The NAB recently announced that a majority of Congress has signed on to the Local Radio Freedom Act, the nonbinding resolution where Congressional representatives declare their opposition to the adoption of a broadcast performance royalty. With that announcement, it is worth taking another look at what a broadcast performance royalty is and what might happen next. We have been covering the arguments about a broadcast performance royalty for over 13 years, but it still bears consideration as I find that there are still broadcasters who do not fully understand the issues.
As we’ve written before, the royalties that broadcasters pay to ASCAP, BMI, SESAC and even GMR are paid for the public performance of musical compositions (or “musical works,” the words and music in a song). These royalties are paid to the composers of music (and the copyright holders in the musical compositions, usually a publishing company). The broadcast performance royalty proposes that broadcasters also pay royalties for the public performance of sound recordings. A sound recording is the actual recording of a musical composition by a singer or band. Sound recording royalties are paid to the performers (and the copyright holders in the performances, usually the record labels). Broadcasters do pay these royalties now to SoundExchange when they stream their programming on the Internet. But in the US, other than digital audio services (like webcasters and music services like Pandora, Sirius XM, Spotify or Apple Music), over-the-air broadcasters and other businesses (like bars, restaurants, and retail establishments) who play sound recordings are not subject to a performance royalty for the performance of those sound recordings, though such royalties are paid in many other countries in the world.
For well over a decade, the music industry has been trying to get Congress to mandate a sound recording performance royalty for over the air broadcasting. These efforts were most pronounced about a decade ago, where we wrote about some estimates of what the costs would be to the industry were such royalties imposed (see our articles here and here). Even in more recent times, bills have been introduced that would potentially place significant financial burdens on broadcasters (see, for instance, our article here). The proposal to impose these royalties continues to be pushed by the recording industry, with the proposed legislation most recently introduced in Congress last year (see our article here). That bill seemed to be an attempt to ease the industry into the royalty by providing for minimal payments by noncommercial stations and stations with revenues of less than a million dollars. However, that bill never advanced in Congress after its initial introduction.
The radio industry has continued to oppose these efforts, worried about the financial burden that could be imposed on the industry – particularly in light of current economic conditions. Even the minimal royalties proposed in the recent bill are seen as simply a first step to higher fees similar to those that plague digital services and hamper their profitability.
But, as digital performances become more and more a part of the business of broadcasters, and the royalties that they impose become a bigger and bigger burden on the industry (see our article here on the SoundExchange royalties that are imposed on a radio station whose programming is provided through Alexa or other smart speaker technology), there has been some talk in the broadcast industry about a grand bargain with the recording industry that would impose some fees on over-the-air broadcast revenues in exchange for lower digital royalties (on a limited scale, some deals were done over 5 years ago big broadcast companies and certain record labels using this formula – see, for instance, our articles here and here). Thus far, that talk about an industry-wide deal has been simply talk, and has not solidified into any concrete action except these limited deals reached years ago.
This is an issue that continues to be debated. While the prospects of any action in the current Congress, which sits only through the end of this year, are slim (unless something is sneaked into some unrelated must-pass legislation), this will no doubt be an issue that will continue to be debated, so keep watching for developments.
Courtesy Broadcast Law Blog
About this time each year, as hurricane season ramps up, the FCC issues a notice reminding television broadcasters and other video providers of their obligations to make accessible emergency information to all of the populations which may be using their services – especially if parts of the audience cannot see or hear the emergency information that the service is transmitting. The FCC this week released that notice for this year, with a couple of new wrinkles.
The FCC provides examples of the kinds of emergencies that the rules are intended to cover – which for the first time this year includes pandemics. Other examples of the emergencies that these obligations would apply to include “tornadoes, hurricanes, floods, tidal waves, earthquakes, icing conditions, heavy snows, widespread fires, discharge of toxic gases, widespread power failures, industrial explosions, civil disorders, school closings and changes in school bus schedules resulting from such conditions, and warnings and watches of impending changes in weather.” The details that must be conveyed to the entire audience include “specific details regarding the areas that will be affected by the emergency, evacuation orders, detailed descriptions of areas to be evacuated, specific evacuation routes, approved shelters or the way to take shelter in one’s home, instructions on how to secure personal property, road closures, and how to obtain relief assistance.” The obligations are intended to cover not just the area where the emergency is occurring, but also in adjacent areas that may be affected by the effects of the emergency – and the obligations extend not just to the immediate time of the emergency but also to information about dealing with its aftermath. What do these rules require?
To accommodate those who are blind or visually impaired, the rules require that the video provider, in a newscast, present any visual information about emergency conditions in an aural manner as well. If information is presented outside a newscast in, for instance, a crawl on the bottom of the screen during an entertainment program, that crawl must be preceded by aural tones alerting the audience that they can tune to a secondary audio stream provided by the TV station giving the same information as conveyed by the crawl (see our articles here, here, here and hereabout that obligation).
For those who are deaf or hard of hearing, the FCC requires that emergency information that is provided aurally also be provided visually. This is often done through open captions but sometimes is even presented by whiteboards or other handwritten information by stations providing fast-breaking information.
The Public Notice sets out more information about these requirements, including specifics for MVPDs (including cable systems). It also suggests that any emergency information be provided in ways that those with any sort of cognitive impairment be able to understand what is being conveyed. In this time of hurricanes, pandemic and other natural and man-made disasters, all video providers should review this public notice and the FCC rules establishing these obligations.
Courtesy Broadcast Law Blog
A window for the filing of applications for new noncommercial FM stations in the reserved FM band (below 92.1 FM) appears to be on its way – either later this year or early next. As we reported in our summary of last week’s broadcast legal actions, Chairman Pai last week responded to a Congressional inquiry about the next window for new LPFM stations. In his letter, he stated that the LPFM window would follow a window for new noncommercial FM stations, as noncommercial applicants have not had the opportunity to file for new stations in a decade. The letter says that the NCE window will open after the recently adopted changes in the rules for processing these noncommercial applications become effective later this year (see our article here on those changes). The changes are waiting for Paperwork Reduction Act review before they can become effective.
In fact, the 2010 window for NCE applications was for a limited number of commercial frequencies that had been set aside and reserved for noncommercial use where the reserved band had constraints (see our article on that window here). The last window for reserved band FM stations (stations operating on 88.1 to 91.9 FM) opened in 2007 (see our article here). In that window, the FCC limited any applicant to 10 applications nationwide (see our article here). We would not be surprised to see a similar requirement in any new window. Stations in the reserved band can be located where no interference is caused to any already authorized FM station – so careful engineering analysis is required. Start your planning now as the analysis as to where a new station can be located can be time consuming.
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At its meeting last week, the FCC adopted an order that eliminated its rule that prohibits radio stations in the same service (AM or FM) that have over 50% overlap of their principal community contours (the 70 dBu for FM stations and the 5 mV/m contour for AM stations) from duplicating more than 25 per cent of the total hours in their average programming week. The elimination of the rule for AM stations had been included in the draft order released several weeks ago in anticipation of the meeting (see our article here). In that draft order, FM program duplication was permitted only by a waiver of the rules. In contrast to the draft order, the majority of the Commissioners voted to permit program duplication for both AM and FM stations. The repeal of the rule for FM stations was justified to give flexibility to stations to react to circumstances that might require duplication to keep a station operating – as might happen during the pandemic or following any natural disaster – without needing to wait for the FCC to rule on a waiver request. The FCC anticipates that such duplication will occur only rarely for FM stations, as there is still an economic incentive to program different formats on different stations to maximize revenue. But stations will now have the flexibility to make that decision for themselves. This order will become effective upon its publication in the Federal Register.
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Here are some of the regulatory and legal actions and developments of the last week of significance to broadcasters, with links to where you can go to find more information as to how these actions may affect your operations.
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A $12,000 fine issued to an FM translator operator for operating with a transmitter power output that exceeded its licensed limits was upheld by the FCC’s Enforcement Bureau in a decision released this week. The Commission rejected the licensee’s argument that the Commission should have first given it notice and an opportunity to fix the improper operation before issuing a fine. The FCC noted that licensees, not the FCC, have the obligation to determine if they are operating legally or not. The FCC also rejected an argument that the licensee was only trying to maintain its effective radiated power when its antenna was damaged by a storm when it increased its transmitter power output. But, unlike for full-power stations, the transmitter power output of FM translators is regulated, and to make a change, you need FCC approval. The FCC also rejected attempts to reduce the amount of the fine based on the licensee never having been fined before, an argument rejected based on the licensee’s record that included several other violations that had not resulted in fines.
When we wrote about this case when the FCC’s staff initially issued the fine, we warned translator operators to keep this case in mind when reviewing their operations. With so many new translators coming on the air in the last few years, it is important for operators to remember to limit TPO to what is specified in a license. The power output cannot exceed 105% of what is authorized on the license (See Section 74.1235(e) of the FCC Rules). Full-power non-directional FM stations, on the other hand, can generally change their TPO and transmission line without prior FCC approval as long as the change does not result in changes to authorized ERP (and even some ERP changes are permitted without a construction permit application – see Section 73.1690 for details), with the licensee only having to file an application for license on Form 302 after the changes have been made. But translators need approval to change TPO before it is done. Translators can sometimes be out of sight and out of mind. But licensees are just as responsible for their proper operation as they are for the proper operation of any other station. Given the size of the fine issued in this case, translator operators should be sure that they know the rules and review their operations to make sure that these operations fully comply with all of the FCC’s rules.
Courtesy Broadcast Law Blog
The FCC yesterday acted to resolve the proceeding begun a year ago (see our article here) to eliminate the rule that prevented an FM or TV broadcaster from denying space to a competing broadcaster on a broadcast tower that it controls. As expected, that rule was eliminated by an order to become effective when it is published in the Federal Register (as it adopts no new paperwork requirements, review under the Paperwork Reduction Act which so often delays the effective date of FCC actions is not required). This rule was initially adopted 75 years ago and, in the past, it had been seen as a way to ensure that a broadcaster could not, by withholding access to a unique tower site that the existing broadcaster controlled, foreclose a new competing station from coming on the air.
The FCC justified its abolition of the rule by finding that there are many more towers now available to broadcasters than were available when this rule was first adopted, and most of these new towers are owned by companies that do not own broadcast stations and have no incentive to stop a new broadcast station from leasing space on their facilities. Also, the FCC noted that it is not the lack of access to tower space that limits the ability of potential broadcasters to launch new competitive stations in a market, but instead the lack of available spectrum in any community on which to operate a new FM or TV station.
The rule was always very narrow in scope, and thus had never been successfully used. The rule only prohibited the renewal of the license of a radio or TV station that did not provide access to a unique tower site to a potential competitor. The FCC could never force a broadcaster to provide access to a competitor – it could only wait to the next renewal and decide not to renew a station license if the competitor was denied access. Moreover, the competitor had to prove that the site to which it was denied access was unique – that there was no other suitable site from which the competitor could operate. As there were always arguments that some new tower could be built to accommodate the competitor, or some building might exist where its antenna could be mounted, that uniqueness requirement limited the applicability of the rule.
Many years ago, I represented a new broadcaster who had tried to use that rule to gain access to a tower site that appeared to be the only one from which it could launch its new TV station. While in initial orders the FCC declined to order the licensee to make the site available (as its renewal was pending), the complaint based on this rule did eventually result in the new TV station getting access to the tower. But that was a different time, when there were few towers and many more new entrants to the broadcast industry. Now, when towers have become much more plentiful with the explosion of wireless companies that demand tower space, and so few new broadcast stations, the rule appears to have outlived its usefulness. So, as the FCC noted, no broadcaster supported its retention. Now it is one less rule broadcasters have to remember.
Courtesy Broadcast Law Blog
Almost every broadcaster and other media company uses digital and social media to reach their audiences with content and information that can be presented in ways different than those provided by their traditional platforms. Whether it is simply maintaining a website or streaming audio or video or maintaining a social media presence to reach and interact with their audiences, these alternative platforms pose their own legal issues. These issues can range from the protection of a current brand to concerns over having the rights to exploit content that you obtain from others. You can have concerns over music rights. There has been much litigation over improper uses of photos found on the Internet (see our articles here, here and here). And there are concerns over the rights of social media platforms to use your content in ways that you don’t expect (see my blog articles here and here). Toss in some sponsorship identification issues from the FTC and emerging privacy concerns, and there are plenty of legal issues that you need to consider in exploiting digital platforms. To help highlight the issues, I conducted a webinar for numerous state broadcast associations a few weeks ago, the video of which is available below (note that the sound quality was a little rough at first but improves a few minutes into the discussion). Plenty of legal issues for any media company to consider:
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Here are some of the regulatory and legal developments of the last week of significance to broadcasters – and a look ahead to the FCC’s consideration of two media modernization items in the coming week. Links are also provided for you to find more information on how these actions may affect your operations.
Next week, here is an event that we will be watching:
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While we are approaching the end of summer in this most unusual year, the regulatory dates keep coming, though perhaps a bit slower than at other times of the year. One of the big dates that broadcasters should be looking for is the announcement of the Annual Regulatory Fees that will likely be paid sometime in September. This year, there has been much controversy over those fees, with the FCC proposing that broadcasters’ fees should go up even though the FCC’s budget is flat, while the NAB has argued that they should remain flat or decrease. And many broadcast groups have argued for liberal waivers of the fee requirement in this year of the pandemic when so many stations were hit so hard by the economic downturn. Watch for this decision – likely toward the end of the month.
The license renewal cycle continues in August for both radio and TV. Full-power TV, Class A TV, TV translator and LPTV stations in North Carolina and South Carolina and full-power AM, FM, FM translator, and LPFM radio stations in Illinois and Wisconsin should be putting the finishing touches on their license renewal applications—due to be filed on or before August 3 (the deadline being the 3rd as the 1st of the month is a Saturday). While stations are no longer required to air pre-filing announcements, the requirement to air post-filing announcements remains. Those announcements must begin airing on August 1 and continue through October. See our article about how to prepare for license renewal here.
If they are part of a station employment unit (commonly owned stations serving the same area) with 5 or more full-time employees, commercial and noncommercial full-power TV, Class A TV, LPTV, full-power AM and FM whose license renewal filing date is August 1 in any year are required to upload to their FCC-hosted online public file their Annual EEO Public File Report. This report is to be uploaded on or before August 1 (no carry-over to August 3 as this report is not actually “filed” with the FCC). This report details the station employment unit’s hiring outreach in the preceding year, as well as its supplemental, non-vacancy specific efforts to educate the community about broadcast employment opportunities and to train their staff to assume greater employment responsibilities. Stations with August 3 renewal deadline dates this year (that is, TV stations in North Carolina and South Carolina and full-power radio stations in Illinois, and Wisconsin) must also file a Broadcast Equal Employment Opportunity Program Report (FCC Form 396) even if they have fewer than 5 full-time employees. The license renewal application requires the Form 396 file number, so that form must be filed before finalizing the renewal application. If you’re looking for a refresher on EEO compliance, see the slides from a presentation we did on the topic here.
The FCC will hold its next Open Meeting on August 6. The FCC included two media modernization items on the August agenda that are relevant to broadcast operations. If adopted, the first item would eliminate the radio duplication rule for AM service. Currently, the rule prohibits two commonly-owned (or operated through a Time Brokerage Agreement) radio stations operating in the same service (AM or FM) where 50% of either station’s city-grade contour overlaps the other commonly-controlled station’s contour from duplicating more than 25% of their weekly programming. Eliminating the rule would permit two overlapping AM stations to duplicate up to 100% of their weekly programming. The FCC saw AM duplication as a possible way to preserve economically challenged AM stations, while also allowing AMs that may be allowed to convert to full-time digital operations (if the FCC allows such conversions) to continue to serve audiences that have not yet bought digital receivers. The draft FCC decision would not eliminate the rule for FM service, on the theory that FM does not face the same economic problems as AM, while noting that FM stations that need additional flexibility can apply for a waiver. We wrote in more detail here about what elimination of the rule means for AM broadcasters.
The second media modernization item to be considered would eliminate a seldom-used rule that forced TV and FM licensees to share a unique tower sites with other licensees, if no other comparable site was available in the area. This rule was adopted to prevent a licensee from restricting competition by not allowing other licensees to use a unique tower site. As a party seeking to invoke the rule needed to show that a site was unique, and as the rule could only be invoked to deny the license renewal of the licensee of a station controlling a unique site and blocking its competitive use, the FCC has never found that a licensee violated its provisions. The FCC also points to the increase in the number of antenna sites as a reason for getting rid of the rule. See our brief writeup of this item here.
Comments are due by August 17 and reply comments by August 31 in the Broadcast Internet (ATSC 3.0 datacasting) proceeding. This rulemaking seeks comment on industry’s ideas for Commission’s rule changes needed to speed deployment and adoption of the datacasting capabilities of this NextGen Television transmission standard. See our articles about the declaratory ruling and the rulemaking here and here.
Without another extension past August 31, the sponsorship identification waiver issued by the Media Bureau in April and extended in June will expire. The waiver allowed stations to air PSAs related to the pandemic, using time donated by commercial entities to organizations involved in the pandemic relief effort, without identifying the commercial entities paying for the time. Such sponsorship identification would otherwise be required by the rules as the commercial sponsors paid for the time. As there was fear that some of the commercial sponsors would not want their products associated with the pandemic, the FCC waived the sponsorship identification rules in this limited circumstance. We wrote about the waiver here and here.
Consult your own attorneys and advisors to determine what other important dates may apply to your stations. And stay tuned to our blog for updates and commentary on regulatory developments throughout the month.
Courtesy Broadcast Law Blog