This afternoon, the FCC issued an erratum revising the deadline for submitting Comments in the rule making proceeding regarding potential modifications to the ownership report filing requirements for noncommercial broadcasters. Comments in this proceeding are now due by June 26th, not June 29th as previously indicated. Please see our earlier post, here, discussing the
UPDATE: On June 2, the FCC issued an erratum revising the Comment date in this proceeding to June 26th. We’ve updated our earlier post to reflect the change.
The FCC today issued a Public Notice announcing the filing deadline for comments regarding potential modifications to the ownership report filing requirements for noncommercial broadcasters (see our…
Rural communities – do their radio stations need government protection? The FCC seems to think so, proposing a series of new rules and policies that restrict the ability of the owners of rural radio stations to move their stations into Urban areas. These rules would make it harder for entrepreneurs to do “move in” applications – taking stations from less populated areas and moving them to communities where they can serve larger populations in nearby cities. The Commission states that it is making these proposals to attempt to live up to its obligations under Section 307(b) of the Communications Act to ensure a “fair, efficient and equitable” distribution of radio services to the various states and communities in the country. While this may be a noble goal, one wonders if it is a solution in search of a problem. Are there really rural communities that have an unmet demand for missing radio services – and which can economically support such services? And do these proposals conflict with other goals of the new Commission, by effectively decreasing the opportunities for minorities and other new entrants from acquiring stations in major markets – by taking away move-in stations that are often the only stations that these broadcast station owners can afford in urban markets? These are questions that the FCC will need to resolve as part of this proceeding.
A Section 307(b) analysis is done by the FCC when it faces conflicting proposals, specifying different communities of license, for new AM stations or requests for new FM allotments. It is also required when an applicant proposes to move a station from one community to another, as the applicant must demonstrate that the move to the new community would better serve the objectives of Section 307(b) than would the current location of the station. In the past, the 307(b) analysis looks at several factors, or “Priorities.” These include:
- Service to white areas – when a proposed station will serve “white area,” an area where residents currently receive no predicted radio service (no “reception service” in FCC parlance).
- Service to gray areas – when a proposed station will serve areas that currently receive only a single reception service
- Provision of a first local “transmission” service – where the proposed station will be the first station licensed to a particular community, and thus the first station that has the primary responsibility to serve the needs of that community
- Other public interest factors – usually meaning which proposal will provide the service to the most people (with service to “underserved areas,” i.e. those that receive 5 or fewer “reception services,” getting somewhat more weight).
At its meeting today, the FCC decided to revamp its Ownership Report filing process – requiring all stations to file Biennial Ownership Reports on FCC Form 323 on November 1 of this year – even stations that have just filed those reports in the normal course in the last few months. All stations will have to file every two years thereafter – on November 1 of every other year. Reports will also be required from Low Power TV stations and Class A TV stations, which have not in the past had to file reports. Reports will also be required from stations that are owned by an individual, and by general partnerships in which all of the partners are individuals (or, in the FCC’s legalese, "natural persons"). In the past, such stations did not have to file reports as any change in ownership would have required, at a minimum, the filing of a Form 316 short-form assignment or transfer application. Finally, the Commission will require the reporting of the interests of currently non-attributable owners who are not attributable simply because there is a single majority shareholder in the licensee.
The FCC is not asking for this information because it wants to track improper transfers, but instead so that it can gather information about the racial and gender make-up of the broadcast ownership universe. This information has been required on ownership reports for the last ten years, but the FCC did not believe that the system was extensive enough to capture all information about the ownership of broadcast properties, as so many stations were not covered by the requirements. Why does the FCC want racial and gender information about the owners of stations? To potentially take more aggressive actions to encourage minority ownership. The FCC has considered such actions in the past, but has not felt that it take actions specifically targeted to minority and female applicants, as there was no record of past discrimination in the broadcast industry. The government can constitutionally only make racial or gender-based decisions if these decisions are to remedy the effects of past discrimination. To justify such acts, the government agency must demonstrate the past discrimination – and these new filing requirements are meant to gather that information through what is called an Adarand study. In the recent past, when it adopted certain diversity initiatives for designated entities (like the ability of a designated entity to buy an expiring construction permit and get an extension, which we recently wrote about here), the Commission had to define a designated entity as a "small business" defined by SBA standards. Chairman Copps today said that this definition did not truly benefit diversity as favoring small businesses "generally benefit white males."
As part of its order in it proceeding to encourage diversity in broadcast ownership, the FCC adopted a number of new rules, including a rule allowing parties holding construction permits for new broadcast stations to sell those permits to "qualified entities." The buying qualified entity would then then get 18 months to construct the new station, even if the construction permit would otherwise expire in less than 18 months. Under prior policy, an FCC construction permit would expire 3 years after it is issued, with no real opportunity for extension (though the construction period could be "tolled" for the period that certain impediments to construction existed, i. e. litigation over zoning, FCC litigation over the validity of the permit, or Acts of God that temporarily stopped construction – but only for the limited period that such an impediment existed). The new rule was adopted to encourage the sale to new entrants to broadcast ownership who could purchase construction permits that might otherwise expire. Today, the FCC issued some clarifications of the new rule.
The clarification was issued principally to set out when the sale must take place in order for the buyer to qualify for the 18 month extension. The FCC’s staff looked at the literal language of the new rule, and concluded that the sale must be approved by the FCC and consummated before the expiration date of the construction permit in order for the buyer to get the 18 month extension. If the sale is not completed before expiration, the permit would expire. Thus, the Commission warned applicants planning to take advantage of this new rule to file for the FCC approval of the sale at least 90 days before the expiration of the permit, to give time for the FCC approval of the sale and a consummation. However, because of the uncertainty of the rule, the Commission decided that it would allow any party wanting to buy an unbuilt construction permit and who files to acquire that permit by May 31 to get the 18 month extension, even if the permit expires while the FCC application for approval of the sale is pending. But after June 1, the buyer will not get the extension if the sale is not completed before the expiration of the permit.
This week, an interesting concept has been advanced in a series of applications filed with the FCC. Ion Media Networks, the successor to Paxson Television, has proposed to transfer some of its broadcast stations to a new company, Urban Television LLP, to be owned 51% by Robert Johnson, the former owner of BET, and 49% by Ion itself. But, when we say that they are transferring "some" of its stations, we don’t mean that any of its stations are being transferred, but instead only that a piece of its stations are proposed to be transferred. Ion proposes to continue to own and operate stations in every market where it currently operates, but proposes to sell digital multicast channels to Johnson. Unlike any LMA or other programming agreement, the proposal is to actually take one 6 MHz television channel and break it up so that Ion continues to program one channel with its programming and the Urban Television will program the other channel with its programming, and become the actual license of that portion of the spectrum. The FCC has accepted the applications and issued a Public Notice, giving parties 30 days to file comments on the proposal.
It is not unheard of for two licensees to share the same channel – though where it is currently occurs most frequently is in connection with noncommercial broadcasters who share a single radio or TV channel, they divide it by time, so that one licensee operates, say midnight to noon and the other operates from noon to midnight. Obviously, in these shared-time arrangements, both broadcasters are not operating on the same channel at the same time. This new proposal, though, does not come out of the blue. The idea of allowing a broadcaster to sell a digital channel to a different company, has been proposed before, for both Digital Television and Digital HD Radio channels when the original station is multicasting, as a way to increase diversity of ownership.
With Barack Obama’s historic victory just sinking in, all over Washington (and no doubt elsewhere in the country), the speculation begins as to what the new administration will mean to various sectors of the economy (though, in truth, that speculation has been going on for months). What will his administration mean for broadcasters? Will the Obama administration mean more regulation? Will the fairness doctrine make a return? What other issues will highlight his agenda? Or will the administration be a transformational one – looking at issues far beyond traditional regulatory matters to a broader communications policy that will look to make the communications sector one that will help to drive the economy? Some guesses, and some hopes, follow.
First, it should be emphasized that, in most administrations, the President has very little to do with the shaping of FCC policy beyond his appointment of the Commissioners who run the agency. As we have seen with the current FCC, the appointment of the FCC Chairman can be the defining moment in establishing a President’s communications policy. The appointment of Kevin Martin has certainly shaped FCC policy toward broadcasters in a way that would never have been expected in a Republican administration, with regulatory requirements and proposals that one could not have imagined 4 years ago from the Bush White House. To see issues like localism, program content requirements and LPFM become such a large part of the FCC agenda can be directly attributed to the personality and agenda of the Chairman, rather than to the President. But, perhaps, an Obama administration will be different.
We recently wrote about the controversy before the FCC about Arbitron‘s roll-out of the Portable People Meter ("PPM"). A number of broadcast groups, particularly those who target minority audiences with their programming, have requested that the FCC hold a hearing as to whether the introduction of the PPM in a number of major radio markets should be allowed, arguing that it has the potential to discriminate against minority audiences and to decrease diversity in the media. Arbitron and other broadcast groups have opposed the initiation of that proceeding, arguing that the regulation of a ratings service exceeds the FCC’s regulatory authority. Now, the opponents of the PPM have sough relief from a number of state and local governments, with the Attorneys General of New York and New Jersey filing suit to prevent the initiation of service by Arbitron. The office of New York Attorney General Andrew Cuomo issued this Press Release, and that of New Jersey Attorney General Anne Milgram issued this Release, citing the reasons for the suit. Both claim that the use of PPM technology, which they claim has methodological flaws, is a deceptive trade practice by a monopoly provider of services. The NJ suit goes on to claim that the disparate effect of the claimed inaccurate measurements on minority and ethnic stations violated the state’s anti-discrimination laws. Arbitron of course denies these claims.
The lawsuits have received substantial coverage in both the popular and trade press. Today’s Washington Post has an article discussing the controversy. Citing an interview with Alfred Liggins of Radio One, a leading radio group targeting African American listeners, the article suggests that the PPM may take a while for stations to adapt to, but once they do, even minority-targeted stations can obtain valuable programming feedback from the new methodology, as it allows feedback as the ratings information in days rather than the months that that the current diary system requires. This rapid feedback allows broadcasters to make programming adjustments that will allow them to maintain or improve their ratings position. Mark Ramsey’s Hear 2.0 blog looks at some anomalies in the PPM in specific demographics, but in another post concludes that despite whatever shortcomings the PPM may have, the industry needs to work with Arbitron on insuring that the PPM works – as an automated system is inherently more reliable than the diary method that relies on listeners recalling and accurately writing down their radio listening.
The Digital Television conversion has allowed the FCC to reclaim significant portions of the TV spectrum for wireless and public safety uses – television channels above 51 will no longer be used for broadcast TV at the end of the analog to digital transition. But, as part of the FCC’s Diversity proceeding (see our post here), a proposal dealing with the other end of the TV spectrum is being considered – whether to remove Channels 5 and 6 from the television band and instead use these channels for FM radio. These channels are adjacent to the lower end of the FM band. Because of this adjacency, the existence of TV Channel 6 in a market can limit the use of the lowest end of the FM band (used for Noncommercial Educational stations) to avoid interference to the TV station. Similarly, Channel 6’s audio can be heard on many FM radio receivers, a fact that has recently been used by some LPTV operators to use their stations to deliver an audio service that can be received by FM radios (see our post on this subject). In comments filed in the Diversity proceeding, parties have taken positions all across the spectrum – from television operators who have opposed using the channel for anything but television, to those suggesting that the channels be entirely cleared of television users and turned into a digital radio service. Proposals also suggest using the band for LPFM operations, and even for clearing the AM band by assigning AM operators to this band to commence new digital operations.
In comments that our firm submitted on behalf of a group of noncommercial FM radio licensees who also rebroadcast their signals on a number of FM translator stations, we suggested that Channel 6 could provide a home for LPFM operations, instead of trying to squeeze those stations into the existing FM band. There are currently proposals to squeeze more LPFM stations into the FM band by supplanting some FM translators (see our summary of some of those proposals here). In these comments in the Diversity proceeding, we pointed out that, as there are currently radios on the market that receive 87.9, 87.7 and even 87.5, using these three channels for LPFM service would provide an immediate home to these stations, and far more opportunity for than LPFM would have in the already congested FM band. These opportunities would exist even in most of the largest radio markets in the country, except in the handful of markets where a Channel 6 television station will continue to operate after the digital transition. By adopting this proposal, the service that would be provided by FM translators would not be threatened.
The FCC today issued an order extending the comment deadline in its Broadcast Diversity proceeding, extending the comment date a full month until July 30, with Reply Comments now due on August 29. This important proceeding, about which we wrote here, will address many issues, including proposals to, among other things, repurpose television…