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The FCC’s video description rules require covered broadcasters and MVPDs to provide audio-narration of the key visual elements of a program during pauses in the dialogue so as to make it more accessible to individuals who are blind or visually impaired. Under the current rules (which Congress in 2010 directed the FCC to reinstate after a court struck them down in 2000), broadcast stations affiliated with ABC, CBS, Fox, or NBC that are located in the top 60 television markets are required to provide 50 hours of programming with video description per calendar quarter. The top five non-broadcast networks on Pay-TV systems serving 50,000 or more subscribers (currently USA, TNT, TBS, History, and Disney Channel, as of July 1, 2015) are also subject to this requirement.

In addition to directing the FCC to reinstate its video description rules in the Twenty-First Century Communications and Video Accessibility Act of 2010 (CVAA), Congress gave the FCC authority to adopt additional video description rules if the benefits of doing so would outweigh the costs. At today’s Open Meeting, the FCC tentatively concluded that the substantial benefits of adopting additional video description requirements would outweigh the costs of the proposed requirements, and therefore adopted a Notice of Proposed Rulemaking recommending an update to and expansion of its video description rules.

The FCC’s additional proposed requirements include increasing the required amount of video-described programming on each covered network from 50 hours per calendar quarter to 87.5 hours, and expanding the number of networks subject to the rules from four broadcast and five non-broadcast networks to five broadcast and ten non-broadcast networks.

The NPRM will also seek comment on a “no-backsliding rule”, which would keep covered networks subject to the requirements even if they fall below the top-five (broadcast) or top-ten (non-broadcast) ranking.

Dissenting in part, Commissioners Pai and O’Rielly voiced concern that the FCC’s proposals exceed the Commission’s statutory authority, which had been the downfall of the earlier rules. In particular, both commissioners warned that the proposals far exceed the 75% increase of the total hour requirement permitted under the CVAA:  Commissioner Pai’s “conservative estimate” was that the proposed additional requirements would increase the total hours requirement by 192% (before taking into account the no-backsliding rule).  With respect to the no-backsliding rule, Commissioner Pai described the proposal as the “Hotel California” approach to regulation, and accused the FCC of Orwellian speak and “reinvent[ing] math”—where the “top five broadcast networks can mean more than five networks.”

The text of the NPRM and comment deadlines have yet to be released, but it’s already sounding like the FCC will be in for a lively debate.

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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:

  • Noncommercial FM Broadcaster Fined $10,000 for Public Inspection File Violations
  • TV Licensee Faces $20,000 Fine for Untimely Filing of 16 Children’s TV Programming Reports
  • Man Agrees to $2,360 Fine for Using GPS Jamming Device at Newark Airport

FCC Refuses to Take Pity on “Mom and Pop” FM Public Broadcaster With Public Inspection File Violations

The FCC’s Media Bureau denied a New York noncommercial FM licensee’s Petition for Reconsideration of a March 2015 Forfeiture Order, affirming a $10,000 fine against the licensee for failing to place 13 Quarterly Issues/Programs Lists in the station’s public inspection file.

Section 73.3527 of the FCC’s Rules requires noncommercial educational licensees to maintain a public inspection file containing specific types of information related to station operations. Among the materials required for inclusion in the file are the station’s Quarterly Issues/Programs Lists, which must be retained until final Commission action on the station’s next license renewal application. Issues/Program Lists detail programs that have provided the station’s most significant treatment of community issues during the preceding quarter.

In February 2014, the licensee filed an application for renewal of the station’s license, which it had acquired from a university in 2010 after the university decided to defund the station. In the application, the licensee admitted that the station’s public inspection file was missing 13 Quarterly Issues/Programs Lists, commencing with the licensee’s acquisition of the station in 2010.

In March 2015, the FCC issued a Notice of Apparent Liability for Forfeiture in the amount of $10,000, the base fine for a public inspection file violation. The licensee filed a Petition for Reconsideration, urging the FCC to withdraw the fine. While the licensee did not dispute the violations, it explained that it had a history of compliance with the FCC’s rules, and that it was the public radio equivalent of a “mom-and-pop-operation.” It further explained that it only had several employees and volunteers, including an unpaid manager, and was under constant financial strain.

In response, the FCC contacted the station on three separate occasions in 2015 to request that the licensee provide documentation supporting its claim of financial hardship. After receiving no response to these requests, the FCC chose not to reduce the fine based on financial hardship when it issued the resulting Forfeiture Order. In addition, the FCC chose not to reduce the fine based on the station’s history of compliance with the rules because of the “extensive” nature of the violations. Ultimately, however, the FCC stated that it would grant the license renewal application upon the conclusion of the forfeiture proceeding if “there are no issues other than the violations discussed here that would preclude grant of the application.”

Sour Sixteen: Failing to Timely File 16 Children’s TV Programming Reports Nets Proposed $20,000 Fine

A Texas TV licensee is facing a $20,000 fine for failing to timely file sixteen Children’s Television Programming Reports.

Section 73.3526 of the FCC’s Rules requires each commercial broadcast licensee to maintain a public inspection file containing specific information related to station operations. Subsection 73.3526(e)(11)(iii) requires a commercial licensee to prepare and place in its public inspection file a Children’s Television Programming Report for each calendar quarter. The report sets forth the efforts the station made during that quarter and has planned for the next quarter to serve the educational and informational needs of children. Licensees are required to file the reports with the FCC and place them in their public files by the tenth day of the month following the quarter. Continue reading →

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The next Quarterly Issues/Programs List (“Quarterly List”) must be placed in stations’ public inspection files by April 10, 2016, reflecting information for the months of January, February, and March 2016.

Content of the Quarterly List

The FCC requires each broadcast station to air a reasonable amount of programming responsive to significant community needs, issues, and problems as determined by the station. The FCC gives each station the discretion to determine which issues facing the community served by the station are the most significant and how best to respond to them in the station’s overall programming.

To demonstrate a station’s compliance with this public interest obligation, the FCC requires the station to maintain and place in the public inspection file a Quarterly List reflecting the “station’s most significant programming treatment of community issues during the preceding three month period.” By its use of the term “most significant,” the FCC has noted that stations are not required to list all responsive programming, but only that programming which provided the most significant treatment of the issues identified.

Given that program logs are no longer mandated by the FCC, the Quarterly Lists may be the most important evidence of a station’s compliance with its public service obligations. The lists also provide important support for the certification of Class A station compliance discussed below. We therefore urge stations not to “skimp” on the Quarterly Lists, and to err on the side of over-inclusiveness. Otherwise, stations risk a determination by the FCC that they did not adequately serve the public interest during the license term. Stations should include in the Quarterly Lists as much issue-responsive programming as they feel is necessary to demonstrate fully their responsiveness to community needs. Taking extra time now to provide a thorough Quarterly List will help reduce risk at license renewal time.

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March 2016

The next Children’s Television Programming Report must be filed with the FCC and placed in stations’ public inspection files by April 11, 2016, reflecting programming aired during the months of January, February, and March 2016.

Statutory and Regulatory Requirements

As a result of the Children’s Television Act of 1990 (“Act”) and the FCC rules adopted under the Act, full power and Class A television stations are required, among other things, to: (1) limit the amount of commercial matter aired during programs originally produced and broadcast for an audience of children 12 years of age and under, and (2) air programming responsive to the educational and informational needs of children 16 years of age and under.

These two obligations, in turn, require broadcasters to comply with two paperwork requirements. Specifically, stations must: (1) place in their online public inspection file one of four prescribed types of documentation demonstrating compliance with the commercial limits in children’s television, and (2) submit FCC Form 398, which requests information regarding the educational and informational programming the station has aired for children 16 years of age and under. Form 398 must be filed electronically with the FCC. The FCC automatically places the electronically filed Form 398 filings into the respective station’s online public inspection file. However, each station should confirm that has occurred to ensure that its online public inspection file is complete. The base fine for noncompliance with the requirements of the FCC’s Children’s Television Programming Rule is $10,000.

Note: Broadcasters may no longer use the KIDVID link to file their reports.  Beginning this quarter, broadcasters must file their reports via the new Licensing and Management System (LMS), accessible at https://enterpriseefiling.fcc.gov/dataentry/login.html.

Noncommercial Educational Television Stations

Because noncommercial educational television stations are precluded from airing commercials, the commercial limitation rules do not apply to such stations. Accordingly, noncommercial television stations have no obligation to place commercial limits documentation in their public inspection files. Similarly, though noncommercial stations are required to air programming responsive to the educational and informational needs of children 16 years of age and under, they do not need to complete FCC Form 398. They must, however, maintain records of their own in the event their performance is challenged at license renewal time. In the face of such a challenge, a noncommercial station will be required to have documentation available that demonstrates its efforts to meet the needs of children.

Commercial Television Stations

Commercial Limitations

The Commission’s rules require that stations limit the amount of “commercial matter” appearing in children’s programs to 12 minutes per clock hour on weekdays and 10.5 minutes per clock hour on the weekend. In addition to commercial spots, website addresses displayed during children’s programming and promotional material must comply with a four-part test or they will be considered “commercial matter” and counted against the commercial time limits. In addition, the content of some websites whose addresses are displayed during programming or promotional material are subject to host-selling limitations. Program promos also qualify as “commercial matter” unless they promote children’s educational/informational programming or other age-appropriate programming appearing on the same channel. Licensees must prepare supporting documents to demonstrate compliance with these limits on a quarterly basis.

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Consumer protection is always in style at the Federal Trade Commission (FTC”). When 50 fashion “influencers” flooded Instagram, all wearing the same dress in photos tagged “@lordandtaylor”, and an article featuring the same dress appeared in the online fashion magazine Nylon, some at the FTC suspected an advertising campaign masquerading as a social media dialogue.  While this matter arose in a “new media” context, and therefore impacts all businesses’ online activities, broadcasters are doubly affected—online and on-air—by the FTC’s action.

As we describe in more detail in our Client Advisory Lord and Taylor Case Shows the Importance of Transparency in Advertising, the FTC’s investigation into a supposedly viral phenomenon unveiled an integrated advertising campaign. Among other things, Lord & Taylor formally contracted with fashion influencers, giving them the dress for free and compensating them to “product bomb” Instagram with photos of themselves wearing the dress on one particular weekend.  Lord & Taylor approved the influencers’ posts and required them to include the @lordandtaylor tag and #DesignLab hashtag.  Lord & Taylor also contracted with Nylon to run an article about its new Design Lab collection, featuring the dress in the article and on Nylon’s Instagram page as well.  Again, Lord & Taylor reviewed the content before it was published.  However, Lord & Taylor did not require the influencers or Nylon to disclose their connection to Lord & Taylor or that they had been compensated for posting the photos and comments.

In December 2015, the FTC released its Enforcement Policy Statement on Deceptively Formatted Advertisements.  The Policy Statement provides an overview of how the FTC intends to apply its consumer protection principles to “native advertising”—online advertising material that resembles editorial content, product reviews, or other content which could mislead consumers into believing that the advertising isn’t really advertising.  It also notes some factors that have contributed to a rise in native advertising online, such as the increased ability of publishers to quickly and cheaply reformat and reuse content, evolving business models around monetization of content, and the ability of consumers to skip or block ads placing pressure on advertisers to capture consumers’ attention.  However, the Policy Statement concludes that “[a]lthough digital media has expanded and changed the way marketers reach consumers, all advertisers, including digital advertisers, must comply with the same legal principles regarding deceptive conduct the Commission has long enforced.”

In setting out what those legal principles are, the FTC referred back to many cases involving a wide variety of media, including television infomercials that blurred the line between advertising and editorial content.  The FTC brought numerous cases in the 1980s and 1990s against infomercials that looked like investigative news reports or consumer product review content and required the addition of conspicuous “PAID ADVERTISEMENT” disclosures at the beginning and throughout the program where product ordering information was presented.

The FTC’s approach to digital marketing is similar. In its Native Advertising: A Guide For Businesses released along with the December Policy Statement, the FTC noted “[t]he more a native ad is similar in format and topic to content on the publisher’s site, the more likely that a disclosure will be necessary to prevent deception.”  In the Lord & Taylor case, the Nylon article used language similar to traditional editorial content recommending certain fashion choices.  Specifically, it stated:  “[W]e’re taking out the guess work and introducing you to spring’s must-have line: Lord & Taylor’s Design Lab.”  The FTC faulted Lord & Taylor for not requiring a disclosure that the article was paid-for advertising.

In addition, the FTC’s updated Endorsement Guides published in 2009 require that when advertisers recruit endorsers and provide them with free merchandise or other compensation, they must require their endorsers to clearly and conspicuously disclose their connection to the advertiser and, further, to monitor those endorsements for accuracy and inclusion of the required disclosure language.  Here, while Lord & Taylor did review and even edit the endorsements, it did not require any disclosure of the endorser’s relationship with Lord & Taylor.  We have written extensively about the Endorsement Guides and how they apply to broadcasters, including common situations that arise in on-air “banter”, here and here.

As a result of its investigation into Lord & Taylor’s advertising of the Design Lab line, the FTC and Lord & Taylor agreed to a settlement which imposes a number of conditions beyond mere compliance on Lord & Taylor going forward.  These include filing various reports with the FTC, preserving documents for later FTC review should it be necessary, and providing copies of the settlement agreement to all those who have anything to do with creating similar advertising campaigns. The case is an important reminder to all advertisers that, as the FTC has said, “[r]egardless of the medium in which an advertising or promotional message is disseminated, deception occurs when consumers acting reasonably under the circumstances are misled about its nature or source, and such misleading impression is likely to affect their decisions or conduct regarding the advertised product or the advertising.”

Do your online and on-air promotions meet this test?

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It’s not just high school seniors who should be waiting by the mailbox for a thick package to arrive this coming week.  All television stations that filed a Form 177 application in Auction 1001 should be looking for their Second Confidential Status Letter between today and March 22nd.  The FCC has released a Public Notice stating that the letters have now been mailed to auction applicants.

THE SECOND CONFIDENTIAL STATUS LETTER REQUIRES A SIGNATURE

The Second Confidential Status Letter was sent to the contact person for each applicant.  Someone must be available to sign for the package.  It does not have to be the contact person, but applicants will want to be sure someone is available at the address used in their Form 177 to sign for the package.

APPLICANTS THAT DO NOT RECEIVE THEIR LETTER BY NOON ET ON MARCH 22ND MUST CONTACT THE AUCTIONS HOTLINE BY TELEPHONE

The Second Confidential Status Letter will inform applicants as to whether their Form 177 applications have been deemed complete.  Those applicants whose applications are deemed complete with respect to at least one selected station will receive the SecurID tokens for each of the applicants’ authorized bidders.  To participate in the auction, the applicant will need the SecurID token, the FCC-assigned Username associated with that token, and the password associated with that licensee’s Federal Registration Number.  Note that group owners that hold licenses in multiple licensees will receive a token and Username for each licensee and will have to sign in to the auction system separately for each licensee.

The Second Confidential Status Letter will also provide applicants with instructions for signing in to the auction online system and submitting their Initial Commitment by the deadline of 6:00 p.m. ET on March 29, 2016.  As we have previously written, there will be a preview period beginning at 10:00 a.m. on March 24, 2016.  All applicants should sign in to the system during the preview period to familiarize themselves with the system.

The FCC held a Workshop on March 11th to educate applicants about the Initial Commitment process.  The presentation is available for review here.  In the Initial Commitment, applicants will have the opportunity to designate their preferred relinquishment option from among the relinquishment option(s) they selected on their Form 177.  Any applicant that selects the “Go Off Air” option will be accommodated, unless the FCC determines that their station is not needed.  Stations that select one of the options to move to the High VHF or Low VHF band will also have the ability to select one or more “fall back” options.

It is important for applicants to understand their Initial Commitment options.  Once the Initial Commitment window closes, the FCC will take several weeks to recalculate its spectrum clearing targets.  The FCC will then send applicants a Final Confidential Status Letter which will advise them whether their station is needed in the auction (recall that when the FCC released the opening bids, it identified some stations that would not be needed in the auction because its analysis showed those stations will always have a channel to repack to, regardless of the elections made by other broadcasters).  Stations previously deemed needed could be recategorized as not needed based on the information the FCC receives in the Initial Commitments.

In addition, any station that selects the move to High VHF or Low VHF band in the Initial Commitment window will be informed whether that selection can be accommodated.  If a station making a VHF selection cannot be accommodated because of the limited number of channels available in that band, the station will be repacked in its original band and not be eligible to participate in the auction unless the station has selected a “fall back” option that can be accommodated.  As noted, the “Go Off Air” option can always be accommodated unless the station is deemed not needed.

The learning curve for the Broadcast Incentive Auction is steep.  Applicants should take advantage of the educational materials that the FCC has released thus far, and keep a sharp eye out for the arrival of the Second Confidential Status Letter.