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.

• The four television network affiliates groups have asked the FCC to clarify its new rules for sponsorship identification of programming paid for or produced by foreign governments or their representatives. The new rules require broadcasters to inquire of any party purchasing program time as to whether they are representatives of foreign governments, and to confirm the response by searching a database maintained by the Department of Justice of companies that are representatives of a foreign government.  The FCC provided an exception to the requirements of the enhanced sponsorship identification and the investigation into the foreign connections of the programming buyer for “traditional short-form advertising.”  The affiliate groups want the FCC to clarify that the new rules do not apply to advertising regardless of its length.  (Affiliate Groups Petition).  These rules are also being reviewed under the Paperwork Reduction Act, and a Federal Register publication this week sets a September 20 deadline for interested parties to file comments on the information collection requirements imposed by these rules.  (Federal Register)
• The FCC released a Public Notice this week with more information on how to apply for new reserved-band noncommercial educational FM stations during the November 2-9 filing window. Applicants may file or hold attributable interests in up to ten applications.  Other requirements set out by the Media Bureau include that applicants must certify that (1) they are an entity qualified to hold a noncommercial educational FM license (nonprofit educational institution, governmental entity, or nonprofit educational organization); (2) the entity has the financial ability to build the new station and run it for at least three months; and (3) the entity has reasonable assurance that its specified transmitter site will be available for the construction and operation of the proposed station.  The FCC also will impose a freeze on certain FM minor change applications from October 5 through November 9 to stabilize the FM database while potential applicants prepare their applications.  (Public Notice)
• President Biden has nominated Jonathan Kanter to be chief of the Department of Justice’s antitrust division. The division examines transactions and mergers that could affect competition in the marketplace.  The antitrust division has in the past provided opinions as to what competitors are part of the broadcast marketplace (thus far not fully acknowledging that digital media is in the same competitive market as broadcasters leading to challenges to some broadcast mergers).  It also oversees the long-standing ASCAP and BMI consent decrees that have been reviewed by the last two administrations.  (White House Nomination)
• In a slight change from what was previously published in the Federal Register, the FCC’s Public Safety and Homeland Security Bureau released a Public Notice indicating that the deadline for filing State EAS Plans and for complying with the content requirements for the plans is now July 5, 2022, not July 1, 2022. The content requirements can be found in the FCC’s rules, here.  (Public Notice)

A review of certain FCC’s EEO policies has been removed after five months from the list of items being considered by FCC Commissioners.  This may mean that the item has been adopted by a majority of the Commissioners and will be released within the next few days.  Watch the FCC website for more on the contents of the item.

Courtesy Broadcast Law Blog

Last week, it was announced that the FCC would be considering some changes to its political broadcasting rules at its monthly open meeting in August.  In some quarters (see, for example, this article), that raised concern that significant changes were coming in time for the 2022 Congressional elections.  But, when the draft of the proposed changes was released last week, it turned out that the changes were instead very minor – almost ministerial.  The proposed rule changes revise the Commission’s rules on two matters that are already part of the practices of stations and the lawyers who advise them on political broadcasting matters.  Two changes are being proposed – one dealing with the showing that needs to be made by a write-in candidate to show that the candidate is “legally qualified” and entitled to take advantage of the FCC’s political broadcasting rules, and the second being just a rule change to conform FCC rules to statutory requirements that broadcasters include, in their online public files, information about the sale of advertising time to non-candidate buyers who convey a message on a matter of national importance, i.e., a federal issue ad.

The first proposal would add use of social media and creation of a campaign website to the factors specified in the rules as factors to consider when determining if a write-in candidate has made a “substantial showing” of a bona fide campaign for office so that they can be considered a “legally qualified candidate.”   Legally qualified candidates, even write-ins who have made this substantial showing, are entitled to all the protections of the Commission’s political rules, including equal opportunities, lowest unit rates and, for candidates for federal office, reasonable access to buy advertising time on commercial broadcast stations.  Looking at the online activities of an alleged candidate has already been part of the evaluation of whether write-in candidates have made a substantial showing of a “bona fide candidacy” – one demonstrating that the write-in candidate was conducting a serious campaign for office entitling them to the protections of the political rules.  Just saying that you are a write-in candidate is not enough to qualify for protections under the FCC rules – a write-in candidate must also show that he or she is really conducting a serious campaign for office (see our article here).  The facts set forth in that showing determine how serious the campaign is.  Since the FCC’s list of activities in its rules is illustrative and not exhaustive, and since online activities are indicative of how serious a candidate is, stations were already reviewing online activities when assessing substantial showings.  The FCC’s proposal would just make sure that what is already being done is spelled out in the rules.

The second proposal would update the political file recordkeeping rules to require that stations upload to their political files any request for advertising time that “communicates a message relating to any political matter of national importance” (i.e., federal issue ads).  This requirement was imposed by the Bipartisan Campaign Reform Act almost 20 years ago but was never carried over into the FCC rules.   The FCC has enforced these requirements, as evidenced by the FCC actions last year as to the public file obligations of stations for ads dealing with political issues of national importance, including FCC guidance issued in the form of admonishments to a number of TV broadcasters.  See our article here on the FCC’s admonitions, our articles here and here on some of the follow-on controversy, and our article here about the FCC’s limited reconsideration decision.  But, even after all of that litigation last year, there is still some confusion among some broadcasters as to what the law requires.  Perhaps updating the FCC’s rules to make the public file obligations clear will serve as a reminder to broadcasters of their obligations.

Watch for these matters to be considered at the Commission’s regular monthly open meeting to be held on August 5.  The FCC will simply be adopting a Notice of Proposed Rulemaking looking to adopt these rules.  If the Commission as expected moves forward with its proposal, comments on the Notice of Proposed Rulemaking will be due after its publication in the Federal Register.

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.

• The FCC’s Video Division of its Media Bureau has begun to release decisions on TV license renewal applications filed in the renewal windows beginning last June that have been held up for public file deficiencies. For the first time since the pandemic started, proposed fines were announced for untimely uploads of documents to an online public file.  The Video Division proposed fines of $9000 to two noncommercial Virginia TV stations – one of which uploaded four quarterly issues/programs lists over a year late and three others less than a month late; the other station was more than a year late with five lists and had another that was uploaded less than a month late.  (Notice of Apparent Liability).  Two other Virginia noncommercial TV stations were admonished by the Video Division for lesser delays in uploading quarterly issues/programs lists, problems apparently caught by FCC staff in reviewing the public files after the filing of the stations’ license renewal applications.  (Admonishment Letter Example)  These actions highlight the importance that the Commission places on timely uploads of documents to broadcasters’ online public files generally, and on the quarterly issues/programs lists in particular (see our article on the importance of such lists, here).
• New FCC application fees became effective on July 15, and the FCC released a Guide to the new fees for entities regulated by the Media Bureau. Many common applications, like applications for license renewal, assignment, transfer of control, and special temporary authority, now cost more to file.  Biennial ownership reports, which will be filed later this year, will cost $15 more to file than they did during the 2019 filing cycle.  FM translator minor changes will, for the first time, carry fees.  The fee adjustments are meant to reflect the legal, engineering, and supervisory resources used in reviewing an application.  (Fee Filing Guide)
• The FCC released a proposal to update certain rules dealing with political advertising to make them consistent with common practice in the regulation of such advertising. The first proposal would formally add use of social media and creation of a campaign website to the factors to consider when determining if a write-in candidate has made a “substantial showing” of a bona fide campaign for office so that they can be considered a “legally qualified candidate.”   Legally qualified candidates, even write-ins who have made this substantial showing, are entitled to all the protections of the Commission’s political rules, including equal opportunities, lowest unit rates and, for candidates for federal office, reasonable access to buy advertising time on commercial broadcast stations.  Looking at the online activities of an alleged candidate has already been part of the evaluation of whether write-in candidates have made a substantial showing of a “bona fide candidacy” – one demonstrating that the write-in candidate was conducting a serious campaign for office entitling them to the protections of the political rules.  The second proposal would update the political file recordkeeping rules to require that stations upload to their political files any request for advertising time that “communicates a message relating to any political matter of national importance” (i.e., federal issue ads) – a requirement that was imposed by statute almost two decades ago but never reflected in the FCC rules. The Notice of Proposed Rulemaking containing these updates is to be considered at the Commission’s regular monthly open meeting to be held on August 5.  If adopted, comments on the proposals will be due after Federal Register publication.  (Draft NPRM)
• At the request of several industry parties, the Media Bureau gave interested parties more time to file comments and reply comments to refresh the record in the 2018 Quadrennial Review of media ownership, which includes proposals for relaxation of the local radio ownership rules.  Comments will now be due September 2, 2021 with reply comments due October 1, 2021. We wrote in more depth about this quadrennial review, here.  (Public Notice)
• The FCC adopted a Notice of Proposed Rulemaking that proposes updates and changes to, or elimination of, several broadcast radio technical rules. Comments will be due 30 days after publication in the Federal Register, with reply comments due 45 days after Federal Register publication.  (NPRM)
• The FCC released its accounting of broadcast station totals as of June 30, showing a slight decrease in full-power radio stations and a slight increase in translators and boosters over the totals released in early April. (Station Totals)

Courtesy Broadcast Law Blog

We’ve written many times about the perils of posting a photo on your website without getting permission from the photo’s owner (see, for instance, our articles here and here).  Copyright protects photos, even when they are shared on the Internet.  Just by posting a photo to some website does not mean that the owner has given up its copyright protections – and just because you can easily right-click on the image and paste it on your website doesn’t mean it is legal to do so. If you copy a photo for use on your site without permission, you should not be surprised to see a copyright infringement claim seeking damages – potentially big damages.  To avoid issues, many website owners look for ways to get permission to use photos, signing up for subscriptions from stock photo services or, often when trying to save money, relying on photos made available through some “creative commons” license.  However, relying on the creative commons license can be perilous.  One example is a recent US District Court ruling on a motion for summary judgment of a copyright lawsuit brought by a photographer when his photos of Willie Nelson and Carlos Santana appeared on a news website to illustrate articles on the musicians.  Anyone with a website should read this decision, as it addresses in detail not only the issues with these creative commons licenses, but also many of the other legal issues that arise in lawsuits about the unauthorized use of photos.

In this case, a local news website had used photos that were freely available on a creative commons site and were widely circulated on other sites.  But when they were posted to the defendant’s site, there was allegedly no attribution of the photos to the photographer and no link to the photographer’s own site, which were preconditions to the creative commons license.  Because the defendant did not follow the terms of license, the court found that the license was not effective.  The fact that these photos were otherwise widely available on the Internet similarly provided no defense to the infringement claim.  Relying on a creative commons license without scrupulous attention to any license requirements can lead to legal actions like the one brought here. In fact, the decision suggested that this was not the first lawsuit brought by this photographer, and as we’ve seen in past cases, there is no shortage of other photographers ready to make claims against those who use their work without an effective license.

The case is also of interest because the court did not give any weight to the defendant’s argument that the revenue generated by use of the photos was miniscule.  According to the decision, the article using the Nelson photo generated about $10 in advertising revenue.  The one using the Santana photo only realized about $3.  The photographer indicated that even when he sold a photo, the sales price was at most a few thousand dollars – likely far less than the costs for the attorney’s fees to brief all the issues discussed in this decision.  Why would a case continue to be fought in these circumstances?  While there is always the possibility of some personal score being settled, more than likely it is the potential for statutory damages that fuels suits like this one – damages that can be as much as $150,000 per infringed work, even without any proof of any actual damages.

Will damages be that high in this case?  Perhaps not, as the court’s opinion notes that the site’s owner claimed that he respected copyrights and did not realize that the pictures were protected or that they were posted without obtaining all necessary permissions.  Statutory damages can be as little as $200 if the infringer can prove that they were not aware, and had no reason to believe, that their acts infringed on someone’s copyright.  But even if the damages are found to be low, the defendant still has to pay his attorney’s fees and face potentially higher insurance premiums in the future – so any violation is not without pain.

The court also noted that there was no notice of violation or a request that the infringing material be taken down sent by the copyright holder.  The first notice that the news site owner had of the violation was when he received the lawsuit.  It is a common misperception that there is no liability if a site takes down infringing content when notified of an infringement. As shown by this decision, notice is not required – the copyright owner can sue without any prior warning to the unauthorized user.

The case also goes through an analysis of whether the uses on the website were “fair use” of the photos.  We will not go through all the analysis of the factors to be considered in a fair use analysis – but if you are interested, you can look at our articles here and here for more details about that defense to a copyright claim.  As the defendant’s uses were direct appropriations of the photos and not for purposes of commentary or criticism of the photos themselves, it was not deemed a fair use.  The use in the defendant’s articles deprived the copyright holder of revenues from the sale of the works (or at least the publicity for his own website that would have resulted from the link that was required by the creative commons license – a link to a display of the plaintiff’s other photographic works he had for sale).  There was no other “transformative use” (a use that changed the nature of the copyrighted material and used it in a way that would not compete with the original use). Direct copies of the photos were used with nothing being changed but a little cropping of the Santana photo.  Thus, under the fair use factors, there was no reason to conclude that a fair use defense was applicable to the uses here.

The court looked at other issues in its comprehensive decision, including an argument that the copyright holder waited too long to sue (rejected, as the suit was brought within the 3-year statute of limitations) and arguments that any harm was “de minimis” and did not justify a lawsuit.  So the case moves forward to trial if the parties do not settle.  While this is a small case in a US District Court in Florida – and not in a court known for dealing with big media issues – it is a very instructive decision that should be reviewed for its careful analysis of many of the issues that come up in these photo cases – issues that media companies should be thinking about before they post any content on their website that they did not create themselves.

Courtesy Broadcast Law Blog

Last week, we wrote about two dissenting opinions in a Supreme Court decision that highlight the debate that is underway on the principles that govern defamation liability in the United States.  While we are reviewing Supreme Court decisions that could have an impact on broadcasters, including on political advertising, we thought that we should highlight another decision of the Supreme Court, a case called Americans For Prosperity Foundation v. Bonta, Attorney General of California, that could have an even more direct effect on the political advertising disclosure obligations of broadcasters.  In that case, the Court struck down a California requirement that charities operating in California reveal to the state their major donors.  Even though the state was supposed to keep this information confidential, the Court felt that the potential for disclosure of the contributors to groups dealing with controversial issues could chill their willingness to donate to the charitable groups, due to fears of repercussions should their donations become public (thus, in effect, creating a restraint on their First Amendment right to free association).  But could this decision have a wider impact on First Amendment rights and potentially affect disclosure obligations about contributions used for political advertising?

At least one commentator, George Will, seemed to think so.  In a column that he wrote last week, he suggests that supporters of the DISCLOSE Act (we wrote about a similar bill introduced 5 years ago here) should be worried  about its constitutionality in light of this Supreme Court decision.  If creating fears about the repercussions of donations to charitable organizations is seen as constitutionally suspect, a court could draw a similar conclusion about donations to political speech organizations.  The Supreme Court’s decision does acknowledge that the government could justify narrowly tailored disclosure obligations that advanced an important government interest, and the Court has, in the past, upheld disclosure obligations for contributors to political campaigns.  But would today’s Court see things the same way?  Would it make distinctions between disclosures of donations directly to campaigns (which have been upheld in the past where they could be seen as being linked to an attempt to buy influence with a candidate) versus  donations to third-party organizations that may engage in political speech, including support or opposition to candidates, which the Court might view  as the donors exercise of its free speech rights (as were the political expenditures by corporations in the Citizen’s United case – see our articles here and here)?  Time will tell how the ramifications of the Court’s decision will play out.

Were this protection of anonymous donations extended to political speech, we could see difficulties in passing and defending the Disclose Act as well as issues with state political disclosure rules.  As we wrote here and here, many states have been adopting laws that regulate political advertising.  In many states, regulations include requirements that the top donors to any non-candidate group buying political and issue advertising be disclosed – even on broadcast ads.  An expansive reading of the Court’s recent decision could spell problems for these rules similar to those that have faced other attempts by states to impose more transparency on political speech (see, for instance, our article on the demise of certain of Maryland’s political regulations requiring that media outlets maintain public records of the purchase of pollical advertising accepted by such outlets).  This is one more line of cases that broadcasters need to watch as the ramifications of the Court’s decision unfold in future decisions.

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.

• This week all but ends analog television operations in the US. The FCC’s Media Bureau reminded all low power television and television translator stations that their digital transition must take place by Tuesday, July 13, 2021.  By that date, LPTV and translator stations must terminate all analog television operations.  All permittees and licensees with a July 13, 2021 expiration date on their digital construction permits must complete construction of their new facilities by that date or their license or permit will be automatically cancelled unless they have received an extension from the FCC giving them more time to construct these digital facilities.  If your operations are affected by the transition deadline, read the Public Notice for more details.  (Public Notice)
• Revised fees for broadcast applications will take effect July 15. As we noted in early January when the fees were adopted, they were adjusted to reflect the FCC’s estimation of the amount of legal, engineering, and supervisory resources spent on reviewing an application.  One of the changes was that FM translator minor modifications will now, for the first time, require a fee.  (Public Notice)
• The FCC proposed a fine of $518,283 to Gray Television for allegedly violating the FCC’s rule that prohibits ownership of two top-four TV stations in a market. Gray was already the licensee of the NBC affiliate in Anchorage when it purchased the CBS affiliation agreement from another station and moved that affiliation to another Gray station, which resulted in the company owning two of the top-four stations in the Anchorage market.  The Commission went through a detailed analysis of its 2016 rulemaking that clarified its rules on combinations of Top 4 stations to justify its conclusion that the transaction in this case was prohibited. The amount of the proposed fine is an indication of the seriousness with which the FCC regards violations of its ownership rules.  (Notice of Apparent Liability for Forfeiture)
• An auction of LPTV construction permits in 17 markets is on the horizon. A Public Notice released on Friday asked for comments on the rules that will govern the auction to be held among mutually exclusive applicants for these 17 channels.  These applicants had not been able to resolve their conflicts when previously given the chance by the Commission (though the Notice indicates that there will be another potential for settlements before the auction).  The applications that will be involved in this auction were initially filed in 2009.  (Public Notice)(List of channels and mutually exclusive applicants).
• Wireless microphone company Shure has asked the FCC to reconsider its 2020 decision to expand white space device use in portions of the TV band (channels 2-35). Shure takes issue with an FCC decision on white space devices that Shure contends will limit opportunities for wireless microphones and suggests that the relaxed rules on these white space devices apply only in rural areas with less spectrum congestion.  Comments will be due within 15 days of publication of this week’s Public Notice of the filing of this petition in the Federal Register, but interested parties can read the petition now and start developing their comments.  (Public Notice)
• The Media Bureau gave notice that the licenses of eleven Texas radio stations that did not timely file a license renewal application will be cancelled on August 1 if they do not file a renewal by that date. In recent months, the FCC fined stations that had, like these stations, filed late renewals only after an FCC reminder that they had missed the license renewal filing deadline in their state.  This notice serves to remind radio stations in California and TV stations in Illinois and Wisconsin that they should be preparing now to file their license renewal applications on or before August 2.  We wrote more about preparing for license renewal, here.  (Public Notice)
• Prompted by dissenting opinions released this month by two Supreme Court Justices, last week we wrote on our Broadcast Law Blog about a growing debate on changes to the law governing liability for defamation of public figures, and the impact that any change would have on broadcasters in connection with their news and political sales operations. (Blog)

Next week, keep an eye out for an action by the FCC at its regular monthly Open Meeting on July 13 when it is scheduled to consider whether to seek public comment on proposals to change or delete several technical rules governing radio station operations.  The proposed changes are detailed in the FCC’s draft of the proposal, here.  The meeting will be streamed, here.

Courtesy Broadcast Law Blog

For well over 50 years, the Supreme Court’s New York Times v. Sullivan decision has governed the principles applied by the courts when assessing any claim of defamation.  That standard requires that, to find a statement about a public figure to be defamatory, not only does the statement need to be false, but it also needs to have been conveyed with “actual malice.” The Sullivan decision generally defines actual malice as writing or publishing an incorrect harmful statement knowing that the statement was false, or with reckless disregard as to whether the statement was true or not.  See our articles here and here, on this standard.  Because of this standard, the vast majority of defamation cases against public figures cannot be sustained, as it can rarely be proven that a defendant knew or should have known that a statement about a public figure was untrue.

In the recent past, there have been calls for this standard to be revisited.  Former President Trump was a big critic of the policy, thinking that he should have a greater ability to successfully sue media outlets over his claims of “fake news.”  Earlier this year, a prominent US Court of Appeals judge suggested that the doctrine should be abolished, using his dissenting opinion (at the end of this decision) to rail against big media companies and what he perceived to be their liberal bias.  This past week, two Supreme Court justices, Thomas and Gorsuch, issued dissenting opinions arguing that the Sullivan standard should change, in a case in which the Court decided not to review a lower court’s finding that a defamation case was precluded by the application of the Sullivan standards.  Justice Thomas has made this argument before (prior case here, new dissent here), but the dissenting opinion of Justice Gorsuch was the first time that he officially went on record calling for a modification of the standard.

The Sullivan standard was adopted, in significant part, to protect press reporting on public issues and to promote public debate about those issues.  The theory underlying the decision is that the Constitution protects free speech and a free press, and that the public and the press would not be free if they were afraid that even well-meaning factual mistakes could result in defamation liability – particularly when covering important issues or public figures.  It was also reasoned that public figures, by putting themselves in the public’s eye, invited more scrutiny and should not complain if, on occasion, a well-meaning but false comment was made about them.

Judge Gorsuch’s dissent was not the aggressive attack on the Sullivan reasoning that has appeared in other calls for abolition of the standard.  Instead, it was a suggestion that the application of the standard had gone too far in protecting those accused of defamation – as too many defendants have been found to be public figures even when their public fame was in very limited circumstances.  His dissent looked to digital media companies as contributing to a situation in which almost everyone is arguably a public figure for doing something that becomes “public” at some time.

In addition, because of the difficulty of proving actual malice – that a party publishing the falsehood knew or should have known that the material was false – his dissent argued that too few cases can meet that burden.  Justice Gorsuch suggested that the standard might even cause publishers to be willfully ignorant of the truth of the matters they publish – Gorsuch called it “ignorance is bliss” – as these parties can, in his view, in some cases protect themselves by saying that they did not know that the material they published was false because they never investigated enough to reach that conclusion.  Based on his recitation of evidence that defamation is now too hard to prove, the dissent suggested that some review of the standard was in order.  He did not necessarily call for the abolition of the principles set out in the Sullivan decision, but suggested that its application needed to be limited, as it was simply precluding too many allegedly defamed people from having their day in court.

These are but two of the nine Supreme Court justices who have suggested that the standard be changed.  Certainly, First Amendment advocates will argue that the standard has proven to be a good one as its adoption led to a flowering of investigative journalism free from the concerns of defamation liability for the slightest of mistakes.  Both investigative journalism and talk radio have blossomed in the years following the Sullivan decision, and no matter which side of the political spectrum one falls, some of their favorite information sources would likely be far more restrained in a world where there were no Sullivan principles restraining defamation lawsuits.

But it is not only in news and talk programming where a change in the standard would have significant impact.  In the political advertising sphere, there also would likely be far more reluctance on behalf of broadcasters and other media companies to distribute to the public some of the hard-hitting political attack ads that now are so common in any political season.  In the past election season, we saw the former President sue one TV station for airing a PAC attack ad that the President claimed to be false.  Any relaxation of the Sullivan standard would likely result in more of these cases.  A relaxation could result in media companies having to vet the truth of every political issue ad to avoid potential liability for its distribution, and these companies might well become arbiters of truth in election campaigns (akin to the role that some have advocated that social media sites should assume in vetting the truth of the content that they transmit).

As we have written here and here, right now, to comport with the Sullivan standard, when stations have questions about the truth of claims made in an attack ad by a non-candidate group, including when the attacked candidate raises those questions, media companies have a duty to investigate because they have been put on notice that the claim could potentially be false.  Continuing to run the ads without any vetting could be seen as violating the actual malice standard through a reckless disregard for the truth or falsity of the ad.  Were that standard to be modified, a strict liability standard could apply, where any publication (which is a broad term for any distribution to the public, including broadcasting) of a false claim could lead to liability.  So broadcasters would have to investigation all ads (not just those that are challenged or where there are questions of truth on the face of the ad), and that review might have to be more rigorous than what is conducted now if the more stringent standards applicable to public figures no longer apply, as even a good-faith mistake could result in liability.

But we are a long way from that point, as it would take at least three more Supreme Court justices to constitute the majority necessary to determine that the standard needs to be changed.  But media companies need to be alert, as this call for change is now spreading.  The implications of any such change could be broad, so media companies need to participate in this debate over the standards that should apply in these cases.

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.

• The FCC this week reminded television broadcasters of their obligation to make televised emergency information accessible to persons with disabilities. Specific reminders include that emergency information provided visually during any newscast must also be conveyed verbally, and emergency information provided in the audio portion of programming must be provided on screen visually.  In addition, emergency information provided visually (e.g., through crawls) during non-news programming must be provided aurally on a station’s secondary audio program (SAP) channel.  Examples of the types of emergencies covered by the rule include pandemics, extreme weather, discharge of toxic gases, widespread power failures, industrial explosions, civil disorders, and other actionable information arising from such conditions.  (Public Notice)  (Broadcast Law Blog)
• Though it is mid-way through 2021, the FCC is reopening the comment period in the 2018 Quadrennial Review proceeding on media ownership. It wants to refresh the docket in which initial comments were filed in mid-2019.  The issue in the proceeding likely to have the broadest impact is the consideration of possible changes to the local radio ownership rules.  The FCC seeks, among other information, updates on developments in the marketplace since the initial comments were submitted.  In particular, parties should address the impact of digital competition, including issues of access to and use of broadband, and how it should factor into revisions of the media ownership rules.  We wrote more about the 2018 Quadrennial Review, here.  Comments will be due Monday, August 2, 2021, and reply comments will be due Monday, August 30, 2021.  (Federal Register)(Broadcast Law Blog)
• June 30 was the effective date of the reinstatement of the 2017 FCC ownership rule changes following their being upheld by the Supreme Court’s Prometheus Radio The Newspaper/Broadcast Cross-Ownership Rule, the Radio/Television Cross-Ownership Rule, and the Television Joint Sales Agreement Attribution policy have been eliminated, as was the rule that required eight independently operated stations in a market to remain after the combination of any two TV stations in that market.  We wrote in depth about the Court’s decision, here.  (Public Notice)
• With four months remaining in the 2021 election cycle, remember that the FCC’s political broadcasting rules apply even in odd-year elections. Federal candidates (like those running in this year’s special House elections) are entitled to reasonable access and equal opportunities once the candidates become legally qualified.  State and local candidates are not entitled to reasonable access but are entitled to both equal opportunities and lowest unit rates.  See our article here for more on these requirements.  Lowest unit charges apply during the political window that opens on July 16 for the upcoming California gubernatorial recall election to be held on September 14.  The political window opens on September 3 for the November 2 general election.  See our 2020 political broadcasting guide for more information on the political broadcasting rules and answers to common questions.
• The FCC released the final list of bidders that qualified to participate in Auction 109, the upcoming auction of AM and FM construction permits scheduled to begin on July 27, 2021. Of the 158 applicants, 114 were deemed qualified to bid during the auction.  An upstate New York construction permit that had been offered was removed from the auction.  See the Public Notice for more auction details.  (List of Qualified Bidders)  (List of Disqualified Bidders)
• A Federal Register notice last week reminds State Emergency Communications Committees that they have one year—by July 1, 2022—to upload to the FCC’s Alert Reporting System their state EAS plan. State EAS plans must describe state and local EAS operations and contain guidelines that must be followed to activate the EAS.  (Federal Register)
• On the legislative front this week, Sen. Ron Wyden (D-OR) introduced a media shield bill that seeks to protect journalists from having to disclose a source’s identity unless the information is necessary to prevent an act of terrorism against the United States (and to catch the perpetrator of such an act) or to prevent other imminent violence, significant bodily harm, or death. The bill also seeks to shield journalists’ communications from being secretly obtained by the federal government.  Many states have media shield laws in place, but those laws do not reach actions by the federal government.  (PRESS Act)

For more information on upcoming regulatory dates for broadcasters in the rest of July and in early August, see our article here.  And check out the Broadcast Law Blog this week when we will address how dissenting opinions in a recent Supreme Court case could signal a broader debate on the law of defamation, which could impact broadcasters both in their news coverage and in their review of political advertising to be placed on their stations.

Courtesy Broadcast Law Blog

The FCC yesterday released a Public Notice reminding TV stations and other video programming providers including cable and satellite television providers of their obligations on making emergency information accessible for all viewers.  With a few tweaks, including emphasizing that more hurricanes and wildfires occurred in the last year, the reminder is very similar to what the FCC said last year.  Here is what we wrote about that notice, equally applicable to the one released yesterday:

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 here about 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

Last week, Congressmen Ted Deutch (D-FL) and Darrell Issa (R-CA) introduced the American Music Fairness Act ( see their Press Release for more details) which would impose a new music royalty on over-the-air radio stations.  The royalty would be payable to SoundExchange for the public performance of sound recordings.  This means that the money collected would be paid to performing artists and record labels for the use of their recording of a song.  This new royalty would be in addition to the royalties paid by radio stations to composers and publishing companies through ASCAP, BMI, SESAC and GMR, which are paid for the performance of the musical composition – the words and music to a song. The new legislation is another in a string of similar bills introduced in Congress over the last decade.  See, for instance, our articles here, here, here and here on previous attempts to impose such a royalty.

Each time this idea is introduced, it has a slightly different angle.  In an attempt to rebut arguments that this royalty would impose an unreasonable financial burden on small broadcasters, the new bill proposes relatively low flat fees on small commercial and noncommercial radio stations, while the rates applicable to all other broadcasters would be determined by the Copyright Royalty Board – the same judges who recently released their decision to increase the royalties payable to SoundExchange by webcasters, including broadcasters for their internet simulcasts.  Under the bill, the CRB would review rates every 5 years, just as they do for webcasting royalty rates.

The reduced fees would be just $10 per year for noncommercial stations with less than $100,000 in revenue, $100 per year for larger noncommercial stations with revenues of less than $1.5 million per year, and $500 for commercial stations with less than $1.5 million in revenue.  But these discounts – for both commercial and non-commercial stations – would disappear if the stations are co-owned or otherwise affiliated with other stations that cumulatively have revenues of $10 million or more (so those stations would be subject to royalties established in the CRB rate-setting process).  Revenues would include all revenues earned by a station, whether or not related to the use of sound recordings.

What kind of fees would be likely for larger broadcasters were this proposal to be adopted?  A decade ago, when these fees were first proposed, a Congressional Budget Office (CBO) review of the cost to broadcasters of the proposed performance royalty concluded that the cost of such royalties would likely be “substantial.”  That can be seen in the royalties that SoundExchange has been able to receive from other services who pay for the digital performance of sound recordings.

The recent ratemaking decision for webcasters is difficult to translate to a broadcast context, as webcasting royalties are paid on a per performance rate (per song, per listener).  Obviously, there is no precise way to count performances for over-the-air broadcasting, so a percentage of revenue royalty would be more likely for any broadcast sound recording performance royalty.  But there are analogs in other services where the CRB has set sound recording performance royalties based on a percentage of revenue metric when performances were similarly impossible to determine.

For instance, in 2017, the CRB decided that Sirius XM would pay sound recording royalties of 15.5% of its revenues.  Note that this decision was based on a different standard than that which now applies to most rate-setting proceedings (the so-called 801(b) standard that factored in public interest factors into determining royalty rates in addition to the theoretically market-driven “willing-buyer, willing-seller” royalty rate now to be used for all services following the Music Modernization Act).  The satellite radio rate was also based on subscription revenues received by Sirius XM, which are at least partially attributable to many channels offered by the service that contain sports, talk and other non-music content.  Thus, a rate for a single music-oriented radio station would seemingly be substantially higher than that set for satellite radio.  Imagine what a royalty of 20% or more of radio revenue would do to the radio industry.

In connection with Business Establishment Services (music services that digitally transmit music to retail and other business – what some would call “background music services”), which by law do not pay for the public performance of music but only for the ephemeral copies made in the digital transmission process (the least significant part of the webcaster royalty – assumed to be only 8%-10% of the royalty payment in other contexts), the parties to a proceeding to set their rates for 2019 through 2024 agreed to pay 12.5% of a service’s gross revenues as royalties to SoundExchange, increasing to 13.5% over the 5-year royalty term (see our article here). That is more than twice what the broadcast industry pays to ASCAP, BMI, SESAC and GMR for rights to the musical compositions.

Thus, the CBO’s conclusion a decade ago that the broadcast performance royalty would be substantial seems right on target.   Royalty levels that could be over 20% of revenue, particularly in today’s economic climate, would virtually drain the radio industry of its profit margins.  Obviously, the NAB immediately condemned the proposal and continues to push its own anti-royalty bill.  So the proposed Deutch/Issa legislation will no doubt be vigorously contested.  From time to time over the last decade, there have been discussions of a voluntary resolution of the question of a broadcast royalty – perhaps a lower webcasting royalty in exchange for a share in over-the-air revenues, as some big broadcast companies have, from time to time (see, e.g. our article here and here), negotiated with various record labels.  But, until there is such an agreement, this will be a battle to which radio broadcasters must pay close attention.

Courtesy Broadcast Law Blog