.  But there are some practical considerations that should be taken into account when making the decision as to what should be done on Monday.

First, it should be noted that not all webcasters are equally affected by the royalty rate increase.  Larger commercial webcasters, including most broadcasters who are streaming their signals on the Internet, should have been paying royalties up to now that, while lower than those adopted by the CRB, have increased by "only" about 40%  – from $.00076 per performance (per song per listener) to $.0011 per performance.  These rates will continue to increase between now and 2010 so that they eventually will reach $.0019 per song per listener.  But for now, the increase is relatively modest (as compared with some of the other increases discussed below).  While there are reportedly at least some conversations going on between SoundExchange and groups representing broadcasters and large webcasters about reaching some sort of accommodation on royalties, there is no certainty that any deal will be reached, so these webcasters probably should be paying the higher royalties (and hoping for a credit against future royalties should there be an agreement reached in the future to reduce these royalties, a successful appeal, or future legislative action reducing the royalties).

Continue Reading It’s July 15th – What’s a Webcaster to Do?

This article is no longer available. For more information on this topic, see  FCC Announces New Round of EEO Audits for Radio Stations; Reminds Broadcsters of Requirement to Post Annual EEO Public File Report on Station Website, and Cable Companies of Obligation to File EEO Program Annual Report

Yesterday, a three judge panel of the US Court of Appeals in Washington, D.C. denied the Emergency Motion for a Stay of the Internet Radio Royalty rates set earlier this year by the Copyright Royalty Board.  Our coverage of the stay motion can be found here and here.  Coverage of the entire royalty issue and the surrounding controversy can be found in various posts on our blog, here.  The denial of the stay means that, absent Congressional action or some voluntary agreement of the parties, the new rates will go into effect with payments for the period since the CRB decision being due on Monday, July 16.

The Court’s decision was very brief – in essence three sentences which merely stated that the moving parties had not met the high legal burden necessary for the Court to impose a stay.  A stay is an extraordinary legal action, taken by a Court as part of its equitable powers to insure that justice is carried out.  In order to justify a stay, a party must show the Court that there is a likelihood of success on the merits of the case (in other words, it must prove in a 20 page stay motion the likelihood that it will eventually win its appeal after full briefing and oral argument), plus it must prove that there will be irreparable harm if the stay is not issued (more than simply a loss of money – but harm that cannot be remedied if the appeal is eventually successful).  Weighing those factors, and balancing the competing interests of the parties and the public interest, the Court decides whether or not to issue a Stay.  In this case, as there was no more than the pro forma Order, we do not know what shortcomings the Court perceived in the Motion seeking the Stay, but no reasons are required as the Court can merely decide not to exercise its equitable discretion in a case.

Continue Reading Court Denies Webcaster Stay

The Commission’s Notice of Proposed Rule Making (NPRM) regarding the next steps in the DTV transition has been published in the Federal Register, and the dates for submitting Comments in the proceedings have been set.  Parties interested in commenting on the Commission’s proposed rules must submit Comments by August 8th, and Reply Comments by August 23rd.  A copy of the full NPRM can be found here.  Given that this proceeding will establish the details for the final push to digital broadcasting by February 17, 2009, broadcasters should be sure to review the the NPRM and consider filing comments. 

Last week brought more action, and not much in the way of  results, as we count down to the July 15 effective date of the new Internet Radio Royalties.  The actions that received the largest amount of press coverage were the hearing before the US House of Representatives Small Business Committee, and the offer by SoundExchange suggesting that the minimum $500 per channel fee be capped at $2500 per service. While both initially seemed to offer the prospect of some resolution of the dispute over the Internet Radio royalties that were adopted by the Copyright Royalty Board, in fact neither ultimately resulted in much.

The Committee hearing featured webcasters and musicians – equally divided between those who believed that the royalties were fairly decided, and those who believed that the rates were too high.  The one thing on which most of the witnesses seemed to agree was that some rate adjustment was warranted for small webcasters, though no one was able to quantify how such a settlement should be reached.  The Congressional representatives, on the other hand, were cautious to act, asking again and again whether the parties were going to be able to settle the case between themselves.  While Congressman Jay Inslee testified in favor of his Internet Radio Equality Act, the members of the committee seemed hesitant to act while there were judicial avenues of relief still pending, and the possibility of settlement.

Continue Reading Minimum Per Channel Fee Offer – Waiting for the Stay?