The Copyright Office last week released a wide-ranging Notice of Inquiry, asking many questions about the statutory licenses that allow cable and satellite companies to retransmit broadcast television signals without getting the specific approval of all the copyright holders who provide programming to the television stations. The notice was released so that the Copyright Office can prepare a report to Congress, due June of 2008, in which it will present its views as to whether the various statutory licenses still perform a necessary function, and whether any reforms of the current licenses are necessary. To complete its report, the Notice asks many questions about how these licenses currently work, whether the licenses function efficiently, and whether they should be retained, modified or abolished in favor of marketplace negotiations. The Notice even asks whether the existing statutory licenses should be expanded to take into account the different ways video programming is now delivered to the consumer, including various Internet and mobile delivery systems. Thus, virtually anyone involved in the video programming world may want to be part of this proceeding. Comments are due July 2 and reply comments are due September 13.

The cable and satellite statutory licenses were adopted by Congress to allow these multi-channel video systems to retransmit broadcast  signals. Without these licenses, the individual owners of copyrighted material – including syndicated,  network, sports, and music programming — would have to be consulted to secure necessary copyright approval before the television signal could be retransmitted. As the multi-channel video providers would, in many cases, not even know who held all these rights, they instead pay a statutory license which is collected, pooled, and then distributed to the various rights holders in proportions agreed to by those copyright holders or, in the absence of agreement, set by the Copyright Royalty Board.

Continue Reading Copyright Office Begins Inquiry to Reexamine Cable and Satellite Statutory Licenses – and Asks if Statutory Licenses are Appropriate for Internet Video

The FCC’s agenda for its meeting to be held on Wednesday, April 25, contains four separate items related to the digital television transition.  The issue receiving the most press coverage is the proposal advanced by Chairman Martin that would require the cable carriage of television signals in both analog and digital formats until all cable subscribers have been transitioned to a digital cable format.  As the item addressing this issue is a Notice of Proposed Rulemaking, no final rules will be adopted this week.  Instead, this will be an issue on which parties can comment, and will likely take the FCC quite some time to resolve.  The agenda contains other items that may ultimately be just as important.

For consumers, the Commission will consider new rules on the labeling of television equipment – presumably to warn consumers that they may be buying a piece of analog television equipment that may not work after the February 2009 digital conversion.  Another item will address other technical issues in the digital transition.  The final item is not coming from the Media Bureau which usually considers broadcast matters, but instead from the FCC’s Wireless Bureau, which regulates the spectrum at Channel 52 and above (the so-called 700 MHz spectrum) which will be fully reclaimed from broadcasters for wireless services after the end of the digital television transition. The item will consider a number of issues on how operators in that spectrum will be able to operate as they come online.  As there are already uses of that spectrum to provide media services, e.g. QualComm’s Media Flo technology about which we wrote here, and other wireless broadband uses are planned, broadcasters should monitor the developments that arise in this area as they may well affect the competitive environment in the years to come.

Last week, the FCC issued a Public Notice asking for information as to the compliance of television broadcasters with their obligations to provide programming that addresses the educational and informational needs of children.  While the Notice indicates that it is a follow-up to the 2004 Order addressing the children’s broadcasting obligations of digital television broadcasters, the notice also refers to the $24 million settlement with Univision to resolve allegations that it had misclassified entertainment programming as being educational programming addressed to children.  The Commission asks questions in its notice as to whether television broadcasters are complying with the rules, and whether the rules provide sufficient guidance to broadcasters as to what kind of programming satisfies the rules for educational broadcasting.

We wrote about the Univision settlement agreement, here.  It is interesting that the FCC, after issuing the largest broadcast fine in history to Univision, apparently rejecting the arguments that Univision made that its programming was in compliance, now asks whether the rules provide enough guidance for broadcasters to know whether or not particular programs comply.  As we’ve written before in many contexts, whenever the government gets into issues of defining when speech is acceptable or not, guidelines and limits are difficult or impossible to establish.  Nevertheless, the Commission is now asking that parties help to clarify the definition of educational programming directed to children.  Comments are due 30 days after publication of this Notice in the Federal Register, and reply comments are due 15 days later.

On Friday, the FCC issued a Notice of Proposed Rulemaking to establish the fees and collection procedures for the 2007 regulatory fees – the amount that entities regulated by the FCC pay for the privilege of being regulated.  These fees reimburse the US Treasury for the cost of the regulation.  While no one likes to pay these fees, the total amount to be collected by the FCC is actually slightly less than last year, meaning that the proposed regulatory fees for broadcasters are not proposed to increase from the fees paid last year. The proposed fees for broadcasters for 2007, and the fees that were paid in 2006, are found in the attachment to the FCC’s Notice.  Fees will be paid at a date to be established later, sometime in August or September.

For radio stations, the fees are based on the Class of station, and the population served by that station.  These fees range from $400 for a Class C AM station serving less than 25,000 people, to $9125 for a Class B or C2 or higher FM station serving over 3,000,000 people.  For AM stations, population is computed based on the 5 mv/m service area.  For FM stations, it is based on the 70 dbu contour.

TV stations will pay between $64,300 for a VHF station in the Top 10 markets, to $1750 for UHF stations in markets below 100.  LPTV stations and TV translators will pay $450.  For each broadcast auxiliary license, a broadcaster will pay $10.

Continue Reading FCC Regulatory Fees for 2007 Proposed – No Inflation Here

As we wrote earlier this week, the Copyright Royalty Board denied motions for rehearing of its decision raising royalty rates for the use of sound recordings by Internet Radio stations.  The full text of that decision has now been posted on the Copyright Royalty Board’s website, here.  Our summary of this order can be found here.  We have also posted a more detailed summary of the Royalty decision on our law firm website, here.

The Copyright Royalty Board today denied the Motions for Rehearing of their decision raising the royalty rate for the use of sound recordings on Internet radio stations for 2006-2010.  The Board found that the Rehearing requests did not demonstrate that there was any manifest error in the initial decision, and did not introduce any new evidence that could not have been introduced in the original hearings.  Finding that these standards for rehearing were not met, the motions were all denied.  The Board decision was brief, not addressing in any specifics the issues raised in the rehearing motions. 

The Board did, however, decide to issue two clarifications to its decision.  It decided that, for administrative convenience, they would permit royalties for a transition period to be paid on an aggregate tuning hour basis for 2006 and 2007.  For 2006, the ATH rate would be $.0123 per hour for Internet-only webcasters, $.0092 per hour for broadcasters who stream their over-the-air music programming, and $.0011 for broadcast stations which use only incidental music (e.g. news/talk and sports stations).  For 2007, those rates would rise to $.0169 for Internet-only webcasters, $.0127 for the simulcast of a terrestrial broadcast station’s signal for a music station, and $.0014 for the simulcast of a talk radio station.  These numbers appear to assume 11.5 songs per hour for broadcasters, and 15.4 songs per hour for Internet-only stations.

Continue Reading Copyright Royalty Board Denies Rehearing Motions – Next Stop, Court of Appeals

The FCC today issued a Public Notice announcing that it has approved four consent decrees settling its investigation into possible payola violations by several large radio broadcasters.  A copy of the public notice summarizing the action is available here, and copies of the full consent decrees can be found on www.fcc.gov.   

CBS Radio, Citadel Broadcasting Corporation, Clear Channel Communications, Inc. and Entercom Communications Corp. each entered into a consent decree with the Commission to end the FCC’s investigation into possible violations of the payola rules for failing to provide the required sponsorship identification related to material broadcast on the stations.  In addition to making a combined contribution of $12.5 million to the U.S. Treasury, the broadcasters agreed to implement certain business reforms and compliance measures, such as:

  • Prohibiting stations and employees from exchanging airtime for cash or items of value except under certain circumstances;
  • Placing limits on gifts, concert tickets, and other valuable items from record labels to company stations or employees;
  • Appointing compliance officers who will be responsible for monitoring and reporting company performance under the consent decrees; and
  • Providing regular training to programming personnel on payola restrictions.

The consent decrees contain a fair amount of detail regarding the documentation and monitoring that will be required by these stations under these agreements, as well as new details regarding the interaction between radio stations and record promoters.  We are preparing a full summary of the consent decrees, along with an analysis of the impact these orders may have on broadcast radio, so check back early next week. 

The FCC has just released a Public Notice providing guidance on various situations that may arise under the new simplified processing rules for changes in the city of license of AM and FM stations. These clarifications had been promised for many months, ever since the new rules became effective in mid-January.  The Public Notice sets out a number of scenarios as to when a broadcast station may change its channel or make a change in a city of license by using a Form 301 application, be processed on a first-come, first serve basis, not subject to competing applications, and when a more lengthy process must be used, requiring public notice and comment and the opportunity for counterproposals, before the change can be made. 

For those who have been involved in the filing of these applications since the January 19 effective date of the rules, and who have informally discussed these processes with the FCC, there are few if any major revelations in the Public Notice.  Essentially, city of license changes can be made on an application where the proposal moves a station from one city to another, when no new station could be located at the second city because of the licensed facilities of the station.  One clarification that had been discussed with the staff in preparation for applications already on file, and confirmed by this notice, is the fact that the new rules allow the change of channel of an existing station, at its current city of license, to a nonadjacent channel (one which is not precluded by the current station operation), using a Form 301 application, as long as there is no upgrade in facilities of the station.  Thus, a station could move from 92.1 to 105.3 (if it works under the FCC’s technical standards), without any sort of notice and comment or competing proposal.  In some cases, the station could use this process to change channels, then file an upgrade application on the new channel, and complete a non-adjacent channel upgrade through a two step process never subject to formal comment or counterproposals. 

Even for those without applications currently pending, this public notice is worth reading, as it may give the broadcaster ideas of possible changes that can be made to improve the facilities of its stations.

We have written much on the Copyright Royalty Board decision on Internet Radio Royalties, and have received many questions and comments on the decision.  To try to put all of the answers in one place, we have put together a comprehensive memo on the decision.  The entire memo can be found here. 

In the memo, we provide a background of the case, a summary of the decision, a discussion of what comes next, and answers to some commonly asked questions.  Those questions follow here, but for a full understanding of the case, we urge you to read the complete memo. 

 To whom does the decision apply? The Board’s decision covers only non-interactive webcasters operating pursuant to the statutory license. Essentially, a webcaster covered by this decision is one that operates like a radio station – where no listener can dictate which artists or songs he or she will hear (some limited degree of consumer influence is permitted, but a webcaster must comply with the restrictions set out in the Copyright statute). These restrictions forbid prior notification to the listeners of when any specific song will play, and restrict the number of songs by a specific artist that can be played. For more information on these restrictions, see our memo on Internet Radio – The Basics of Music Royalty Obligations.

Does the decision cover broadcasters who stream on the Internet? Yes, the decision does cover the Internet transmissions of the over-the-air content of broadcast stations.

Continue Reading Copyright Royalty Board Decision on Music Royalties – Clarifying the Confusion