Here are some of the regulatory developments of significance to broadcasters from the past week, with links to where you can go to find more information as to how these actions may affect your operations.

• On March 16, the Federal Trade Commission (“FTC”) held an open meeting at which it voted to issue “6(b) orders” to eight social media and video streaming platforms (specifically Meta, Instagram, YouTube, TikTok, Snap, Twitter, Pinterest and Twitch) requesting information on how they monitor and review deceptive advertising on their platforms.  “6(b) orders” are issued pursuant to the FTC’s authority under Section 6(b) of the FTC Act to compel information so that the FTC can investigate businesses and business practices.  The FTC at the same time announced that it will conducting a study of the social media and video streaming platforms’ policies and practices to detect, prevent, and reduce deceptive commercial advertising and online shopping fraud, including the platforms’ maintenance and enforcement of advertising standards; verification and authentication of advertisers; screening for misleading, deceptive, and fraudulent ads; and use of disclosures and other techniques to ensure commercial messages are identifiable as advertising.  The FTC also announced that it would issue a 6(b) order to five business credit reporting agencies (Dun & Bradstreet, Experian Information Solutions, Equifax, Ansonia Credit Data, and Creditsafe USA) requesting information on how they collect and report data about small businesses, and how they market their business credit reporting products.  It will also conduct a study of the credit reporting agencies to bring more transparency to how algorithms and alternative data are utilized in the small business credit reporting market and whether there are disparities that disadvantage small business owners.  Press releases announcing the FTC’s actions are available here and here; models of the 6(b) orders sent by the FTC are available here and here.  
• The Florida Association of Broadcasters this week filed a Petition for Declaratory Ruling asking the FCC to declare that political ads run by committees and organizations which are not a candidate’s official campaign committee, but are “authorized” by the candidate, are not entitled to lowest unit rates.  There has been a dispute over that question in the last few election cycles. The FCC has not yet announced whether it will take comments on this petition.
• As expected, the FCC, at its March 16 open meeting, adopted a Further Notice of Proposed Rulemaking (the full text of which is available here) seeking comment on whether to apply its audio description requirements to the TV markets where those requirements do not already apply (i.e., DMAs 101 through 210). Audio description inserts narrated descriptions of a television program’s key visual elements during natural pauses in the program’s dialogue, for the benefit of individuals who are blind or visually impaired.  The FCC proposes that, if it determines that the costs are reasonable, the phase-in of the requirements will begin with DMAs 101 through 110 on January 1, 2025, and extend to an additional 10 DMAs per year, concluding with DMAs 201 through 210 on January 1, 2035.  Comments and reply comments on the Further Notice will be due 30 and 45 days, respectively, after it is published in the Federal Register.
• As we’ve reported in previous weekly updates, the FCC’s Media Bureau has issued a hearing designation order referring questions about Standard General Broadcasting’s proposed acquisition of the TEGNA broadcast stations to an Administrative Law Judge (ALJ) for an evidentiary hearing.  In response, the parties filed a Motion asking the ALJ to certify this designation to the FCC Commissioners for a determination as to whether the case really should have been designated for hearing.  The ALJ this week denied that Motion.  Because the FCC’s rules do not permit the parties to appeal the ALJ’s ruling, the hearing ordinarily would proceed before the ALJ as scheduled.  The parties have nonetheless responded by filing an Application for Review, asking the Commission to overturn the Media Bureau’s decision to designate the transaction for hearing.  At this time, it is unclear what if any impact this filing will have on the conduct of the hearing.
• The FCC released two Notices of Apparent Liability proposing to impose big fines on two pirate radio operators (the Notices are available here and here).    Using the enforcement tools – particularly the higher fines – authorized by the PIRATE Act passed by Congress in 2020, the FCC proposed a to impose a fine of $2,316,034 on one alleged operator of a pirate radio station in the New York City area, and a fine of $80,000 fine on another operator of a pirate station in Oregon.  As the FCC noted in its press release, this is the first time since the adoption of the PIRATE Act that the FCC has gone beyond the warning phase to issue notices of “forfeitures” (fines) on pirate operators and, in the New York case, use the full force permitted by the law to levy a multimillion dollar fine.  For more details about these cases, see our Broadcast Law Blog article here.
• The Media Bureau denied a broadcaster’s petition for reconsideration asking for reinstatement and an 18-month extension of a construction period for a new FM in Florida.  The decision highlights Section 73.3598(a) of the FCC’s rules, which states that an “eligible entity” buying a construction permit for a new station will be afforded an 18-month period to construct, beginning on the consummation date of its acquisition of the permit.  The effect of that rule, which can extend the length of construction permits that would otherwise expire, had been suspended by a Court of Appeals decision in 2011 when the Court overturned the “eligible entity” definition.  An eligible entity is one that qualifies as a “small business” until Small Business Administration rules.  While the FCC eligible entity definition and its rule on the extension of construction permits was reinstated by the FCC in 2021, because the permit in this case expired in 2014 and that expiration was final before the policy was reinstated, the Commission declined to reinstate the construction permit. 
• Via its “points system” for selecting among mutually exclusive applicants for NCE FM stations filed in the 2021 window for new NCE stations, the FCC’s Media Bureau awarded a construction permit to an applicant for a new station at Bernardsville, New Jersey.  The Bureau did so notwithstanding an informal objection by one of the competing applicants, contending that the winning application should have been dismissed because it did not include a showing demonstrating the applicant’s compliance with the spacing requirements in Section 73.525 of the Commission’s rules to two television stations operating on Channel 6 (Channel 6 being adjacent to the NCE band).  The winning applicant eventually amended its application to include the required showing.  The Bureau ruled that the applicant’s initial failure to include the required showing was a curable defect, and the applicant’s showing demonstrated compliance with the rule.
• The Bureau entered into a Memorandum of Understanding (MOU) with an FM station that acknowledged that it had failed to timely place records in its online public inspection file.  The MOU included a commitment from the station to implement a compliance plan to ensure compliance with its online public inspection file obligations.
• The Bureau proposed to impose a $1,500 fine on a low power television (LPTV) station that without explanation filed its license renewal application six weeks late.  Ordinarily, the FCC’s rules require a $3,000 fine for such a violation.  The Bureau reduced the fine $1,500 in recognition of the fact that LPTV stations only provide a secondary service.
• The Media Bureau proposed to substitute Channel 256A for vacant Channel 288A at Tecopa, California, to accommodate a proposed upgrade of an existing FM station from channel 290C1 to channel 291C at Amargosa Valley, Nevada.  Channel 288A at Tecopa became vacant due to the Bureau’s cancellation of the license of the station that previously occupied that channel and will be available for application in a future FM auction window.
• The Bureau issued a Report and Order granting a noncommercial educational television station’s request that the FCC substitute noncommercial VHF channel 13 for noncommercial VHF channel 3 at Roanoke, Virginia, to address signal quality issues.  For similar reasons, the Bureau substituted UHF channel 35 for VHF channel 11 at Hampton, Virginia.  These decisions recognize the industry consensus that UHF channels, and even high VHF channels, provide better reception of digital television transmissions than do low VHF channels. 
• The Bureau, jointly with the FCC’s Managing Director, issued an Order to Pay or to Show Cause to an AM station that had failed to pay or only partially paid its annual regulatory fees for 2012, 2015, 2016, 2017, 2018, 2019, 2020, and 2021.  The Order directs the station to either provide the Bureau with evidence of full payment in 60 days or risk revocation of its license. While this is an extreme case, it is a reminder that the FCC takes unpaid regulatory fees seriously, and that licensees must ensure that such fees are paid in a timely manner.

Courtesy Broadcast Law Blog

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Courtesy Broadcast Law Blog

Here are some of the regulatory developments of significance to broadcasters from the past week, with links to where you can go to find more information as to how these actions may affect your operations.

• As widely reported, Gigi Sohn has asked President Biden to withdraw her nomination to become the third Democratic FCC Commissioner (her statement to the Washington Post about her withdrawal is available here).  Had it been successful, Sohn’s nomination would have eliminated the 2-2 deadlock between Republicans and Democrats that has existed at the FCC for over two years.  Sohn’s withdrawal came shortly before Sen. Joe Manchin of West Virginia became the first Democrat to formally oppose her confirmation.  As of the date of publication of this article, the White House had not provided any updates regarding potential replacement nominees.  For a further discussion of Sohn’s withdrawal and its implications for broadcast regulation, see the article on our Broadcast Law Blog, here.
• As we reported in our weekly update the week before last, the FCC’s Media Bureau issued a hearing designation order referring to an Administrative Law Judge for an evidentiary hearing questions about the proposed acquisition of the TEGNA broadcast stations by Standard General Broadcasting.  This week brings news that the parties have filed a Motion asking that the Judge certify this designation to the FCC Commissioners for a determination as to whether the case really should have been designated for hearing.  For more details on this matter and the legal issues associated with it, see our Blog article here.
• The FCC issued an Order temporarily staying the March 6, 2023 sunset of the requirement that television station’s that convert to the new ATSC 3.0 transmission standard must maintain their primary broadcast streams in accord with the ATSC A/322 standard, which defines the waveforms that ATSC 3.0 signals must take.  In June 2022, the FCC issued a Third Further Notice of Proposed Rulemaking (Third FNPRM) seeking comment on, among other things, whether to retain the requirement that broadcasters comply with the ATSC A/322 standard and, if so, for how long.  The Order leaves the requirement in place indefinitely (thus maintaining the status quo) until the Third FNPRM is resolved.  In support, the Order notes that virtually all who commented on the Third FNPRM supported at least a temporary extension of the requirement; that it is unclear whether any consumer receive equipment could display 3.0 signals that are noncompliant with A/322; and that there is no information in the record indicating that any party would be harmed by the grant of an interim stay.
• The FCC issued its Application Fee Filing Guide for its Media Bureau.  The Guide, which provides fee amounts and instructions for paying those fees, covers applications filed by, among others, commercial television stations, commercial AM and FM stations, TV translators and LPTV stations, FM translator stations, Class A television stations, and FM booster stations.  The FCC’s Managing Director subsequently issued an Erratum correcting the fees for certain types of AM applications.
• The FCC’s Public Safety and Homeland Security Bureau issued a Public Notice encouraging broadcasters who did not file their Form One in the EAS Test Reporting System (ETRS) by the February 28, 2023 deadline to do so now. The Public Notice also provided information about FCC assistance that is available for applicants who have not yet filed this Form One which provides basic information about EAS participants and the EAS equipment that they use.  As we noted in an article on our Blog, the FCC has made clear that this filing is mandatory for virtually all broadcast stations and suggested that there may be consequences for those who have not filed.  This form is the first of three used to report on the results of Nationwide EAS tests – one of which is expected to be conducted later this year.  If your station has not filed the ETRS Form One yet, you should do so immediately. 
• The FCC’s International Bureau released a Public Notice and a list of the C-Band earth stations that it has found to be “incumbent earth stations” entitled to reimbursement as part of the repurposing of part of this spectrum for wireless uses.  As set out in the Notice, all earth stations continuing to operate in the C-Band are required to register with the International Bureau’s filing system, and any earth stations that are deactivated must also be reported.  If you have C-Band earth stations, review this notice for more details. 
• With the NCAA Basketball Tournaments for both men and women set to start this coming week, we published on our Broadcast Law Blog a two-part article (here and here) about the NCAA’s trademarks, how it protects those marks, and the legal issues that can arise in broadcast advertising and promotions tied to the tournaments. 
• Via its “points system” for selecting among mutually exclusive applicants for NCE FM stations filed in the 2021 window for new NCE stations, the Bureau awarded a construction permit to an applicant for a new station at Baker City, Oregon.  The Bureau did so notwithstanding an informal objection by a third party alleging that the winning application should have been dismissed because its proposed directional antenna radiation pattern varied more than 2 dB per 10 degrees of azimuth in violation of section 73.316(b)(2) of the FCC’s rules.  The winning applicant subsequently amended its application to bring its antenna pattern into compliance with the rules.  The Bureau ruled that the antenna pattern was a curable defect and thus the winning applicant’s amendment was permissible, thus mooting the third party’s objection.  The Bureau also found that the winning applicant remained the winner on points even though its amendment resulted in reduced coverage that rendered it ineligible for a point under the “best technical proposal.”
• The Bureau proposed to substitute Channel 287A for vacant Channel 280A at Peach Springs, Arizona to accommodate a proposed upgrade of an existing FM station from channel 280A to channel 280C2  at Fort Mohave, Arizona.  Channel 280A at Peach Springs became vacant due to the Bureau’s cancellation of the license of the station that previously occupied that channel.
• The Bureau entered into a consent decree with a student-run NCE FM station that filed its license renewal application nearly four months late.  Consistent with the FCC’s policy for treating first-time violations of FCC “paperwork” rules by student-run NCE radio stations more leniently than violations by other stations, the licensee agreed to implement a compliance plan to prevent future untimely renewals, and make a civil penalty payment to the United States Treasury in the amount of $500.

Courtesy Broadcast Law Blog

Yesterday, I wrote about the history of the NCAA’s assembling of the rights to an array of trademarks associated with this month’s basketball tournament.  Today, I will provide some examples of the activities that can bring unwanted NCAA attention to your advertisements or broadcasting of advertising, as well as one more issue that should be considered when considering whether to accept advertising.

Activities that May Result in a Demand Letter from the NCAA

The NCAA acknowledges that media entities can sell advertising that accompanies the entity’s coverage of the NCAA championships.  However, similar to my discussion last  year on the use of Super Bowl trademarks (see here) and my 2018 discussion on the use of Olympics trademarks (see here), unless authorized by the NCAA, any of the following activities may result in a cease and desist demand:

• accepting advertising that refers to the NCAA, the NCAA Basketball Tournament, March Madness, The Big Dance, Final Four, Elite Eight or any other NCAA trademark or logo (The NCAA has posted a list of its trademarks here.)
  • Example:  An ad from a retailer with the headline, “Buy A New Big Screen TV in Time to Watch March Madness.”
  • Presumably, to avoid this issue, some advertisers have used “It’s Tournament Time!”
• local programming that uses any NCAA trademark as part of its name
  • Example:  A locally produced program previewing the tournament called “The Big Dance:  Pick a Winning Bracket.”
• selling the right to sponsor the overall coverage by a broadcaster, website or print publication of the tournament
  • Example:  During the sports segment of the local news, introducing the section of the report on tournament developments as “March Madness, brought to you by .”
• sweepstakes or giveaways that include any NCAA trademark in its name (see here)
  • Example: “The Final Four Giveaway.”
• sweepstakes or giveaways that offer tickets to a tournament game as a prize
  • Example:  even if the sweepstakes name is not a problem, offering game tickets as a prize will raise an objection by the NCAA due to language on the tickets prohibiting their use for such purposes.
• events or parties that use any NCAA trademark to attract guests
  • Example:  a radio station sponsors a happy hour where fans can watch a tournament game, with any NCAA marks that are prominently placed on signage.
• advertising that wishes or congratulates a team, or its coach or players, on success in the tournament
  • Example:  “[Advertiser name] wishes [Name of Coach] and the 2022 [Name of Team] success in the NCAA tournament!”

There is one more common pitfall that is unique to the NCAA Basketball:  tournament brackets used in office pools where participants predict the winners of each game in advance of the tournament.  The NCAA’s position (see here) is that the unauthorized placement of advertising within an NCAA bracket and corporate sponsorship of a tournament bracket is misleading and constitutes an infringement of its intellectual property rights.  Accordingly, it says that any advertising should be outside of the bracket space and should clearly indicate that the advertiser or its goods or services are not sponsored by, approved by or otherwise associated with the NCAA or its championship tournament.

It should be noted that the NCAA also imposes strict rules about the authorized uses of its trademarks.  The NCAA’s Advertising and Promotional Guidelines for authorized use of its marks are posted online (see here).

Again, importantly, none of these restrictions prevents media companies from using any of the marks in providing customary news coverage of or commentary on the tournament.  Just be sure that they are just used to identify the tournament and its stages, and don’t in any way imply that there is an association between the station itself or any sponsor or advertiser who does not have the rights to claim such association and the NCAA.

A Surprising History of “March Madness” (For Those Who May Like Sports Trivia)

The NCAA may not have been the first to license the use of “March Madness.”  Beginning in the early 1990’s, the IHSA licensed it for use by other state high school basketball tournaments and by corporations.

Moreover, the NCAA did not originate the use of “March Madness” to promote its collegiate basketball tournament.  Rather, a CBS broadcaster is credited with first using “March Madness” in 1982 to describe the tournament.  As CBS was licensed by the NCAA to air the tournament, the NCAA apparently claims that as its date of first use.

Finally, the NCAA was not the first to register “March Madness” as a trademark.  That honor went to a company called Intersport, Inc., which used the mark for sports programs it produced and registered the mark in 1989.

So, how did the NCAA get to claim ownership of the March Madness^® trademark?  The short answer is through litigation and negotiations over a period of many years.  Although it has also been able to obtain federal registrations for Final Four^® and Elite Eight,^® it was late to the gate and Sweet Sixteen^® and Sweet 16^® are registered to the Kentucky High School Athletic Association (KHSAA).  (The NCAA, however, has the KHSAA’s consent to register NCAA Sweet Sixteen^® and NCAA Sweet 16^®.)

The Final Score

Having invested so much in its trademarks, the NCAA takes policing its trademark rights very seriously.  Even so, although the NCAA may call “foul!” and send a cease-and-desist letter over the types of activities discussed above, some claims may not be a slam-dunk as there can be arguments to be made on both sides of these issues.

If you are deciding whether or not to pass on accepting advertising incorporating an NCAA trademark or logo or using an NCAA trademark or logo other than in the context of reporting on the tournament, or if you are not certain whether the NCAA (or anyone else) owns a particular word or phrase as a trademark, you should seek an assist.  An experienced trademark attorney can help you make an informed decision about whether you can successfully post a defense against any such charge and assess possible risks.

One Last Advertising Issue:  Endorsements by Individual Student-Athletes

After many years of litigation, in July 2021, the NCAA suspended its policy prohibiting college athletes from profiting from their names, images and likenesses (“NIL”) (or their right of publicity) without losing their eligibility.  However, there is no national set of rules as to what is permissible.  Rather, the right of publicity is governed by state law.  Moreover, colleges and universities still have the right establish some rules or standards.  For example, although student-athletes can now get paid to endorse a commercial product, they are not automatically entitled to use any NCAA or school trademarks.  Thus, a college basketball player may not be authorized to wear their uniform in advertising unless the school has granted permission.  Can the player wear a uniform with the school colors, but no names or logos?  Can the player endorse an alcoholic product?  Answers will vary state by state and school by school, so it will be extremely important to check with experienced counsel before running any advertising that involves college players.

Courtesy Broadcast Law Blog

With Selection Sunday this weekend, the 2023 NCAA Collegiate Basketball Tournament is about to begin.  As faithful readers of this blog know, broadcasters, publishers and other businesses need to be wary about potential claims arising from their use of terms and logos associated with the tournament.

NCAA Trademarks

The NCAA owns the well-known marks March Madness^®, The Big Dance^®, Final Four^®, Women’s Final Four^®, Elite Eight,^® and The Road to the Final Four^® (with and without the word “The”), each of which is a federally registered trademark. The NCAA does not own “Sweet Sixteen” – someone else does – but it does have federal registrations for NCAA Sweet Sixteen^® and NCAA Sweet 16^®.

The NCAA also has federal registrations for some lesser-known marks, including March Mayhem^®, March Is On^®,Midnight Madness^®, Selection Sunday^®, 68 Teams, One Dream^®, And Then There Were Four^® and NCAA Fast Break^®. (It also has a registration for SPRING MADNESS^®in connectionwith its soccer tournaments.)

Some of these marks are used to promote the basketball tournament or the coverage of the tournament, while others are used on merchandise, such as t-shirts.  The NCAA also uses (or licenses) variations on these marks without seeking registration, but it can claim common law rights in those marks, such as March Madness Live, March Madness Music Festival and Final Four Fan Fest.

The NCAA also has pending applications for the marks And Then There Were Eight, And Then There Were 8 and Four It All.  Although there has not yet been any use of these marks, if they are ultimately registered, the NCAA will have priority over anyone using those marks after the filing dates of the applications. In other words, although the NCAA currently does not have any rights in these marks, anyone who chooses to use either mark runs a significant risk of liability down the line.

Although the NCAA may use the federal registration symbol (®) with any of its federally registered marks, it is not obligated to do so.  Thus, it should not be assumed that the lack of the symbol with any particular trademark means that the NCAA is not claiming trademark rights.

The NCAA Aggressively Pursues Unauthorized Use of its Trademarks

The NCAA’s revenue from its annual basketball tournament is the primary source of its annual income.  In 2022, its total revenue was $1.14 B and 85-90% of that came from the men’s tournament.  Although this figure is marginally less than the revenue for 2021, historically, with the exception of 2020 when the tournament had to be cancelled, its revenues have grown each year.

For 2023, the licensing of television rights in the Division I Men’s Basketball Tournament will result in $870M in revenue for the NCAA.  Although most of the NCAA’s tournament-related income is directly related to the games, it also has a substantial amount of revenue from licensing March Madness^® and its other marks for use by advertisers.  As part of those licenses, the NCAA agrees to stop non-authorized parties from using any of the marks.  Indeed, if the NCAA did not actively police the use of its marks by unauthorized companies, advertisers might not feel the need to get a license or, at least, to pay as much as they do for the license.  Thus, the NCAA has a strong incentive to put on a full court press to prevent non-licensees from associating their goods and services with the NCAA tournament through unauthorized use of its trademarks.  The NCAA’s current statement regarding its Trademark Protection Program can be viewed here.

Accordingly, the NCAA is very serious about taking action against anyone who may try to trade off the goodwill in its marks — even if the NCAA’s actual marks are not used.  For example:

• In 2017, the NCAA filed a trademark infringement action against a company that ran online sports-themed promotions and sweepstakes under the marks “April Madness” and “Final 3.”  The defendant stipulated to an order providing that it would cease using those marks at least until the end of the year, but the order did not provide for dismissal of the case.  The defendant failed to file an answer to the complaint and the NCAA was granted a default judgment, after which it filed a motion requesting an award of attorneys’ fees against the defendant in the amount of $242,213.55.  In May 2018, the Court found the infringement to be willful and awarded attorneys’ fees in the amount of $220,998.05.
• The NCAA sued a car dealership that had registered and was using the mark “Markdown Madness” in advertising. (The case was settled.)
• Even schools that are part of the NCAA are not immune from claims of infringement.  Seven years after the Big Ten Conference started using the mark “March Is On!,” the NCAA opposed an application to have that mark federally registered. (Ultimately, the opposition was withdrawn, the mark was registered, but the registration was assigned to the NCAA.)
• Just in the last twelve months, the NCAA has opposed or obtained extensions of time to oppose applications to register the following marks:
  • STREET MADNESS (automobile shows and car meets)
  • MARCH GREATNESS (charitable fundraising)
  • MAD MARCH (advertising, marketing and promotional services)
  • FINAL FRIDAY (bathrobes, masquerade costumes and various items of clothing, including sports jerseys)
  • MAD IQ BASKETBALL BOARD GAME (board games and online games – this proceeding was resolved when the applicant agreed to exclude games relating to collegiate basketball tournaments)
• In addition, the NCAA currently has an extension of time to oppose an application to register MARSH MANIA (for seeds used to attract wildlife.

It should be noted that, before these marks were published for opposition, Trademark Attorneys at the PTO concluded that each of these marks was not confusingly similar to any registered marks.

These actions illustrate the level of importance that the NCAA places on acting against the use or registration of trademarks which it views as being likely to create an association with its annual Collegiate Basketball Tournament.  Clearly, such activities carry great risks.

Tomorrow, I will provide some specific examples of actions built around the tournament that could attract the unwanted attention of the NCAA and one more issue to be considered in advertising or accepting advertising relating to the games.

Courtesy Broadcast Law Blog

Yesterday’s big news across the broadcast press was that Gigi Sohn, who had for well over a year been the nominee of the Biden administration to fill the open seat at the FCC, withdrew her name from consideration.  This may have been in reaction to circulated stories that there were several Democratic Senators who still were not committed to vote for her nomination without whose support she could not have been confirmed.  Until the Biden administration can make another nomination and have that nominee go through the confirmation process in the Senate, the FCC will continue to have two Democratic Commissioners and two Republican ones, potentially stalling action on some rulemaking matters where there is a partisan split on the pending issue.  We wrote in January in our look at the issues pending before the FCC about some of the issues that the FCC could face in 2023.  In light of the seeming extension of the partisan divide on the FCC, we thought that we would again highlight some of the issues likely to be affected by the current state of the Commission. 

But it is first worth noting that, merely because there is a partisan split among the Commissioners, this does not mean that nothing of significance will happen at the FCC.  As we wrote yesterday, the TEGNA merger was designated for hearing, potentially leading to its demise.  This was done not by an action of the Commissioners, but instead by its Media Bureau.  Interpretations of FCC authority in specific cases by the Media Bureau, the Enforcement Bureau or other lower-level bureaus and offices within the Commission can be just as impactful on any specific company as are the big policy decisions made by the Commissioners themselves.  Just as the TEGNA designation could have significant ramifications for broadcast dealmaking if its conclusions are taken to their logical ends, Bureau-level decisions can set day-to-day policy on many issues if the Commission itself cannot make broader decisions through their rulemaking process.

Changes to the FCC ownership rules may be one casualty of a deadlocked FCC.  On the same day that the TEGNA decision was released, comments were due on the 2022 Quadrennial Review FCC’s ownership rules, a review initiated as the partisan deadlock on the Commission apparently prevented the FCC making any decisions in its 2018 Quadrennial Review (see our article here on the initiation of the 2022 Review).  The comments filed Friday are little different from those filed when the Commission asked in 2021 for a refreshing of the record in the 2018 Quadrennial Review, after the Supreme Court decision upheld the Commission’s 2017 abolition of the TV-Newspaper cross-ownership rule and relaxed certain TV ownership rules (see our article here).  Many public interest groups opposed any further relaxation of the ownership rules, some radio companies opposed relaxation of the radio rules except for AM station subcaps, fearing that relaxation of the FM rules would take all investment away from AM. In addition, the NAB and other broadcast companies have argued that today’s media marketplace requires substantial relaxation in the ownership rules.  With these diverse comments, and the partisan-deadlocked FCC, don’t expect quick resolution of any Quadrennial Review.  Instead, it appears that any action that does occur on broadcast dealmaking will be through decisions like last week’s TEGNA designation.

EEO reform seems to be another area where there are partisan differences, with some favoring a more numbers-oriented enforcement and monitoring regime, and others looking more broadly at questions of unfairness and actual hiring bias and discrimination, and at affirmative actions (like the tax certificate) to economically incentivize new entrants into broadcasting.  While there are EEO proposals pending at the FCC (including the possible revival of the Form 395B annual report which would disclose race, ethnicity, and gender information for broadcast employees, and another proceeding to more broadly look at EEO enforcement), the partisan divide on the Commission may well leave EEO enforcement issues to the Commission’s staff.

There does seem to be more bipartisan cooperation on issues like emergency communications, disabilities-related accessibility, and even rules for the disclosure of information about foreign government sponsored programming, so expect continued Commission actions in these areas.  Also watch for action on issues that appear more non-partisan, like reform of the process for allocating the burdens of annual regulatory fees.  Where issues about the ATSC 3.0 rollout for television fall are a little harder to discern – but there may be some action there soon as the FCC just issued a temporary stay of the expiration of the requirement that stations converting to ATSC 3.0 maintain a substantially similar program stream in the old ATSC 1.0 transmission format. An FCC decision is now circulating among Commissioners that would apparently address this issue and other matters related to the transition. 

Regulatory activity at the FCC will go on – such as considering routine actions in the normal course, putting the resolution of some high-profile partisan issues on hold, and considering other issues through novel means like those employed in connection with the TEGNA deal.  No matter what the make-up of the FCC, there seems to be no lack of regulatory issues for broadcasters and other media companies to consider. 

Courtesy Broadcast Law Blog

Last week, broadcasters and broadcast journalists were abuzz with discussions of the FCC’s Media Bureau issuing a hearing designation order referring to an Administrative Law Judge questions about the proposed acquisition of the TEGNA broadcast stations by Standard General Broadcasting.  This week brings news that the parties have filed a Motion asking that the Judge certify this designation to the FCC Commissioners to determine whether the case really should have been designated for hearing.  The request that the case be referred to the Commissioners notes that the designation would have the effect of terminating the transaction, as the contract provides the parties only until May to close, and the buyer cannot get the agreement extended.  With so many questions about the TEGNA deal and its designation for hearing, we thought that we would review the hearing designation process and look at the inherent delays in the process which led to the parties’ contention that the designation, if not reviewed by the Commission, will effectively kill the deal.  In a subsequent article, we will look at some of the substantive issues raised by the hearing designation order.

Five years ago, we wrote about the hearing designation process in connection with the last major case where a proposed broadcast transaction was designated for hearing, i.e., Sinclair Broadcast Group’s proposed acquisition of the television stations owned by Tribune Media.  The TEGNA case differs from the Sinclair case in one significant manner, namely that the hearing designation order in the TEGNA case was issued by the Chief of the FCC’s Media Bureau, not by the Commissioners themselves.  In the Sinclair case, the Commissioners issued the hearing designation order, meaning there was no opportunity to ask for the review now being sought by the parties to the TEGNA deal.  When a designation order is issued by a Bureau, the party whose application was designated for hearing can, as in the TEGNA case, ask the presiding Administrative Law Judge to certify the case to the Commissioners before starting the hearing process, if there are questions of law that suggest that the case should not have been set for hearing.  While the Judge can decide to seek the guidance of the full Commission through this kind of certification, the full Commission need not take up the case even if the Judge decides to certify it to them.  Instead, the Commissioners can decide that the hearing should move forward, and that the legal issues can be considered later after the full hearing has taken place.  While that is the procedure set out in the FCC’s rules,  the TEGNA parties argue that were the Judge to certify the case and the Commission did take action, then they intend to directly appeal the matter to the Courts for review (which is normally not allowed until a decision is reached by the ALJ) because the designation for hearing by itself, issued after the application was pending for a year, equates to a the denial of the application.  What in the process for a case once designated for hearing that leads to that conclusion?  Let’s look at the process of setting a case for hearing.

Several decades ago, the process of designating an application for hearing was a common occurrence, often used by the FCC to decide between competing applicants for new broadcast (and in some cases non-broadcast) licenses, or in connection with decisions as  to grant the license renewal of broadcast stations where substantive petitions or competing applications were filed against such applications, or to deal with enforcement issues when there were questions about the facts of a particular case.  The FCC had a large staff of Administrative Law Judges who heard these cases, and they were usually quite busy.  But as the comparative hearing process for new stations morphed into the current process of awarding new stations through auctions, and after the FCC’s rules were changed to eliminate competing applicants to renewal applications, hearings dwindled.  As a result, the staff of ALJs at the FCC shrunk to just one.  Administrative hearings at the FCC are now rare, so the process that an FCC hearing would follow may not be widely understood. 

Congress established, in Sections 309 and 310(d) of the Communications Act, the way in which the FCC must process applications.  In cases involving applications for new stations or for the purchase and sale of stations, applications are filed providing information required by the FCC and such supplemental information as the FCC may request.  Interested parties routinely have 30 days in which to petitions objecting to applications, and those petitions must include detailed allegations supported by facts either in the public record or otherwise supported by statements from those with personal knowledge, arguing why an application should not be granted.  Applicants then are afforded the opportunity to respond to any allegations raised.  In most cases, the FCC will attempt to resolve any disputes, or any questions that it has on its own, on the basis of the written materials presented in the application, the petitions, and in response to any FCC supplemental request for information. 

In evaluating whether to approve an application to acquire a station, the FCC, under Section 310(d) of the Communications Act, must determine whether the public interest will be served by a grant of the application.  However, that same section makes clear that the FCC “may not consider whether the public interest, convenience, and necessity might be served by the transfer, assignment, or disposal of the permit or license to a person other than the proposed transferee or assignee.”  Thus, the FCC must evaluate the applicant before it to decide if they have the basic qualifications to acquire the station, and the FCC cannot deny the application based on a belief that there might be some better qualified applicant to acquire the station.  This obviously provides some comfort to the deal marketplace, as it provides assurance that, the FCC will grant the application if the buyer is qualified, even if there was some unsuccessful bidder who might believe that they would better be able to run the station in question.  In the TEGNA case, the parties argue that this policy has been violated because no disqualifying issue about the potential buyer has been raised.  We will look at the issues raised in a subsequent article.

At the same time, Section 309(e) makes clear that, if there is a “substantial and material question of fact” or if the Commission is otherwise not able to determine that an application meets the requirements of the rules, it can formally designate the application for hearing.  More specifically, where there are questions of fact raised about the qualifications of the prospective applicant, and those factual issues cannot be resolved based on the pleadings filed in connection with the application and any objection, the FCC can issue what is called a Hearing Designation Order to send the application to an Administrative Law judge to hold an evidentiary hearing to try to resolve the factual issues.  That Order recites the facts of the case and discusses the problems that the FCC has with the application.  It sets out a specific list of “issues” that the Judge is to consider in the hearing process.  In its request that the full Commission review the designation order, the TEGNA parties have argued that there really is no material question of fact, as every document related to the transaction has been produced to the FCC, and as the parties have made promises that they believe resolve all issues that the FCC raises. 

But if a hearing goes forward, the process by which the ALJ conducts the hearing is set out in the Communications Act and by FCC rules.  Usually, the FCC will have its own attorneys participate in the case, conducting discovery (e.g., document production, depositions, interrogatories) as in any other court case, trying to get to the bottom of the specific issues presented.  Other “parties in interest” in the case, usually including those who filed formal petitions to deny, will also have an opportunity to participate as parties.  The FCC process allows parties to file requests to “enlarge the issues,” urging consideration of issues beyond those designated by the FCC.  As in the petition to deny process, specific facts to support any additional issues must be provided, and the judge needs to conclude that the request raises a substantial matter that merits the addition of new issues besides those already designated by the FCC.

Also, before any actual trial-type hearing, parties can also ask for summary decision to resolve some or all of the issues presented based on the facts in the record or produced through discovery.  If the issues are not resolved in that manner, the ALJ will routinely conduct an actual trial-type hearing, with the Judge in a robe, witnesses being called to testify under oath as recorded by a court reporter, and cross-examination by attorneys for the other side.  After the hearing, the parties typically file “findings and conclusions” – legal briefs summarizing the facts brought out at hearing and citing the legal precedent that should be applied to those facts. 

In most cases that are designated for hearing, the Judge, after considering the facts, will evaluate the record of the hearing and the written arguments before rendering a decision in writing.  Usually, the Judge’s decision can be appealed to the full Commission.  But the TEGNA case does not follow the usual model.  Most of the time, the Hearing Designation Order will include a final “issue” that is designated for hearing – one asking the Judge to determine, based on her findings of fact, whether the application that has been designated should be granted.  In the TEGNA case, there is no such ultimate issue for the Judge to decide.  Instead, the Order simply asks the Judge to make the findings of fact and return the case to the Media Bureau to decide what additional steps should be taken based on the Judge’s findings. 

As in any civil litigation, these cases can be lengthy, with discovery and other procedural wrangling taking months to play out.  Those delays are one of the reasons that the FCC has tried wherever possible to avoid actual hearings – even in some cases resorting to “paper hearings” to try to adduce the facts necessary to deal with an application (see, for instance our articles here and here about cases where the FCC ordered a paper hearing as to whether stations that had been off the air for substantial periods of time during a license term were entitled to a renewal of license).  It is common for contracts for the acquisition of broadcast stations to contain a right to terminate the agreement by either party if there is a designation for hearing, given the delays and costs inherent in such a hearing. 

The process is a relatively straightforward one, but one that is time-consuming, leading to the TEGNA parties’ contention that the designation order effectively kills the deal.  We will see how that process plays out if the Judge grants the request to refer the case for consideration by the full Commission, or if the parties seek other extraordinary relief in this most unusual case.

Courtesy Broadcast Law Blog

Here are some of the regulatory developments of significance to broadcasters from the past week, with links to where you can go to find more information as to how these actions may affect your operations.

• FCC Commissioner Simington issued a statement supporting a recent letter from former FEMA leaders to the Department of Transportation highlighting AM radio’s importance for public safety.  The letter was to address the concern about AM radios being left out of electric cars.  He said that the issue “deserves urgent attention”; that “as adoption of electric vehicles increases, we must not leave behind those in rural areas who depend upon radio for their news and alerts”; and that the FCC must “be good stewards of the AM radio band” by “safeguarding reception of AM radio from arrogation by incidental and unintentional radiation.”
• The FCC’s Media Bureau proposed to assess a fine of $3,000 against the licensee of a full power television station that, without explanation, filed its license renewal application five weeks late ($3,000 is the base fine in the FCC’s rules for an untimely renewal application).  At the same time, the Bureau proposed to assess a fines of $1,500 against each of two low power television stations, in one case for filing the license renewal applications nearly four months late (two days before the license expiration date), and over six weeks late in the other case. In both cases, the Bureau reduced the proposed fine to $1,500 from the $3000 base fine because the stations were LPTV stations and thus only provided a secondary service.
  • The Bureau also entered into a Consent Decree with an AM station to resolve the station’s admitted failure to timely file its renewal application (the licensee filed five months late) and timely upload any issues and program lists to its online public inspection file.  The Bureau did not impose a fine, citing difficult economic circumstances within the radio industry generally and the illness and death of the station’s sole owner.  Instead, the Bureau mandated that the licensee implement a compliance plan to ensure the station’s compliance with the FCC’s rules pertaining to filing deadlines and the online public inspection file.
• The Bureau proposed to fine an LPTV station $3,500 for its failure to file an application for a “license to cover” its construction permit until over a year after its displacement construction permit had expired and almost nine months after commencing operations.  As we’ve noted before, upon completion of the construction of new technical facilities authorized by a construction permit, a station must file a license application specifying details of the facilities that were built and certifying that those facilities align with those authorized by the construction permit.  The station also had engaged in unauthorized operation on two separate occasions for a cumulative period of approximately 14 months for operations after the construction permit expired and before the license application was filed.  The Bureau rejected the licensee’s claim that its violations were due to “administrative oversight.”  The base forfeiture in the FCC’s rules for the licensee’s violations was $10,000, but the Bureau reduced the proposed fine to $3,500, citing the fact that, as an LPTV facility, the station only provided a secondary service.
• The Bureau continues to substitute UHF channels for VHF channels in local markets to improve reception of over-the-air television channels, recognizing the preference for UHF channels for digital operations, the most recent examples being its proposed substitution of channel 17 for channel 9 at Kalispell, Montana; its substitution of channel 31 for channel 7 at Odessa, Texas; its substitution of channel 24 for channel 9 at Lufkin, Texas; and its proposed substitution of channel 20 for channel 10 at Elko, Nevada.
  • In another allocations decision, the Bureau issued a Report and Order amending the FM Table of Allotments (section 73.202(b) of the FCC’s rules) by allotting a new FM channel, Channel 233C, at Ralston, Wyoming as its first local service.  Ralston is listed in the 2020 U.S. Census as a census-designated place having a population of 240 persons, although the Bureau also noted that Ralston has its own post office, zip code, and a variety of local and area businesses and event venues.  This channel will be available for application in a future window for filing applications to be considered in an auction for new FM stations. 
• Via its “points system” for selecting among mutually exclusive applicants for NCE FM stations filed in the 2021 window for new NCE stations, the Bureau awarded a construction permit to an applicant for a new station at Willows, California.  The Bureau did so notwithstanding a petition to deny filed by one of the other mutually exclusive applicants, which alleged that the winning applicant’s application should have been denied for reasons including diversity of ownership; whether the winning applicant was an “established local applicant”; public inspection file and local public notice requirements; and violation of the FCC’s technical rules. The Bureau conducted a factual analysis of the claims of the petitioner as to the localism of the application and found them to not be sufficiently supported by the facts, and it found the technical and application preparation issues to be insubstantial, not justifying the denial of the application.

Courtesy Broadcast Law Blog

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Courtesy Broadcast Law Blog

Here are some of the regulatory developments of significance to broadcasters from the past week, with links to where you can go to find more information as to how these actions may affect your operations.

• The FCC’s Media Bureau designated for evidentiary hearing a series of applications that, if granted, would transfer control of TEGNA Inc. to SGCI Holdings III LLC.  TEGNA is the parent company of the licensees of 64 full-power television stations, two full-power radio stations, and other related Commission licenses.  In its Hearing Designation Order, the Bureau directs an FCC Administrative Law Judge to resolve questions regarding (i) whether the transactions are likely to trigger a cable or satellite rate increase harmful to consumers because of increases in retransmission consent fees, and (ii) whether the transactions will reduce or impair localism, including whether they will result in fewer employees and less local content at the stations.  In a news release, FCC Chairwoman Rosenworcel stated that “[t]he additional review will allow us to make a more informed assessment on whether proposed safeguards [related to the transactions] are sufficient to protect the public interest, and we will take the time needed to address these critical questions.”  From the Republican side, Commissioners Carr and Simington issued a joint statement that was less enthusiastic: “[T]he FCC should be working to encourage more of the investment necessary for . . . local broadcasters to innovate and thrive. . .  After a protracted, nearly yearlong review, the Commission should be providing the parties with a decision on the merits—not an uncertain future.”
• The FCC released a draft Further Notice of Proposed Rulemaking (“FNPRM”) that, if adopted as scheduled at the FCC’s March 16 open meeting, would formally propose to extend the FCC’s existing audio description requirements for broadcast television to DMAs below the top 100 (i.e., DMAs 101-210).  Audio description makes video programming more accessible to individuals who are blind or visually impaired by inserting, using a secondary audio stream, narrated descriptions of a television program’s key visual elements during natural pauses in the program’s dialogue. Audio description is already required in DMAs 1 through 90, and these requirements will go into effect in DMAs 91 through 100 on January 1, 2024.  In these markets, “Big Four” stations (ABC, NBC, CBS, and Fox) are required to provide 50 hours of audio description per calendar quarter, either during prime time or in children’s programming, and 37.5 additional hours of audio description per calendar quarter between 6 a.m. and 11:59 p.m. local time.  The FCC proposes to extend these requirements to DMAs 101-210 by phasing in 10 DMAs per year starting on January 1, 2025, meaning that the bottom 10 DMAs would not be phased in until January 1, 2035.  The draft FNPRM asks for comment on, among other things, the cost implications of imposing audio description requirements on stations in DMAs below the top 100; the appropriate compliance deadlines for those stations; how the FCC’s proposals may affect advances in diversity, equity, inclusion, and accessibility; and the FCC’s legal authority to extend the audio description rules as proposed.  If adopted, comments and reply comments on the FNPRM will be due 30 days and 45 days, respectively, after its publication in the Federal Register.
• The FCC recently released a new 2023 version of the EAS Operating Handbook.  A copy of the Handbook must be located at normal duty positions of station operators or at the location of EAS equipment where it can be immediately available to staff responsible for authenticating messages and initiating actions. The handbook provides duty operators information about what to do when EAS alerts (tests or real activations of the system) are received by the station.  The new handbook updates the old handbook in a limited fashion, but it also provides stations an opportunity to update their own practices as the Handbook requires that the broadcaster provide information in spaces provided as to the broadcaster’s specific equipment and procedures at their stations.  Stations should download this Handbook and make sure that it is available as required.
  • Stations are reminded that the deadline for filing EAS Test Reporting System (ETRS) Form One is February 28, 2023.  Filing instructions are provided in the Public Notice issued by the FCC earlier this year.  All EAS Participants – including Low Power FM stations (LPFM), Class D non-commercial educational FM stations, and EAS Participants that are silent pursuant to a grant of Special Temporary Authority – are required to register and file in ETRS, with limited exceptions.  See our recent Broadcast Law Blog article for more information. 
• The Media Bureau entered into a Consent Decree with the licensee of a noncommercial low power FM (LPFM) station to resolve the licensee’s admitted failure to comply with Section 73.850(d) of the FCC’s rules, which requires a station to notify the FCC within ten days that it has gone silent and request special temporary authority (STA) to remain silent for more than 30 days.  The licensee admitted that the station had discontinued operations for 61 days (from May 26, 2021, to July 25, 2021), that it failed to comply with the 10-day notice rule, and that it failed to request an STA after 30 days of silence.  The licensee also inaccurately certified in its renewal application that it had complied with Section 73.850(d), thus violating the FCC’s rule prohibiting inaccurate certifications.  The Bureau directed the licensee to pay a civil penalty of $500 to the U.S. Treasury and to adopt a compliance plan to ensure future compliance with the rules that it violated.  The Bureau also rejected a third-party objector’s claims relating to the station’s ownership, the station’s alleged unauthorized operation as a translator for another LPFM station, the station’s alleged airing of commercial advertising, and the station’s alleged failure to air local programming, finding that the objection did not provide specific allegations sufficient to support the claims made.
• The Bureau proposed to assess a fine of $13,500 against the licensee of nine digital television translator applications (i.e., $1,500 per station) because the licensee had without explanation filed the renewal applications for the stations over two months late.  The Bureau noted that the base fine under the FCC’s rules for this type of violation is $3,000, but that it was reducing it to $1,500 because the stations provide a secondary service and were providing important “fill-in” service to areas that otherwise may be unable to receive over-the-air television signals.
• The Bureau continues to substitute UHF channels for VHF channels in local markets to improve reception of over-the-air television channels, the most recent example being its substitution of channel 27 for channel 11 at Yuma, Arizona.

Courtesy Broadcast Law Blog