Chairman Martin yesterday announced the appointment of a new Chief of the Media Bureau, the FCC Bureau which directly regulates broadcasters.  The Media Bureau processes broadcast technical applications, approves sales of stations, and takes the first draft of most policy issues which affect broadcasters.  Donna Gregg, who has held that position since 2005, is moving on to become the policy adviser to the US Delegation to the World Administrative Radio Conference. 

The new chief, Monica Shah Desai, is an FCC veteran, who most recently was the Chief of the FCC’s Consumer and Government Affairs Bureau, the Bureau responsible for dealing with consumers and other governmental agencies – presenting, explaining and often implementing the FCC’s positions and programs.  That bureau also works to develop consumer policy to be implemented by other Commission bureaus.

What will this change in leadership mean to the broadcaster?  Probably, not much.  Many remember the long Media Bureau leadership of Roy Stewart, who was very visible around the country, meeting with broadcasters, and exerting a long institutional memory and strong policy position on broadcast matters.  Under Chairman Powell, the Media Bureau also was very visible developing policy proposals.  In one of those cyclical variations that the FCC routinely goes through, in recent years, more decision-making has been centered on "the Eighth Floor," i.e. among the FCC Commissioners.  Whether a new Media Bureau chief changes that recent dynamic remains to be seen. 

In a recent article from the Boston Globe, an interview with the new manger of WBZ-TV in Boston stressed the importance of the stations call letters.  The article talks about the connection that the local audience had to the well-known station call letters , and how the station had suffered to some degree by de-emphasizing those call letters while using other station branding.  That story, to me, raises the question of whether stations have taken the necessary steps to protect their brand by protecting the use of their call letters.

Since 1983, the FCC has left disputes about the use of confusingly similar call letters to local courts.  Thus, if a competitor picks a set of call letters that could confuse the public about the relationship of their station to yours, you may need to sue to stop that use.  And now, when stations often keep alive formats that have been dropped by moving the formats onto Internet Radio Stations or to HD Radio subchannels, the call sign may well live on even after it has been dropped from a primary on-air station.  Thus, it needs protections other than those provided by the FCC.

In 1983, the FCC stated that stations had a sufficient interest in call letters to obtain a service mark.  A service mark gives the call letters the protection of Federal law, and may impose penalties on a competitor who tries to infringe on those call letters.  To protect that brand, the investment of a few hundred dollars to file a service mark application may well be worth it, and something that more stations should consider.

In a decision released last week on an increasingly common issue, the FCC refused to get involved in a retransmission consent negotiation dispute between a cable television system and a television station.  The dispute involved Sinclair Broadcasting’s demands for cash consideration for the carriage of its television stations by cable systems owned by Mediacom Communications.  In a Petition filed with the FCC, Mediacom argued, among other things, that Sinclair was not asking for marketplace rates for the carriage of its stations, and thus was violating the duty of the television station to bargain in good faith with the cable system.

In the decision, the FCC’s Media Bureau essentially concluded that there was no obligation of a television station to agree to marketplace rates in exchange for its agreement to provide the cable system with retransmission consent.  Essentially, the FCC said that as long as Sinclair did not offer only a take-it-or-leave-it proposal, the FCC would not get involved in deciding whether a proposed price was reasonable or not.  Sinclair owed no duty to disclose its other deals with other systems to establish what was a marketplace price for its signals, as long as it made offers to Mediacom.   If Sinclair wanted to hold out for more consideration than it had ever received from any other cable system before, that was it’s decision.  As the FCC put it, one party was incorrectly valuing the television signal – and that party would ultimately pay in the marketplace if the station was not carried. 

This decision seems to signal the FCC’s reluctance to get involved in retransmission consent negotiations.  As long as the parties talk, and make proposals to each other, the FCC will seemingly rarely intervene in evaluating the specifics of those proposals.  This decision can be appealed to the full Commission, though it will be interesting to see if the case is decided through that appeal or the parallel antitrust litigation that is going on, or whether the parties will heed the Media Bureau’s admonition in the last paragraph of its decision – to reach a negotiated decision that both can live with, one which won’t deprive cable subscribers of access to the signals of the television stations that are involved.

In recent weeks, the FCC has been vigorously defending its indecency rules in Court.  First, oral arguments on the FCC’s actions against Fox and NBC for "fleeting utterances," one-time unscripted airing of profanities during television coverage of live award programs, were held the week before Christmas – with a decision possible in the upcoming months.  At the same time, briefs are being filed in the case involving Janet Jackson and the Super Bowl clothing malfunctions.  But, with more and more video moving on-line, where the FCC’s indecency rules don’t reach, who is the FCC really protecting?

A recent article in the New York Times (subscription required for full archived content) reported on NBC’s Saturday Night Live posting on the Internet an unedited copy of a partially censored animated feature that aired on its program.  If viewers can access complete, unedited content of a television program online, and that online content can be promoted on the air, unless there is some great expansion of the FCC’s power in regulating on-line activity, it seems that the FCC’s indecency crackdown doesn’t accomplish much.  But, with the pending court actions, it may well be that the FCC’s ability to regulate indecency shrinks before it increases.

Two recent decisions show a stark divide in the approach of the Democratic and Republican FCC Commissioners which may indicate the difficulty of reaching consensus on any of the pressing issues which will be facing the FCC in this new year.  The FCC decision on the AT&T acquisition of BellSouth, approved by FCC action on Friday, was a result of AT&T throwing in the towel, surrendering to the demands of the two Democratic Commissioners who were seeking greater consumer protections before voting to approve the acquisition.  In that case, as one of the Republican Commissioners had removed himself from consideration of the matter due to a conflict from a previous job, the Democrats had an effective veto over any FCC decision. 

In the decision reached right before Christmas, requiring local municipalities to act quickly on new video franchise applications and restricting the conditions that could be put on such approvals, the Commissioners again split on party lines.  The three Republicans argued that the restrictions were necessary to encourage the entry of new competition in the multi-channel video world, resulting in the potential of lower prices to consumers.  Democrats, on the other hand, contended that the rules were beyond the FCC’s power.  Beyond what some might see as the role reversal represented by the votes (the Republicans looking out for consumer interests while the Democrats were protecting states rights, with Commissioner Adelstein even quoting Ronald Reagan in his dissent), one wonders why these positions broke down on party line.  If the proposal really did exceed the Commission’s power, shouldn’t Republicans and Democrats alike refrain from acting?  And if the result of this action was really a benefit to consumers, shouldn’t Commissioners of both parties have looked for ways that the rules could be adopted within legal bounds?

The seeming inability of the Commissioners to reach consensus on most big issues does not bode well for prompt action on some of the major broadcast issues facing the FCC.  We’ve already seen a decision on adopting final standards on digital radio (including authorizing nighttime digital operations for AM stations) postponed for over 6 months, reportedly based on arguments over the public service obligations of multicast channels.  And how will the contentious multiple ownership debate be resolved?  And what will happen should one of the Republican Commissioners leave the Commission during the course of the year?  It certainly will be interesting to see these issues play out during the course of this new year.

While recent press reports talk about the growth of Internet Radio and the increasing presence of terrestrial radio companies on the net, the amount of the music royalties that will have to be paid by Internet radio companies for the 2006-2010 period remains unresolved.  The trial phase of the proceeding to set the rates, held before the Copyright Royalty Board, is now completed, and the upcoming decision of the Board may have a profound impact on the economics of the Internet radio industry.  Final briefs in the case were filed with the Board in December, and an oral argument was held on Thursday, December 21.  With the completion of the argument, the decision is now in the Board’s hands, and the amount of the royalties for the use of the sound recordings will be decided by the Board on or before March 4. 

In the on-line world, and in most digital communications channels other than over-the-air digital broadcasts, a royalty for the use of the "sound recording" (the actual recording made by a particular artist) must be paid in addition to the royalty for the use of the composition (i.e. the underlying words and music) that is paid to ASCAP, BMI and SESAC.  Our summary of the royalty rates that Internet radio stations should currently be paying can be found on our firm’s website, here.  As we make clear in that memo, the rates that are currently being paid expired at the end of 2005, so the rates that are adopted in the current proceeding will be retroactive to January 1, 2006.

The proceeding to determine the new rates has been underway for more than a year.  Written cases were filed by the parties in October 2005.  Discovery, including depositions and document discovery, took place in the early part of 2006.  A trial began in May and lasted through the first week in August, with a rebuttal phase that ended the week after Thanksgiving.

Continue Reading Copyright Royalty Board to Decide Internet Radio Music Royalties By March 4

This article is no longer available. For more information on this topic, see FCC Releases New EAS Manuals Explaining Obligations for Broadcasters and Video Providers