It’s a new year, and a good time to reflect on where all the Washington issues for TV broadcasters stand at the moment, especially given the rapid pace of change since the new administration took over just about a year ago. While we try on this Blog to write about many of the DC issues for broadcasters, we can’t always address everything that is happening. Every few months, my partner David O’Connor and I update a list of the legal and regulatory issues facing TV broadcasters. That list of issues is published by TVNewsCheck and the latest version, published this week, is available on their website, here. It provides a summary of the status of legal and regulatory issues ranging from the adoption of the ATSC 3.0 standard at one end of the alphabet to White Spaces and Wireless Microphones on the other – with summaries of other issues including the Incentive Auction, Ownership Rule Changes, Media Regulation Modernization, EEO compliance, Political Advertising and Sponsorship Identification, along with dozens of other topics, many with links to our more detailed discussions here on the Blog. Of course, the status of these issues changes almost daily, so watch this Blog and other trade publications for the latest Washington news of interest to broadcasters.
Archive for David Oxenford
Yesterday, the President reportedly used the word “shithole” to describe certain countries whose immigrants were seemingly less favored than others. This predictably caused outrage in many quarters – and left the electronic media, especially broadcast TV in a quandary. Do they broadcast the purportedly used term, or do they use some euphemism so that “shit,” one of those words that the FCC has from time to time found inappropriate to be used on the air, does not reach tender ears? The New York Times ran a story describing how different media outlets handled the story here. What is a broadcaster to do?
The FCC has said repeatedly that there is no blanket rule exempting news programming from its indecency rules – so theoretically, a broadcaster could face an indecency action at the FCC for the use of a proscribed word on the air, even in a newscast. However, the FCC has recognized that decisions made about the language used in newscasts are subject to a different level of First Amendment protection than language that might be included in an entertainment program. So, for instance, when NPR aired excerpts from a tape of mobster John Gotti that had been introduced during his criminal trial, and that tape contained multiple words usually not allowed on broadcast stations, the FCC and the courts found that, in the circumstances of news coverage, the use of these words was not actionable. In another case, a CBS Morning News interview with the winner of the Survivor television program, there was a similar decision from the FCC. On the morning news program, the winning contestant labeled a competitor a “bullshitter.” The FCC took no action, deferring to the licensee’s decision given that it was made in the context of a news program. So, while there is no blanket exception for indecency in news programs (witness the huge fine issued to a TV station that had not properly edited a news segment on a former adult industry movie star turned first responder, about which we wrote here), certainly the FCC has provided stations more discretion to air otherwise prohibited words in their news if necessary to provide context to their news coverage. But with FCC Chairman Pai admonishing broadcasters to “keep it clean,” and with the FCC’s indecency rules still on the books, and any complaint likely to cost time and money to defend, broadcasters may want to be cautious in their approach to these situations, even in the context of news programs.
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.
Ownership Rule Changes Effective February 7; Comments on Incubator Programs to Foster Diversity in Broadcast Ownership Due March 9
Published today in the Federal Register were two notices from the FCC implementing November’s decision on the FCC’s ownership rules. First, a summary of the changes in the rules was published in the Federal Register. These changes particularly affect the local TV ownership rules (changes that we summarized here). Changes included, among other things, the elimination of the rule that required that there be 8 independent owners of TV stations in a market before any party can own two TV stations, elimination of ownership attribution for Joint Sales Agreements between television stations in the same market (meaning that such arrangements do not count in any analysis of compliance with the local TV ownership rules), and a plan to review proposals to combine two of the top 4 stations in any market on a case-by-case basis. These rule changes become effective on February 7.
Also published in the Federal Register was a summary of a different part of the order, one asking questions about how the FCC should structure an incubator program that would support diversity in the ownership of broadcast stations. In that Notice of Proposed Rulemaking, the FCC asks a series of questions as to how a program could be established in a way that would benefit minorities and other new broadcast entrants. As the usual discussion about such programs involves providing established broadcasters a waiver of an ownership rule or other incentive to assist the new entrant, one of the central issues is how to establish a program providing real benefits without creating a loophole in the ownership rules for the sponsoring broadcaster. Comments on the Notice of Proposed Rulemaking are due on March 9, with replies on April 9. Some of the questions asked by the FCC are summarized below.
These questions include:
- Who should be eligible to benefit from the incubator program? Options include:
- Any “new entrant” that does not have interests in other mass media properties – the same definition used to confer benefits in broadcast auctions;
- A revenue-based definition, such as a small business definition under Small Business Administration rules;
- A socially and economically disadvantaged group definition – a definition used by the SBA to include members of minority group and others who can show they are disadvantaged (the FCC noting that, in the past, they have not believed that they have sufficient data to support an explicitly race-based preference like this one);
- A preference based on a showing that the entrant has Overcome Disadvantages (the FCC noting the difficulty in enforcing such a standard).
- What would qualify as “incubation”? And to what extent would any established broadcaster have to supply support to qualify for any benefit from the program. Possible areas for incubation include:
- Technical assistance;
- Management assistance;
- Financial assistance including loans or loan guarantees;
- Station donations.
- What would the established broadcaster get out of the incubation services that it provides?
- If the benefit is to allow the established broadcaster to get some sort of ownership waiver, would it simply allow that broadcaster to own an interest in the incubated station, or could they get the right to own another station that they otherwise could not hold under the ownership rules?
- If it is another station, would it have to be in the same market as the incubated station, or could it be in another market? Would the market have to be similarly sized – and how would that be defined?
- How long would any waiver last? Would it be contingent on the success of the incubated station?
- Should it apply only to radio or to TV as well?
- Should the FCC establish standards for reviewing these incubation programs?
- If the incubator is not set up as part of an application involving an assignment or transfer application that is to be reviewed by the FCC, should some other review mechanism be established?
- Should the Commission require periodic reports on the success of the incubation after it is established?
- What kinds of compliance measures should be adopted by the FCC in reviewing these programs?
As set out above, comments are due on March 9. Incubator programs are ones that just about everyone seems to think are a good idea, but determining exactly what such programs should entail are another matter –parties may have vastly different ideas of what kinds of services should be required and what kinds of benefits should be obtained from providing those services. Thus, comments before the March 9 deadline are very important.
Attorney General Sessions Memo Frees Federal Prosecutors to Pursue Marijuana Cases – What Does It Mean for Broadcast Advertisements?
Yesterday, Attorney General Jeff Sessions issued a one-page memo (here) advising Federal prosecutors to use their discretion in pursuing marijuana prosecutions – even in states where state law has made marijuana legal for either medical or recreational use. Even though some states have removed state law restrictions on the sale or use of marijuana, marijuana remains illegal under Federal law as we wrote here when the FDA, under the Obama administration, refused to remove the drug from “Schedule 1” – the category of drugs most restricted under Federal law. As we wrote here, because marijuana is illegal under Federal law, and broadcasters are Federal licensees, running advertising for a substance that is generally illegal to use or possess under Federal law poses real risks for broadcast licensees. Yesterday’s action by the DOJ, essentially repealing guidance given to Federal prosecutors not to pursue marijuana cases where there was no abusive conduct (e.g. no sales to children, no attempts to sell outside states where the drug is legal under state law, no cooperation with international drug dealers, etc.), does nothing to lessen the risk to broadcasters of running such ads, and in fact likely ups those risks.
Some broadcasters may have taken hope from a decision of a federal appeals court from 2016 finding criminal prosecutions by the Department of Justice of entities and individuals who were complying with state laws decriminalizing medical marijuana were barred by a rider to a federal appropriations bill. Some saw this decision as a broad statement that the federal government would not be enforcing its marijuana laws in any context. But, as we wrote here, the bar on the spending of any money on prosecutions applies only to the DOJ (not to other federal agencies such as the FCC) and only to medical marijuana. Moreover, the decision practically quoted the same warning that I have included in my articles on the topic – the rider does not change the underlying law declaring the sale and distribution of marijuana illegal under federal law. Moreover, the Court observed that administrations can change (as they did), changing prosecution priorities. This rider can also expire, increasing the potential for prosecutions in the new atmosphere at the DOJ. Given the DOJ decision yesterday, broadcasters need to remain very cautious about marijuana ads of any sort, and seek counsel on any such ads that they are considering.
Differing Perspectives on Deregulation – Looking at Comments on FCC’s Proposal to Modify Rules on Public Notice of Broadcast Applications
While some might think that the business of deregulation is easy, that usually is not the case, as comments on the FCC’s proposals to modify the public notice requirements for broadcast applications make clear. In a Notice of Proposed Rulemaking about which we wrote here and here, as part of its initiative on the Modernization of Media Regulation, the FCC looked to modify the rules governing public notice that broadcasters must give when they file certain types of broadcast applications – particularly license renewals and applications for the assignment or transfer of broadcast stations. The FCC asked whether the obligations requiring most of these notices to be published in a local newspaper, in addition to being broadcast on the station, could be replaced by giving an online public notice. The Commission even asked if on-air notice was still necessary. The FCC also asked how the rules should be unified, so that the various exceptions and textual differences that apply to different rules could be made simpler to understand. Comments on these proposals were filed last week between the holidays.
While this proposal seems very straightforward, and many of the comments took the sides that one would expect, there were numerous comments that range from support for continued newspaper publication (principally from the newspaper industry), to calls for more detailed on air-announcements from certain public interest groups, to suggestions that the on-air notice be more abbreviated and used to direct listeners and viewers to a more detailed online disclosure. Let’s look at some of the specific comments that were filed.
An organization representing several state press associations took the obvious position in its comments of supporting continuing newspaper publication, arguing that the publication in a newspaper provides a qualitatively different experience than an online publication – as most people go online to find a specific item, while reading the newspaper allows for more serendipitous discovery of information provided on the printed page, which leads to more people discovering government-mandated notices. The comments also argue that the obligation to print these notices in the newspaper provides the news media greater notice about the matters addressed by the notice, causing the media to write stories about the matter in the notice. These comments also argue that the digital divide persists, contending that many people still do not have Internet access (though the comments don’t cite statistics indicating whether those without Internet access are likely to be newspaper readers). The comments do cite several instances where certain state government agencies have gone to online notices and found that public participation in their proceedings has decreased (of course, nowhere suggesting that broadcast notice of such agency actions was required).
MMTC, representing the minority community, suggests in its comments that requirements for newspaper notice impose an unnecessary financial burden on small businesses without any demonstration that any real public interest benefit is achieved. Other public interest groups submitted comments that focus not on the proposal to abolish the need for newspaper publication, but instead on the proposals to limit on-air notice of applications – arguing that these notices should be more informative and use less jargon so that they are better understood by the public.
Broadcaster comments point out that the obligations to provide these public notices are not justified by the public interest benefits that they provide. The NAB comments show that only 1.5% of all license renewal applications received any public comment at all, and most of that was generated by DC-based public interest groups unlikely to be relying on local public notices to discover the filing of broadcast applications. The NAB also points out that these notice requirements are only imposed on broadcasters – no other FCC-regulated entities have public notice obligations, yet interested parties are aware of those applications and manage to file comments where appropriate. The NAB suggests that, even if the FCC decides that some public notice should still be given, the appropriate notice is a brief on-air announcement directing listeners to a more detailed online statement, similar to what the FCC determined was appropriate for disclosure of contest rules (see our post here). A similar position was expressed by Nexstar Broadcasting in its comments.
We would expect FCC action on this proposal at some point later this year. This proposal, on what seems like a very small regulatory matter, demonstrates that for every rule, no matter how clear the need for reform seems to be, there is some constituency that will argue that change is not appropriate. We will see how the FCC balances the claims of the parties in this proceeding, and in the many other proceedings likely to follow in the Modernization of Media Regulation process.
Comment Dates Set on Unresolved Issues for Next Generation TV ATSC 3.0 Transition – Comments Due By February 20
When the FCC adopted its Report and Order authorizing the “next generation TV” standard ATSC 3.0, it did not resolve all issues, instead leaving a few for further public comment. Notice of the issues raised in the Further Notice of Proposed Rulemaking was published in the Federal Register just before Christmas, setting February 20 as the deadline for initial comments on the outstanding issues, and March 20 as the deadline for reply comments. What issues are left to be resolved?
In allowing the voluntary transition to ATSC 3.0, the FCC required that stations choosing to transition to the new standard must enter into agreements with another station in their market to remain in the current ATSC 1.0 transmission standard and host a “lighthouse” signal rebroadcasting the primary video signal of the converting station on one of the multicast streams of the host station. The FCC recognized that not all stations would be able to find a partner with a signal covering the converting station’s city of license that could host the lighthouse signal in the old standard, and agreed to consider waivers of that requirement. The Further Notice raises questions as to whether the FCC should issue further guidance on the standards that it will apply to such waiver requests.
Some of the questions asked include the following:
- Should the FCC provide more specific guidance on waiver standards?
- If so, should they determine that there is no viable partner only when there is no other station with a signal that covers the converting station’s city of license, or should there be some other standard?
- Does the refusal of a potential host to act as the lighthouse station justify a waiver?
- Should stations that do not cover a converting station’s city of license be potential hosts if there are no other options? If so, should some level of signal be required?
- What other factors could be used to justify a waiver? Would providing free ATSC 3.0 converters be enough to justify the waiver? What else could be done to provide continuous service to residents who have not purchased equipment capable of picking up stations broadcasting in the new service?
- Should noncommercial stations, or Class A stations, be exempt from the simulcast requirements? Would allowing them to transition directly to the new standard encourage them to operate for a time as lighthouse stations in the old standard?
The Commission also asks whether stations that cannot find a partner to host their lighthouse signals should be able to use vacant TV channels in their markets to provide that lighthouse signal. If so, how vacant does the channel need to be? Can full-power stations use a channel that would pre-empt the operations of an LPTV or TV translator station? When should such channels be made available – now or after the repacking is complete and all LPTVs and translators have had the opportunity to find new channels? What impact would this have on white spaces operations? What kind of transition issues would this proposal raise?
Finally, the Further Notice asks if stations should maintain their current “significantly viewed” status even if their lighthouse signal does not cover the same area as their full-power signal that has converted to ATSC 3.0. The Commission suggests that significant viewing be frozen for the period until stations have converted to the new standard, so as to not disrupt viewers of broadcast TV stations. But it asks for comments on the impact that this tentative conclusion would have on MVPD operators.
These are obviously important issues for many TV broadcasters, who should consider comments by the dates that the Commission has now set. While the Further Notice has been published in the Federal Register, the FCC’s Order approving the use of ATSC 3.0 has not yet been published, so the effective date of those rules has not yet been set. Stay tuned for further details.
January Regulatory Dates for Broadcasters – Quarterly Issues Programs Lists and Children’s Television Reports, FM Translator Window, Main Studio Rule Change and Streaming Requirements
The holidays are over, and while the regulation never stops, it is time to once again buckle down and look at what is on the horizon for broadcasters. While, in the next few days, we will have our typical look ahead at the broadcast regulatory agenda in Washington for the New Year, we also need to look at more immediate deadlines in the month of January. As we are at the beginning of a calendar quarter, the tenth of the month is the date for broadcasters to add their Quarterly Issues Programs Lists for the just completed quarter to their public file – whether it be the online public file for TV broadcasters and the many radio groups that have already converted to the online file, or into the paper file for those radio broadcasters waiting until the last minute before making the conversion to the online file as required by March 1. These Quarterly Issues Programs lists are the only FCC-required documents showing how a broadcaster has met its public interest obligations to serve their communities and, as we have written many times (see, for instance, here and here), the FCC considers them to be very important, and thus have led to numerous substantial fines for broadcasters who have not met the FCC’s requirements.
TV broadcasters also need to file their Children’s Television Reports with the FCC by the 10th of the month, and place information into their public file about how they complied with the commercial limits on children’s television programming. As we have written before (see our articles here and here), these, too have been the subject of numerous FCC enforcement actions when the Commission becomes aware that the reports were not filed, or were submitted late. So be sure to timely file these reports with the FCC, and place the information about compliance with the commercial limits in your online public file by the deadline.
TV stations that are being repacked to a new post-auction channel also must file their quarterly FCC Form 2100, Schedule 387 Transition Progress reports by the 10th of January. See our article here about the initial FCC reminder on these reports.
For AM broadcasters, the second window for filing for new FM translators to pair with their AM stations is open from January 25 through January 31. This window is for Class A and B AM stations who were not allowed to file in the window that opened earlier this summer but only if the stations did not buy a translator and use a 250-mile waiver in the window that the FCC had opened for moving translators last year. See our article here on this upcoming window. We would also expect to begin to see applications granted for many of the FM translator applicants that filed long-form applications last month for their translator applications filed in the window earlier this year for Class C and D AM stations. And keep in mind that, in connection with the upcoming window, there will be a freeze on the filing of minor change applications for FM translators, FM booster stations and low power FM stations from January 18-31.
The effective date of the elimination of the FCC’s main studio rules is January 8 (see our article here). So we would expect some broadcasters to begin to take advantage of the flexibility that this rule change provides as to the location and staffing of their station operations. Obviously, station operators still need to serve the public interest in their communities (and demonstrate it in the Quarterly Issues Programs Lists mentioned above), but their local studio and staffing requirements will disappear as of January 8.
For broadcasters who stream their signals on the Internet and other webcasters, as we wrote here, January 1 brings higher royalties to be paid to SoundExchange, as the royalties set by the Copyright Royalty Board at the end of 2015 for the period from 2016 through the end of 2020 have been adjusted for inflation. Also, under many of the royalty regimes in place under the CRB decision, minimum fees for the year must be paid to SoundExchange by the end of the month.
As in any month, these are just some of the highlights on the regulatory calendar. Every station should be on alert to make sure that they address those compliance issues that need to be addressed, when they need to be addressed, to avoid regulatory issues down road.
Copyright Office Extends Comment Dates on Proceeding Looking at MVPD Reporting Obligations and the Definition of Cable System
Recently, we wrote about a proceeding initiated by the Copyright Office to review the reporting obligations of cable and satellite television systems related to the statutory license that permits those systems to carry the programming of local television stations. Systems must report information including revenue and subscriber information that allow royalties to be computed. This proceeding also included a section asking for comments on the Copyright Office’s tentative conclusion that the Copyright Act’s definition of a cable system did not extend to online services, like those that had been proposed by Aereo and FilmOn. See our article here about the Copyright Office’s request for comments. The Copyright Office has just announced that they are extending the comment period in this proceeding. Comments are now due March 16, with replies due on April 6, 2018.
The FCC, apparently not in a holiday mood, yesterday released a Notice of Apparent Liability proposing a $13,376,200 fine against Sinclair Broadcast group for alleged violations of the sponsorship identification requirements of Section 317 of the Communications Act and Section 73.1212 of the FCC rules. The FCC alleges that program segments contained in news broadcasts of certain Sinclair stations and certain program-length reports featured stories about the Huntsman Cancer Institute which were not tagged as being sponsored – even though they were broadcast as part of a contract that required that Sinclair air advertising for the Institute and develop programming about the Institute’s activities.
While the amount of the fine is large given the thousands of alleged broadcasts missing the sponsorship tags, the Commission’s basis for the fines are not new. The FCC has previously fined stations for news segments that were sold as part of a commercial package and aired without sponsorship identification tags (see our article here.) Accepting any consideration, even video footage, from a commercial entity, can be seen by the FCC as consideration requiring sponsorship identification. See, for instance, our article here about one such case. The stand-alone programs that Sinclair argued were identified as having been sponsored were found wanting by the FCC as, while the fact that the programs were sponsored was made clear, the actual sponsor’s name was not explicitly stated in the announcement. The Commission rejected claims that the visual depiction of the Institute’s logo that was shown visually just before the sponsorship announcement, and a welcome from the announcer thanking the audience for joining in the broadcast “from the Huntsman Cancer Institute,” were sufficient to notify the audience as to the sponsor of the broadcast. As in cases we wrote about here and here, the FCC takes a hard line on these cases, requiring that the name of the sponsor, and the fact that they sponsored the programming be presented clearly so that any viewer will know who is sponsoring a broadcast program.
While the fine amount was increased due to a number of aggregating factors (including past violations of various rules by Sinclair, the number of violations, and the fact that Sinclair has substantial revenue and a fine, according to the FCC, to be meaningful, needs to be felt by the company being fined), this case sends a warning to all broadcasters that, if you are paid to say something, tell your audience that you received consideration, and who provided that consideration, or the FCC may well be coming your way. The Democratic Commissioners argued that the penalty should have been even harsher – so it is clear that no breaks will be given to those that the FCC believes have violated their sponsorship identification obligations.