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At the Oklahoma Association of Broadcasters meeting last week, David Donovan, President of the Association for Maximum Service Television, discussed the digital television transition, and the significant issues that face television broadcasters as the February 17, 2009 deadline for the transition to digital television approaches. The theme of David’s message was that, for the transition to go smoothly, television broadcasters need to be actively planning now for that end date. Without planning and coordination now, some broadcasters won’t be ready for the transition deadline, and others may have difficulty operating interference-free because of the actions of others.

David’s presentation, DTV – When the Rubber Meets the Road – can be found on the MSTV website. Among David’s key points was that the Table of Television Allotments as adopted by the FCC, in order to compress all existing stations into the smaller television spectrum that will exist after the transition, relies on re-using channels that are currently being used by one station as the ultimate digital channel of another station in the same or adjacent market. Unless these stations coordinate their transition to digital, interference issues can result and, in some cases, the transition may be delayed. In the simplest example, a station might have both its analog and digital operations outside the “core” channels that will be available for television use after the February 19, 2009 deadline. In the Table of Allotments, that station may have been assigned as its digital channel for post-2009 operations a channel currently being used by another station in the market. If the station currently using that channel does not move to its own digital channel on time, the out-of-core station cannot begin its in-core digital operations. In some cases, as many as five or six stations’ ultimate digital operations may be mutually dependent, and will need to be coordinated, perhaps on the last day of the digital transition. Problems with one station’s transition may prevent the conversion of all of the other related stations. Thus, it will be in each station’s mutual interest to assist all other related stations to make sure that all are ready to meet the transition deadline.

Continue Reading Digital TV Transition End Game Issues Loom

Monday was the deadline for the filing of Motions for Rehearing of the decision of the Copyright Royalty Board decision on Internet radio music royalties for 2006-2010.  As we have written before, the decision proposes significant increases in the royalties, particularly for independent webcasters who have up to now paid royalties on a percentage of revenue basis, rather than on the per song per listener basis set out in the CRB decision.  In motions filed today, many of the webcasters challenged specific aspects of the CRB decision.  And at least one party raised an issue that seems to contradict the very foundation of the Board’s decision.  Plus, in virtually all of the rehearing motions, the parties noted that additional issues may be raised on appeal to the US Court of Appeals, which do not need to be filed for several weeks.  

In the Motion filed by the Broadcasters’ group, it was argued that an expert witness offered by SoundExchange in the proceeding which is now underway to determine royalty rates for satellite radio contradicted some of the basic assumptions used by SoundExchange’s witness in this proceeding.  If the assumptions used by SoundExchange’s expert in the satellite proceeding were to be applied in this case, the royalties would actually decrease from those that were in effect before the Board’s decision. The assumptions used by the expert in the satellite proceeding seemed to confirm the claims offered by the webcaster’s witnesses in this proceeding.  Could this be a smoking gun that could undermine the decision of the Board?  We’ll have to see if the Board accepts this new evidence which seems to challenge the very foundation of the webcasting decision.

As the appeals are addressed to the CRB itself, asking that it reconsider or review its own decision, most of the other issues focused on limited matters that the parties thought that the Board might want to clarify as to avoid unintended consequences.  For instance, the appeals of the DiMA group, representing large webcasters, and the appeal that I worked on for the small commercial webcasters, both addressed the issue of the $500 per channel minimum fee which, if it was to be paid on literally every unique channel streamed by a service, could mean that some webcasters could pay hundreds of thousands or even millions of dollars as a minimum fee.  Some webcasters (like Pandora) serve up a unique stream for every listener.  Virtually all of the parties also addressed the question of whether most webcasters could even compute a royalty based on a per song per listener basis.  This is especially true for retroactive payments, when many webcasters did not keep such records (especially those small commercial webcasters paying on a percentage of revenue basis, or noncommercial webcasters who had payed on a flat fee basis). 

Continue Reading Motions for Rehearing of Copyright Royalty Decision Filed – And the Foundation of that Decision is Challenged

We have been covering the controversy over the rise in the royalties for all those who are providing an Internet radio service, whether they be over-the-air broadcasters streaming their signals on the Internet or pure webcasters whose stations are only available on the web.  Our previous postings on the topic can be found here.  Today, National Public Radio’s program, On the Media, is airing an interview that they did with me on this topic.  You can listen to the Interview, here. 

A number of major media sources are doing stories on the impact of these royalties on small webcasters.  The Wall Street Journal yesterday ran a story focusing on the impact on the royalties on small webcaster, WOXY.  That story can be found here (subscription required for full story).  The Boston Globe also ran a story focusing on two Boston area webcasters.  As those stories set forth, while all webcasters are hit hard by the royalty, small independent webcasters face the most immediate crisis, as their royalty obligations will exceed their total revenues.  The first royalty payment under the new royalty rates is due on May 15, so the clock is ticking for these webcasters.

Requests for rehearing to be filed with the Copyright Royalty Board will be filed on Monday, so coverage of this story will continue.

In the agenda for next week’s FCC meeting, one of the items to be discussed is the proposed acquisition by Citadel Communications of the radio stations currently owned by ABC Radio, a subsidiary of the Disney Company.  As Citadel is one of the broadcasters against which payola issues have reportedly been raised, certain parties objected to this transaction based on these and other issues.  As we have reported, there have been rumors of a large payola settlement between the FCC and broadcast companies including Citadel involving millions of dollars in fines.  As the agenda item for next week’s meeting indicates that the Commission will consider not only the proposed acquisition of the stations, but also a Notice of Apparent Liability, will this be the first case to actually impose the rumored fines for payola?  Watch the FCC meeting next week to see if payola issues are in fact resolved.  We’ll also see if the FCC provides any guidance on payola issues, and what kinds of conduct it sees as being prohibited by the payola rules.

The Agenda for next week’s FCC meeting includes the consideration of 76 groups of mutually exclusive applications for new noncommercial FM stations.  Many of the 200 or so applications contained in these groups have been pending at the FCC for almost 10 years.  Several years ago, the FCC adopted a point system to resolve cases involving these applications as many of the applications were mutually exclusive – meaning that technical considerations prevented more than one of the applications in each of these groups from being granted.  The point system awards each application points for perceived positive attributes such as being owned by a local organization or being part of a state-wide educational broadcasting network.    The adoption of the point system was supposed to speed the processing of these applications, and many such applications were granted using the point system before the processing seemingly stopped last year.  If the remaining applications are all dealt with next week as announced, this should clear the way for the opening of a new window for the filing of applications for new noncommercial FM stations. 

As it has been years since such a window last opened, the FCC expects that there is significant pent-up demand for new noncommercial stations, and that many applications will be filed.  Questions remain as to when the window will open (we are hearing Fall of 2007), and if there will be any sort of limit on the number of applications that can be filed.  Watch for further information on a noncommercial filing window in the coming months.

In July, we wrote about that the FCC was about to adopt final rules for over-the-air digital radio.  But these expected final rules were pulled off the agenda of the FCC July meeting, and they remained in limbo for the last six months.  Finally, today, the FCC announced that it will consider these final rules at its open meeting next week.  The rules have reportedly been held up while considering requests by the Democratic Commissioners that specific public interest obligations be attached to any multi-cast digital streams that a broadcaster may offer.

But the rules will also consider interference issues, and may finally authorize AM digital operations at night.  The rules should also give permanent authority to all digital radio operations which have, up to this time, been conducted under experimental or temporary authority.  It will be interesting to see if the Commission will in fact finally reach a resolution of these issues at its March 22 meeting, and how they will resolve the question of the public interest obligations of digital broadcasters – probably through the Further Notice of Proposed Rulemaking that is also on the agenda for next week’s meeting.