On Friday the Commission released a further Order confirming certain recent changes to its ownership reporting requirements for commercial broadcast stations and soliciting additional input on the reporting of certain non-attributable interest holders. Earlier this year, the Commission revised its rules regarding the reporting of ownership interests by commercial broadcasters. The FCC also recast its FCC
Come the New Year, we all engage in speculation about what’s ahead in our chosen fields, so it’s time for us to look into our crystal ball to try to discern what Washington may have in store for broadcasters in 2009. With each new year, a new set of regulatory issues face the broadcaster from the powers-that-be in Washington. But this year, with a new Presidential administration, new chairs of the Congressional committees that regulate broadcasters, and with a new FCC on the way, the potential regulatory challenges may cause the broadcaster to look at the new year with more trepidation than usual. In a year when the digital television transition finally becomes a reality, and with a troubled economy and no election or Olympic dollars to ease the downturn, who wants to deal with new regulatory obstacles? Yet, there are potential changes that could affect virtually all phases of the broadcast operations for both radio and television stations – technical, programming, sales, and even the use of music – all of which may have a direct impact on a station’s bottom line that can’t be ignored.
With the digital conversion, one would think that television broadcasters have all the technical issues that they need for 2009. But the FCC’s recent adoption of its “White Spaces” order, authorizing the operation of unlicensed wireless devices on the TV channels, insures that there will be other issues to watch. The White Spaces decision will likely be appealed. While the appeal is going on, the FCC will have to work on the details of the order’s implementation, including approving operators of the database that is supposed to list all the stations that the new wireless devices will have to protect, as well as “type accepting” the devices themselves, essentially certifying that the devices can do what their backers claim – knowing where they are through the use of geolocation technology, “sniffing” out signals to protect, and communicating with the database to avoid interference with local television, land mobile radio, and wireless microphone signals.
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.
Broadcasting and Cable magazine today reported that the FCC is looking to back off some of the requirements for the "enhanced disclosure" of television broadcaster’s public interest programming (see our summary of the new requirements of FCC Form 355, here). B&C reports that the FCC may lessen or at least better explain…
We’ve written extensively about the FCC’s proposals to turn back the hands of time, and return to the regulatory scheme that existed prior to the early 1980s by mandating that broadcasters serve their local communities – in a manner dictated by the FCC. In the 1980s, the FCC decided that it did not need to micromanage…
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.
In a case just released by the FCC, a broadcaster was fined for enforcing a non-compete agreement that was entered into when a broadcaster sold one of its stations in a market in and agreed that it would not compete in the same format if it ever acquired another station in the same market. The agreement had prohibited the Seller from competing with the Buyer in a news-talk format. After the closing of the sale of the station, the Seller acquired another station in the market and adopted a format that a local court found was covered by the non-compete clause in the contract. The local court issued an injunction against the continuation of the news-talk format. At that point, the Seller filed a complaint with the FCC, arguing that, by obtaining the injunction, the Buyer had engaged in an unauthorized assumption of control of the station covered by the injunction, without FCC approval. The FCC agreed with the Seller, and fined the Buyer $8000 for exercising control over the station that Seller had bought.
The FCC’s reasoning in this case, citing a similar letter decision from 2006, is that the restriction on format impedes a licensee’s control over its own programming, and restricts its ability to adjust its operations to account for changing market conditions. The Commission concluded that, barring the licensee from utilizing a particular format, even for the limited period of the non-compete agreement, was contrary to the public interest. By obtaining the injunction to prevent the Seller from using the news-talk format, the Buyer had impermissibly exercised control over the station that it had already sold. In fact, the Commission went further, and found that the exercise of control over the programming, personnel or finances of the station would be a violation of the rules.
The deadline for submitting comments in the Commission’s Localism rule making proceeding is fast approaching. Comments are due by April 28th, and can be filed electronically through the FCC’s Electronic Comment Filing System. This proceeding contains a number of significant proposals and could possibly re-institute regulations that were lifted from the broadcast industry decades ago. Formal ascertainment through community advisory boards and possibly other means, requirements for manning main studios during all hours of operation of broadcast stations, imposing quantitative programming requirements, and requiring that main studios be maintained within a station’s community of license are just a few of the many proposals the FCC is considering. See our more detailed summary here. This proceeding seeks input on these and other potentially burdensome requirements, many of which were eliminated by the Commission long ago, and some of which go beyond what the FCC has ever required before. Given the potential impact this proceeding could have on broadcast stations, broadcasters are encouraged to file comments in this important rule making proceeding. When submitting comments, commenters should be sure to reference the docket number for this rule making, MB Docket No. 04-233.
Some members of Congress have already chimed in in this proceeding and submitted comments opposing the Commission’s localism proposals. Over 120 members of Congress signed on to a letter addressed to Chairman Martin urging the Commission to avoid imposing additional regulations on broadcasters and to carefully consider the cost and effect that such regulation would have on the industry. A copy of the letter is available here. A summary of the letter posted on Rep. Marsha Blackburn’s web site characterizes the localism proceeding as an attempt to "restore a 1970s era regulatory regime for local broadcasters."
The FCC Form 355 requiring "enhanced disclosure" by television stations was a frequent topic of discussion at this week’s NAB Convention in Las Vegas. That form will require that television broadcasters report significant, detailed information about their programming, providing very detailed reports of the percentage of programming that they devote to news, public affairs, election programming, local programming, PSAs, independently produced programs and various other program categories, as well as specifics of each program that fits into these categories (see our detailed description of the requirements here). Obviously, all broadcasters were concerned about how they would deal with the expense and time necessary to complete the forms, and the potential for complaints about the programming that such reports will generate. At legal sessions by the American Bar Association Forum on Communications Law and the Federal Communications Bar Association, held in connection with the NAB Convention, it became very clear to me that the obligations imposed by these new rules are obligations adopted for absolutely no reason, as the Commission has not adopted any rules mandating specific amounts of the types of programming reported on the form. In fact, one of the Commissioner’s legal assistants confirmed that, unless and until the FCC adopts such specific programming requirements, the Commission’s staff will not need to spend any time processing these forms. Thus, if the form goes into effect, broadcasters will be forced to keep these records, and expend significant amounts of staff time and station resources necessary to complete the forms, for essentially no purpose.
Of course, public interest advocates will argue that the forms will allow the Commission to assess the station’s operation in the public interest, and will allow the public to complain about failures of stations to serve local needs. But, as in a recent license renewal case we wrote about here, the Commission rejected a Petition to Deny against a station based on its alleged failure to do much local public affairs programming as, without specific quantitative program requirements, the Commission cannot punish a station for not doing specific amounts of particular programming. If the Commission adheres to this precedent, it will not be able to fine stations for the information that they put on the Form 355, but only for not filing it or not completing it accurately. Thus, unless the Commission adopts specific programming requirements, the form will be nothing more than a paperwork trap for the unwary or overburdened broadcaster. And, as is usually the case with such obligations, the burden will fall hardest on the small broadcaster who does not the staff and resources to devote to otherwise unnecessary paperwork.
In the early 1980s, the FCC deregulated many of the very detailed programing rules that governed broadcasters, based on the theory that the marketplace would assure that broadcasters provided programming of interest to their local community. The FCC looked at the marketplace, and decided that broadcasters either had to program to the needs of their community, or risk the loss of their audience to competitors. Now, the FCC is proposing to bring back many of these rules with a vengeance (see our post on the FCC’s current efforts) – imposing rules even more detailed than those that were abolished over a quarter century ago. A look at this week’s news raises the question of why now – when there are more media choices than ever (and when, particularly in the radio industry, revenues with which to meet such requirements are shrinking) – the FCC cannot rely on the marketplace to assure service to the public. When marketplace forces require that broadcasters use their most important asset – their localism – to compete against all the new competition, the FCC is now looking to require that broadcasters meet their public interest obligations in a very specific, cookie cutter, government-mandated fashion. Some of the announcements made this week highlight the extent of the competition that broadcasters now face.
On the most basic level, there are simply far more stations than there ever were. According to an FCC Report published in 1980, there were 4559 commercial AM stations, 3155 commercial FM stations, and 1038 noncommercial FM stations. While the number of AM stations had not increased substantially by the end of 2007 (4776), the number of commercial FM stations has doubled to 6309, and the number of noncommercial FMs has increased even more substantially, to 2892. TV shows a similar increase in service – from 746 commercial and 267 noncommercial stations in 1980 to 1379 commercial stations and 380 noncommercial stations. In addition, thousand of LPTV stations have been created, and over 800 LPFM stations – services that didn’t even exist in 1980. Clearly, the over-the-air competition is far greater than when the FCC initiated its deregulation efforts.