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May 2014

Class A and Full-Power Television Broadcasters in All Markets Regardless of Network Affiliation and Market Rank Must Comply with the Online Retention of Political Programming Materials as of July 1, 2014

The FCC recently published in the Federal Register a reminder that all Class A and full-power television broadcasters must, by July 1, 2014, begin maintaining new political advertising materials mandated by Section 73.1943 of the Commission’s Rules in the station’s online public inspection file.

As previously reported, pursuant to the FCC’s Second Report and Order (“R&O”), adopted in May 2012, Class A and full-power television stations affiliated with the top four networks in the top 50 Designated Market Areas (“DMAs”) have been required to comply with the online political file rule since August 2, 2012.

The R&O stayed the online political file requirement for all Class A and full-power television stations that are not a top four network station in the top 50 DMAs until July 1, 2014. Accordingly, from July 1, 2014 forward, all stations, regardless of network affiliation or DMA, must begin keeping their political file in their online public inspection file. Notably, while political advertising documents created on or after July 1, 2014 must be placed in the online public file, stations should continue to retain hard copies of pre-July 1, 2014 documents in their physical public file to comply with the two-year retention period for political file documents set forth in Section 73.3526(e)(6).

The Federal Register notice can be viewed here.

A pdf version of this article can be found at Client Alert.

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April 2014

Pillsbury’s communications lawyers have published FCC Enforcement Monitor monthly since 1999 to inform our clients of notable FCC enforcement actions against FCC license holders and others. This month’s issue includes:

  • FCC Proposes $12,000 in Fines for Contest Violations
  • $20,000 Fine for Unlicensed Operation and Interference
  • Violations of Sponsorship Identification and Indecency Rules Lead to $15,000 Consent Decree

Changing Rules and Delay in Conducting Contest Lead to $12,000 in Fines

Late last month, the FCC’s Enforcement Bureau issued two essentially identical Notices of Apparent Liability for Forfeiture (“NALs”) against two radio station licensees for failure to conduct a contest as advertised. Although the stations have different licensees, one licensee provided programming to the second licensee’s station through a time brokerage agreement. The brokering station’s response to a letter of inquiry (“LOI”) addressed both licensees’ actions with regard to the contest. In the subsequent NALs, the FCC’s Enforcement Bureau proposed a $4,000 fine against the brokered licensee and an $8,000 fine against the brokering licensee.

In July of 2009, the FCC received a complaint that several radio stations held a weekly contest called “Par 3 Shoot Out” but did not conduct the contest substantially as announced or advertised. Specifically, the complaint maintained that at least one participant did not receive a promised prize of a golf hat and was not entered into a drawing to win a car or other prizes (as was promised in the contest’s rules). About four months later, the FCC issued an LOI to the licensee conducting the contest about the claims made in the complaint. In its response to the LOI, the licensee conducting the contest indicated that the contest consisted of two phases. The first was an 18-week, online golf competition where the highest-scoring contestant each week would win a hat from a golf club. Each weekly winner and one write-in contestant would be able to participate in the second phase of the contest, a real golf competition consisting of taking one shot at a three par hole. As was publicized online, the prize for the winner of the second phase was a $350 golf store gift certificate, and if anyone hit a hole-in-one, they would win a Lexus car.

According to the brokering licensee, the first phase of the contest took place between June and November 2008. The contest took place entirely online, and although the second phase was scheduled to begin in November 2008, it was postponed due to inclement weather and ultimately did not occur at all because the employee who was tasked with running the live golf competition was fired, and the remaining staff never resumed the contest. The brokering licensee further indicated that it forgot about the contest until it received the FCC’s LOI, and, after receiving the LOI, the second phase of the contest occurred and was completed by January 2010. The brokering licensee indicated that it had provided additional prizes of a $25 golf store gift card and a catered lunch to each finalist in the second phase given the delay in conducting the contest.

Section 73.1216 of the FCC’s Rules requires that a station-sponsored contest be conducted “substantially as announced or advertised” and must fully and accurately disclose the “material terms,” including eligibility restrictions, methods of selecting winners, and the extent, nature and value of prizes involved in a contest.

The Enforcement Bureau determined that the contest was not conducted as announced or advertised because the rules were changed during the course of the contest and the contest was not conducted within the promised time frame. The Bureau further found that the licensees failed to fully disclose the material terms of the contest as required by the Commission’s rules. According to the Bureau, the on-air announcements broadcast by the stations failed to mention all of the prizes the licensee planned to award and failed to describe any of the procedures regarding how prizes would be awarded or how the winners would be picked. The brokering licensee argued in its response to the LOI that the full rules were included online, which was a better way to make sure that potential contest participants were not confused. However, the Bureau found that while licensees can supplement broadcast announcements with online rules, online announcements are not a substitute for on-air announcements.

The base fine for failure to conduct a contest as announced is $4,000. The Bureau determined that, contrary to the argument presented in response to the LOI, “neither negligence nor inadvertence” due to the overseeing employee’s departure “can absolve licensees of liability.” The Bureau also said that providing additional prizes to make up for the delay does not overcome the violation of Section 73.1216. Finally, the FCC found that the licensees had failed to disclose the material terms of the contest because the advertisements that were broadcast over the air did not mention certain prizes.

The FCC proposed to impose the base fine amount of $4,000 against the time-brokered station after determining that the licensee had violated Section 73.1216. For the brokering licensee, the FCC proposed an increased fine of $8,000 because of the licensee’s “pattern of violative conduct, and because it conducted the Contest over four stations, not one, thus posing harm to a larger audience.”

Nine Years of Unauthorized Operation and Interference to Wireless Operator Lead to Large Fine

The FCC recently issued a Forfeiture Order to the former licensee of a Private Land Mobile Radio Service (“PLMRS”) station. The Forfeiture Order follows an NAL that the FCC released in July of 2012 proposing a fine of $20,000 for the former licensee of the facility for operating without a license for nine years and causing interference to another wireless service provider.

The former licensee initially received the license for the PLMRS station in April 1997 for a five-year term. Three months before the expiration of the license, the FCC sent the licensee a reminder to renew the license, but the licensee never filed a renewal application. Therefore, the license expired in April of 2002. Nevertheless, the licensee continued operating the station, and on July 31, 2011, filed a request for Special Temporary Authority (“STA”) with the Wireless Telecommunications Bureau of the FCC. The licensee stated in the application that it had recently discovered that its license had expired and that it needed an STA to continue operating the station. The Wireless Bureau granted the STA three days later for a period of six months, until the end of January 2012. Continue reading →

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Back in March, the FCC’s Public Safety and Homeland Safety Bureau (PSHSB) issued a Public Notice seeking to update the record on a 2005 Petition for Immediate Interim Relief regarding proposals to make fundamental changes to the FCC’s EAS Rules with respect to requiring broadcast stations to air multilingual EAS alerts. Yesterday, the PSHSB released a Public Notice extending the comment deadlines in the proceeding. Comments are now due by May 28, 2014 and replies are due by June 12, 2014.

The March Public Notice seeks comments on a number of issues, but the most-discussed issue is the Petitioner’s proposal to have the FCC adopt a so-called “designated hitter” requirement for multilingual EAS.

The Public Notice quotes the Petitioner in describing the proposal:

Such a plan could be modeled after the current EAS structure that could include a “designated hitter” approach to identify which stations would step in to broadcast multilingual information if the original non-English speaking station was knocked off air in the wake of a disaster. Broadcasters should work with one another and the state and/or local government to prepare an emergency communications plan that contemplates reasonable circumstances that may come to pass in the wake of an emergency. The plan should include a way to serve all portions of the population, regardless of the language they speak at home. One market plan might spell out the procedures by which non-English broadcasters can get physical access to another station’s facilities to alert the non-English speaking community – e.g. where to pick up the key to the station, who has access to the microphones, how often multilingual information will be aired, and what constitutes best efforts to contact the non-English broadcasters during and after an emergency if personnel are unable to travel to the designated hitter station.

The March Public Notice asked for comment on a number of questions related to this proposal. The Commission also acknowledged in the March Public Notice that broadcasters have raised concerns that a multilingual EAS requirement using the designated hitter approach would require them to hire additional personnel capable of translating emergency alert information into one or more additional languages.

Given that there is a nine year record in this proceeding and that any multilingual EAS requirements will have wide-ranging implications, those wishing to file comments in the proceeding now have some additional time to make that happen.

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Yesterday, the U.S. Supreme Court heard oral arguments in the Aereo case, providing the first indication of how the Justices view the case pitting Aereo against content providers, particularly broadcast networks. For background on Aereo’s technology and the previous lower court cases, Scott Flick of our office has written extensively on the subject, and a variety of his writings on Aereo can be found here. While trying to read the Court’s mind solely through the questions asked by the Justices can be risky, it is fair to say that Aereo encountered some skepticism on its claim to be an innovator and not a copyright infringer.

Given the significant amount of lower court litigation preceding Tuesday’s oral arguments, there wasn’t much in the way of surprises in the arguments made, many of which focused on the question of whether Aereo engages in a “public performance” when it transmits content to paying subscribers requesting that programming. A transcript of the proceeding can be found here. A number of the Justices focused on the question of whether Aereo’s fabled sea of mini-antennas served any purpose beyond seeking to circumvent the Copyright Act of 1976. Chief Justice Roberts noted that Aereo’s system seemed designed specifically “to get around the copyright laws,” and Justice Ginsburg asked Aereo’s counsel if there is any “technical reason” Aereo needed to have 10,000 dime-size antennas to operate, or if it was merely designed that way to “avoid the breach of the Copyright Act.”

What was a bit of a surprise was the extent to which the Justices’ questions focused on Aereo’s strategic effort to cloak itself as just another provider of cloud services. A number of the Justices indicated concern that there might not be an elegant way of ruling against Aereo without risking a ripple effect to cloud-based services, and it was obvious that none were interested in seeing that happen. Justice Kagan sought clarification regarding how Aereo could be distinguished from other cloud service companies, asking:

What if –­­ how about there are lots of companies where many, many thousands or millions of people put things up there, and then they share them, and the company in some ways aggregates and sorts all that content. Does that count?

Counsel for the broadcasters and the Justice Department attempted to respond to this concern, largely reiterating the position taken in the DOJ’s amicus brief:

The proper resolution of this dispute is straightforward. Unlike a purveyor of home antennas, or the lessor of hilltop space on which individual consumers may erect their own antennas . . . [Aereo] does not simply provide access to equipment or other property that facilitates customers’ reception of broadcast signals. Rather, [Aereo] operates an integrated system–i.e., a “device or process”–whose functioning depends on its customers’ shared use of common facilities. The fact that as part of that system [Aereo] uses unique copies and many individual transmissions does not alter the conclusion that it is retransmitting broadcast content “to the public.” Like its competitors, [Aereo] therefore must obtain licenses to perform the copyrighted content on which its business relies. That conclusion, however, should not call into question the legitimacy of businesses that use the Internet to provide new ways for consumers to store, hear, and view their own lawfully acquired copies of copyrighted works.

The catchphrase for this idea in the oral arguments became a “locker” in the cloud, where consumers could safely store their lawfully obtained content, but which would cross the copyright line if stocked for the consumer for a fee with infringing content by a commercial service like Aereo. While a useful analogy, it did not appear to put an end to the Justices’ concern that the line between a fair use and infringement might not always be clear in the cloud. That is certainly true, but it is also true outside the cloud, where copyright questions are notoriously complex and difficult.

Of course, the most interesting aspect of the Court’s diversion into an examination of cloud services is that it is technically irrelevant to the case at hand. It is safe to say that when Congress enacted the Copyright Act of 1976, cloud computing wasn’t even a distant dream. Imputing an intent on the part of Congress to draft the law in 1976 so as to neatly exclude such services from what might have then been considered copyright infringement is an unrealistic expectation. As a result, courts have always been faced with the task of applying existing copyright law to evolving applications of technologies, with the understanding that Congress will need to step in and change the law if the results cease to be satisfactory.

Having said that, it is the policy of the Supreme Court to narrowly rule on questions before it wherever possible, and drafting a decision addressing only Aereo without reaching the broader question of copyright law in the cloud is certainly the judicious approach, and what most expect the Court to do when a decision is released this summer.

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Oral arguments before the Supreme Court are less than a week away in the Aereo case, and broadcasters are feeling pretty good about their chances. With the Department of Justice, Professor Nimmer (who, along with his father, quite literally wrote the book on copyright), and a host of other luminaries filing in support of the broadcasters’ position, the storyline looks a lot like broadcasters have portrayed it from the beginning: that this is a simple case of copyright infringement hidden behind a veil of modern technological obfuscation.

Sensing that such a storyline is fatal to its prospects, Aereo has responded by casting this case as an attack on consumers’ use of the cloud, and has attracted some allies based on that storyline. However, it is a pretty thin storyline, as few think that the country’s highest court is so careless as to draft a broadcast retransmission rights decision that accidentally destroys the world of cloud computing. The two are not tough to distinguish, and even if the Court secretly disliked cloud computing, it hardly needs to opine on the copyright implications of cloud computing to decide the Aereo question.

Still, lower courts have disagreed on these issues, and only a fool enters the Supreme Court certain that the court will rule in his favor. There are many moving parts, and if a case were easy to decide, it would not have made it to the Supreme Court. That is why both sides will be anxiously watching the oral arguments for hints as to where the various justices stand on the matter.

As of today, however, broadcasters have one less reason to sweat about the outcome. The Court announced yesterday that Justice Alito, who had previously recused himself from the case, is now able to participate. This is a significant development for broadcasters. Because the 2nd Circuit decision being appealed was in Aereo’s favor, Alito’s earlier recusal meant that the case would be heard by the remaining eight justices. That created the risk of a 4-4 tie, which would leave the adverse 2nd Circuit decision in place.

In that scenario, broadcasters would need to win 5 of the 8 possible votes in order to overturn the lower court decision. That can be a tall order, and impossible if it turns out that four justices are firmly on the Aereo side of the fence. With Alito no longer recused, broadcasters now have an additional avenue for scoring that fifth vote. In other words, it’s easier to attract 5 votes out of 9 than it is to get 5 votes out of 8. That means broadcasters are unlikely to find themselves losing on a tie vote, and if the rest of the court should split 4-4, Alito’s entry into the fray effectively gives broadcasters a free throw opportunity at the buzzer to score his vote and break that tie. Now broadcasters just need to convert on that opportunity.

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After Monday’s FCC meeting left television broadcasters facing higher expenses and lower revenues by restricting the use of Joint Sales Agreements and joint retransmission negotiations, broadcasters were due for some good news. Where the FCC is the bearer of bad news, it has often fallen to the courts to be the bearer of good news, generally by overruling the adverse FCC decision. Unfortunately, that process can take years, meaning that in Washington you have to take a very long term view of “the good outweighs the bad.”

This week, however, the FCC’s bad news was followed very quickly by the Supreme Court’s decision today in McCutcheon v. Federal Election Commission. In McCutcheon, the Court ruled that while limits on political contributions to individual candidates continue to be permissible, overall limits on contributions to candidates and party committees are unconstitutional. In other words, the government can limit how much you donate to an individual candidate or party committee, but cannot limit the number of candidates or party committees you support with your donations.

While campaign finance reform will continue to be a hot-button issue, a direct effect of today’s decision will be to increase the war chests of candidates and parties through greater political donations. Much of those increased funds will ultimately be used for political advertising, redounding to the benefit of media in general, but particularly to local broadcasters.

The Court’s 5-4 decision was not particularly a surprise, as many saw McCutcheon as the sequel to 2010’s Citizens United decision, in which the Court found restrictions on political expenditures by corporations and unions to be unconstitutional. When the Supreme Court released its decision in Citizens United, we all understood the immediate financial implications for media, but no one was quite sure just how great that impact would be. It turned out to be very substantial, completing the multi-decade transition of political advertising from being a “not worth the regulatory headaches” obligation of broadcasters to now being a highly sought after segment of the overall advertising market. Indeed, there is no stronger validation of this than the fact that cash flow multiples used in station acquisitions are based on two-year averages, balancing political year revenue with revenue from a non-political year.

As in 2010, the question is not whether today’s decision will result in more ad revenue for media outlets, but how much more. Given that in recent years the number of donors bumping up against the now-unconstitutional cap measured in the hundreds rather than the thousands, the economic impact of today’s decision is unlikely to match that of Citizens United. However, it may have a more interesting effect. The limit on overall donations effectively forced a political contributor to pick and choose a small number of candidates to support with the maximum ($2600 at the moment) donation, and to turn away others because of the cap. The practical result was that donors tended to focus their contributions on candidates in hotly contested races where the contribution could have the most impact.

With today’s elimination of the overall cap, a donor can make the maximum individual donation to every federal political candidate it wishes to support. The likely result is an increased flow of political contributions to candidates in races previously deemed to be lost causes, creating tighter races through the influx of political ad dollars.

From a political standpoint, this means the number of hotly contested races around the country will increase. From an economic standpoint, it means political ad dollars will flow on a more geographically diverse basis, ensuring that a larger number of local stations benefit, rather than just those in swing states and swing districts. This will be welcome news for stations that previously found themselves missing out on political ad dollars while candidates and parties flung large sums at stations in nearby swing districts. By itself, it may not entirely remove the sting of Monday’s FCC actions, but given enough time, the courts may eventually produce some good news in that regard as well.

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While it has been around since 2009, Bitcoin has seen substantial media coverage in the past few months. Media outlets (as well as many other businesses) have been increasingly dabbling in the Bitcoin world, if for no other reason than to show they are up to date with the latest consumer fixations.

While numerous businesses have begun accepting Bitcoin transactions, the most likely place to find them in the media world is as contest prizes or as part of an advertiser promotion. Of course, one of the principal reasons for the novelty of Bitcoin is its goal of being an electronic currency unregulated by governments. As a result, how businesses have been treating their usage of bitcoins from an accounting and legal perspective is highly variable, since it is in many ways a new frontier.

That frontier changed significantly yesterday, when the IRS ruled that virtual currencies like Bitcoin are to be treated as property for federal tax purposes, with transactions using virtual currency subject to much the same tax treatment as those involving U.S. currency. Our own Jim Gatto, head of Pillsbury’s Social Media and Games Team, distributed a Pillsbury Client Alert discussing the ruling. In that Alert, Jim notes that the impact of the IRS ruling includes:

  • Wages paid to employees using virtual currency are taxable to the employee, must be reported by the employer on a Form W-2, and are subject to federal income tax withholding and payroll taxes.
  • Payments using virtual currency made to independent contractors and other service providers are taxable and self-employment tax rules generally apply. Normally, payers must issue IRS Form 1099.
  • The character of gain or loss from the sale or exchange of virtual currency depends on whether the virtual currency is a capital asset in the hands of the taxpayer.
  • A payment made using virtual currency is subject to information reporting to the same extent as any other payment made in property.
  • For purposes of computing gross income, a taxpayer who receives virtual currency as payment for goods or services must include the fair market value of virtual currency received as measured in U.S. dollars, as of the date that the virtual currency was received.

The Client Alert provides additional detail, but if you are using bitcoins for any type of transaction, whether as contest prize, currency for purchases on your website, or payments to employees and vendors, the IRS has made clear that you will need to follow the same procedures (and pay taxes) as though the transaction had occurred in dollars.

While that is a big issue for businesses doing large Bitcoin transactions, businesses dabbling in small and occasional Bitcoin transactions will need to pay even closer attention than they would to a transaction using traditional currency. For example, if the prize in a station contest is one bitcoin, the station will need to assess whether awarding the prize triggers the need for issuing IRS Form 1099 to record the awarding of the prize. In a cash prize contest, that is straightforward, since the Form 1099 currently specifies a prize of $600 or more as the threshold for needing to issue the form. As I write this, however, the current Bitcoin exchange rate is roughly $582 U.S. dollars per bitcoin. That means a one bitcoin prize would not trigger the need for a Form 1099, but a two bitcoin prize would.

Similarly, yesterday’s IRS ruling seems to indicate that the bitcoin must be valued for tax purposes at the time it is received. As a result, the station holding the contest would need to check the value of a bitcoin on the day the prize is awarded to see if it is above or below the $600 threshold for tax purposes. Of course, given the volatility of the Bitcoin exchange rate, this raises other questions, such as how do you value the bitcoin for tax reporting if the exchange rate was below $600 for part of that day and above $600 for part of that day, or if the day the prize is “sent” is not the same day as the prize winner receives or “cashes” it.

Like so many things, Bitcoin appears to be another example of something meant to simplify life, but which is turning out to only make life more complicated. Look for life to get even more complicated as individual states formally adopt a similar approach in treating virtual currency transactions as taxable events.

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March 2014

Pillsbury’s communications lawyers have published FCC Enforcement Monitor monthly since 1999 to inform our clients of notable FCC enforcement actions against FCC license holders and others. This month’s issue includes:

  • FCC Proposes $40,000 Fine for Public Inspection File/License Renewal Violations
  • Short-Term License Renewal and Hefty Fine for Missing QIP Lists
  • $5,000 Fine for FM Station’s Failure to Maintain Minimum Operating Hours


Failure to Disclose Rules Violations Leads to $40,000 Fine

Late last month, the FCC issued two essentially identical orders against co-owned Milwaukee and Chicago Class A TV stations in response to a number of missing Quarterly Issues/Programs Lists and Children’s Television Programming Reports and for not reporting the missing issues/programs lists in the stations’ license renewal applications. The FCC’s Media Bureau proposed a $20,000 fine against each station, for a total fine of $40,000.

In late December of last year, the FCC issued Notices of Apparent Liability for Forfeiture (“NAL”) for the two stations, noting that the stations had mentioned in their license renewal applications that they had failed to timely file numerous Children’s Television Programming Reports, but had not disclosed the absence from their online public files of over a dozen (each) Quarterly Issues/Program Lists. Section 73.3526 of the FCC’s Rules requires licensees to maintain information about station operations in their public inspection files so the public can obtain “timely information about the station at regular intervals.”

The base fine for failure to file a required form is $3,000, and the base fine for public file violations is $10,000. After considering the facts, the FCC concluded in each NAL that the respective station was liable for $9,000 for the missing Quarterly Issues/Programs Lists, $9,000 for the missing Children’s Television Programming Reports, and an additional $2,000 for failing to disclose the missing Quarterly Issues/Program Lists in their renewal applications.

After receiving the NALs, each station requested that the fine be reduced due to an inability to pay. The FCC will not consider reducing a fine based on a claimed inability to pay unless the licensee submits federal tax returns for the last three years, financial statements, or other documentation that accurately demonstrates its financial status. In this case, each station submitted appropriate documentation about its financial condition. However, the FCC was not persuaded that the amount of the fines exceeded each station’s ability to pay, and declined to reduce the fines.

Public Inspection File Violations Lead to $46,000 in Fines and Limited License Terms
In connection with recent license renewal applications, the FCC issued four essentially identical Memorandum Opinions and Orders and Notices of Apparent Liability for Forfeiture, resulting in $46,000 in fines for a Washington radio licensee. In addition, three of the licensee’s four stations’ license renewal applications were granted for only a four-year term rather than the normal eight-year term.

The first three of the licensee’s stations were missing, respectively, 24, 26, and 20 Quarterly Issues/Programs Lists for various periods during the license term. The fourth station’s public inspection file was missing 12 reports for a two-year period spanning from 2006 to 2008. Continue reading →

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March 2014

TV, Class A TV, and locally originating LPTV stations licensed to communities in Arizona, Idaho, New Mexico, Nevada, Utah, and Wyoming must begin airing pre-filing license renewal announcements on April 1, 2014. License renewal applications for all TV stations in these states are due by June 2, 2014.

Pre-Filing License Renewal Announcements

Stations in the video services that are licensed to communities in Arizona, Idaho, New Mexico, Nevada, Utah, and Wyoming must file their license renewal applications by June 2, 2014 (June 1 being a Sunday).

Beginning two months prior to that filing, full power TV, Class A TV, and LPTV stations capable of local origination must air four pre-filing renewal announcements alerting the public to the upcoming license renewal application filing. These stations must air the first pre-filing announcement on April 1, 2014. The remaining announcements must air on April 16, May 1, and May 16, 2014, for a total of four announcements. A sign board or slide showing the licensee’s address and the FCC’s Washington DC address must be displayed while the pre-filing announcements are broadcast.

For commercial stations, at least two of these four announcements must air between 6:00 p.m. and 11:00 p.m. (Eastern/Pacific) or 5:00 p.m. and 10:00 p.m. (Central/Mountain). Locally-originating LPTV stations must broadcast these announcements as close to the above schedule as their operating schedule permits. Noncommercial stations must air the announcements at the same times as commercial stations, but need not air any announcements in a month in which the station does not operate. A noncommercial station that will not air some announcements because it is off the air must air the remaining announcements as listed above, i.e., the first two must air between 6:00 p.m. and 11:00 p.m. (Eastern/Pacific) or 5:00 p.m. and 10:00 p.m. (Central/Mountain).

The text of the pre-filing announcement is as follows:

On [date of last renewal grant], [call letters] was granted a license by the Federal Communications Commission to serve the public interest as a public trustee until October 1, 2014. [Stations which have not received a renewal grant since the filing of their previous renewal application should modify the foregoing to read: “(Call letters) is licensed by the Federal Communications Commission to serve the public interest as a public trustee.”]

Our license will expire on October 1, 2014. We must file an application for renewal with the FCC by June 2, 2014. When filed, a copy of this application will be available for public inspection at www.fcc.gov. It contains information concerning this station’s performance during the last eight years [or other period of time covered by the application, if the station’s license term was not a standard eight-year license term].

Individuals who wish to advise the FCC of facts relating to our renewal application and to whether this station has operated in the public interest should file comments and petitions with the Commission by September 1, 2014.

Further information concerning the FCC’s broadcast license renewal process is available at [address of location of the station] or may be obtained from the FCC, Washington, DC 20554.

If a station misses airing an announcement, it should broadcast a make-up announcement as soon as possible and contact us to further address the situation. As noted above, special rules apply to noncommercial stations that do not normally operate during any month when their announcements would otherwise be required to air, as well as to other silent stations. These stations should contact us to ensure they give the required public notice.

Article continues — the full article can be found at Pre-Filing and Post-Filing License Renewal Announcement Reminder

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There was quite a stir today when the FCC, despite being closed for a snow day, issued a Notice of Apparent Liability proposing very large fines against Viacom ($1,120,000), NBCUniversal ($530,000), and ESPN ($280,000) for transmitting false EAS alert tones. According to the FCC, all three aired an ad for the movie Olympus Has Fallen that contained a false EAS alert tone, with Viacom airing it 108 times on seven of its cable networks, NBCUniversal airing it 38 times on seven of its cable networks, and ESPN airing it 13 times on three of its cable networks.

The size of the fines certainly drew some attention. Probably not helping the situation was the ad’s inclusion of the onscreen text “THIS IS NOT A TEST” and “THIS IS NOT A DRILL” while sounding the EAS tone. The FCC launched the investigation after receiving complaints from the public.

All three entities raised a variety of arguments that were uniformly rejected by the FCC, including that “they had inadequate notice of the requirements and applicability of the rules with respect to EAS violations.” What particularly caught my eye, however, was that all three indicated the ad had cleared an internal review before airing, and in each case, those handling the internal review were apparently unaware of Section 325 of the Communications Act (prohibiting transmission of a “false or fraudulent signal of distress”) and Section 11.45 of the FCC’s Rules, which states that “No person may transmit or cause to transmit the EAS codes or Attention Signal, or a recording or simulation thereof, in any circumstance other than in an actual National, State or Local Area emergency or authorized test of the EAS.”

Back in 2010, I wrote a post titled EAS False Alerts in Radio Ads and Other Reasons to Panic that discussed the evolution of the FCC’s concerns about false emergency tones in media, which originally centered on sirens, then on Emergency Broadcast System tones, and now on the Emergency Alert System’s digital squeals. Two months later, I found myself writing about it again (The Phantom Menace: Return of the EAS False Alerts) when a TV ad for the movie Skyline was distributed for airing with a false EAS tone included in it.

That was the beginning of what has since become a clear trend. Those initial posts warned broadcasters and cable programmers to avoid airing specific ads with false EAS tones, but were not connected to any adverse action by the FCC. After three years of EAS tone tranquility, the issue reemerged in 2013 when hackers managed to commandeer via Internet the EAS equipment of some Michigan and Montana TV stations to send out false EAS alert warnings of a zombie attack. The result was a rapid public notice from the FCC instructing EAS participants to change their EAS passwords and ensure their firewalls are functioning (covered in my posts FCC Urges IMMEDIATE Action to Prevent Further Fake EAS Alerts and EAS Alerts and the Zombie Apocalypse Make Skynet a Reality), but no fines.

From there we moved in a strange direction when the Federal Emergency Management Agency distributed a public service announcement seeking to educate the public about the Emergency Alert System, but used an EAS tone to get that message across. Because it did not involve an actual emergency nor a test of the EAS system, the PSA violated the FCC’s rule against false EAS tones and broadcasters had no choice but to decline to air it. The matter was resolved when the FCC quickly rushed through a one-year waiver permitting the FEMA ad to be aired (Stations Find Out When Airing a Fake EAS Tone Is Okay).

Late last year, however, the evolution of the FCC’s treatment of false EAS alerts turned dark (FCC Reaches Tipping Point on False EAS Alerts) when the FCC issued the first financial penalties for false EAS alerts. The FCC proposed a $25,000 fine for Turner Broadcasting and entered into a $39,000 consent decree with a Kentucky radio station for airing false EAS alert tones. The FCC indicated at the time that other investigations were ongoing, and more fines might be on the way.

We didn’t have to wait long, as just two months later, the FCC upped the ante, proposing a fine of $200,000 against Turner Broadcasting for again airing false EAS alert tones, this time on its Adult Swim network. The size of the fine was startling, and according to the FCC, was based upon the nationwide reach of the false EAS tone ad, as well as the fact that Turner had indicated in connection with its earlier $25,000 fine that it had put in place mechanisms to prevent such an event from happening again. When it did happen again, the FCC didn’t hesitate to assess the $200,000 fine.

Today’s order, issued less than two months after the last Turner decision, ups the ante once again, proposing fines of such size that only some of the FCC’s larger indecency fines compare. The FCC is clearly sending a signal that it takes false EAS tones very seriously, and the fact that the ads containing the EAS tones were produced by an independent third party didn’t let the programmers off the hook. In other words, it doesn’t matter how or why the ads got on the air; the mere fact that they aired is sufficient to create liability.

So what lesson should broadcasters and cable networks take away from this? Well, the all too obvious one is to do whatever it takes to prevent false EAS tones from making it on air. However, an equally useful lesson is to make sure that your contracts with advertisers require the advertiser to warrant that the spots provided will comply with all laws and to indemnify the broadcaster or network if that turns out not to be the case. That won’t save you from a big FCC fine and a black mark on your FCC record, but it will at least require the advertiser to compensate you for the damages you suffered in airing the ad and defending yourself. Unfortunately, many advertising contracts are not particularly well drafted (and some are just a handshake), which can expose you to a variety of liabilities like this unnecessarily.

It is therefore wise to have both your ad contracts and your advertising guidelines carefully reviewed by counsel experienced in this area of the law. Vigilant review of ads submitted for airing is an excellent first line of defense, but as demonstrated in today’s decision, it won’t do much good if the individuals reviewing the ads don’t know what to look for.