The nuts and bolts of legal issues for broadcasters were highlighted in two sessions in which I participated at last week’s joint convention of the Oregon and Washington State Broadcasters Associations, held in Stephenson, Washington, on the Columbia River that divides the two states. Initially, I conducted a seminar for broadcasters providing a refresher on their
In two recent actions, the FCC has evidenced its concern about the EEO performance of its licensees. Last week, the Commission’s Enforcement Bureau entered into a Consent Decree with DIRECTV, by which DIRECTV paid the FCC $150,000 in lieu of a fine for the company’s failure to abide by the FCC’s EEO rules by not preparing an Annual EEO Public File Report or submitting a Form 396-C for several years. The FCC also released a Public Notice announcing changes in the racial categories to be used in FCC Form 395 – the Form breaking down the employees of a broadcaster or cable company by race and gender. That form has not been filed for years, as its use was prohibited when the FCC EEO rules were declared unconstitutional. In adopting new EEO rules in 2003, the FCC promised to return the form to use, but has been wrestling with the issue of whether or not the form should be publicly available or whether it should simply used internally by the FCC to collect data about industry employment trends. The adoption of new definitions for the racial categories specified on the form may signal the return of this form. Together, these actions demonstrate that the FCC has not lessened its concern about EEO in any fashion.
The DIRECTV fine was the result of the company’s failure to prepare Annual EEO Public File Reports or to submit 2003 and 2004 Form 396-C reports – reports that are more detailed versions of the Form 396 filed by broadcasters with their license renewals and the Form 397 Mid-Term Employment report. The Form 396-C requires that multichannel video providers detail their hiring in the previous year and the outreach efforts made to fill job vacancies, the supplemental efforts that the employment unit has made to educate its community about job openings, and other details on the company’s employment practices. After review of the company’s efforts, the Commission not only faulted the company for its paperwork failures, but also determined that the company had not engaged in sufficient outreach for all of its employment openings – relying solely on the Internet and on word-of-mouth recruiting for many job openings, which the Commission found to be insufficient. Broadcasters need to make sure that they do not forget to file their required EEO forms, prepare their annual EEO Annual Public File Report, and engage in wide dissemination of information about all job openings. Details of the FCC’s EEO rules, policies and requirements applicable to broadcasters can be found in Davis Wright Tremaine’s EEO Advisory.
Monday, July 16th is the first business day after the effective date of the new Internet Radio royalties set by the Copyright Royalty Board. As we wrote earlier this week, the Court of Appeals has denied the requested stay of the effective date. And, while a bill was introduced in Congress this week to provide for a legislative stay, that will not be acted on by Monday, nor will action occur on the broader Internet Radio Equality Act. Thus, many webcasters are asking what they should do on July 16. Some have suggested that they should stop streaming, while others have wondered what will happen if they don’t pay the higher royalties. This decision is one that each webcaster should make carefully, in consultation with their counsel and business advisers. But there are some practical considerations that should be taken into account when making the decision as to what should be done on Monday.
First, it should be noted that not all webcasters are equally affected by the royalty rate increase. Larger commercial webcasters, including most broadcasters who are streaming their signals on the Internet, should have been paying royalties up to now that, while lower than those adopted by the CRB, have increased by "only" about 40% – from $.00076 per performance (per song per listener) to $.0011 per performance. These rates will continue to increase between now and 2010 so that they eventually will reach $.0019 per song per listener. But for now, the increase is relatively modest (as compared with some of the other increases discussed below). While there are reportedly at least some conversations going on between SoundExchange and groups representing broadcasters and large webcasters about reaching some sort of accommodation on royalties, there is no certainty that any deal will be reached, so these webcasters probably should be paying the higher royalties (and hoping for a credit against future royalties should there be an agreement reached in the future to reduce these royalties, a successful appeal, or future legislative action reducing the royalties).