The nuts and bolts of legal issues for broadcasters were highlighted in two sessions in which I participated at last week’s joint convention of the Oregon and Washington State Broadcasters Associations, held in Stephenson, Washington, on the Columbia River that divides the two states. Initially, I conducted a seminar for broadcasters providing a refresher on their
Last month, the FCC released its proposal to restrict the movement of FM stations from rural areas into larger markets (which we summarized here). The proposals that the FCC has put forward would greatly restrict the ability of broadcast owners to move stations to cover larger population areas – in many senses reversing the decision of the FCC just two…
This week, an interesting concept has been advanced in a series of applications filed with the FCC. Ion Media Networks, the successor to Paxson Television, has proposed to transfer some of its broadcast stations to a new company, Urban Television LLP, to be owned 51% by Robert Johnson, the former owner of BET, and 49% by Ion itself. But, when we say that they are transferring "some" of its stations, we don’t mean that any of its stations are being transferred, but instead only that a piece of its stations are proposed to be transferred. Ion proposes to continue to own and operate stations in every market where it currently operates, but proposes to sell digital multicast channels to Johnson. Unlike any LMA or other programming agreement, the proposal is to actually take one 6 MHz television channel and break it up so that Ion continues to program one channel with its programming and the Urban Television will program the other channel with its programming, and become the actual license of that portion of the spectrum. The FCC has accepted the applications and issued a Public Notice, giving parties 30 days to file comments on the proposal.
It is not unheard of for two licensees to share the same channel – though where it is currently occurs most frequently is in connection with noncommercial broadcasters who share a single radio or TV channel, they divide it by time, so that one licensee operates, say midnight to noon and the other operates from noon to midnight. Obviously, in these shared-time arrangements, both broadcasters are not operating on the same channel at the same time. This new proposal, though, does not come out of the blue. The idea of allowing a broadcaster to sell a digital channel to a different company, has been proposed before, for both Digital Television and Digital HD Radio channels when the original station is multicasting, as a way to increase diversity of ownership.
In the FCC’s recent Report and Order on Diversity, released earlier this year, the Commission announced new requirements for all broadcast station’s advertising sales contracts. The new FCC rule requires that all advertising contracts contain clauses ensuring that there is no discrimination based on race or gender in the sale of advertising time. This new requirement, which took effect in July, not only requires broadcasters to have these non-discrimination clauses in their advertising sales contracts, but will also require that broadcasters certify as to the existence of such clauses in their next license renewal application. Thus, to be sure that you can make such certifications, you must revise your advertising contracts to include a nondiscrimination provision, such as the one set out below, if you have not done so already.
These new measures are intended to increase participation in the broadcast industry by businesses owned by women and minorities. The Commission was concerned that some advertising contracts include either explicit or implicit “no urban/no Spanish” dictates. Such contractual limitations, the Commission explained, may violate U.S. anti-discrimination laws by either presuming that certain minority groups cannot be persuaded to buy the advertiser’s product or service, or worse, intentionally minimizing the number African Americans or Hispanics patronizing advertisers’ businesses.
UPDATE 5-29-2008- Please note, the Commission has revised the dates for submitting comments in this rule making proceeding. Comments in the proceeding are now due on or before June 30, 2008, and Reply Comments are due on or before July 14, 2008. This means that interested parties have a couple of weeks less than…
At its December meeting, at the same time as it adopted rules relaxing the newspaper-broadcast cross-ownership rules, the FCC adopted new rules to expand diversity in the ownership of broadcast stations, encouraging new entrants into such ownership. The full text of that decision was just released last week, providing a number of specific rule changes adopted to promote diverse ownership, as well as a number of proposals for changes on which it requests further comment. Comments on the proposed changes will be due 30 days after this order is published in the Federal Register. As this proceeding involves extensive changes and proposals, we will cover it in two parts. This post will focus on the rule changes that have already been made – a subsequent post will cover the proposed changes. The new rules deal not only with ownership rule modifications, but also with issues of discrimination in the sale of broadcast stations and in the sale of advertising on broadcast stations, new rules that leave some important unanswered questions.
The rules that the Commission adopted were for the benefit of "designated entities." Essentially, to avoid constitutional issues of preferences based on race or gender, the definition of a designated entity adopted by the Commission is based on the size of the business, and not the characteristics of the owners. A small business is one designated as such by the Small Business Administration classification system. Essentially, a radio business is small if it had less than $6.5 million in revenue in the preceding year. A television company is small if it had less than $13 million in revenues. These tests take into account not only the revenue of the particular entity, but also entities that are under common control, and those of parent companies. For FCC purposes, investment by larger companies in the proposed FCC licensee is permissible as long as the designated entity is in voting control of the proposed FCC licensee and meets one of three tests as to equity ownership: (1) the designated entity holds at least 30% of the equity of the proposed licensee, or (2) it holds at least 15% of the equity and no other person or entity holds more than 25%, or (3) in a public company, regardless of the equity ownership, the designated entity must be in voting control of the company.