Each day, there seems to be a report about broadcast stations going off the air because of the current economic downturn – some permanently (witness several Montana full-power television stations formerly owned by Equity Broadcasting whose licenses were surrendered two weeks ago), some temporary, and some being given away to charity (like Clear Channel’s announcement of its donation of 4 AM stations to the Minority Media and Telecommunications Council).  Several months ago, we wrote here about the steps a broadcaster should take when taking a station off the air – notification to the FCC within 10 days of the station going silent, seeking permission to remain silent after 30 days, and making sure that tower lights are maintained even if the station is off the air.  But, as this situation becomes more common, there are a couple of other issues that have recently come up that are worth mentioning – one having to do with the one year period that a station can stay off the air without forfeiting its license, and the other dealing with music royalties. 

First, in the last few months, there have been cases which have clarified, at least to a degree, the law that states that a license will be forfeit if a station is off the air for more than a year.  In one decision, the Commission’s Video Division of its Media Bureau canceled the license of a television station that had come back on the air shortly before the year of silence was to end, but only broadcast a test pattern.  Finding that the station had not broadcast any programming, and that transmission of a test pattern did not constitute "broadcasting", the Division determined that the obligation to return to the air had not been met, and canceled the license.  The licensee is appealing this decision, arguing that the law (Section 312g of the Communications Act) does not require that a station broadcast programming, just that it "transmit broadcast signals" within a year of the time that it went off the air.  But, for now, licensees who take their stations silent should plan for returning to the air with some programming within a year, or risk the cancellation of the station license.


Continue Reading Broadcast Stations Going Dark – Issues to Think About

A story in today’s Wall Street Journal discusses the significant amount of money being spent on television advertising for and against pending proposals for health care reform.  As we have written before, broadcasters are required to keep in their public file information about advertising dealing with Federal issues – records as detailed as those kept for political candidates.  Information in the file should include not only the sponsor of the ad, but also when the spots are scheduled to run (and, after the fact, when they did in fact run), the class of time purchased, and the price paid for the advertising.  Clearly, the health care issue is a Federal issue, as it is being considered by the US Congress in Washington.  So remember to keep your public file up to date with this required information. 

Section 315 of the Communications Act deals with these issues, stating that these records must be kept for any request to purchase time on a "political matter of national importance", which is defined as any matter relating to a candidate or Federal election or "a national legislative issue of public importance."  Clearly, health care would fit in that definition.  The specific information to be kept in the file includes:

  • If the request to purchase time is accepted or rejected
  • Dates on which the ad is run
  • The rates charged by the station
  • Class of time purchased
  • The issue to which the ad refers
  • The name of the purchaser of the advertising time including:
    • The name, address and phone number of a contact person
    • A list of the chief executive officers or members of the executive committee or board of directors of the sponsoring organization.


Continue Reading Health Policy Ads on Broadcast Stations – Remember Your Public File Obligations

The US Court of Appeals for the District of Columbia Circuit today issued a decision basically upholding the royalty rates set by the Copyright Royalty Board due under Section 114 of the Copyright Act by satellite radio operators for the public performance of sound recordings.  The CRB decision, setting royalties for the years of 2007 to 2012, established rates that grew from 6% to 8% over the six year term. As we explained in our post, here, the Board looked at the the public interest factors set out by Section 801(b) of the Copyright Act, factors not applicable to Internet Radio royalties, in reaching the determination these royalties.  Particularly important was the factor which took into account the potential impact of the royalties on the stability of the businesses that would be subject to the royalty, resulting in a reduction of the perceived fair market value of the royalty from what the board determined to be about 13% of gross revenues to the 6-8% final royalty set by the Board.  The Court upheld the Board’s reasoning, rejecting SoundExchange’s challenge to the decision, though the Court did remand the case to the Board to decide the proper allocation of the royalty to the ephemeral rights covered by Section 112 of the Copyright Act.

What was perhaps most interesting about the Court’s decision was the concurring opinion of one of the three Judges, who stated that the fact that the Board’s judges were appointed by the Librarian of Congress, and not by the President, "raises a serious constitutional issue."   This was the same issue raised by Royalty Logic in challenging the constitutionality of the CRB in the webcasting proceeding (see our posts here and here).  The Judge concurred in the majority decision as none of the parties to the satellite radio case raised the constitutional issue, but this very question was squarely raised in the webcasting proceeding, and thus may well be resolved in the decision on that appeal.


Continue Reading Court Upholds Copyright Royalty Board Decision on Satellite Radio Royalties, But Questions Board’s Constitutionality

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.


Continue Reading With April 2 Webcasting Election Due for Broadcasters – A Look at the Record Label Waivers of the Performance Complement

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 FCC today issued two fines to stations who violated the FCC’s rule against airing phone calls for which permission had not been received before the call was either taped for broadcast or aired live.  We’ve written about other fines for the violation of this rule, Section 73.1206, many times (see here, here, and here).  What was interesting about the new cases is that they made clear that a station needs to get permission to record or broadcast the phone call even before the person at the other end of the line says "hello."  

In one case, the station was broadcasting using a tape delay.  The station placed a call to a local restaurant and, when the person at the other end of the line said hello, the station DJ informed the restaurant employee that he was being broadcast and asked if that was OK.  The person responded "yep."  But he changed his mind later in the call.  The station claimed that, had the person not given permission, the tape delay would have allowed the call to be dumped but, as permission was given, the station continued to run with the conversation on the air. The FCC found that insufficient, as permission had not been received prior to the person saying hello.  The second case was much more straightforward – a wake up call by the station to a randomly selected phone number.  While the station immediately informed the person who answered the phone that the call was on the air – that did not happen until the recipient of the call had already said hello.  In the first case, the fine was $6000 – in the second, $3200.


Continue Reading More Fines for Stations That Broadcast Telephone Conversations Without Prior Permission – Permission After “Hello” Is Too Late

Since the election of President Obama and the Democratic majority in both houses of Congress, the fears of the return of the Fairness Doctrine have been highlighted on talk radio, online, by emails and in conversations throughout the broadcast industry.  Even though President Obama had stated that he was not in favor of its return, and even liberal commentators have gone so far as to make fun of conservatives for suggesting that there might be an attempt to bring it back (see our post on Keith Olbermann lambasting George Will for making such a suggestion).  Yet this week the doctrine was back into the national discussion, coming up in a press conference with White House Press Secretary Robert Gibbs (who joked it off without dismissing the rumors) and in a speech by FCC Commissioner Robert McDowell.  What’s all the fuss about anyway?

To really understand the debate, it’s important to understand what the Fairness Doctrine is and what it is not.  We’ve seen many politicians referring to the Fairness Doctrine and the Equal Time Rule in the same sentence, as if they are part and parcel of the same thing. In fact, they are different issuesEssentially, the Fairness Doctrine simply required that stations provide balanced coverage of controversial issues of public importance.  The Fairness Doctrine never required "equal time" in the sense of strict equality for each side of an issue on a minute for minute basis.  In talk programs and news coverage, a station just had to make sure that both points of view were presented in such a way that the listener would get exposure to them.  How that was done was in a station’s discretion, and the FCC intervened in only the most egregious cases.


Continue Reading Fairness Doctrine Back in the News (Part 1) – What’s It all About?

In these challenging economic times, it seems like almost every day we see a notice that a broadcast station has gone silent while the owner evaluates what to do with the facility.  This seems particularly common among AM stations – many of which have significant operating costs and, in recent times, often minimal revenues.  The DTV transition deadline (whenever that may be) may also result in a number of TV stations that don’t finish their DTV buildout in time being forced to go dark.  While these times may call for these economic measures to cut costs to preserve the operations of other stations that are bringing in revenue, broadcasters must remember that there are specific steps that must be taken at the FCC to avoid fines or other problems down the road.

One of the first issues to be addressed is the requirement that the FCC be informed of the fact that a station has gone silent.  Once a station has ceased operations for 10 days, a notice must be filed with the the FCC providing notification that the station is not operational.  If the station remains silent for 30 days, specific permission, in the form of a request for Special Temporary Authority to remain silent, must be sought from the FCC.  The rules refer to reasons beyond the control of the licensee as providing justification for the station being off the air.   Traditionally, the FCC has wanted a licensee to demonstrate that there has been a technical issue that has kept the station off the air.  The Commission was reluctant to accept financial concerns as providing justification for the station being silent – especially if there was no clear plan to sell the station or to promptly return it to the air.  Perhaps the current economic climate may cause the FCC to be more understanding – at least for some period of time.


Continue Reading Steps to Take When A Broadcast Station Goes Silent

Last week, the FCC issued several fines to noncommercial broadcasters who had underwriting announcements that sounded too commercial.  In these decisions, the Commission found that the stations had broadcast promotional announcements for commercial businesses – and those announcements did not conform to the FCC’s rules requiring that announcements acknowledging contributions to noncommercial stations cannot contain qualitative claims about the sponsor, nor can they contain "calls to action" suggesting that listeners patronize the sponsor.  These cases also raised an interesting issue in that the promotional announcements that exceeded FCC limits were not in programming produced by the station, but instead in programs produced by outside parties who received the compensation that led to the announcement.  The FCC found that there was liability for the spots that were too promotional even though the station itself had received no compensation for the airing of that spot.

The rules for underwriting announcements on noncommercial stations (including Low Power FM stations) limit these announcements to ones that identify sponsors, but do not overtly promote their businesses.   Underwriting announcements can identify the sponsor, say what the business of the sponsor is, and give a location (seemingly including a website address).  But the announcements cannot do anything that would specifically encourage patronage of the sponsor’s business.  They cannot contain a "call to action" (e.g. they cannot say "visit Joe’s hardware on Main Street" or "Call Mary’s Insurance Company today").  They cannot contain any qualitative statements about the sponsors products or services (e.g. they cannot say "delicious food", "the best service", or "a friendly and knowledgeable staff" ).  The underwriting announcements cannot contain price information about products sold by a sponsor.  In one of the cases decided this week, the Commission also stated that the announcements cannot be too long, as that in and of itself makes the spot seem overly promotional and was more than was necessary to identify the sponsor and the business that the sponsor was in.  The spot that was criticized was approximately 60 seconds in length. 


Continue Reading FCC Fines for Noncommercial Stations Having Underwriting Announcements That Were Too Commercial – Even Where the Station Received No Money

Today, the National Music Publishers Association ("NMPA"), DiMA, the RIAA and other music publishing groups issued a press release announcing a settlement of certain aspects of the current Copyright Royalty Board proceeding to determine the royalties due under Section 115 of the Copyright Act for the mechanical royalty for the reproduction and distribution