Here are some of the regulatory developments from 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.
Looking ahead to next week, the FCC by Wednesday, April 14 will post an online tutorial to help parties interested in participating in Auction 109, the upcoming auction of 136 FM construction permits and 4 AM construction permits that we wrote about here. The tutorial will provide information about all aspects of the upcoming auction for the opportunity to construct new radio stations. There will also be a way to ask FCC staff questions about the auction. Once posted, the tutorial will be accessible on the “Education” tab of the Auction 109 website at http://www.fcc.gov/auction/109 for on-demand viewing.
Courtesy Broadcast Law Blog
The Commission’s staff this week issued a Public Notice reminding broadcasters that the reimbursement program for those broadcasters displaced by the repacking of the television band after the incentive auction is coming to an end. The FCC reminded broadcasters eligible for reimbursement (including certain FM stations and LPTV licensees – see our article here ) that deadlines to submit invoices for reimbursement will start in six months. By those deadlines, all remaining invoices for reimbursement from the TV Broadcaster Relocation Fund must be submitted to qualify for reimbursement.
While different deadlines apply to different categories of broadcasters eligible for reimbursement, the Commission “strongly encouraged” all broadcasters to submit all remaining invoices and initiate close-out procedures as early as possible. The FCC notes in the Public Notice that payments up to the total amount of each entity’s allocation are available upon processing of documents reflecting reasonably incurred costs. However, the FCC will not be able to make a final allocation up to the full amount of costs incurred until all or virtually all invoices for incurred costs are submitted, or at such time as the FCC can reasonably extrapolate that the total amounts available in the Relocation Fund will be sufficient to meet all of the costs that have to be covered under that program.
The final invoice filing deadlines are:
Look for more details about the process in the FCC’s Public Notice as well as in a prior Public Notice about these deadlines that was released on October 7, 2020. These notices also remind broadcasters that submitting the invoices and receiving the reimbursement is not the end of the line – they must retain documents supporting the claimed expenses for a period ending 10 years after the date they receive their final payments from the Reimbursement Fund – just in case questions come up about the reimbursement claimed. So if you have not made claims for reimbursement for repacking expenses, now is the time to do so.
Courtesy Broadcast Law Blog
The broadcast trade press is full today with the news that NAB CEO Gordon Smith will be stepping back from that position at the end of the year, to be replaced by current COO (and former head of Government Relations) Curtis LeGeyt. As many will remember, Smith took over the organization over a decade ago during a turbulent time for the industry. At the time, TV stations faced increasing calls for other uses of the broadcast spectrum, and radio stations faced a possible performance royalty on their over-the-air broadcasts of sound recordings. Since then, through all sorts of issues, there has been a general consensus in the industry that its leadership was in capable hands and meeting the issues as they arose.
But many issues remain for broadcasters – some of them ones that have never gone away completely. The sound recording performance royalty for over-the-air broadcasting remains an issue, as do other music licensing issues calling for changes to the way that songwriters and composers are compensated, generally calling for higher payments or different compensation systems (see our articles here on the GMR controversy and here on the review of music industry antitrust consent decrees). TV stations, while having gone through the incentive auction giving up significant parts of the TV broadcast spectrum, still face demands by wireless operators and others hungry for more spectrum to provide the many in-demand services necessary to meet the need for faster mobile services (see our articles here on C-Band redeployment and here on requests for a set aside of TV spectrum for unlicensed wireless users). But competition from digital services may well be the biggest current issue facing broadcasters.
Digital services compete directly with broadcasters for both audience and advertising dollars. The FCC’s 2017 changes in the ownership rules upheld by the Supreme Court last week (see our article here) were premised on changes brought about by digital competition. Certainly, the abolition of the newspaper-broadcast cross-ownership restrictions was directly tied to the newspaper industry being fundamentally weakened by digital competition. Forty-five years ago, when the prohibition was initially approved, newspapers had the largest share of the local advertising market. As much of their readership and advertising is gone, many papers are struggling to stay alive. Thus, the newspaper has gone from a competitor whose combination with a broadcaster threatened the competitive balance in a market to one where that combination can be a lifeline to the paper.
The TV rules were also relaxed by the Court’s decision. In light of competition from streaming services and online content, the FCC decided to allow TV owners in small and medium markets to own up to two TV stations, so that those owners can continue to provide the local services and free entertainment for which they have been known. While there have been some calls to revisit those decisions, one can only imagine that the pandemic has accelerated trends toward more reliance on streaming services. Moving away from the modest 2017 relaxation in local TV ownership rules in today’s environment would only set the stage for a weakened TV industry in the future.
Radio too faces these threats (see our articles here and here). As radio audiences are eroded by streaming and podcasting, and over-the-air radios are becoming harder and harder to find in stores and even in homes, one cannot help but see the impact of digital competition on the health of the industry. In 2019 when the FCC took comments on the radio ownership rules, economic studies showed that the big tech companies are now taking more than 50% of local advertising dollars in virtually every market in the country. This has reduced the revenue that formerly supported local media like radio (which has always received the bulk of its advertising sales from local advertising, not national ads). Allowing local radio stations to combine to battle the digital media giants will be another battle that will have to be faced by the NAB in the near term.
Regulation of the online platforms themselves is certainly going to be another issue on which the NAB will have to weigh in. We recently wrote about the proposals for changes to the antitrust laws to allow broadcasters and other traditional media companies to jointly negotiate for fair compensation and other rules of the road with online service providers who distribute their content. The NAB already has endorsed that call. That issue will no doubt be just one of the many issues about digital regulation that will arise. There have been some calls for creating a must-carry/retransmission consent regime for the virtual MVPDs that are now competing with traditional cable and satellite TV providers. And there are a whole host of other proposed regulations on these digital platforms that the NAB will no doubt need to consider (see our article here for a summary of some of these issues).
These big picture items are just some of the many regulatory issues facing broadcasters. There are always tax issues (like advertising sales taxes and ad tax deductibility) that could cause problems for broadcasters. Other advertising issues regularly arise. In the past few months, we have seen more and more calls for limitations on press freedoms and First Amendment protections that should trouble broadcasters. And the FCC is always doing something that could affect broadcasters in some way, requiring industry vigilance.
The broadcaster’s regulatory plate is full. We look forward to seeing Senator Smith at industry events during the remainder of his term to wish him well and thank him for his service. And we extend our congratulations to Curtis LeGeyt and look forward to working with him, as he will now be charged with tackling all of the issues that face the industry in the coming years.
Courtesy Broadcast Law Blog
At the end of last week, the FCC released several orders clarifying the rules for upcoming windows where construction permits for new FM channels will be made available to parties interested in starting new radio stations, and a few AM construction permits will also be auctioned off. The Public Notice released on Thursday for commercial operators set the important filing dates and procedural rules for the July auction of 136 FM permits, as well as 4 AM permits in the St. Louis area that are available after an AM licensee whose license was challenged at renewal time surrendered the licenses for these AM stations (see the list of available channels here). The FCC also issued a Public Notice setting a freeze on changes to other FM stations during the initial filing window, to stabilize the FCC’s database for parties interested in these new FM channels. Also on Thursday, the FCC issued a draft order on the number of applications for which applicants will be able to apply in an upcoming reserved-band FM (channels below 92 on the FM band) filing window for noncommercial educational stations (NCE stations).
First, let’s look at the noncommercial draft order that is expected to be adopted at the FCC’s regular monthly Open Meeting on April 22 unless changes are made between now and then. That order, about which we wrote here, asked whether the FCC should adopt a limit of 10 applications in the upcoming window for new noncommercial FMs or for major changes in existing stations. While there were parties that requested that the limit be higher (particularly in rural areas where the likely demand will not be as great), and other parties expressed a belief that the limit should be lower (particularly as there will be few open channels in larger markets), the draft order suggests that the FCC will stick with the limit of 10 applications. The FCC’s intent in adopting an application cap is to reduce processing backlogs and limit the number of situations where applicants will file applications that are mutually exclusive (i.e. where both cannot be granted without creating prohibited interference), while still allowing applicants to provide new noncommercial services throughout the country. According to the draft order, the 10-application limit used in previous NCE windows still makes sense as a happy medium between the competing desires for expanded or narrower limits.
The dates for this NCE filing window have not yet been announced. Presumably, the filing dates will be set once this order on application limits is finally adopted by the FCC. If you are a nonprofit, educational entity interested in pursuing an application in this window, stay alert for the announcement of the dates for filing applications in this window.
For the commercial FM window, the FCC set the final rules for the auction, and established the other important dates leading up to the auction itself which it to start on July 27. The most important of those dates is the window between 12:00 p.m. Eastern on April 28 through 6:00 p.m. Eastern on May 11 for the filing of “short-form” applications to participate in the auction. If you want to be a bidder in July, you need to file a short-form application in this window. That application will list the channel or channels in which you are interested in bidding, as well as providing information about the applicant including its owners and its other broadcast interests, and whether it has ever defaulted on obligations in past FCC auctions. Other important dates include the following:
|Auction Tutorial Available (via Internet)||by April 14, 2021|
|Short-Form Application (FCC Form 175) Filing Window Opens||April 28, 2021, 12:00 noon Eastern Time (ET)|
|Short-Form Application (FCC Form 175) Filing Deadline||May 11, 2021, 6:00 p.m. ET|
|Upfront Payments (via wire transfer)||June 16, 2021, 6:00 p.m. ET|
|Mock Auction||July 23, 2021|
|Auction Bidding Begins||July 27, 2021|
Interested parties should read the Public Notice setting out the auction rules. Especially if you have not participated in prior auctions, watching the FCC tutorial is also an important step in the preparation for the auction.
FM minor change applications will be frozen from April 28 to May 11 to stabilize the database for parties interested in filing in the window for short-form applications. As applicants in their short-form applications can reserve specific preferred transmitter sites for use on any of these new FM allotments, that freeze is important to assure the FCC that no one files a minor change application that ends up in a technical conflict with one of the auction applications.
If you are interested in starting a new radio station or adding to your existing holdings, this may be your chance no matter whether you are a commercial or noncommercial operator. Pay attention to the rules already adopted for the commercial channels leading up to the July auction, and watch for more details if you are interested in the yet-to-be announced noncommercial filing window.
Courtesy Broadcast Law Blog
Here are some of the regulatory developments of significance to broadcasters from the last week, with links to where you can go to find more information as to how these actions may affect your operations.
Courtesy Broadcast Law Blog
The Copyright Office this week granted a request from the Copyright Royalty Board for more time to decide on the royalties to be paid to SoundExchange for the public performance of sound recordings by webcasters, including broadcasters who simulcast their programming on the Internet. As we wrote in July, the CRB decision on the webcasting royalties for 2021-2025 was initially to be rendered by the end of 2020 to be in place when the prior royalty term concluded at the end of 2020. Because of COVID, the trial to determine the royalties was pushed from March back into August and September, with final arguments not being held until November. Congress in its initial COVID relief bill authorized agencies to extend times to take certain actions – and the Copyright Office in July extended the time for the CRB webcasting decision to April 15. Now, given the delays in the trial, the Copyright Royalty Judges asked for an additional two months – and were granted an extension until June 14.
Once decided, these royalties will be retroactive to January 1, 2021. If the rates go up, as advocated by SoundExchange, webcasters will have to “true up” on their royalties and pay any increases back to the first of the year. If broadcasters and other internet radio operators prevail in their arguments and the rates are lowered, then presumably these services would have credits toward future royalties based on any overpayment made at the old rates since January 1. All companies providing a non-interactive internet music service should be watching for the CRB action to see what obligations they will have not only retroactive to the beginning of the year, but also going forward through the end of 2025, the end of the royalty period now being considered.
Courtesy Broadcast Law Blog
Earlier this month, the FCC proposed changes to its Emergency Alert System (EAS) rules and initiated an inquiry as to whether EAS should be expanded to require streaming services to carry local emergency alerts (see our article here on those proposals). These proposals have now been published in the Federal Register, starting the public comment dates. For broadcasters, the changes proposed in the FCC’s Notice of Proposed Rulemaking include mandatory yearly meetings of State Emergency Communications Committees with certifications to the FCC that these meetings occurred, and more robust reporting of false EAS alerts. The Notice of Inquiry asked many questions about whether streaming services have the technical capability to provide EAS alerts and, if they do, which streaming services should be required to do so. The comments and reply comments on the Notice of Proposed Rulemaking will be due by April 20, 2021 and May 4, 2021, respectively and comments and reply comments on the Notice of Inquiry will be due by May 14, 2021 and June 14, 2021.
Courtesy Broadcast Law Blog
After so much turmoil in the last year, radio stations may be inclined to blow off some steam this year with some big April Fools” Day stunt. But because of the continuing issues with the pandemic and social tensions throughout the country, a prank that may seem funny to some could trigger concerns with others. As we do every year about this time, we need to play our role as attorneys and ruin any fun that you may be planning by repeating our reminder that broadcasters need to be careful with any on-air pranks, jokes or other on-air bits prepared especially for the day. While a little fun is OK, remember that the FCC does have a rule against on-air hoaxes. Issues under this rule can arise at any time, but a broadcaster’s temptation to go over the line is probably highest on April 1.
The FCC’s rule against broadcast hoaxes, Section 73.1217, prevents stations from running any information about a “crime or catastrophe” on the air, if the broadcaster (1) knows the information to be false, (2) it is reasonably foreseeable that the broadcast of the material will cause substantial public harm and (3) public harm is in fact caused. Public harm is defined as “direct and actual damage to property or to the health or safety of the general public, or diversion of law enforcement or other public health and safety authorities from their duties.” If you air a program that fits within this definition and causes a public harm, you should expect to be fined by the FCC.
This rule was adopted in the early 1990s after several incidents that were well-publicized in the broadcast industry, including one case where the on-air personalities at a station falsely claimed that they had been taken hostage, and another case where a station broadcast bulletins reporting that a local trash dump had exploded like a volcano and was spewing burning trash. In both cases, first responders were notified about the non-existent emergencies and emergency teams responded to the fake events after listeners called. Thus, these crucial emergency personnel were temporarily not available to respond to real emergencies. After the publicity from these incidents, the FCC adopted its prohibition against broadcast hoaxes.
And, as we’ve reminded broadcasters before, the FCC hoax rule is not the only reason to be wary about on-air pranks on April 1. Beyond the potential for FCC fines, any station activity that could present the risk of bodily harm to a participant also raises the potential for civil liability. In cases where people are injured because first responders had been responding to the hoaxes instead of to real emergencies, stations could have faced potential liability. If some April Fools’ stunt by a station goes wrong, and someone is injured either because police, fire or paramedics are tied up responding to a false alarm, or if someone is hurt rushing to or from the scene of the non-existent calamity that was reported on a radio station, the victim will be looking for a deep pocket to sue – and broadcasters may become the target. Even a case that doesn’t result in liability can be expensive to defend and subject the station to unwanted negative publicity. So, have fun, but be careful how you do it.
Courtesy Broadcast Law Blog
A few weeks ago, the news was abuzz with the controversy over an Australian law that would make social media companies and even search engines pay for their making available content originating with traditional media outlets. While the controversy was hot, there were articles in many general interest publications asking whether that model could work outside Australia – and perhaps whether such a bill could even be adopted in the US. What has received far less notice in the popular press was a US version of that bill that was recently introduced in Congress to address some of the same issues. The Journalism Competition and Preservation Act of 2021 was not introduced in response to the Australian law, but instead it is an idea that pre-dated the overseas action. Versions of the US bill have been introduced in prior sessions of Congress, though it never before gained much attention. But this year’s version has been introduced in both the House and the Senate, has already been the subject of a Congressional committee hearing, and has gained support (including from the National Association of Broadcasters and even the tech company Microsoft).
The intent of these bills, and other similar legislation considered across the world, is to open a new revenue stream for traditional media outlets which cover local news – outlets that have been hit hard by the online media revolution over the last 25 years. As we have noted in other contexts (see for instance our articles here and here), as huge digital media platforms have developed in this century, these platforms have taken away over half the local advertising revenue in virtually all media markets – revenues that had supported local journalism. The perception is that this has been done without significantly adding to the coverage of local issues and events in these markets. We certainly have seen the economics of the newspaper industry severely impacted, with many if not most newspapers cutting staff and local coverage, and even how often the papers are published. Broadcasting, too, has felt the impact. Many legislators across the globe have come to the conclusion that these digital platforms attract audiences by featuring content created by the traditional media sources that have been so impacted by online operations. To preserve and support original news sources, various ways in which the content creators can be compensated for the use of their works, such as the legislation in the US and Australia, are being explored. We thought it worth looking at proposed legislation in the US and comparing it to the more extensive legislation introduced in Australia, and to highlight some of the issues that may arise in connection with such regulatory proposals.
The US proposal simply provides an antitrust exemption for creators of news content to get together to negotiate collectively with tech companies for the use of that content. The bill, as introduced, does not require that the tech companies reach any collective agreement with media companies, nor does it even require that they negotiate with these companies. Presumably, the legislation envisions that tech companies would have an incentive to do so as the media companies, with an antitrust exemption, could join together and forbid use of their works unless the tech companies negotiated an acceptable agreement. Without an antitrust exemption, media companies would be limited in their ability to jointly negotiate (and potentially boycott) these tech platforms -the very issue raised in the countersuit filed by GMR against the RMLC in connection with the attempts of the radio industry to negotiate reasonable rates with GMR for the use of the musical works that it controls (see our article here).
The bill would extend this protection to collectively negotiate to any print, broadcast or digital news organization that has a professional editorial staff that creates and distributes original news content on at least a weekly basis. The bill applies to any FCC-licensed broadcaster who airs original news and related content. Any other media company would have to meet the requirement that it “provides original news and related content, with the editorial content consisting of not less than 25 percent current news and related content.” There is no definition of “editorial content,” so the effect of this 25% requirement is unclear, but presumably the bill is saying that at least of 25% of the news content must be current news as opposed to some sort of archived, documentary or features that are not covering current events. But that provision does not apply to FCC-licensed broadcasters.
The tech companies that are the target of the negotiations are limited to those very large companies that have over a billion aggregate worldwide active monthly users to all of a company’s services (so, for instance, users of Facebook, Instagram and WhatsApp would be included in the monthly user count). The companies subject to the negotiations also must have a “website or other online service that displays, distributes, or directs users to news articles, works of journalism, or other content on the internet that is generated by third party news content creators.” This would seem to encompass companies like Facebook that display journalistic works on their sites and apps, and to search engines like Google that direct users to such content.
Under the bill, in any such negotiation, news creators would be be entitled to rely on the antitrust exemption only if they are negotiating on more than just the price that they will be paid. They also must be negotiating the terms of the use of their content, including terms that relate to “the quality, accuracy, attribution or branding, and interoperability of news.” The terms reached in any negotiation must be available to all similarly situated news content creators, presumably including those not in the group conducting the negotiations. This would be much like the music licenses offered under antitrust consent decrees by ASCAP and BMI that must be offered to all similarly situated licensees in the same manner.
The Australian legislation, the News Media and Digital Platforms Mandatory Bargaining code, was much more far reaching and contained elements that some US media companies might balk at. The legislation requires that big tech platforms negotiate with media registered media businesses and, if they do not reach an agreement for carriage of the news content, a government panel would determine a reasonable rate for the news used by the online platform. But only media companies registered with the government would be eligible to participate in the negotiations – and that registration requires that the government make certain decisions about the media outlets before they can be registered (or to maintain their registration). The media entity must have revenues of over $150,000, it must have as it primary purpose the creation of news content, it must operate predominantly for the purpose of addressing an Australian audience, and it must meet a “professional standards test” by adhering to certain industry professional guidelines These provisions seem to provide the government with significant discretion to determine the media outlets that could profit from any mandatory bargaining requirement. While such registration is not uncommon in other parts of the world, in the US having the government approve media outlets based on the content that they provide would be a tricky First Amendment issue.
In Australia, attempts to implement the law ran into major problems when Facebook decided to pull all local content from its platform in that country, resulting in some retreat from the mandatory nature of the duty to negotiate. The US bill also is likely a starting point, rather than finished legislation that could be immediately enacted and implemented as written. The premise of the bill – that jointly negotiating media companies would have the ability by joining together to force negotiations from the big tech platforms – is untested. It also presupposes that the media companies could in fact pull their content from the platforms. Existing US Copyright law, such as the Fair Use doctrine, gives companies the right to use content created by others without permission or compensation in certain instances. Indexing sites like Google have often been found to have the right to provide links to content without permission under Fair Use, if the content used in connection with the link is limited to that necessary to identify the content. Perhaps more concerning would be the ability of users to post content on a site like Facebook or Twitter commenting or criticizing the content prepared by a media company without linking to or excepting that content. This also has First Amendment implications – you would not want to have the government enforcing any prohibition on people using an excerpt of a story run by the New York Times, the Wall Street Journal, MSNBC or Fox News in connection with commentary or criticism on that content.
We recently wrote about the desire of government to regulate online media as there is criticism of the impact of big tech from across the political spectrum. The Journalism Competition and Preservation Act of 2021 is but one of the many proposals now pending in Congress – with more proposals sure to follow. These proposals all must be handled carefully, as while regulation may be needed (seemingly even Facebook has been acknowledging that need in a set of its own commercials now running across all media platforms), the regulation can affect core values in our society given the reach that these platforms now have and the role that they have assumed for many of being our modern town square where diverse opinions are expressed. We will be following this bill and writing about other aspects of this debate in future articles.
Courtesy Broadcast Law Blog