The FCC last week issued a decision that should make Buyers think twice in determining how sales of broadcast stations are concluded – especially in the days of $325,000 potential fines for indecency violations.  In the case decided last week, the Commission concluded that the licensee of a broadcast station was liable for fines for violations

The Digital Television conversion has allowed the FCC to reclaim significant portions of the TV spectrum for wireless and public safety uses – television channels above 51 will no longer be used for broadcast TV at the end of the analog to digital transition.  But, as part of the FCC’s Diversity proceeding (see our post here), a proposal dealing with the other end of the TV spectrum is being considered – whether to remove Channels 5 and 6 from the television band and instead use these channels for FM radio.  These channels are adjacent to the lower end of the FM band.  Because of this adjacency, the existence of TV Channel 6 in a market can limit the use of the lowest end of the FM band (used for Noncommercial Educational stations) to avoid interference to the TV station.  Similarly, Channel 6’s audio can be heard on many FM radio receivers, a fact that has recently been used by some LPTV operators to use their stations to deliver an audio service that can be received by FM radios (see our post on this subject).  In comments filed in the Diversity proceeding, parties have taken positions all across the spectrum – from television operators who have opposed using the channel for anything but television, to those suggesting that the channels be entirely cleared of television users and turned into a digital radio service.  Proposals also suggest using the band for LPFM operations, and even for clearing the AM band by assigning AM operators to this band to commence new digital operations.

In comments that our firm submitted on behalf of a group of noncommercial FM radio licensees who also rebroadcast their signals on a number of FM translator stations, we suggested that Channel 6 could provide a home for LPFM operations, instead of trying to squeeze those stations into the existing FM band.  There are currently proposals to squeeze more LPFM stations into the FM band by supplanting some FM translators (see our summary of some of those proposals here).  In these comments in the Diversity proceeding, we pointed out that, as there are currently radios on the market that receive 87.9, 87.7 and even 87.5, using these three channels for LPFM service would provide an immediate home to these stations, and far more opportunity for than LPFM would have in the already congested FM band.  These opportunities would exist even in most of the largest radio markets in the country, except in the handful of markets where a Channel 6 television station will continue to operate after the digital transition.  By adopting this proposal, the service that would be provided by FM translators would not be threatened. Continue Reading What to Do With TV Channels 5 and 6 – Proposals to Turn Them Over to Radio Services

I recently attended the convention of the Montana Broadcasters Association, and just a few weeks before that I had been at an event sponsored by the Washington State Association of Broadcasters.  Talking with small market TV Broadcasters in those states, an issue that does not affect major television markets but which complicates the digital transition has become clear.  In smaller markets in many states, particularly in some of the western states where there are multiple geographically dispersed cities in many television markets, there is at least one network affiliate in many cities that is either an LPTV or TV translator station.   As we’ve written before, LPTV and translator stations are not required to convert to digital by the February 2009 digital conversion deadline.  Instead, these stations can continue to operate in analog until an as yet unspecified date in the future.  While these stations are allowed to convert to digital, many do not have the resources to do so.  Thus, many of these stations will continue to broadcast in analog after the February 18 transition deadline.  What makes the issue particularly problematic is that most  DTV converters do not allow the "pass through" of analog programming, i.e. once they are hooked up, television sets only receive digital signals and analog signals are effectively blocked.  This presents the potential of marketplace confusion for those viewers who do not receive their signals from cable or satellite, as they will be getting conflicting messages – being told to get a digital converter to pick up the full-power stations in a market as they convert to digital, but if the consumer buys the wrong converter box, they will not be able to receive other LPTV and translator stations in the same market.

The problem has been exaggerated as converter boxes with analog pass through have been delayed in reaching the marketplace.  When I bought converter boxes in Washington, DC early last month, neither of the two major electronics retailers had the converter boxes with analog pass-through available.  A well-reviewed box from EchoStar was supposed to hit stores last month, but it is in short supply.  I can find it on-line only at the Dish Network’s (owned by EchoStar) own website.  Thus, for households who buy and connect most of the available digital converter boxes, suddenly their analog LPTV stations are gone.  In some of these smaller Western markets, that may mean the loss of one or more local network affiliates.Continue Reading The Digital Transition End Game in Smaller Markets – The Problem with LPTV

In a decision released late on Friday, the FCC upheld a $9,000 fine on a noncommercial television operator who broadcast underwriting announcements which, in the opinion of the Commission, were too much like commercials and thus were impermissible on a noncommercial station.  Under the Commission’s policies governing the noncommercial nature of noncommercial stations, it is permissible to air an underwriting announcement acknowledging a commercial entity that makes a financial contribution to the station.  And it is permissible to state the nature of the business, where it is located, and to air the slogan of the company.  What is not permissible is when the underwriting announcement contains "calls to action," qualitative or comparative claims, price information, or other inducements to do business with this particular company.  In this case, the Commission felt that the announcements crossed some or all of these lines.

In the initial Notice of Apparent Liability in this case, released in late 2004, the text of the announcements at issue are set out.  In last week’s order, phrases such as "planning a special occasion?" as the intro line to an announcement about an Ice cream store were deemed to be calls to action, and the description of the ice cream cakes that the store made as "tastefully decorated" were deemed to be qualitative.  Similarly, statements about a real estate company that "we’re all about family" and "we love selling real estate" were deemed to be comparative in nature, trying to distinguish this particular agent from other competitors.  In only one of ten ads, one for a school supply store, did the Commission overturn its previous determination, finding that an announcement for "creative learning materials" was arguably descriptive and not qualitative.Continue Reading FCC Fines Noncommercial Station for Enhanced Underwriting Announcments that Were too Commercial

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.  Continue Reading Format Noncompete Agreements Can Lead to FCC Fine

We recently wrote about the Federal Communications Commission’s actions in their Diversity docket, designed to promote new entrants into the ranks of broadcast station owners. In addition to the rules adopted in the proceeding, the FCC is seeking comment on a number of other ideas – some to restrict the definition of the Designated Entities that are eligible to take advantage of these rules, others to expand the universe of media outlets available to potential broadcast owners – including proposals to expand the FM band onto TV channels 5 and 6, and proposals to allow certain AM stations, which were to be returned to the FCC after their owners received construction permits for expanded band stations, to retain those stations or transfer them to Designated Entities. The proposals, on which public comment is being sought, are summarized below.

Definition of Designated Entity. The first issue raised by the Commission deals with whether the class of applicants entitled to Designated Entity status and entitled to take advantage of the Commission’s diversity initiatives should be restricted. One proposal is to restrict the Designated Entity status to companies controlled by racial minorities. The Commission expressed skepticism about that proposal, noting that the courts had throw out several versions of the FCC’s EEO rules, finding that there was insufficient justification offered by the FCC to constitutionally justify raced-based preferences. The Commission asked that proponents of such preferences provide a “compelling” showing of needed, as necessary for a constitutional justification for governmental race-based discrimination.Continue Reading FCC’s Acts to Increase Diversity in Media Ownership – Part 2, The Proposals for Future Actions – Channel 6 for FM, AM Expanded Band, Definition of Designated Entity, Must Carry for Class A TV and Others

In recent weeks, Low Power Television stations have been the center of attention in Washington in connection with the Digital television transition.  While all full-power television stations are set to convert to digital operations less than a year from now, ceasing analog operations at the end of the day on February 17, 2009, there is no specific deadline for LPTV stations to convert to digital.  As the NTIA rolls out its coupon program for the purchase of converter boxes that will take digital signals of over-the-air television stations and convert them to analog for those who do not have digital television receivers (see our summary here), LPTV advocates noted that many converters do not pass through analog signals.  Thus, once a television is hooked up to a converter box, that television will not be able to pick up stations broadcasting in analog – so many unconverted LPTV stations after the conversion date will be denied access to television receivers.

Suggestions have been made that the converter boxes be reconfigured to pass through analog – unlikely as many of the boxes have already been manufactured and are on their way to stores (note that some converters do pass through analog signals, but a consumer needs to look for those boxes).  LPTV advocates have also asked for some form of cable must-carry during the transition process – a proposal sure to be opposed by cable system operators.  Continue Reading The Trouble With LPTV – No Plan for DTV Transition

In two recent cases, the FCC discussed the issue of "blanketing interference," the interference that can be caused by a broadcaster to electronic devices that are located in homes and businesses near to the station’s transmitter site.  In the first case, the FCC rejected a license renewal challenge finding that there was no