The FCC has asked for public comment on a change in its rules which would allow broadcasters to conduct proofs of performance for a new directional AM antenna system to be conducted by a computer modeling system, rather than the extensive system of field tests that currently are required. While generations of broadcast engineers have grown up slogging through swamps, driving through fields and even flying in helicopters to conduct field strength readings to prove that AM antenna systems are operating in compliance with the parameters specified in their applications as submitted to the FCC, this proposed new system would allow all this to be done by computer in most instances. Comments on the proposals can be filed with the FCC on or before July 23, with replies due on August 22.

This proposal was filed at the Commission by a consortium of broadcasters, broadcast engineers and antenna manufacturers who had concluded that the existing process was overly expensive and cumbersome and similar results could be achieved by current computer technology.  Whether the FCC concludes that this is in fact the case will depend on the comments filed in response to this notice. 

As these comments are requested to refresh and update the record in an existing rulemaking proceeding to assess the performance of AM directional antenna systems – a proceeding which was actually initiated by a Petition for Rulemaking filed in 1989 – the FCC could immediately issue new rules following the results of this inquiry. Thus, relief for AM broadcasters, making the process of building AM directional antenna systems much faster and cheaper, may be on the way in the short term.

Much has been made in the press in the last day about SoundExchange "extending" the Small Webcasters Settlement Act and allowing small webcasters to pay their royalties on a percentage of revenue basis.  However, these reports overstate what happened yesterday. SoundExchange simply made a preliminary, conditional offer to settle the case to the group of independent commercial webcasters that I represented in the Copyright Royalty Board proceeding . The offer is to extend the SWSA with some "tweaks" that are yet to be negotiated. Unless and until a full agreement is reached regarding these "tweaks," and as to other issues that have been raised by the independent webcasters, the rates set out by the Copyright Royalty Board remain unchanged and will go into effect on July 15.

A simple extension of the SWSA through 2010 does raise some issues that have been reported elsewhere, including in the Radio and Internet Newsletter.  An SWSA extension would retain the caps on revenues of small webcasters – limiting their revenues to $1.2 million.  Up to that point, they would be paying 12% of their gross revenues.  But once they earned a dollar more than that cap – the percentage of revenue rate would disappear retroactively for the entire year in which they exceeded the cap and all of  their performances back to the beginning of the year would be subject to the CRB per performance royalties – effectively exceeding the total revenues of the independent webcaster by many multiples. While the $1.2 million cap was fine in 2002 when it was used in the agreement reached pursuant to the SWSA , that was when webcasting was a nascent industry and was simply looking for a way to survive.  It doesn’t work in 2007. This cap on revenue would effectively limit the independent webcaster’s growth and investment opportunities – as who would invest in an entity with an absolute cap on their financial growth?

Continue Reading Almost an Offer From SoundExchange on Internet Radio Royalties

As we reminded broadcasters earlier this month, the first filings of FCC Form 397, the Broadcast Mid-Term EEO Report, will be due to be filed at the FCC on June 1.  This report is filed 4 years after the due date for filing of a station’s license renewal application, and is to be filed by all radio station employment units with more than 10 full time employees, and all TV station employment units with five or more employees.  The first reports are due on June 1 by radio groups in Maryland, Virginia, West Virginia and the District of Columbia.  Every two months thereafter, stations in a different group of states will need to file their Mid-Term reports.  Last week, the FCC released a Public Notice clarifying some aspects of the filing process.

The Public Notice addressed two principal issues – (1) what happens when radio station clusters and their associated station employment units include stations in different states with different filing deadlines, and (2) what happens when employment units include both radio and television stations in the same state.  For radio employment units with stations in different states, the FCC reminds broadcasters that they should have made an election about which state’s filing deadline to use back in 2003 when the current EEO rules were adopted, and they should have been using that election for each of their public file reports since then.  That same election would control the filing deadline for the Mid-Term report. 

Continue Reading FCC Issues Clarification of Mid-Term EEO Report Obligations of Broadcasters

Three of the FCC Commissioners have responded to the Congressional inquiry about the Commission’s rules regarding junk food advertising about which we wrote here.  This inquiry was initiated by Congressman Ed Markey, Chairman of the House of Representatives Subcommittee on Telecommunications and the Internet. The Congressman’s letter had urged the FCC to move quickly to implement rules limiting the advertising of unhealthy food aired during broadcasting directed to children.  The Commissioners’ responses uniformly indicate the potential for regulation, depending in part on the outcome of the activities of the industry Task Force formed at the initiation of, and with the participation by, the FCC and Congress. See our reports on the formation of the Task Force, here.  The Commissioners all note that should the Task Force fail to conclude that the industry has achieved satisfactory results through self-regulation, FCC proceedings might be required to insure that children are not unduly exposed to junk food advertisements. 

Two commissioners, Chairman Martin and Commissioner Tate, responded jointly, and indicated that the FCC could explore regulation of unhealthy food, perhaps looking at guidelines adopted in other countries as a model for US regulation.  These Commissioners’ statement even address the issue of regulating children’s programming on cable television networks, where they claim that there is much exposure to ads for junk food.  These statements make clear that this is not just an issue for the broadcast industry.

Continue Reading Commission Responds to Congressional Inquiry on Children’s Junk Food Ads

The FCC recently released a decision granting two waivers of its requirement that any communications tower which has lighting requirements and is registered with the FCC be visually inspected at least quarterly to insure that all of the required lights are working. The waivers were granted to American Tower Corporation and Global Signal, Inc., both operators of thousands of communications towers nationwide.  The waivers were based on showings by the companies that the automated systems that they employ to monitor tower lights were sufficiently robust that they could insure that the lights were operational even without visual inspection. The Commission stressed the reliability of the monitoring systems, and the cost savings to the companies, in granting the waivers.

The importance of this decision to other owners of communications towers came in the concluding paragraph of the FCC decision. There, the Commission stated that this decision paved the way for other tower owners to adopt sufficiently reliable systems so that similar waivers could be granted.  Thus, for companies with multiple towers, this decision may give them the incentive to install similar systems and seek waivers of the tower inspection rules. For other companies, this decision reminds them of their visual inspection obligations (and the records that should be kept of such inspections to be available in the event of an FCC inspection).

The battle over performance royalties for broadcast stations seems to have been officially joined. We wrote last week about the rumors of a coalition of record companies and musicians that was reportedly forming to lobby Congress to enact a performance royalty on broadcast radio for the use of sound recordings, and the NAB’s immediate reaction, writing a letter to Congress to oppose the new royalty. Now, the press reports that the pro-royalty group has responded with their own letter to every Congressman, asking that immediate action take place to impose the royalty. Two letters in one week indicate that this summer may be a hot one for broadcasters on Capitol Hill.

The royalty being discussed would be one new to broadcast radio in the United States, but one well known to non-broadcast digital music providers such as Internet radio – as it is the same royalty that has been the subject of so much controversy since the Copyright Royalty Board released its Internet radio royalty decision in early March, more than doubling between 2005 and 2010 the royalty that those stations pay for the use of sound recordings. The royalty on the use of sound recordings (the song as recorded by a particular artist) is in addition to the royalties that are paid to ASCAP, BMI and SESAC for the underlying musical composition. So, if imposed, this would be a new royalty for US terrestrial broadcasters.

Continue Reading The Battle is Joined on the Performance Royalty for Over the Air Broadcasting

Two long awaited broadcast items seem to be missing in action at the FCC. Both the final rules on digital radio ("HD radio") and the Commission’s Notice of Proposed rulemaking on using FM translators to fill in gaps of the signals of AM stations, while expected quite a while ago, have still not been released by the FCC. The digital radio item, adopting rules on digital radio, eliminating the need to file for experimental authority for multi-channel FM operations and allowing AM stations to operate digitally at night, was adopted by the FCC at its meeting in March, yet the final text of the decision still hasn’t been released.  As the text has not been released, the effective date of the new rules has not been set.  Those AM stations ready to kick on their nighttime digital operations continue to wait.

As we explained in our previous posting on this matter, here, the digital radio order also contains a Further Notice of Proposed Rulemaking, addressing issues such as the public interest obligations of broadcasters on their multicast digital channels. That was one of the items that was supposedly delayed the action that finally occurred at the March meeting, and perhaps it is delaying the release of the text of the order in this proceeding

Continue Reading Radio Items Missing In Action at the FCC

While the FCC continues its series of public hearings on possible revisions to its multiple ownership rules, the issue of newspaper-broadcast cross ownership is now squarely before the FCC in a number of proceedings. For instance, in the applications proposing a transfer of control of the Tribune Company, waiver requests have been filed in the markets where the company owns both newspaper and broadcast properties.  These markets include some of the largest television markets in the country including Los Angeles, Chicago and New York.  As the current rules prohibit the ownership of a daily paper and either a radio or television station in the same market, Chicago, where Tribune owns radio, TV and newspaper properties and has done so for many years, asks for waivers for both stations.  The FCC just designated the application for transfer of control of the Tribune Company as a permit but disclose proceeding, meaning that parties can talk to the FCC decision makers about the case, as long as they file a written disclosure statement with the FCC for inclusion in the record of the case.

 Also, press reports note that the petitions to deny have been filed against applications for the renewal of Fox’s television stations in New York, arguing that the combination of  Fox’s television stations in the market with the ownership of the New York Post is not in the public interest.

Seemingly, the proposed purchase of the Wall Street Journal by News Corporation, the owners of Fox,  if it were to ever come to fruition, would at least be reviewed by the FCC, as the Journal is published in New York, where Fox owns television stations.  However, FCC precedent established when Gannett purchased a Washington, DC TV station, in the same market where USA Today is published, would seem to set a precedent for the treatment of a specialized national newspaper like the Journal. While published in New York, the Journal really is national in scope – and not focused on local news, sports, entertainment or advertisers in the same manner that a local newspaper would be. 

Continue Reading Debate Over Newspaper-Broadcast Cross Ownership Rule Heats Up

As we have written, here and here, the FCC recently commenced a proceeding to determine if it should adopt rules to require analog cable systems to carry digital television stations after the digital television conversion is complete in 2009.  The proceeding is also to determine what a cable system must do to ensure that there is no material degradation in the signal of a digital television station which is being retransmitted.  Comments in this proceeding are due on July 16.  For more information about the questions being asked in this proceeding, our firm has just released a memo summarizing the issues, which can be found here.