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?

The digital television conversion end game is upon us, and everyone seems to be getting a little testy.  Seemingly, not everyone is convinced that the consumer education efforts have prepared the public for the transition, and thus Washington seems to be preparing for problems.  But, in a last minute attempt to solve some of the potential issues, both Congress and the new Administration have stepped into the breach to put pressure on broadcasters and the FCC to be prepared to deal with the February end date for analog TV.  Congress passed legislation authorizing the FCC to allow some television stations in each market to continue to operate in analog after the end of the transition to tell consumers who didn’t make the switch what to do (an analog "life line service").  At the same time, Congress urged the FCC to mind the transition and not start off on new regulatory battles, causing the cancellation of this week’s FCC meeting.  In this event-filled 10 days, the new Obama administration also stepped into the DTV transition, a potentially significant issue that will face the new administration less than a month after taking office, pushing broadcasters, cable companies and direct broadcast satellite companies to pay for and establish phone banks to provide assistance to consumers stranded by the transition.

The cancellation of the Commission’s meeting was perhaps the strangest of these matters.  The FCC was prepared to hold a meeting later this week, with a full schedule of items to consider, including various items related, in one way or another, to the digital transition.  Included were a series of fines to broadcasters, consumer electronics stores, and others for not doing everything required by the rules to facilitate the digital transition.  The Commission was also planning to start the rulemaking process to authorize digital "fill-in" translators, i.e. low powered TV stations rebroadcasting a main station on other channels within the main station’s service area to fill holes in digital service.  Plus, the FCC was to deal with the Chairman’s proposals for a free wireless Internet service on channels being vacated by television stations as part of the transition.  Yet, Congressman Henry Waxman, the new chair of the House Energy and Commerce Committee, and Senator Rockefeller, the newly appointed Chairman of the Senate Commerce Committee ( the committees with responsibility over the FCC) wrote a letter to the FCC saying that it should concentrate its efforts on the transition, and not take up issues on which the new administration may want a role (perhaps the wireless service).  After receiving the letter, the December meeting was canceled (the first time in memory that the FCC did not have a monthly meeting as seemingly required by Section 5 of the Communications Act). 


Continue Reading Congress Throws an Analog Lifeline While Telling FCC to Deal With the DTV Transition and Cancel Meeting, While New Administration Pushes for Phone Banks for Consumer Complaints