Earlier this week, we covered the broadcast issues that the FCC may be facing in 2024. But the FCC is just one of the many branches of government that regulates the activities of broadcasters. There are numerous federal agencies, the Courts, Congress, and even state legislatures that all are active in adopting rules, making policies, or issuing decisions that can affect the business of broadcasting and the broader media industry. What are some of the issues we can expect to see addressed in 2024 by these authorities?
For radio, there are music rights issues galore that will be considered. Early in the year, the Copyright Royalty Board will be initiating the proceeding to set streaming royalties for webcasters (including broadcasters who stream their programming on the Internet) for 2026-2030. These proceedings, which occur every five years, are lengthy and include extensive discovery and a trial-like hearing to determine what royalty a “willing buyer and a willing seller” would arrive at for the noninteractive use of sound recordings transmitted through internet-based platforms. Because of the complexity of the process, the CRB starts the proceeding early in the year before the year in which the current royalty rate expires. So, as the current rates expire at the end of 2025, parties will need to sign up to participate in the proceeding to determine 2026-2030 rates early this year, even though the proceeding is unlikely to be resolved until late 2025 (unless there is an earlier settlement)(the CRB Notice asking for petitions to participate in the proceeding is expected to be published in the Federal Register tomorrow). Initial stages of the litigation (including the identification of witnesses, the rate proposals, the evidence supporting those proposals, and the initial discovery) will likely take place this year.
In addition to the webcasting proceeding, performance royalties for musical compositions will also be subject to change for some of the performing rights organizations. BMI is already in “rate court” (a US District Court reviewing rate proposals to determine what is reasonable) with the Radio Music License Committee representing the commercial radio industry. ASCAP’s agreement has also expired, and they may follow BMI into rate court if no agreement can be reached with the RMLC. SESAC and the RMLC are also likely to engage in an arbitration process to resolve the royalties to be paid by the commercial radio industry to that group. The music industry groups are, of course, all asking for an increase in the rates paid by broadcasters. Consistent with that theme, there will no doubt be more calls for a sound recording performance royalty to be imposed on radio broadcasters (see our article here on one of the recent legislative proposals for such a royalty). Congress, in an election year when there are so many pressing issues in the early part of the year (including battles over continuing funding for the government), will find it difficult to find time to adopt any legislation on the subject – but it is always an issue for debate and one about which broadcasters need to be vigilant.
Artificial intelligence is also likely to be debated and, as it is an issue that seemingly everyone is discussing, perhaps some controversies regarding its use will be addressed this year. Congress has been exploring the multitude of issues surround AI and has discussed legislation to address these issues but, as with the music issues, with an election year calendar, it is questionable whether Congress will have the time to resolve all of the issues that AI poses. Obviously, there are the deeply philosophical issues of limiting AI so that some of the worst case, science-fiction like concerns about the technology overwhelming human society can be avoided. Even the more immediate concerns – including whether AI companies will owe compensation to content creators for the use of their content to “train” AI models, or whether AI should be limited or at least labeled when used in political advertising, may be difficult for Congress to resolve. Perhaps more clarity will come from pending litigation (like the recent lawsuit by Microsoft against OpenAI) or administrative agencies. The Copyright Office is working on its study of the copyright implications of AI, and the FEC is reviewing the use of AI in political advertising. But even resolution of these proceedings will not be easy, as there is certainly no unanimity of thought on any of these issues (see, for instance our noting of the objections of several Republican campaign groups to proposed FEC requirements for AI labeling, and our summary of some of the AI copyright issues). In the interim, as we noted here, many states are getting into the act of regulating AI at least in political ads. Watch for that trend to continue.
Even outside the area of AI, media companies in the US have been asking for authority to negotiate with tech companies collectively over the question of whether online platforms should pay media companies for the use of their content in social media posts and on similar platforms. Similar rules have been adopted in other countries including Australia and, in 2023, Canada. Will 2024 be the year when these rules are adopted in the US? We’ve written about pending legislation, and we are sure that it will again be a subject of debate in 2024.
The Supreme Court will also be dealing with issues this year that affect media companies. For instance, it will once again be looking at online free speech and the limits of Section 230 and the protection it gives online platforms for content produced by others. The arguments before the Court this year deal principally with the ability of a state to limit an online platform’s moderation of content either by forbidding a platform from rejecting content from a political candidate or journalistic enterprise, or by giving those whose content is rejected a right to sue if they believe the content was arbitrarily removed from the site or removed for political reasons. The Court will be examining whether the laws imposing these limits abridge the First Amendment rights of the platforms to publish what they want or their rights under Section 230 to moderate content that is posted on their sites. These important questions could impact all media companies. First Amendment issues also will be implicated by the decisions in cases dealing with bans on the Biden’s administration’s ability to communicate with media platforms on issues such as the circulation of alleged disinformation, as well as in various suits pending against media companies for defamation based on content that appeared on their platforms.
The Federal Trade Commission has also been active dealing with issues that can affect media companies. We noted their interest in looking at AI issues, and whether the use of copyrighted material by AI companies without compensation to the creators is an unfair trade practice. The FTC held hearings on that issue in 2023 and could move forward on the issue this year. The FTC also has an outstanding proceeding to ban or severely restrict the use of noncompete agreements in employment contracts, potentially restricting the ability of broadcasters to prevent their talent from quitting one day and moving to a competing station the next. That proceeding is ripe for a decision. The FTC has also been active in limiting testimonials and celebrity endorsements in advertising – cracking down on one broadcaster whose DJs were paid to give personal testimonials for a mobile phone that they had not used (see our article here). The FTC in 2023 issued more guidance on practices to be avoided in online endorsements of products and services. Expect more enforcement in 2024.
The FTC and the Department of Justice are also charged with enforcing the antitrust laws. These agencies get involved in big media transactions, often making decisions about what the relevant “market” is for determining if a deal could result in too much consolidation in the hands of one company thereby lessening competition. These determinations often are used by the FCC as guidance for their assessment of competition for various purposes, including in connection with the broadcast ownership rules. If there are any large media transactions reviewed by these agencies, we may see more guidance on their current take on market definitions based on the blurring that has occurred in recent years as digital media begins to function more and more like broadcasting.
One issue about which broadcasters often ask is advertising for cannabis products. The Biden administration has indicated that it wants to remove marijuana from Schedule I of the Controlled Substances Act – a classification that sets a virtual federal ban on its legal sale in the US. With so many states removing their barriers to use of marijuana, the federal ban and associated statutory provisions that make it illegal to use radio or the internet to promote scheduled drugs, have made it hazardous for broadcasters (and other federal regulated industries, like the banking industry) to deal with cannabis dispensaries in states that have abolished their local prohibitions (see our article here). As noted in several recent press articles, whether the Biden administration will resolve these issues remains to be seen, as the current approaches suggest that it will be moved to Schedule III, which allows its sale only when approved by federal authorities. In 2023, the FDA gave up trying to adopt rules for the sale and marketing of CBD as an additive in food and beverages or as a health supplement, punting the issues to Congress as it could not reach consensus as to whether these uses of CBD (which is no longer on any schedule under the Controlled Substances Act) should be permitted (see the FDA press release here). If decisions can’t be reached on CBD issues after years of trying, don’t look for immediate clarity on marijuana advertising even if it is moved off Schedule I.
These are but some of the many issues that may be decided, and certainly will be debated, in 2024. Watch for our coverage of these issues, and follow the developments in these areas in other media as well, as many of these matters can have real and direct impacts on your business. Expect 2024 to be a busy year in policy and regulation and, of course, what happens in November could shape the future. There is plenty to monitor to stay on top of all these issues.
