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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:

Headlines:

  • FCC Refuses TV Licensee’s Request to Defer $15,000 Fine Until After Incentive Auction
  • FCC Proposes $20,000 Fine for Radio Licensee’s Violation of Multiple Ownership Rule
  • FCC Imposes $12,000 Fine and Short-Term License Renewal for Failure to Maintain Public Inspection File and File Ownership Reports

Red Light Blues: FCC Refuses TV Licensee’s Request to Defer Fine Collection Until After Incentive Auction

The FCC’s Media Bureau rejected a Kansas TV licensee’s request to defer a $15,000 fine for failing to timely file fourteen Children’s Television Programming Reports, and for failing to disclose the violations in its license renewal application.

Section 73.3256 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) of the rule requires licensees to prepare and place in their public inspection files a Children’s Television Programming Report for each calendar quarter showing, among other things, the efforts made during that three-month period to serve the educational and informational needs of children.

In addition, Section 73.3514(a) of the FCC’s Rules requires licensees to include all information requested by an application form when filing it with the FCC. The license renewal application form requires licensees to certify that they have complied with Section 73.3526 and have timely filed their Children’s Television Programming Reports with the FCC.

In April 2016, the FCC issued a Notice of Apparent Liability (“NAL”) to the licensee, asserting that since 2011 the licensee had filed fourteen Children’s Television Programming Reports late, and had subsequently failed to report those violations in its license renewal application. After determining that these actions constituted violations of Sections 73.3526(e)(11)(iii) and 73.3514(a), the FCC proposed a fine of $12,000 for the fourteen late reports and another $3,000 for failing to disclose the violations in the license renewal application—for a total proposed fine of $15,000.

The licensee did not dispute the violations. Instead, it requested a waiver of the FCC’s red light rule, which bars stations from receiving certain benefits if they have an outstanding balance owed to the FCC. In October 2015, the FCC waived the red right rule to allow broadcasters that owed debts to the FCC to participate in the Spectrum Auction.

In requesting a waiver of the red light rule and deferral of the fine until after the Auction concludes, the licensee argued that while it did not owe money to the FCC when it filed its reverse auction application, the current $15,000 fine could make it subject to the red light rule in the near future because it is unable to pay that fine. The licensee explained that if it were a winning bidder in the Auction, it would then be able to pay the fine. Alternatively, the licensee requested a 30 day extension to pay the proposed fine in the event that it was unsuccessful in the Auction.

The FCC rejected the licensee’s requests. In doing so, it first noted that the FCC waived the red light rule for only a very limited purpose at the start of the Auction. Second, it stated that since the licensee admitted that it was not subject to a red light restriction when it filed its reverse auction application and is not currently subject to one, and given that the licensee had provided no documentation showing its inability to pay the fine, any request for a waiver would be prospective and speculative.

The FCC indicated the licensee therefore had two options: (i) pay the proposed fine in full, or (ii) seek a reduction or cancellation. Because the licensee did neither, and instead merely provided a statement about its inability to pay the fine without any supporting documentation, the FCC ordered the licensee to pay the $15,000 fine.

Too Soon? Radio Licensee Faces $20,000 Fine for Premature Implementation of Time Brokerage Agreement

The FCC proposed to fine a New York radio licensee $20,000 for implementing a Time Brokerage Agreement (“TBA”) that violated the Commission’s multiple ownership rule before the FCC had an opportunity to rule on the licensee’s waiver request. Continue reading →

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Today, the FCC released a document entitled Fact Sheet: Updating Media Ownership Rules in the Public Interest.  The driver behind the Fact Sheet is the Chairman’s promise to the Third Circuit Court of Appeals that draft multiple ownership rules would be circulated among the commissioners by June 30, with the intent of adopting final rules by the end of 2016.  The Fact Sheet trumpets the accomplishment of that task.  It also makes clear, however, that the path the Chairman has chosen in proposing new rules is to further regulate rather than deregulate broadcasters, and to do so without gathering any additional record evidence to defend that regulatory initiative.  This once again places the Commission on the well-trod path of adopting its desired result and leaving the task of defending it in court to a future FCC.  In the meantime, broadcasters remain in regulatory limbo.

In the Fact Sheet, the Commission explains that the record in the proceeding, which consists of the record of the 2010 quadrennial review as supplemented by comments received in response to the Further Notice of Proposed Rule Making (FNPRM) that commenced the 2014 quadrennial review, is sufficient to conclude that traditional media outlets remain “of vital importance to their local communities.”  Based on this finding, it concludes that continued regulation of the industry is in the public interest.  The Fact Sheet goes on to detail how each of the Commission’s existing media ownership rules will be “tweaked”, but otherwise reaffirmed, save the rules affecting television ownership, which will be tightened.

The Fact Sheet summarizes the proposed rules as follows:

  • The local television ownership rule, which prohibits common ownership of two full-power television stations in a market with fewer than eight independent television owners, and the common ownership of two Top-Four television stations in any market, will be left intact other than to update it to reflect the transition to digital television. However, the new rules will expand the prohibition against ownership of two Top-Four stations in the same market to apply to “network affiliation swaps, to prevent broadcasters from evading” the local ownership limits.
  • The controversial rule that the Commission adopted in 2014 treating TV Joint Sales Agreements (JSAs) as ownership interests (which the Third Circuit recently invalidated) will be reinstated, although existing JSAs will be granted some type of grandfathering relief, consistent with what the Fact Sheet terms Congress’ “guidance” on that issue. The Fact Sheet does not provide any details, nor address whether such grandfathered JSAs will be assignable.
  • TV Shared Services Agreements (SSAs) will now have to be placed in television stations’ online public inspection files. The agreements subject to this provision will be numerous, as SSAs are broadly defined by the Fact Sheet as “[a]ny agreement in which (1) a station provides another station, not commonly owned, with any station-related services, including administrative, technical, sales, and/or programming support; or (2) stations not commonly owned collaborate to provide station-related services, including administrative, technical, sales and/or programming support.”
  • The existing radio ownership rules will remain unchanged except for some “minor clarifications to assist the Media Bureau in processing license assignment/transfer applications.” An example provided of such a clarification is addressing how to define radio markets in Puerto Rico.
  • While the FCC tentatively concluded in the 2014 FNPRM that the Radio/TV Cross-Ownership prohibition is no longer needed for competition or localism purposes, and that the record indicated elimination of the prohibition would not adversely impact ownership diversity, the Fact Sheet, in keeping with its pro-regulation theme, reverses course and states the rule will be retained unchanged except for an update to reflect the transition to digital television.
  • Similarly, while the FCC suggested in the 2014 FNPRM that radio should be eliminated from the Newspaper/Broadcast Cross-Ownership prohibition, the Fact Sheet indicates that the current rule will be retained, but updated for digital television, and will now incorporate a failing or failed station/newspaper waiver standard.
  • The Dual Network Rule, which prohibits common ownership of ABC, CBS, NBC or Fox, will remain unchanged.
  • The Eligible Entity Standard, which determines which entities are eligible for favored regulatory treatment under the multiple ownership rules, was also affected by the recent Third Circuit decision.  The court ordered the FCC to collaborate with advocacy groups on a timeline to adopt a new standard and urged the Commission to engage with those groups on the substance of that standard as well.  The Fact Sheet indicates that the FCC will simply reinstate the prior revenue-based standard, rejecting the advocacy groups’ proposals to use a race or gender-based standard.

While today’s news is hardly surprising, it is disappointing for those waiting for the FCC to address (or even acknowledge) competitive realities that weren’t dreamed of when the FCC completed the 2006 quadrennial review.  For the most part, the Fact Sheet tracks the rules proposed in the even-further-out-of-date-now-than-it-was-then March 2014 FNPRM.  To the extent it varies from the FNPRM, it does so by rejecting any deregulatory proposals, increasing the regulatory burden on broadcasters beyond what was contemplated in 2014.

It wouldn’t be the first time the FCC has had to proceed on an out-of-date record, this time under pressure from the Third Circuit to do something (anything?) before the year is out.  However, expanding TV regulations beyond what the FCC felt could be justified a decade ago will take more than wishful thinking to defend in court, and the decision to go down that path without seeking further comments on the specific new proposals means that the regulatory uncertainty for broadcasters will continue until the courts have had a chance to weigh in.  It is therefore becoming increasingly clear that it is judicial review, and not the FCC’s quadrennial review, that will determine the rules under which 21st Century broadcasters will operate.

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May 2016

On May 18, 2016, the U.S. Department of Labor published final regulations under the Fair Labor Standards Act (“FLSA”) that more than double the minimum salary level necessary to be exempt from the Act’s overtime rules.  While the changes affect all businesses subject to the FLSA, broadcasters in particular may feel the impact of the changes given the staffing models used by many TV and radio stations. The new requirements will go into effect on December 1, 2016, and broadcasters need to take steps to adapt to, and minimize the impact of, those changes prior to that deadline.

The Fair Labor Standards Act (“FLSA”) is the federal law governing wage and hour requirements for employees.  Pursuant to the FLSA, employers must pay employees a minimum wage and compensate them for overtime at 1.5 times their regular rate of pay for any time worked exceeding 40 hours in a workweek unless those employees are exempt from the requirement. On May 18, 2016, the Department of Labor issued a Final Rule that effectively doubled the minimum salary threshold for certain types of employees to be exempt from the FLSA’s overtime rules, and significantly raised the salary threshold for other types of employees. As a result, many currently exempt employees whose salaries are below the new thresholds will soon be eligible for overtime pay. The White House projects the change will impact over four million previously exempt American employees.

Although the FLSA applies to almost all employers, it contains exemptions for certain types of employees at small-market broadcast stations. The Final Rule does not affect these specific broadcast industry exemptions, but will affect many other currently exempt employees in the broadcast industry who, unless they receive salary raises, will soon become eligible for overtime pay.

This Advisory only addresses federal law. Some state laws impose stricter standards than federal law as to which employees are exempt from overtime pay. Employers must ensure that they also meet the requirements of any applicable state or local employment laws.

Overview

The FLSA requires employers to pay non-exempt employees an overtime rate of 1.5 times their regular rate for all hours worked over 40 hours per workweek. However, the FLSA exempts from its overtime rules certain classes of employees who are paid on a salary basis and meet specific “white collar” duties tests. The Department of Labor’s Final Rule increases the minimum salary necessary for these classes of employees to be deemed exempt from the FLSA’s overtime rules, but does not alter the duties tests for those exemptions.  (Continued…)

A PDF version of this entire article can be found at A Broadcaster’s Guide to the U.S. Department of Labor’s New Overtime Exemption Requirements.

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Friday will see the launch of the FCC’s new online public inspection file system, called, not surprisingly, the Online Public Inspection File (“OPIF”).  With stations moving to a “next gen” public inspection file, Pillsbury today released its next gen Public Inspection File Advisory.  Like earlier editions have done since the creation of the public inspection file requirement, this latest edition provides in-depth information on the content of the file for both commercial and noncommercial stations, whether they are already online, moving online this Friday, or not moving online until 2018.

As discussed here previously, the OPIF replaces the Broadcast Public Inspection File (“BPIF”) for full power and Class A TV stations, and becomes mandatory on June 24th for not just those stations, but for:

  • Commercial broadcast radio stations that are located in the Top 50 Nielsen Audio markets with five or more full time employees (“First Wave stations”)
  • DBS providers
  • SDARS licensees
  • Cable systems with 1,000 or more subscribers.

As it did with the predecessor BPIF, the FCC took some commonsense steps to simplify the transition to an online file and avoid unnecessary effort for stations going forward.  Specifically, the FCC will automatically upload to a station’s online public inspection file most applications and reports that are electronically filed with the FCC.

However, stations should not be complacent that the FCC is assuming responsibility for the public file being complete.  Stations must still be knowledgeable about which items actually belong in the public inspection file and for how long.  Not all items required to be filed with the FCC electronically have to be kept in the public file, and many items that are not filed electronically with the FCC do have to be kept in the public inspection file.  Stations must know the difference.  In addition, stations must know where in the file to upload required items.  For example, most commercial stations will have a Political File that covers candidate airtime purchases, and a Section 73.1212 Sponsorship Identification File addressing issue ads.  As the FCC itself has acknowledged, however, many stations have tended to combine those two categories, placing both in their Political File folder.

Knowing how and where these various documents should be uploaded is important for ensuring a rule-compliant file that can withstand worldwide scrutiny on the Internet.  Equally important, however, is knowing when a document should be removed from the public file.  The OPIF does not address this need, and documents that are past their retention period must be manually removed by the licensee.

Of course, the transition to any new online system requires users to become familiar with that system’s architecture and operation as well.  To that end, the FCC recently hosted a live demonstration of the OPIF.  That demonstration revealed that First Wave stations must log into their new online public inspection file on June 24th and actively take steps to switch the file “on” so that the public can access the content.

It turns out that accomplishing this involves several steps.  First, the licensee must sign into the system using its Federal Registration Number (“FRN”) and password, revealing the Owner Dashboard.  The Owner Dashboard displays the Passcode that the system has assigned to each of that owner’s stations.  This allows an owner of multiple stations to give the Passcode to employees responsible for maintaining one station’s public file without having to give up the overall FRN or the Passcodes to its other stations’ public files associated with that FRN.  After this has been accomplished, the licensee will need to log out of the Owner Dashboard and then log back into the system using the “Entity ID”, which in the case of a broadcast station is the Facility Identification Number for the station and the Passcode acquired in the first step.

At this point, a banner will be visible at the top of the public file screen that reads “[Call Sign] is now ready for keeping public inspection files online.  [Call Sign] profile is currently turned On/Off for public view.”  The last step that needs to be taken is switching the station’s public file view to “On”.  The licensee makes the file visible to the world by toggling the On/Off button to the On position.  This action cannot be undone.  Once it is toggled on, it remains on forever.

As part of this process, a pop up box will open requiring the station to certify (and yes, this is exactly how it reads according to the FCC’s demonstration) “I confirm that you are now uploading to your online public inspection file all new public and political file material on a going-forward basis.”  This appears to be intended to let the public know which radio stations are First Wave stations (whose online public files are being phased in from June 24th to December 24th), and explain why documents created before June 24th may not yet be in that station’s online public file.  Once the certification is checked, the station’s online public file will be visible to the public and a banner will appear stating “This entity has confirmed that it is uploading to the online public inspection file all new public and political file material on a going-forward basis.”

For First Wave stations, public file documents that existed prior to June 24th must be uploaded to the online public file by December 24th.  When a station has completed that uploading process, it must go to the Certification tab in the public file and certify “Yes, I certify I have uploaded all existing public file material required to be included in the online public inspection file” and then enter the name of the person certifying.  A banner stating “This entity has confirmed that it has completed uploading of all existing public file material required to be included in the online public file” will then appear and be visible to the public.  Stations obviously will want to make sure this is an accurate statement before making the certification.

While this somewhat complicated process may make radio stations nostalgic for paper files, the transition on June 24th should be much smoother for full power and Class A television stations.  The FCC plans to move all materials in a TV station’s current online public file into the new system by June 24th.  According to the FCC, the links that stations have on their websites to their online public inspection files in BPIF should still work in an OPIF world, as the FCC intends to automatically redirect that link to the new online filing system.  However, stations are still encouraged to update the link on their website on June 24th to be certain visitors actually reach the new online public file location.  More immediately, the direct link that TV stations are required to have on their website to their most recent EEO public inspection file report (if the report itself is not posted on the station website) will not be redirected by the FCC.  As a result, such TV stations need to manually fix that link on their website as of June 24 or be in violation of the EEO report posting requirement.

One final note: in the new database, the FCC has hidden the various document folders under the “Manage” tab, so television stations that are used to seeing all their materials immediately upon logging in should click that tab before assuming the FCC failed to import their public file documents into the new system.

If “content is king” in programming, then content in the public file is king in a station’s next license renewal.  Successfully navigating the transition to an online public file and the worldwide scrutiny it can bring will determine how smoothly that license renewal will go.  More immediately, knowing what needs to be in the public file and ensuring it is there on time will avoid public file fines that start at $10,000 and go up from there.

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This Advisory is designed to aid commercial and noncommercial radio and television stations comply with the FCC’s public inspection file rules, including the online public inspection file requirements. See 47 C.F.R. §§ 73.3526 and 73.3527.  This Advisory discusses the public access, content, retention, and organizational requirements of these regulations. Previous editions of this Advisory are obsolete, and should not be relied upon.

For decades, the FCC required that public inspection files be kept at a station’s main studio in paper or electronic form. In a 2012 push to “modernize” the broadcast disclosure rules, the FCC modified this requirement by requiring stations to make most public file information available online in a Commission-hosted database. In January of 2016, the FCC extended the online public file requirement to broadcast radio stations,
starting with commercial radio stations in the Top 50 Nielsen Audio markets that have five or more full-time employees. Beginning on June 24, 2016, this “first wave” of radio stations must upload their public file materials created on or after that date to the online public inspection file. These stations have until December 24, 2016 to upload all public file documents (with a few exceptions discussed below) created prior to June 24.

All other radio stations (i.e., all non-commercial educational radio stations, commercial radio stations in the Top 50 Nielsen Audio markets with fewer than five full-time employees, and all commercial radio stations located outside of the Top 50 Nielsen Audio markets) will be required to upload their public inspection file documents to the online public inspection file by March 1, 2018, and then use the online public file going forward. This “second wave” of radio stations may continue to maintain their public inspection files exclusively at their main studio until that time, or can voluntarily transition to the online file early. Once a station has transitioned to the online public inspection file, it must provide a link to that file from the home page of that station’s website, if it has one. Beginning on June 24, 2016, online public inspection files will be hosted at https://publicfiles.fcc.gov/.  Full power and Class A TV stations that already have a link on their stations’ websites to the FCC’s “old” public file database will need to verify that the link redirects to this new website address for online public inspection files and update the link on their station website, if they have one, to their current EEO Public Inspection File report in the online public file, which will not be redirected automatically.

With the following two exceptions, all content and retention requirements are the same for local and online public inspection files. First, the FCC does not require station licensees to make letters and email from the public available online due to privacy concerns. As of the date of this publication, each station must continue to maintain these documents in paper or electronic form in a local file at the station’s main studio. The FCC is considering eliminating altogether the requirement that correspondence from the public be kept in the public inspection file, and has released a Notice of Proposed Rulemaking proposing that change. However, until the FCC actually changes the requirement, stations must continue to retain such correspondence in a file located at their main studio.

Second, stations need only upload political file documentation on a going-forward basis. Thus, commercial radio stations in the Top 50 markets with five or more full-time employees that make up the “first wave” of radio stations subject to the online filing requirements may continue to maintain political file documentation that existed prior to June 24, 2016 in their local public file until the expiration of the two-year retention period. Similarly, radio stations moving to the online file as part of the “second wave” may continue to maintain political file documentation that existed prior to March 1, 2018 in their local public file until the expiration of the two-year retention period.

Public Access to the Public Inspection File

The FCC requires every applicant, permittee, or licensee of a full-power AM, FM, or TV station or of a Class A TV station to maintain a public inspection file. The purpose of this file, according to the Commission, is “to make information to which the public already has a right more readily available, so that the public will be encouraged to play a more active part in a dialogue with broadcast licensees.” Because the public file rules are part of the FCC’s commitment to responsive broadcasting, the Commission places great importance on the public’s ability to readily access all of the information required to be in the public file. (Continued…)

A PDF version of this entire article can be found at Special Advisory for Commercial and Noncommercial Broadcasters: Meeting the Radio and Television Public Inspection File
Requirements.

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In a Public Notice released today, the FCC has taken the next steps towards implementing the expanded online public inspection file, which is set to go live on June 24th.  Specifically, the FCC announced that on June 13, 2016 at 1:00 p.m. Eastern Time, it will hold an online demonstration on using the new online public file.  In addition, the FCC publicized the Internet address for the new online public file, which licensees must use to create the required link from their websites to the online public file.

As we previously described in Neither Sleet Nor Snow Can Keep the Radio Public File from Going Online and All New Online Public File for TV, Radio, Cable and Satellite Coming June 24th, the FCC adopted a Report and Order in January 2016 extending the online public inspection file requirement to broadcast and satellite radio licensees and cable and satellite television operators.  That requirement is currently applicable only to full power and Class A television stations.  Pursuant to a phased-in schedule, commercial radio stations that have five or more employees and are located in the Top 50 Nielsen Audio markets, as well as satellite radio licensees, cable systems with 1000 or more subscribers, and DBS operators, must begin using the new system on June 24, 2016.  While commercial radio stations not included in this group as well as all noncommercial radio stations are exempt from the new online public file requirement until March 1, 2018, they are allowed to voluntarily commence use of the new system sooner.  Because these exempt stations are permitted to transition early, the demonstration should be of interest to all radio station licensees.  The demonstration will take place in the Commission Meeting Room, but can be viewed live at https://www.fcc.gov/news-events/events/2016/06/demonstration-expanded-online-public-inspection-file-interface.

Today’s Public Notice also notes that the website address where the new online public file will be hosted will be https://publicfiles.fcc.gov/.  Once a station has transitioned to the online public file, it must provide a link to the new online public inspection file from the home page of the station’s website, if it has one.  Full power and Class A television stations that already have such a link will need to update that link to reflect the new website address.