Next Media Modernization Proposals – Eliminate FCC Filing Requirement for Certain Broadcast Licensee Contracts and Expunge Analog TV Rules

At its next open meeting to be held on January 30, the FCC will consider two more proposals in its Modernization of Media Regulation Initiative. As with many of the other proposals that have been advanced by the FCC as part of this initiative thus far, these proposals address relatively minor matters concerning paperwork obligations rather than substantive FCC rules. Draft proposals were released yesterday by the FCC dealing with two matters. The first is a Notice of Proposed Rulemaking suggesting the elimination of requirements that broadcast licensees file paper copies of certain contracts with the FCC. The second is an Order deleting certain rule sections that explicitly deal with the operations of full-power analog television stations – stations which no longer exist.

It is certainly difficult to argue with the FCC’s decision to delete rules that apply to a service that no long exists, so it is obvious that the more substantive of the two proposals advanced yesterday is the one dealing with the filing of contracts with the FCC by broadcast licensees. But even this proposal was not particularly substantive, proposing only the elimination of the rules requiring the filing of physical copies of the required contracts, not the obligations that these contracts be available for public inspection and review. The NPRM suggests that instead of filing the required contracts with the FCC, the inclusion in a broadcaster’s online public file of information about these agreements is sufficient to eliminate the need for the filing with the FCC of physical copies of these documents. The agreements that are now required to be filed are also required to either be included in the public file or the licensee may opt to include in the public file a list of the contracts with a commitment to produce them within 7 days upon request. The NPRM also proposes to formalize the practice specifically adopted in connection with some but not all of the required documents – allowing broadcasters to redact financially sensitive business information from any document that it provides upon request. The NPRM as currently drafted does not ask whether the FCC should examine whether the filing of some or all of these contracts, or even their inclusion in a station’s public file, should be required at all.

Just what does the FCC now require that a licensee file? Organizational documents of a licensee and its parent entities (e.g., articles of incorporation and by-laws) must be filed currently, and, as with all of these documents, also listed on Ownership Reports and in the list in the public file (if not actually reproduced there). Documents relating to future ownership or control are required (e.g., options, pledge agreements, voting proxy agreements, warrants, etc.). Security agreements and other documents that place significant restrictions on the operational decisions of a licensee (like stock pledge agreements where a lender significantly restricts the licensee’s actions without lender approval as a condition of the loan) are also required to be submitted. Time brokerage and joint sales agreements are required documents, as are network affiliation agreements – but only for TV stations, and only when the network provides at least 15 hours of programming each week to at least 25 affiliates located in at least 10 different states. Licensees are also required to file “citizen agreements” – agreements that were common 30 or 40 years ago as a means for broadcast stations to settle license renewal challenges by promising to devote programming time to issues identified by certain citizens’ groups – but are almost unheard of today.

Obviously, the question arises whether there is a legitimate need for broadcasters to submit these documents to the FCC and to make them available to the public. A licensee’s organizational documents are rarely reviewed by the FCC (except perhaps if the FCC is seeking to confirm that a noncommercial licensee was really organized for educational purposes). If the FCC has a legitimate need to review these documents, one would think that they would be requested in FCC applications – not just placed into a public file that in many cases no one ever reviews. The same goes for agreements regarding future ownership. Why do they need to be filed or included in the public file when they only become relevant if they trigger a change in control of the licensee – at which point they will usually be filed with an assignment or transfer application? Security agreements and similar documents relating to future control are already addressed in certifications on FCC application forms where licensee’s pledge to maintain control of their licenses – so why require that the documents be filed after the fact, when in most cases no one ever bothers to look at them? If affiliation agreements don’t need to be filed for radio, why are they still needed for TV? And why require the submission of citizen agreements when they essentially don’t exist?

These are questions not currently posed by the draft Notice of Proposed Rulemaking. Perhaps they will be added to the NPRM in the few weeks before this item is finalized. If not, perhaps they will be addressed in a future order. We will obviously know more details on these matters at or after the FCC meeting on January 30 when these items will be discussed and presumably approved by the Commissioners.