We recently wrote about the controversy before the FCC about Arbitron‘s roll-out of the Portable People Meter ("PPM").  A number of broadcast groups, particularly those who target minority audiences with their programming, have requested that the FCC hold a hearing as to whether the introduction of the PPM in a number of major radio markets should be allowed, arguing that it has the potential to discriminate against minority audiences and to decrease diversity in the media.  Arbitron and other broadcast groups have opposed the initiation of that proceeding, arguing that the regulation of a ratings service exceeds the FCC’s regulatory authority.  Now, the opponents of the PPM have sough relief from a number of state and local governments, with the Attorneys General of New York and New Jersey filing suit to prevent the initiation of service by Arbitron.  The office of New York Attorney General Andrew Cuomo issued this Press Release, and that of New Jersey Attorney General Anne Milgram issued this Release, citing the reasons for the suit.  Both claim that the use of PPM technology, which they claim has methodological flaws, is a deceptive trade practice by a monopoly provider of services.  The NJ suit goes on to claim that the disparate effect of the claimed inaccurate measurements on minority and ethnic stations violated the state’s anti-discrimination laws.  Arbitron of course denies these claims.

The lawsuits have received substantial coverage in both the popular and trade press.  Today’s Washington Post has an article discussing the controversy.  Citing an interview with Alfred Liggins of Radio One, a leading radio group targeting African American listeners, the article suggests that the PPM may take a while for stations to adapt to, but once they do, even minority-targeted stations can obtain valuable programming feedback from the new methodology, as it allows feedback as the ratings information in days rather than the months that that the current diary system requires.  This rapid feedback allows broadcasters to make programming adjustments that will allow them to maintain or improve their ratings position.  Mark Ramsey’s Hear 2.0 blog looks at some anomalies in the PPM in specific demographics, but in another post concludes that despite whatever shortcomings the PPM may have, the industry needs to work with Arbitron on insuring that the PPM works – as an automated system is inherently more reliable than the diary method that relies on listeners recalling and accurately writing down their radio listening.


Continue Reading NY and NJ State Attorneys General Sue to Stop Roll Out of PPM – What’s A Station to Do?

Last week, the FCC released a Public Notice asking for comments on whether it should begin a Section 403 investigation into the use of Arbitron’s Portable People Meter ("PPM").  A coalition of broadcast groups, the "PPM Coalition," principally comprised of broadcasters providing service to minority communities, sought the investigation as a way of delaying the implementation of the PPM technology next month in a number of large broadcast markets.  In their request, which can be found on the Minority Media and Telecommunications Council website, the PPM Coalition argues that the investigation is justified based on the Commission’s objectives (and various administrative and legislative mandates) to improve minority ownership in broadcasting.  The PPM Coalition contends that methodology problems in PPM implementation result in artificially low ratings for minority owned stations.  These parties argue that, if the system is implemented, a number of minority-programmed stations will disappear.  Arbitron has argued that the Commission does not have the jurisdiction to regulate ratings services (who are obviously not FCC licensees) or the methodology that they use.  Comments on the request for an investigatory hearing are due on September 24, and replies on October 6 (two days before the PPM system is to be implemented in eight markets).

Section 403 of the Communications Act gives the Federal Communications Commission the power to conduct investigations of any complaint of any violation of its rules or of provisions of the Communications Act, or to explore any other matter relating to the provisions of the Act.  Such investigations are often conducted before an Administrative Law Judge, but can be conducted before the Commission itself, and allow the FCC to use full discovery techniques (e.g. document production requests and depositions) and to conduct an evidenciary hearing.  In the past, the process was used much more frequently.  It has been used both to investigate specific complaints of possible misconduct by individual licensees, and to conduct broader inquiries into business practices in a regulated industry to decide if FCC regulation was necessary.  For instance, in the 1960s, there was an investigation into network practices to determine if those practices required FCC action to regulate the network-affiliate relationship.  In recent years, the power has been rarely used, and when used has tended to relate to specific allegations of misconduct to determine if the FCC should bring some sort of enforcement action against a regulated entity.


Continue Reading FCC Seeks Comment on Whether to Begin Investigation of Arbitron PPM – How Far Does FCC Regulatory Power Extend?

Last week, the US Senate passed a resolution of disapproval, which seeks to overturn the FCC’s December decision relaxing the multiple ownership rules to allow newspapers and television stations to come under common ownership in the nation’s largest markets (see our summary of the FCC decision here).  This vote, by itself, does not overturn that decision.  Like any other legislation, it must also be adopted by the House of Representatives, and not vetoed by the President, to become law.  In 2003, the last time that the FCC attempted to relax its ownership rules, the Senate approved a similar resolution, but the House never followed suit (perhaps because the decision was stayed by the Third Circuit Court of Appeals before the House could act).  In this case, we will have to see whether the House acts (no dates for its consideration have yet been scheduled).  Even if the House does approve the resolution, White House officials have indicated that the President will veto the bill, meaning that, unless there is a 2/3 majority of each house of Congress ready to override the veto, this effort will also fail.

The reactions to this bill passing the Senate have been varied.  The two FCC Democratic Commissioners, who both opposed any relaxation of the ownership rules, each issued statements praising the Senate action (see Commissioner Copps statement here and that of Commissioner Adelstein here).  The NAB, on the other hand, opposed the action, arguing that the relaxation was minimal, that it was necessary given "seismic changes in the media landscape over the last three decades" (presumably referring to including the economic and competitive pressures faced by the broadcast and newspaper industries in the current media environment), and that it ought not be undone by Congressional actions.   


Continue Reading Senate Resolution of Disapproval on Multiple Ownership – What Does it Mean?

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.


Continue Reading Broadcasters and the Regulatory Pendulum – Swinging Toward More Regulation

Just prior to the filing of comments in the FCC’s Localism proceeding on April 28, one FCC Commissioner has spoken out, condemning these proposals as being unnecessary in a world of vast media competition, and likely unconstitutional.  According to press reports, Commissioner Robert McDowell last week argued that the rules were unnecessary and counterproductive in a world of media plenty.  The Commissioner pointed to all of the competition from digital and traditional media and asked why the Commission should impose on broadcasters rules abolished 20 years ago – rules which will put them at a competitive disadvantage in the new media world.  These are sentiments that we have repeatedly echoed here.

Today, as comments were being submitted to the Commission, a letter from 23 Senators was sent to the Commission making many of the same arguments.  The letter suggests that the Commission was imposing unreasonable costs on broadcasters when these broadcasters have an economic incentive to serve the public or risk the loss of their audience and the resulting loss of advertising and income.  In other words, they are arguing that the Commission had it right 20 years ago when it decided that marketplace competition would insure that broadcasters served the public interest.  This letter is a companion to the letter sent to the FCC the week before last by members of the House of Representatives, about which we wrote here.


Continue Reading As Comments are Filed in Localism Proceeding, Commissioner Speaks Out

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.


Continue Reading I-Pod Radio, Internet in Cars and More Broadcast Stations Than Ever – Why Can’t the Marketplace Decide?

Last week, the FCC approved the long-pending application for the transfer of control of Clear Channel Broadcasting from its public shareholder to several private equity funds. Even though the application had been pending at the FCC for over a year, the Commission’s decision was notable for the paucity of issues that were discussed. The decision approves the transfer, conditioned on certain divestitures by the Company and by the equity funds that will control the new company, including divestitures previously ordered by the Commission in connection with the investment of one of these funds in Univision Broadcasting but not yet completed, and rejects three petitions that, from the Commission’s description, did not involve fundamental issues about the nature of the overall transaction, but were instead devoted to certain limited issues, in two cases involving actions in a single market. The divestiture conditions were approved seemingly as a matter of course, and do not provide any new insights into the law concerning the FCC’s attribution rules (unlike the recent decision approving the transfer of control of Ion Television, about which we wrote here, which contained an extensive detailed discussion of what it takes to make an ownership interest “nonattributable” for purposes of the FCC multiple ownership rules). Given the lack of controversy in the Commission’s order, what is perhaps most noteworthy about the decision are the concurring statements of the two Democratic Commissioners, which may provide some indication of the concerns of the Commission should we have a Democratic-controlled Commission following this year’s Presidential election.

Of course, as we’ve described in our posts about the FCC’s Localism Notice of Proposed Rulemaking (here), and the new rules regarding Enhanced Disclosure requirements for television broadcasters (here), the Commission has already begun to act in a far more regulatory manner than any other Commission in the past 20 years. Yet the issues raised by the Democrats in this decision are in areas not yet considered by the Commission. Commissioner Copps expresses his concern about the role of private equity in broadcast ownership, and whether such ownership is in the public interest. In numerous proceedings and in response to the presentation made at the FCC’s January meeting by the Media Bureau, Copps has suggested that private equity should be investigated, both to determine whether the Commission is fully aware of all ownership ties of the companies involved, and also (as emphasized in this case) for the potential economic impact on the operations of the broadcast stations caused by the new debt involved in the acquisition. Here, Commissioner Copps questions whether the announcement of a potential downgrade of the bonds of the Company if these deals occur should have been of more concern to the Commission. Private equity should be aware that, in a future FCC, an investigation of the economics of their operations should be expected.


Continue Reading Does the FCC’s Approval of the Clear Channel Transfer of Control Provide a Window Into the Future?

The FCC today adopted Commissioner Martin’s proposal for limited multiple ownership relaxation, adopting a presumption in favor of approving the common ownership of a broadcast station and a daily newspaper in the Top 20 television markets (we wrote about that proposal here).  But the grant of such combinations would not be automatic, but instead would be considered on a case-by-case basis, so opposition to any merger could be submitted to the FCC.  Under the rules announced today, newspaper-television combinations would not be entitled to the presumption in favor of grant if they involved one of the Top 4 ranked television stations in a market, or if there would be fewer than 8 independent media voices (full power TV or significant daily newspapers that are not commonly controlled) after the combination.  As for the other multiple ownership rules, from what was said at the meeting, no change at all will be made.  We addressed some of the many multiple ownership issues before the Commission that were apparently either not addressed or will not be changed in our post, here

As the full text of the decision has not been released, details of how the Commission addressed every issue are not available.  From the comments of the Democratic Commissioners who dissented from the decision, changes were being made to the standards adopted today throughout the night and as early as an hour before the meeting was held (see Commissioner Copps’ impassioned statement against the new rules, here, where he details the last minute revisions).  Given the last minute nature of the final order, it may be a while before the full text is released.  However, from statements made today and from the Commission’s press release, some details of the decision are known.  They are summarized below.


Continue Reading FCC Adopts Changes in Newpaper-Broadcast Cross Ownership Rules – No Relief For Broadcasters Under Other Ownership Rules

As we wrote earlier this week, the FCC is to consider at its meeting next Tuesday a Report on the results of its "Localism" proceeding, and a Notice of Proposed Rulemaking seeking public comment on the findings contained in the Report.  From rumors going around Washington today, that Notice may ask for comments on tentative findings that would roll back of much of the broadcast deregulation of the last 25 years.   Rumors are that the Commission will be issuing "tentative conclusions" determining that the FCC should re-impose specific ascertainment requirements of some sort (requiring that broadcasters regularly meet with specific types of community leaders to get their input on station programming).  Also, the Commission will tentatively conclude that there should be quantitative programming requirements – that each station do a specific amount of local programming and perhaps specific amounts of news, public affairs other types of programs each week. If a licensee does not meet the requirements, the station’s license renewal application would not be granted routinely by the FCC’s staff, but instead would be subject to an additional level of scrutiny by the full Commission. The Commission is also apparently proposing that it return to the old rules that all stations have a manned main studio during all hours of operation. There is reportedly also a proposal that stations report to the FCC about how they decide what music they play.

Staring in the early 1980s, the FCC did away with many of the specific, detailed programming requirements that had previously bound broadcasters.  These requirements were quite burdensome, especially for small stations and stations in small markets with limited staffs.  Rather than spending their time on broadcast operations, station staff had to make sure that their operations met programming standards imposed from Washington, dictating the government’s ideas of what was good for the station’s audience, even if the station might feel, because of its format or the demographics of its audience that a particular type of programming did not serve the needs of its community.  In the mid-1980s, the FCC concluded that these rules were no longer necessary, as it was concluded that there was enough media diversity that the marketplace would dictate that broadcasters serve their audiences with appropriate content that met the needs of that audience as, if they did not, some other broadcaster would.  The economic incentive of the fear of the loss of audience to a competitor who better served the public was deemed enough to insure that the broadcaster acted responsibly.
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Continue Reading Moving Forward Back to 1980 – The FCC Set to Conclude that Specific Public Interest Obigations are Required for Broadcasters