In two recent FCC decisions, one dealing with a commercial operator and that other with a noncommercial licensee, the Commission’s staff addressed the issue of how large an FCC fine could be imposed on a broadcaster without that fine being subject to reduction because of the licensee’s inability to pay. In the first case, a
FCC Fines Noncommercial Station for Enhanced Underwriting Announcments that Were too Commercial
In a decision released late on Friday, the FCC upheld a $9,000 fine on a noncommercial television operator who broadcast underwriting announcements which, in the opinion of the Commission, were too much like commercials and thus were impermissible on a noncommercial station. Under the Commission’s policies governing the noncommercial nature of noncommercial stations, it is permissible to air an underwriting announcement acknowledging a commercial entity that makes a financial contribution to the station. And it is permissible to state the nature of the business, where it is located, and to air the slogan of the company. What is not permissible is when the underwriting announcement contains "calls to action," qualitative or comparative claims, price information, or other inducements to do business with this particular company. In this case, the Commission felt that the announcements crossed some or all of these lines.
In the initial Notice of Apparent Liability in this case, released in late 2004, the text of the announcements at issue are set out. In last week’s order, phrases such as "planning a special occasion?" as the intro line to an announcement about an Ice cream store were deemed to be calls to action, and the description of the ice cream cakes that the store made as "tastefully decorated" were deemed to be qualitative. Similarly, statements about a real estate company that "we’re all about family" and "we love selling real estate" were deemed to be comparative in nature, trying to distinguish this particular agent from other competitors. In only one of ten ads, one for a school supply store, did the Commission overturn its previous determination, finding that an announcement for "creative learning materials" was arguably descriptive and not qualitative.…
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Big Fines for Public File Violation that Escalated
The FCC released an order today, fining a broadcaster $20,000 for misrepresentations made in its license renewal application about the completeness of its public inspection file. The fine issued in this case was not a fine for the fact that the file was incomplete (two stations in the cluster had each already been fined $4000 for the actual public file violations), but instead the fine was issued because the licensee had certified in its renewal application that the public file had been complete and accurate at all points during the course of the license term. This case highlights both the need to keep an accurate public inspection file, and the need to carefully consider all certifications made in FCC applications. Incorrect certifications can lead to fines and potentially even more severe sanctions if the FCC finds an intentional misrepresentation or lack of candor – the potential loss of a license. Admitting a minor paperwork transgression like an incomplete public file will result in a fine – an inaccurate certification which appears to try to hide a problem can lead to far more severe consequences.
In this case, the FCC found that the licensee had not maintained Quarterly Issues Programs lists. The licensee claimed that its obligations had been met through a listing of public service announcements that the stations had put in their files. The FCC rejected that argument, citing the requirement in its rules requiring that Quarterly Issues Programs lists contain "a narrative description of what issues were given substantial treatment" by the licensee as well as the programs that treated each issue. In addition, the time and date of broadcast of each program, as well as its title and duration, is to be provided. A simple list of PSAs does not meet these requirements – as it does not list the issues addressed, much less provide the detailed program information required by the rule. For a summary of the Quarterly Issues Programs list obligations, and a model form to be used to meet the obligations, see our most recent memo on the subject, here. Remember, the Quarterly Issues Programs Lists are a broadcast station’s only official record of how they have served the public interest needs of its community, so be sure that adequate attention is paid to the completion of these forms.…
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Enhanced Public Interest Requirements for TV Too?
In our recent summary of the Commission’s order on Digital Radio, we wrote about the Further Notice of Proposed Rulemaking that raised specific proposals to adopt new rules regulating the public interest obligations of radio broadcasters. These proposals included the possible requirements for a standardized disclosure form for a stations public service programs, limits on a station’s ability to originate programming from locations other than the station’s main studio, and possible limitations on the current ability of stations to operate without manned studios. A recent Commission decision reminds television broadcasters that there is another proceeding – one six years old – that proposes many of the same restrictions on television broadcasters. Does the recent mention of this proceeding that so closely parallels the recent radio proposals indicate that some action may soon be forthcoming on the TV proceeding?
The TV proceeding was mentioned in an FCC decision released last week rejecting Petitions to Deny that had been filed against a number of license renewal applications for television stations in Wisconsin and Illinois alleging that the stations had not adequately served the public interest through the broadcast of issue responsive programming, especially programming covering election issues. In rejecting those Petitions, the FCC stated that its ability to second guess the editorial discretion of a licensee was limited by the First Amendment and by the Communications Act’s prohibition against broadcast censorship. In this case, the FCC said that the showing made by the Petitioner was not sufficient to demonstrate that the stations had not served the public interest of their communities. However, the decision noted that the Commission was considering quantitative standards for evaluating the public service of broadcast licensees, citing to the long-pending rulemaking proceeding, and implying that the evaluation of these licensees might have been at least somewhat different had these proposed standards been in place.…
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Another Localism Hearing and Service to America
The FCC, after taking two years off, is looking to finish their field hearings on Localism by scheduling a hearing in Portland, Maine on June 29. This hearing is not one of the six hearings to discuss possible new multiple ownership rules, but instead a continuation of the hearings started by Chairman Powell after public controversy over the 2003 multiple ownership rules. In an ironic twist of fate, this public notice was released on the Friday before the National Association of Broadcasters Educational Foundation hosts their Service to America Awards Dinner to honor broadcasters and the public service commitment that they have to their communities. Thus, while the FCC is looking in the hinterlands for evidence of the responsiveness of the broadcast industry to the needs of their listeners, some of the best evidence of that service was on display some 12 blocks from the FCC’s headquarters.
The Localism hearings were part of a larger proceeding begun in response to the controversy after the 2003 multiple ownership rules. When the Democratic Commissioners, Congressional legislators from both parties, and a variety of citizen’s groups from across the political spectrum complained about how the public’s input was not sought before the rules were adopted, the FCC tried to respond to some of those complaints by putting out a Notice of Inquiry on Localism. The proceeding was to assess how well broadcasters were serving their communities, and the Notice asked for public comment on a grab bag of issues including the following:
- whether a broadcaster’s public interest obligations should be quantified (bringing back obligations abolished in the 1980s that required specific amounts of the programming of broadcast stations to be devoted to news and public affairs programming),
- should broadcasters be required to play specific amounts of local music,
- is payola a major issue,
- whether more programming should be devoted to political campaigns,
- whether the voices of minorities were being heard on the airwaves.
- if the FCC should authorize more LPFM stations and take other steps to make airtime available to new entrants
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Lobbying Effort to Make Broadcasters Pay Sound Recording Royalties in the Works?
A story in the Hollywood Reporter indicates that a coalition of record companies and associations representing performing artists are preparing to initiate a Congressional lobbying effort to push for a royalty for performance rights in sound recordings that would apply to broadcasters’ over-the-air transmissions, not just their Internet streams. Broadcasters currently pay performance royalties to ASCAP, BMI and SESAC for their over-the-air music programming – royalties that are paid to composers (or music publishing companies) for the use of the underlying musical composition. Digital operators (satellite radio, Internet radio, digital cable radio) pay royalties for the composition and also pay royalties for the sound recording, i.e. the actual performance as recorded on a record, CD, or digital download. The copyright for the sound recording is usually held by a record company. The performance right in a sound recording did not exist in the United States until 1995, and still applies only to digital transmissions. Obviously, if extended to broadcasting, this could result in huge expenses to broadcasters – amounts for which they probably have not planned.
This is not the first time that such a royalty has been mentioned. In introducing the PERFORM Act earlier this year, Senator Feinstein of California suggested that this legislation, which makes certain changes in the digital royalty standards that apply to various services as well as to other copyright license provisions, was only a first step in clarifying royalty issues. In statements made at the time, there were indications that she favored further legislation to adopt a sound recording performance right for broadcasters. At last week’s Future of Music Conference, David Carson, General Counsel of the Copyright Office, also spoke in favor of such a right – suggesting that if SoundExchange collected money from broadcasters they might not need to seek so much from Internet Radio companies (see our coverage of the Internet radio royalty issues, here).
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