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With much of the media world celebrating the life of Walter Cronkite this weekend, we have to wonder what he would have thought about press reports that the FCC is considering the commencement of a proceeding to investigate the status of broadcast journalism – assessing its quality, determining whether the Internet and other new sources are making up for any quality that is lost, and potentially deciding to mandate specific amounts of news coverage by broadcast stations. That surprising story about a planned FCC Notice of Inquiry on the state of broadcast journalism was reported in an an online report picked up by the broadcast trade press last week.  And even if that story is not true, concerns about the government’s intrusion into a broadcaster’s coverage of controversial issues arise from the recent Congressional committee action voting down a bill that would ban the FCC from reinstating the Fairness Doctrine.  In what should have been a symbolic embrace of the First Amendment (symbolic as, in the last 6 weeks, four of the FCC Commissioners or Commissioners-to-be disavowed any interest in bringing back the Fairness Doctrine in their confirmation hearings ), the defeat of the bill raises questions as to whether someone has an agenda to resurrect the government’s role in assessing broadcast media coverage of controversial issues.  In reading one of the many stories of the life of Cronkite (here, at page 3), we were stuck with the contrast between these actions, and the actions of Mr. Cronkite to address controversial issues – regardless of the FCC implications.  One anecdote related his questioning of John Kennedy about his religion when Kennedy thought that topic off limits, even in light of the potential president’s veiled threat that, when he took office, he would be appointing the FCC who would be regulating CBS.  Do we really want the FCC to have that power to assess what journalism is good, or what opinions each station must air to ensure "fairness"?

In reviewing the many FCC Fairness Doctrine claims that CBS faced in the Cronkite era, we are struck with the amount of time and money that must have been spent in defending its coverage against critics from both the right and the left.  We also found one particularly relevant quote from Mr. Cronkite himself: 

That brings me to what I consider the greatest threat to freedom of information: the Government licensing of broadcasting. Broadcast news today is not free. Because it is operated by an industry that is beholden to the Government for its right to exist, its freedom has been curtailed by fiat, by assumption, and by intimidation and harassment. 

 In the last 20 years, since Mr. Cronkite’s retirement as the CBS anchor, the FCC has steadily moved away from the role that he feared.  Yet with these recent actions, one wonders if there are some in government now trying to prove Mr. Cronkite’s concerns correct.Continue Reading The Potential for the Return of the Fariness Doctrine and the FCC’s Assessment of the Quality of Broadcast News – What Would Walter Cronkite Think?

The MusicFirst coalition last week asked that the FCC investigate broadcast stations that allegedly cut back on playing the music of artists who back a broadcast performance royalty, and also those stations who have run spots on the air opposing the performance royalty without giving the supporters of the royalty an opportunity to respond.  While the NAB and many other observers have suggested that the filing is simply wrong on its facts, pointing for instance to the current chart-topping position of the Black Eyed Peas whose lead singer has been a vocal supporter of the royalty, it seems to me that there is an even more fundamental issue at stake here – the First Amendment rights of broadcasters.  What the petition is really saying is that the government should impose a requirement on broadcasters that they not speak out on an issue of fundamental importance to their industry.  The petition seems to argue that the rights of performers (and record labels) to seek money from broadcasters is of such importance that the First Amendment rights of broadcasters to speak out against that royalty should be abridged.

While the MusicFirst petition claims that it neither seeks to abridge the First Amendment rights of broadcasters nor to bring back the Fairness Doctrine, it is hard credit that claim.  After all, the petition goes directly to the heart of the broadcasters ability to speak out on the topic, and seems to want to mandate that broadcasters present the opposing side of the issue, the very purpose of the Fairness Doctrine.  As we’ve written, the Fairness Doctrine was abolished as an unconstitutional abridgment on the broadcaster’s First Amendment rights 20 years ago.  As an outgrowth of this decision, FCC and Court decisions concluded that broadcasters have the right to editorialize on controversial issues, free of any obligation to present opposing viewpoints.  What is it that makes this case different?Continue Reading MusicFirst’s Complaint to the FCC: The First Amendment and the Performance Royalty

In the last two weeks, we have seen Capitol Hill rallies by the Free Radio Alliance, opposing what they term the “performance tax” on radio, and yesterday by the Music First Coalition, trying to persuade Congress to adopt a performance royalty on the use of sound recordings for the over-the-air signal of broadcast stations. We’ve written about the theories as to why a performance royalty on sound recordings should or should not be paid by broadcasters, but one question that now seems to be gaining more significance is the most practical of all questions – if a performance royalty is adopted, how would broadcasters pay for it?

 The recording industry and some Congressional supporters have argued in the past that, if the royalty was adopted, stations could simply raise their advertising rates to get the money to pay for the royalty. While we’ve always questioned that assumption (as, if broadcasters could get more money for their advertising spots, why wouldn’t they be doing so now simply to maximize revenues?), that question is even harder to answer in today’s radio environment. With the current recession, radio is reporting sales declines of as much as 20% from the prior year. Layoffs are hitting stations in almost every market. In this environment, it is difficult to imagine how any significant royalty could be paid by broadcasters without eating into their fundamental ability to serve the public – and perhaps to threaten the very existence of many music-intensive stations. And the structure of the royalty, as proposed in the pending legislation, makes the question of affordability even harder to address.Continue Reading Rallies on Capitol Hill on the Performance Royalty – Who Will Pay?

Last week, we wrote about how the Fairness Doctrine was applied before it was declared unconstitutional by the FCC in the late 1980s. When we wrote that entry, it seemed as if the whole battle over whether or not it would be reinstated was a tempest in a teapot. Conservative commentators were fretting over the re-imposition, while liberals were complaining that the conservatives were making up issues. But what a difference a week makes.

Perhaps it is the verbal jousting that is going on between the political parties over the influence of Rush Limbaugh that has reignited the talk of the return of the Doctrine, but this week it has surprisingly been back on the front burner  – in force. Senator Debbie Stabenow from Michigan said on a radio show that the positions taken by talk radio were unfair and unbalanced and that “fairness” shouldn’t be too much to ask (listen to her on-air remarks) . When prompted by the host as to whether there would be Congressional hearings or legislation, the Senator said that it would certainly be something that Congress would consider.Continue Reading Fairness Doctrine (Part 2) – Will It Return? And What’s Wrong With Fairness?

Last week, President-elect Barack Obama delivered his first weekly radio address since he was elected President.  The broadcast made news, not only for its content, but also because it was streamed on the Internet, particularly on You Tube, but also retransmitted on many other websites.  The fact that the Internet makes such transmissions not only possible, but so easy and so widely available demonstrates one of many reasons why all the worry about the return of the Fairness Doctrine is unwarranted.  With access to so many diverse opinions not only on the radio but also through all of the new technologies, why should the government care that one radio station may not cover all sides of a controversial issue?  If one station does not put on a strongly held viewpoint on an important issue, you can bet that someone who holds that viewpoint will find some way to transmit it to others. 

The return of the Fairness Doctrine has been the great invisible monster in the room since the election – with many commentators, particularly conservative ones, worrying that the Democratic Congress will attempt to reinstate the Fairness Doctrine.  Off-hand comments such as those made by Senator Schumer on Fox News, have fueled this speculation, even though the Obama campaign has specifically rejected such a return.  The Fairness Doctrine is one grounded in scarcity of the electronic spectrum – from the fear that if one side of an issue was allowed to dominate one of the few means of communicating with the population of a community, it would effectively be able to stifle the ability of those with contrasting viewpoints to get their message out.   But, to use a phrase that is becoming increasingly popular – that thinking is so 20th Century.Continue Reading Obama’s Radio Address is Streamed on the Internet – Demonstrating Why There Need Not Be Any Return of the Fairness Doctrine

Once again, the extension of the sound recording performance royalty to broadcasters has become a hot topic in Washington. The subcommittee on Courts, the Internet and Intellectual Property of the  House Judiciary Committee yesterday approved the bill introduced by Congressman Berman (about which we first reported here).  That bill would include broadcasters in the Section 114 sound recoding royalty currently applicable to digital music users including Internet radio, satellite radio and cable radio. Under the bill, the Copyright Royalty Board would be charged with the responsibility of determining what a royalty would be using the "willing buyer, willing seller" standard. Following this subcommittee approval, the bill would next be considered by the full committee. To become law, the Committee and the full House of Representatives would have to approve it, and similar legislation would need to be enacted by the Senate. As the NAB has garnered the support of a majority of the members of the House on a non-binding resolution opposing the imposition of the royalty on broadcasters, and as there is not much time remaining in the legislative session before the election and the end of this Congress, the whole process may well have to start fresh in 2009 (bills have to be reintroduced after the end of each two-year Congressional session). Yet, with all of the controversy over the issue in recent weeks, it appears certain that the issue will arise again, so it is important to look at some of the recent action.

Two weeks ago, the House subcommittee held a hearing on the issue. Prior to the hearing, the MusicFirst Coalition (principally supported by the RIAA and the affiliated record companies as 50% of any royalty goes to the copyright holders who are usually the labels) had Nancy Sinatra and the Nitty Gritty Dirt Band making the rounds on Capitol Hill in support of the royalty. These appearances follow the precedent set in earlier Capitol Hill proceedings, where the Coalition has brought in niche or oldies artists to address Congress – not major popular current acts. The artists who have testified (who have included Judy Collins, Sam Moore, Lyle Lovett, and Alice Peacock) have argued that the additional income that they would receive from a performance royalty would supplement their incomes which, in some cases, has either never been great or has declined as the demand or ability to tour has declined. The argument is always made that the royalty will encourage musicians to produce their music – though it is rarely if ever claimed that music wouldn’t be made if the royalty is not adopted, as songs have been written and sung for time immemorial, well before any royalty existed, merely for the pleasure or to fulfill the need for self-expression. The question is not one of ensuring the availability of music, but instead it is one about who should get how much of whatever money is made, directly or indirectly, from the use of that music. Continue Reading Broadcast Performance Royalty Passes House Subcommittee – But It’s Not Done Yet

On Friday, in a number of publications, a story was carried questioning the claims made by the NAB that the broadcast performance royalty being sought by the music industry could amount to 10-35% of the revenue of the radio industry.  A post on the Wired Listening Post blog seemed to have started the story.  This is the royalty which would be paid to the copyright holders in the sound recording – and would be in addition to the royalties paid to ASCAP, BMI and SESAC for the composers of music (see our post on the topic, here and here) .  Wired quoted a spokesman for the Music First Coalition (the music industry coalition seeking the performance royalty) claiming that the NAB’s claims are overstated – and that any broadcast royalty to be paid to sound recording copyright holders would be similar to those paid in Europe for the use of sound recordings, and similar to the amounts currently paid to ASCAP, BMI and SESAC for the use of the musical compositions, in the range of 3-5% of revenues. Only the Radio and Internet Newsletter seemed to question this statement.  From looking at the history of SoundExchange’s claims made in other royalty proceedings, the questions raised by RAIN seem entirely justified.  SoundExchange has consistently argued in connection with all of the other on-going royalty proceedings that the sound recording royalty is far more valuable than the composition royalty – asking for a royalty over 6 times the amount of the composition royalty – 30% of gross revenues.  How can Music First now contend that the royalty will be only a few percent of revenue, when their representaives have consistently requested royalties many multiples of that amount?

At the House Judiciary Committee hearing on the broadcast performance royalty (see our post, here), when committee members asked how much the royalty would be, Marybeth Peters, the Register of Copyrights, suggested that it could a simple matter of applying the "willing buyer, willing seller" criteria of Section 114 of the Copyright Act to broadcasting.  That standard is exactly the same one that led to the current Internet radio royalties which have been so controversial (see our coverage here).  In that proceeding, SoundExchange had asked for royalties of the greater of the per performance royalty that the Copyright Royalty Board imposed or 30% of gross revenue.  While the Copyright Royalty Board did not adopt a percentage of revenue royalty because they feared that it was too difficult to compute for services that had multiple revenue streams, most observers have estimated that the pe performance royalty exceeds 100% of revenue of the small commercial webcasters, and are close to 100% of revenue even for the Internet radio services provided by the major Internet content companies.  In making their offer of a "special deal" to Small Commercial Webcasters on May 23, with royalties between 10 and 12% of gross revenue, SoundExchange specifically stated that it thought that the 10-12% rate was "a below-market rate to subsidize small webcasters … to help small operators get a stronger foothold" in developing their businesses.  While 10% is suggested to be a "below market" rate in an immature industry still struggling to find a business model, the Music First Coalition now suggests that a royalty less than half that amount is what they would request for broadcast radio.Continue Reading Broadcast Performance Royalty – Getting Fooled Again?

Just as the FCC issued its order to implement the statutory increase in the amount of indecency fines, raising them to $325,000 per violation (see our comment, here), its enforcement of its indecency policy may be dead in its tracks.  A three judge panel of the US Court of Appeals for the Second Circuit, in a 2 to 1 decision released today, rejected the FCC’s actions against a number of television networks for broadcast indecency.  The FCC actions were in the context of "fleeting utterances," i.e. the use of specific words that the FCC determined were indecent whenever they were used.  The Court rejected the FCC decision as being arbitrary and capricious, as the FCC decisions overturned without sufficient rational explanation years of FCC precedent that had had held that the isolated use of these words was not actionable.  The FCC actions were sent back to the FCC for further consideration to see if the Commission could craft a decision that provided a rational explanation for this departure from precedent.

However, this may prove to be impossible.  While the Court’s decision was based on the FCC’s failure to provide a rational basis for its departure from precedent, the Court also said that it was difficult to imagine how the FCC could constitutionally justify its actions.  The Court pointed to the inconsistent decisions of the FCC – fining stations for the use of the "F-word" and the "S-word" in isolated utterances during awards shows, and when used in the context of a program like PBS’  The Blues, but finding that the same words were not actionable when used in Saving Private Ryan or when used by a Survivor contestant interviewed on CBS’ morning show.  In the Survivor case, the Court indicated particular confusion, as the Commission went out of its way to say that there was no blanket exclusion of news programming from the application of its indecency rules, but then it proceeded to find the softest of news – the Survivor cast-away interview – as being of sufficient importance to merit exclusion from any fine.  The Court felt that these decisions were so conflicting that a licensee would not be able to decide whether a use was permissible or not – and that such confusion, leaving so much arbitrary discretion in the hands of government decision-makers as to where to draw lines between the permissible and impermissible, would not withstand constitutional scrutiny.  It would have a chilling effect on free speech – and could be enforced in an arbitrary manner that could favor one point of view over another.Continue Reading Second Circuit Throws Out FCC Indecency Fines

As we’ve discussed before, here, the FCC has been reviewing their power to regulate violent programming on broadcast stations.  Despite the apparent constitutional and practical issues involved in such restrictions (e.g. are Roadrunner cartoons covered?), published reports indicate that a majority of the FCC Commissioners will issue a report asking Congress to give the FCC authority…