The FCC last week issued a decision that should make Buyers think twice in determining how sales of broadcast stations are concluded – especially in the days of $325,000 potential fines for indecency violations. In the case decided last week, the Commission concluded that the licensee of a broadcast station was liable for fines for violations
Just after Christmas, the FCC gave a number of broadcasters the equivalent of coal in their stocking – fining six different licensees for violations of the FCC’s EEO rules. The fines issued that day ranged between $7,000 and $20,000, and included penalties issued to major broadcasting companies including Fox and Cumulus. Also included were fines against Urban Radio in New York City and Puerto Rico Public Broadcasting – demonstrating that the FCC’s EEO rules, adopted in late 2002 after previous rules were declared unconstitutional essentially on "reverse discrimination" grounds (as they encouraged broadcasters to make hiring decisions not based on qualifications but instead based on race or gender), are truly race and gender blind. It would be logical to assume that Urban Radio and Puerto Rico Public Broadcasting both had significant numbers of minority-group members on their staffs but, as they could not demonstrate that they had complied with the new rules requirements to reach out to all groups in their communities (as opposed to just racial or gender focused groups), they were assessed fines. Reporting conditions, requiring that the broadcasters regularly file reports with the FCC so that their EEO efforts can be monitored, were also imposed. All of the decisions can be found on the FCC’s Daily Digest for that day, here.
The basis of all of these fines was the failure of the licensees to be able to demonstrate that they had "widely disseminated" information about all of their job openings. The core of the 2002 EEO regulations was the requirement that licensees broadly disseminate notice about their job openings in such a way so as reach all of the significant groups within the community that the station serves. The Commission was not looking to specifically force minority hiring, but instead to push for hiring from diverse sources. The Commission wanted to push broadcasters to use recruitment sources beyond the existing broadcast community – so that hiring was not simply done by word of mouth or from within other professional broadcast circles. Thus, the rules require that broadcasters use recruitment sources that reach out to various groups within their community and document those efforts.
2009 – a new year, and a whole new cycle of regulatory requirements. We wrote last week about the potential for changes in regulations that may be forthcoming but, like death and taxes, there are certain regulatory dates each year that broadcasters need to note and certain deadlines that must be met. Those dates…
In several decisions released on Friday (here, here and here), the FCC fined Class A TV stations for not meeting their obligations under the Children’s Television Rules to notify their viewers about the location of their public file containing information about the educational and informational programming they broadcast directed to children…
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.
Last week, the Office of Management and Budget determined that the FCC’s new rules on Leased Access to cable channels (see our bulletin describing those rules) violated the Paperwork Reduction Act. This means that the new rules, which would have significantly lowered the cost for parties who wanted to lease cable channels to provide their own programming, will be sent back to the FCC for further consideration. These rules are also on appeal to the Courts, which had stayed the effectiveness of the rules while the appeal is being considered, which is usually a good indication that the Court had issues with the rules as well. The OMB action has the effect of returning the rules back to the FCC to be considered anew in light of the OMB findings. Our firm has prepared a memo detailing the decision, here. Given the OMB decision that these rules imposed too great a burden on cable systems, one wonders if this decision portends a similar result when the OMB reviews the FCC’s rules on Enhanced Disclosure and an on-line public inspection file – rules that would impose a significant burden on television broadcasters (about which we wrote here).
The OMB decision on the leased access rules highlighted some of the perceived shortcomings of the FCC decision, including that the FCC had not shown that they had taken steps to minimize the burden on companies who would have to hire staff to comply with the new rules, and they had not provided reasons why reduced timeframes for responses to requests for leased access were necessary. Looking at these standards, one would have to think that much of the same reasoning would apply to the FCC’s Enhanced Disclosure requirements for TV stations as set out in the new Form 355. The completion of the Form would clearly require the hiring of new staff. We’ve also questioned whether the Commission has given any justification for the increased paperwork requirements, as the information itself has no regulatory purpose as the FCC has not adopted any quantitative standards for public interest programming. With no purpose and increased costs, how could the OMB treat the enhanced disclosure requirements differently than it did the leased access requirements?
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…
June 1st marks the deadline for two FCC EEO requirements. First, by June 1st, radio and television stations located in Arizona, the District of Columbia, Idaho, Maryland, Michigan, Nevada, New Mexico, Ohio, Utah, Virginia, West Virginia, and Wyoming, must prepare their Annual EEO Public File Reports. Specifically, stations or Station Employment…
In recent months, the broadcast industry has experienced one of the most active periods of regulatory activity in recent memory. Since November, the FCC has adopted enhanced disclosure obligations concerning the public interest programming of television broadcasters and requirements for an on-line public inspection file; rejected most calls for increased deregulation of broadcast ownership (allowing only the cross-ownership of broadcast stations and newspapers in the largest markets); established specific prohibitions against advertising practices that involved “no Spanish, no urban dictates”; placed mandatory disclosure obligations on television broadcasters in connection with promotion of the DTV transition; proposed rules that could favor low power FM stations over improvements in full-power broadcast services and existing FM translator licensees; and proposed sweeping regulation of broadcasters which could potentially require specific amounts of nonentertainment programming by all stations, restrict the flexibility of broadcasters’ location of their main studios, require 24-7 live staffing for all stations that operate on that basis, and perhaps even evaluate the music selection process of radio operators. Rumored to be in the offing are proposals to regulate embedded advertising, to adopt enhanced rules on sponsorship identification in connection with video news releases and payola-like practices, and perhaps even expand EEO reporting requirements (as the FCC recently asked for public comment on the employee-classification information for its long-suspended requirements for the filing of FCC Form 395 – the Annual Employment Report in which stations categorize all their employees by their employment duties, race and gender). And Congress has not been idle, with proposals introduced for the adoption of a performance royalty on over-the-air radio for the use of sound recordings, hearings about potential restrictions on prescription drug advertising, and a proposal to roll back the limited ownership reform adopted by the Commission in December.
With all this activity in a six month period under a Republican administration with a Republican majority on the FCC, during a time of great turmoil in the broadcast industry itself, as television prepares for the digital transition and broadcast revenue growth is slow or nonexistent (based on a variety of factors including general economic conditions and competition from the plethora of new media choices), many broadcasters are wondering what’s going on? And some fear even more changes could come about in any new administration that may come to Washington after the November elections, no matter what the result of that election. The one candidate with the most experience in the regulation of broadcasting, Senator McCain who has chaired the Senate Commerce Committee which regulates the broadcast industry, has by no means been a captive of the broadcast industry – leading efforts to enhance the use of LPFM and at one point pushing a spectrum tax proposal for television broadcasters for the use of the digital spectrum.
The Public and Broadcasting is a document first written by the FCC in the 1970s to tell the public about how the FCC regulates broadcast stations, and to tell the public how they can get involved in the regulatory process. Broadcasters must maintain a copy of the manual in their public file, and make it available to members of the public who request it. For years, the manual was grossly out of date, finally being updated a few years ago. Today, the FCC issued a Public Notice announcing that they have once again updated The Public and Broadcasting, and that all stations need to place the new version in their public file. The new version, with a new subtitle "How to Get the Most Service from Your Local Station" can be found here. Stations should print that document, and place it in their public file.
The manual is updated, and sets out most of the programming and other operational rules that would be of interest to the public. The manual seems to be objective – pointing out that most programming decisions are left to the broadcast licensee to avoid violating the Freedom of Speech rights of the broadcaster.