The National Association of Broadcasters and APTS (America’s Public Television Stations – the associations of public television stations) have filed a Petition for Rulemaking seeking to expand the area in which licensees can locate distributed transmission system transmitters (also known as single frequency networks), in connection with ATSC 3.0 operations. With the new
As the next broadcast license renewal cycle is about to begin in June (see our post here about that process), the last renewal cycle still has not ended despite the fact that the last renewal application due in that cycle was to have been submitted almost 5 years ago. At the NAB State Leadership Conference held in Washington, DC yesterday, FCC Commissioner Robert McDowell provided statistics about the hundreds of renewals still pending – principally due to indecency complaints against the stations. The FCC will not grant a license renewal application when there is an indecency complaint pending, as the grant of the renewal could preclude the FCC from taking action against the licensee on the complaints filed before the renewal grant. But with indecency enforcement in a holding pattern pending the final resolution of the pending court cases challenging the FCC’s renewal policy (with no immediate end in sight to the uncertainty that surrounds that policy), these renewals are still in limbo. The Commissioner did, however, provide some good news on the indecency front, noting that the Enforcement Bureau had started weeding through all of the pending complaints, dismissing those that were clearly without merit.
The dismissal of indecency complaints that were without merit is a seemingly small, but nevertheless significant, step in weeding out the backlog of renewal applications. The Enforcement Bureau has traditionally not looked deeply into the merits of each of the pending indecency complaints while the Court challenges to the policy were pending, presumably to avoid a waste of resources were the standards to change based on the Court review. But that avoided weeding out some clearly meritless complaints – ones that complained of content that was broadcast during the 10 PM to 6 AM indecency safe harbor, or complaints that were focused on issues that were not prohibited under the FCC’s policy and precedent – such as complaints that really centered on violence, or ones that dealt with innuendo rather than the use of prohibited words or the depiction of prohibited body parts. Up until now, except when there was a sale of a station pending, there was no pressing reason for the FCC to dispose of the complaints. Stations continued to operate, and the pending complaints had little day to day impact. But, with the renewal cycle soon to begin again, the resolution of these issues takes on some urgency.
National Association of Broadcasters President David Rehr today announced his decision to leave the Association, leaving the NAB without a leader at a time when the Association is facing an incredible number of challenges in Washington. One can only hope that the NAB acts quickly to replace Rehr with someone prepared to aggressively address the needs of an industry hobbled by the current economic climate, and challenged by regulatory issues that could further undermine the ability of radio and television operators to compete in today’s media marketplace. The potential broadcast performance royalty, which could require that radio operators pay musicians and record labels for the rights to play their music on the air, is but one of a number of fundamental challenges that need to be addressed very shortly by broadcaster’s representatives in Washington – perhaps in the next week or two when the House of Representatives Judiciary Committee may take up the "performance tax" issue (as the NAB has called it in their arguments on Capitol Hill).
What else will a new NAB President have to contend with? In addition to the performance royalty, there seems to be a perception in many quarters that broadcasting is no longer the special medium that it once was that demands regulatory deference because of the public interest service that it provides. Because of the lessening of some of Washington’s regard for broadcasters, there are many issues now before the FCC, Congress, the courts, and other agencies in Washington – all of which could have a serious impact on broadcasters – including:
- The final days of the DTV transition
- The FCC’s implementation of their White Areas order allowing wireless users to use parts of the TV spectrum – and the appeals and other attempts to overturn or modify that decision
- The reauthorization of SHVERA, to continue to allow satellite companies to beam local television signals into local markets – where parties are raising all sorts of extraneous issues about carriage rights and retransmission consent, possible changes in TV market boundaries, and changes in the rights of satellite carriers to import distant signals.
- The FCC’s localism proceeding, which could impose new obligations on broadcasters at a time when broadcast competition has never been so intense – when the marketplace should dictate how broadcasters best serve their communities
- Potential Congressional effort to bring back the Fairness Doctrine in some form or another
- A number of FCC proceedings that could affect new methods of advertising meant to combat technological changes – like embedded advertising and product placement that are meant to partially overcome the effects of DVRs.
- Congressional attempts to regulate advertising and programing – including potential efforts to restrict prescription drug ads, ED treatments, violent programming and programming that promotes unhealthy foods
- FCC attempts to reign in technical changes in FM stations to allow them to take steps to increase power and to move into larger markets
- Congressional moves to remove restrictions on LPFM stations on channels that are third-adjacent to full power facilities – and to potentially give these new stations rights to replace existing FM translators
We recently wrote about the agreements between SoundExchange and various groups of webcasters, which became effective under the terms of the Webcasters Settlement Act. These rates act as a substitute for the rates set by the 2007 Copyright Royalty Board decision setting Internet radio royalties for the use of sound recordings in the period from 2006-2010. The deal with broadcasters set lower rates than the CRB for 2009 and 2010, and also waived certain requirements otherwise applicable to webcasters, limiting the number of songs from the same artist that can be played in a given period of time (see our posts here and here). There is also a deal that SoundExchange unilaterally advanced to certain small webcasters which allows for a percentage of revenue royalty, but limits the amount of listening to these webcasters allowed at these rates, and imposes significant recapture fees if a webcaster sells its service to another company that would not qualify as a small webcaster (see our post here). April 30 is an important date under both deals, as it is the date by which small webcasters must elect the deal, and the date by which all broadcasters who elected the broadcaster deal earlier this month are to pay any back royalties which they owe for streaming from 2006 through the date of the agreement.
In talking to Internet radio operators, both broadcasters and small webcasters, many seem to be unaware of the records that need to be maintained to remain in compliance with the requirements of the deals. Both the small webcasters agreement and the NAB-SoundExchange settlement require "full census" reporting of all songs played by the service, which will include information for every song – including the name of the song that was played, the featured artist who performed the song, the album on which the song appeared, and the label on which the album was released. In addition, the webcaster must report on the number of times each song was played, and how many people heard each transmission of the song. Only very small broadcasters and "microcasters" under the small commercial webcaster deal, are totally exempt from these requirements. Under their deal, broadcasters need not provide all the information for up to 20% of their programming, but this percentage of the broadcast week that can avoid full reporting will shrink every year (see our post here for details).
As we have written, by April 2, broadcasters who are streaming need to file with SoundExchange a written election in order to take advantage of the SoundExchange-NAB settlement. For broadcasters who make the election, the settlement agreement will set Internet radio royalty rates through 2015. One aspect of this agreement that has not received much attention is the waiver from the major record labels of certain aspects of the performance complement that dictates how webcasters can use music and remain within the limits of the statutory license. When Section 114 of the Copyright Act, the section that created the performance royalty in sound recordings, was first written in the 1990s, there were limits placed on the number of songs from the same CD that could be played in a row, or within a three hour period, as well as limits on the pre-announcing of when songs were played. These limits were placed seemingly to make it more difficult for listeners to copy songs, or for Internet radio stations to become a substitute for music sales. In conjunction with the NAB-SoundExchange settlement, certain aspects of these rules were waived by the 4 major record labels and by A2IM, the association representing most of the major independent labels. These waivers which, for antitrust reasons, were entered into with each label independently, have not been published in the Federal Register or elsewhere. But I have had the opportunity to review these agreements and, as broadcasters will get the benefit of the agreements, I can provide some information about the provisions of those agreements.
First, it is important to note that each of the 5 agreements is slightly different. In particular, one has slightly more restrictive terms on a few issues. To prevent having to review each song that a station is playing to determine which label it is on, and which restrictions apply, it seems to me that a station has to live up to the most restrictive of the terms. In particular, the agreements generally provide for a waiver of the requirement that stations have in text, on their website, the name of the song, album and artist of a song that is being streamed, so that the listener can easily identify the song. While most of the labels have agreed to waive that requirement for broadcasters – one label has agreed to waive only the requirement that the album name be identified in text – thus still requiring that the song and artist name be provided. To me, no station is going to go to the trouble of providing that information for only the songs of one label – so effectively this sets the floor for identifying all songs played by the station and streamed on the Internet.
While all the details are not out yet, the trade press has been filled with announcements this evening reporting that SoundExchange and the National Association of Broadcasters have reached a deal on Internet Radio Royalties. This deal will apparently settle the royalty dispute between broadcasters and SoundExchange for royalties covering 2006-2010 which arose from the 2007 Copyright Royalty Board decision, as well as the upcoming proceeding for the royalties for 2011-2015. According to the press reports, the royalties are slightly reduced from those decided by the CRB for the remainder of the current period, and continue to rise for the period 2011-2015 until they reach $.0025 per performance in 2015. According to the press release issued by the parties, there was also an agreement between the NAB and the four major labels that would waive the limits on the use of music by broadcasters that are imposed by the Digital Millennium Copyright Act.
These limits, referred to as the performance complement, set out requirements on how many songs from the same artist or same CD can be played within given time periods which, if not observed, can disqualify a webcast from qualifying for the statutory license. If a webcaster cannot rely on the statutory license, it would have to negotiate with each copyright holder for the rights to use the music that it plays. The performance complement imposed requirements including:
- No preannouncing when a song will play
- No more than 3 songs in a row by the same artist
- Not more than 4 songs by same artist in a 3 hour period
- No more than 2 songs from same CD in a row
- Identify song, artist and CD title in writing on the website as the song is being played
It will be interesting to see the details of this agreement setting out what aspects of these rules are being waived.
The battle over the broadcast performance royalty has begun anew, with the introduction of legislation to impose a performance royalty for the use of sound recordings on broadcast stations. This royalty would be in addition to the royalties paid to ASCAP, BMI and SESAC (which go to compensate composers of music), as this royalty would be paid to the performers of the music (and the copyright holders in the recorded performance – usually the record companies). The statement released by the sponsors of the bill cites numerous reasons for its adoption – including the facts that most other countries have such a royalty, that satellite and Internet radio have to pay the royalty, and that it will support musicians who otherwise do not get compensated for the use of their copyrighted material. The NAB has countered with a letter from its CEO David Rehr, arguing that musicians do in fact get compensation through the promotional value that they get from the exposure of their music on broadcast stations. The 50 state broadcast associations also sent a resolution to Congress, taking issue with the premises of the sponsors – citing the differences in the broadcast systems of the US and that of other countries where there is a performance royalty, and arguing that broadcasting is different from the digital services who have a greater potential for substitution for the purchase of music. What does this bill provide?
The bill introduced this year are very similar to the legislation proposed last year (which we summarized here); legislation that passed the House Judiciary Committee but never made it to the full House, nor to the Senate. Some of the provisions of this year’s version include:
- Expansion of the public performance right applicable to sound recordings from digital transmissions to any transmission
- Royalties for FCC-licensed noncommercial stations would be a flat $1000 per year
- Royalties for commercial stations making less than $1.25 million in annual gross revenues would pay a flat $5000 per year. There is no definition of what constitutes "gross revenues," and how a per station revenue figure could be computed in situations where stations are parts of broadcast clusters
- Excludes royalties in connection with the use of music at religious services or assemblies and where the use of music is "incidental." Incidental uses have been defined by Copyright Royalty Board regulations as being the use of "brief" portions of songs in transitions in and out of programs, or the brief use of music in news programs, or the use in the background of a commercial where the commercial is less than 60 seconds – all where an entire sound recording is not used and where the use is less than 30 seconds long
- Allows for a per program license for stations that are primarily talk
- Establishes that the rates established for sound recordings shall not have an adverse effect on the public performance right in compositions (i.e. they can’t be used as justification for lowering the ASCAP, BMI and SESAC rates)
- Requires that 1% of any fees paid by a digital music service (such as a webcaster, or satellite radio operator) for the direct licensing of music by a copyright owner (usually the record company) be deposited with the American Federation of Musicians to be distributed to non-featured performers (background musicians), while the distribution of any fees to the featured performer be governed by the contract between the performer and record company
- Requires that any 50% of any fees paid by a radio station for direct licensing of music be paid to the agent for collection of fees (i.e. SoundExchange) for distribution in the same manner that the statutory license fees are distributed (45% to the featured performer, 2.5% to background musicians, and 2.5% to background vocalists)
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).
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.
The New York Times recently published an article about NBC’s owned and operated station in New York City acceptance of advertising for liquor. While ads for beer and wine have been a staple on broadcast stations (though see our discussion of the limits on that advertising, here), ads for other alcoholic beverages ads have been less frequent. Many broadcasters have for years believed that such ads were prohibited by the FCC or some other government agency. In fact, alcohol ads have not been prohibited by law, but instead by voluntary actions of trade associations representing broadcasters and the alcoholic beverage industry .
Until the early 1980s, the National Association of Broadcasters had a voluntary code of conduct for broadcasters, suggesting good standards and practices for broadcasters: limiting some broadcast content while encouraging broadcasters to air other programming perceived to be in the public interest. Among the conduct that the Code prohibited was the advertising of hard liquor. While the NAB Code was not mandatory for broadcasters, in filing many routine applications for new stations and for the acquisition of existing stations, the FCC in the past had requirements that the potential broadcasters explain how their programming would serve the public interest. Most applicants would shorthand their compliance plans by simply promising to abide by the NAB code, in effect binding themselves to the code through those representations made to the FCC. The Code was in place until the early 1980s, when the Department of Justice became concerned that code provisions suggesting maximum commercial loads and similar matters functioned as a restraint of trade in violation of the antitrust laws, and the NAB Code was abandoned.