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
At its meeting today, the FCC decided to revamp its Ownership Report filing process – requiring all stations to file Biennial Ownership Reports on FCC Form 323 on November 1 of this year – even stations that have just filed those reports in the normal course in the last few months. All stations will have to file every two years thereafter – on November 1 of every other year. Reports will also be required from Low Power TV stations and Class A TV stations, which have not in the past had to file reports. Reports will also be required from stations that are owned by an individual, and by general partnerships in which all of the partners are individuals (or, in the FCC’s legalese, "natural persons"). In the past, such stations did not have to file reports as any change in ownership would have required, at a minimum, the filing of a Form 316 short-form assignment or transfer application. Finally, the Commission will require the reporting of the interests of currently non-attributable owners who are not attributable simply because there is a single majority shareholder in the licensee.
The FCC is not asking for this information because it wants to track improper transfers, but instead so that it can gather information about the racial and gender make-up of the broadcast ownership universe. This information has been required on ownership reports for the last ten years, but the FCC did not believe that the system was extensive enough to capture all information about the ownership of broadcast properties, as so many stations were not covered by the requirements. Why does the FCC want racial and gender information about the owners of stations? To potentially take more aggressive actions to encourage minority ownership. The FCC has considered such actions in the past, but has not felt that it take actions specifically targeted to minority and female applicants, as there was no record of past discrimination in the broadcast industry. The government can constitutionally only make racial or gender-based decisions if these decisions are to remedy the effects of past discrimination. To justify such acts, the government agency must demonstrate the past discrimination – and these new filing requirements are meant to gather that information through what is called an Adarand study. In the recent past, when it adopted certain diversity initiatives for designated entities (like the ability of a designated entity to buy an expiring construction permit and get an extension, which we recently wrote about here), the Commission had to define a designated entity as a "small business" defined by SBA standards. Chairman Copps today said that this definition did not truly benefit diversity as favoring small businesses "generally benefit white males."
In January, the Copyright Royalty Board asked for comments as to whether it should require "census reporting" of all sound recordings that are used by a digital service subject to the statutory royalty. This would replace the current requirement that services need only report on the sound recordings used for two weeks every calender quarter. Most of the comments that were filed dealt with the difficulties of certain classes of webcasters – particularly small webcasters and certain broadcasters – in keeping full census reports of every song that is played by a service, and how many people heard each song. In a Notice of Inquiry published in the Federal Register today, the CRB asked for further information about the cost and difficulties of such reporting. Comments on the Notice are due on May 26, 2009, and replies on June 8.
The real issues, as identified by the CRB, were raised by smaller entities that argued that they do not have the ability to track performances. Especially problematic are stations that have on-air announcers who pick the music that they want to play in real time, and don’t run their programming through any sort of automation system or music scheduling software. Live DJs playing music that they want is a hallmark of college radio, but one that creates problems for tracking performances. How can a DJ’s on-the-fly selection of music be converted to the nice, neat computer spreadsheets required by SoundExchange for the Reports of Use of music played?
Just after Christmas, the FCC gave a number of broadcasters the equivalent of coal in their stocking – fining six different licensees for violations of the FCC’s EEO rules. The fines issued that day ranged between $7,000 and $20,000, and included penalties issued to major broadcasting companies including Fox and Cumulus. Also included were fines against Urban Radio in New York City and Puerto Rico Public Broadcasting – demonstrating that the FCC’s EEO rules, adopted in late 2002 after previous rules were declared unconstitutional essentially on "reverse discrimination" grounds (as they encouraged broadcasters to make hiring decisions not based on qualifications but instead based on race or gender), are truly race and gender blind. It would be logical to assume that Urban Radio and Puerto Rico Public Broadcasting both had significant numbers of minority-group members on their staffs but, as they could not demonstrate that they had complied with the new rules requirements to reach out to all groups in their communities (as opposed to just racial or gender focused groups), they were assessed fines. Reporting conditions, requiring that the broadcasters regularly file reports with the FCC so that their EEO efforts can be monitored, were also imposed. All of the decisions can be found on the FCC’s Daily Digest for that day, here.
The basis of all of these fines was the failure of the licensees to be able to demonstrate that they had "widely disseminated" information about all of their job openings. The core of the 2002 EEO regulations was the requirement that licensees broadly disseminate notice about their job openings in such a way so as reach all of the significant groups within the community that the station serves. The Commission was not looking to specifically force minority hiring, but instead to push for hiring from diverse sources. The Commission wanted to push broadcasters to use recruitment sources beyond the existing broadcast community – so that hiring was not simply done by word of mouth or from within other professional broadcast circles. Thus, the rules require that broadcasters use recruitment sources that reach out to various groups within their community and document those efforts.
2009 – a new year, and a whole new cycle of regulatory requirements. We wrote last week about the potential for changes in regulations that may be forthcoming but, like death and taxes, there are certain regulatory dates each year that broadcasters need to note and certain deadlines that must be met. Those dates…
Just when you think that the year will come to a quiet end, something always seems to pop up. Today, the Copyright Royalty Board announced a Notice of Proposed Rulemaking that would change the reporting requirements for services that pay royalties for the use of sound recordings to SoundExchange. The proposed new rules would require that Reports of Use submitted by services relying on the statutory royalty contain "full census reporting" of all songs played by any service. Services would include all users of music who pay royalties due under Sections 112 or 114 of the Copyright Act – including Internet Radio, satellite radio, digital cable radio, digitally transmitted business establishment services, and radio-like services delivered by other digital means, including deliveries to cell phones. This reporting requirement would replace the current system, about which we wrote here, that only requires reporting for two weeks each quarter. Under the new rules, an Internet radio service would have to submit the name of every song that they play to SoundExchange, along with information as to how many times that song played, the name of the featured artist, and either the recording’s ISRC code or both the album title and label. Comments on this proposal are due by January 29.
Currently, the quarterly reports are filed electronically using an ASCII format and using either an Excel or Quattro Pro spreadsheet template as created by SoundExchange. The Board asks for comments as to whether there are technological impediments to providing this information in this manner, and if other changes should be made to more easily facilitate the delivery of this information. The Copyright Royalty Judges who make up the CRB expressed their opinion that the full census reporting is preferable to the limited information now provided, so that SoundExchange does not need to rely on estimates or projections to insure that all artists are fairly compensated when their works are played. Using census reporting, all artists can be paid based on how often their songs are actually played.
Here we are, almost a full month into the new year, and a number of important dates for broadcasters are already upon us. As we wrote here, for instance, the payment of a minimum fee to SoundExchange by radio stations streaming their signals on the Internet is due today. Lowest unit rates are in…