In recent months, SoundExchange has been reaching out to webcasters seeking to identify those who are delinquent in their royalty payments for music used on the Internet. Numerous broadcasters and webcasters have received calls or letters from SoundExchange seeking information about apparent underpayments or missing mandatory reports of royalty liability that should be filed regularly by webcasters.

Some webcasters may believe that, as the rates for Internet radio music use for 2006-2010 have not yet been established, they don’t have to pay anything until those rates are set. That is not correct, as the legislation adopted in 2005 which established the Copyright Royalty Board also specifically required that fees be paid at the old rates until a new rate structure is adopted. Some broadcasters have assumed that their ASCAP and BMI fees, which cover “streaming,” cover all costs of putting their signals on the Internet. Again, that is not the case, as the ASCAP and BMI cover only the use of the musical composition (the song) on the Internet.  The SoundExchange fee compensates the copyright holder in the actual performance of the music (the money that is collected goes to the copyright holder of the recording and the musicians who play on the recording).   The SoundExchange fee is entirely different from ASCAP and BMI, and is imposed only for non-broadcast digital transmissions of recorded music. Broadcasters do not pay a SoundExchange fee for their over-the-air broadcasts, and may not be familiar with this fee, but it is one that should not be overlooked, especially given SoundExchange’s recent attempts to identify noncompliant webcasters.

For those who may be unfamiliar with the royalties for use of music in an Internet radio broadcast, a memo outlining the requirements is available <here>

Yesterday, the FCC released its text of the Notice of Proposed Rulemaking on Multiple Ownership.  The text summarizes the findings of the Commission in its 2003 multiple ownership proceeding, the questions about those decisions that were raised by the Third Circuit Court of Appeals, and then basically asks for public comments – without making any specific proposals on how to deal with the issues that have been raised. 

With so little guidance from the FCC, this is going to be a wide-open process. The FCC doesn’t give any hint on how it is leaning on any issue, nor even suggest how to address many of the open issues. Given the issues that were remanded by the Third Circuit to the FCC, and the broad spectrum of issues raised in the Petitions for Reconsideration (all of which will be considered in this proceeding, but on none of which the FCC made any comment or suggested any way in which they would treat the issues raised), there is almost no ownership rule that is off limits in this proceeding.  In fact, the FCC could quite well revisit all the ownership rules decided in the 2003 Order, with the possible exception of the Television national ownership limits which have now been set by statute (though the FCC again raises the question of the "UHF discount" that goes into computing the national cap – asking if that discount should be retained).

A summary of some of the issues involved in this proceedings is contained in our client advisory – Multiple Ownership, Yet Again – sent out after the FCC meeting last month that announced the initiation of the new proceeding.

With so much to consider and so little guidance, this will be a long process.

An article in Saturday’s NY Times once again highlights the broadcaster’s dilemma in deciding what can and cannot be said on over-the-air without triggering the wrath of the FCC for broadcast indecency.  The article also highlights the self-censorship that broadcasters are engaged in to avoid even the potential of the $325,000 fines that Congress has recently authorized the FCC to impose in cases where a violation of the Commission’s standards are found.

The Times article talks about the issues now facing PBS in connection with a new documentary being produced by award-winning film maker Ken Burns.  Mr. Burns’ new multi-part documentary is about World War II, and he has interviewed veterans about their experiences in the war.  As might be expected, some of those interviews contain words that the FCC has determined to be actionably indecent whenever they are used on broadcast television.  Thus, according to the article, new PBS guidelines would call not only for deletion of the words but, perhaps based on concerns about recent FCC interpretations that have fined stations based on implications of indecent actions even where the actions may not have been shown, pixilation of the mouths of the veterans so that the TV audience cannot lip-read to determine what words were being used.

To some, this legal advice may seem extreme, but with the FCC guidelines and precedent as confusing as it is, and the stakes so high with the new level of potential fines, perhaps this very conservative advice is all that can be given.  Some may look at the proposed documentary as essentially identical to the airing of Saving Private Ryan, where the FCC held that the use of these otherwise prohibited words was permissible given the serious nature of the programming and the need to portray the soldiers in a realistic setting.  So you would think that a documentary on exactly the same subject, dealing with the topics depicted in the movie, would be entitled to the same treatment.  One would think – but then we have the case of PBS’ airing of The Blues, a serious documentary about blues singers which used some of the prohibited words to convey the realism of  of the blues musicians being portrayed.  The significant difference, and the reason for broadcasters’ concerns is that, unlike Private Ryan, The Blues drew a fine from the FCC for the use of the words.  Our memo of April 2006 discusses some of these issues.

Continue Reading What is a Broadcaster to Do?

As the second named tropical storm of this year makes its way up the East Coast, the FCC has warned video program distributors, including television stations and cable systems, to remember the Commission’s rules on the dissemination of emergency information.  In a public notice issued today, the Commission summarized its rules regarding the visual presentation of emergency information to the hearing and visually impaired.  in the last two years, the FCC has been aggressive in penalizing stations which did not make emergency information – information about an imminent threat to health or safety – available visually so that the hearing impaired could understand the message being conveyed.  And the rules also require that an audio tone to alert the visually impaired be played if a station presents emergency information by text without interrupting other programming. 

Today’s reminder ends with information about how to file a complaint against stations who do not comply with the requirements.  This seems to be a clear warning to broadcasters that they need to carefully review the requirements, and be ready to comply should disaster strike.

Yesterday, according to press reports, Federal agents arrested the CEO of BetOnSports.com, an on-line sports gambling site.  The reports state that others involved with this website were indicted, and those involved in companies which were in charge of promotion of this site were also arrested.  Indications are that this may just be the beginning of a Federal crackdown on Internet gambling.

Broadcasters are well aware of Internet gaming sites, as many of these sites have tried to entice radio and television stations to run advertising to promote the sites.  Most stations have wisely stayed away from any promotion of actual gaming sites.  However, the promotion of the so-called "dot-net" sites, i.e. sites with URLs identical to the gaming site, but ending in ".net" instead of ".com."  The dot-net sites have claimed to broadcasters that they are legal because they do not accept bets, instead featuring instructions on how to play various games and allowing people to play the game with free credits assigned by the site.

We have always warned broadcasters to be wary of such advertising.  If the broadcaster decides to accept the "dot net" ads, it should do so only after being very careful to be absolutely sure that these sites do not promote gambling – that they are free of links to the associated gambling site and other promotion for those sites.  With the government arresting people for promoting gambling sites, extra caution about this advertising is warranted. 

Today, many broadcast stations covered the comments that President Bush made to British Prime Minister Tony Blair at the G-8 Summit.  While discussing the Middle East before a microphone that the President did not realize was live, he used the "S Word" in discussing the problems in that part of the world.  As the FCC recently declared the "S Word" to be one of those words that will subject a broadcast station to a fine except in very rare circumstances where the context and importance of the broadcast demands its use (like Saving Private Ryan, but not a PBS documentary on the blues), will the President have presented the FCC with the first case where it can impose the new $325,000 fines for indecency that he himself signed into law less than a month ago?  Perhaps it’s a one-man government revenue enhancement plan!  Stay tuned for what might be a very interesting case.

Today, the FCC released an Order announcing the rules for the regulatory fees that will be due in September.  The exact dates for filing will be announced in a subsequent public notice.  But today’s Order sets out the amount of the fees that will be due for broadcasters and other services.

For AM stations, these fees will range from $400 to $7375, depending on the Class of Station and the population that the FCC estimates that the station serves.  For FM stations, the rates range from $575 to $9750.  UHF Television stations will owe between $1775 to $20,750, while VHF stations will pay between $3400 and $64,775.  Satellite television stations, which simply rebroadcast the signals of other stations, need pay only $1150.

All fees are based on the status of the station as of October 1, 2005.  So stations which have upgraded in the interim, or have gone from a construction permit to a licensed station after that date, will not have to pay for their new facilities until next year.  However, even if there has been a change in ownership since October 1, 2005, the current licensee is responsible for the fee.

 

Continue Reading FCC Announces Regulatory Fees For 2006