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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.

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Today, the FCC posted to the Auction 1001 website the Reverse Auction Initial Commitment User Guide and Online Tutorial.  Broadcasters that submitted an FCC Form 177 to participate in the Reverse Auction should review these materials to gain a better understanding of how the system will work so that they are prepared to participate when the Initial Commitment Window opens.  The Tutorial is easy to use, and you can pause it as needed to study and better understand the materials.  The User Guide is largely duplicative, but does contain important information such as technical requirements for using the system and contact information for help troubleshooting problems.

A few informational highlights include:

Important Dates:

  • March 28, 2016 10am ET – March 29, 2016 6pm ET: The Initial Commitment Window – a total of 32 hours – during which broadcasters must file their Initial Commitments. The Initial Commitment may be changed until the close of the window, but if no commitment is made by the close of the window, the station will be excluded from the auction and repacked in its pre-auction band.
  • March 24, 2016 10am ET – March 28, 2016 9:59am ET: The Initial Commitment Preview Period – a four-day period during which all participating stations are encouraged to log into the system, set their PINs, and view the list of stations and Relinquishment Options available to them.

What to Do in the Preview Period:  During the Preview Period, broadcasters should log in to the system and familiarize themselves with it. You will understand why this is important as you read through the paragraph below.

To log in to the system for the first time, each authorized bidder must activate their FCC-supplied RSA token (which displays a code randomly generated every 60 seconds) and select a PIN. To do so, select the “Click here for the login screen” link, enter the FCC-assigned Username for the authorized bidder logging in, the password associated with the FRN listed on the licensee’s Form 177, and the current code displayed on the FCC-supplied RSA token.  Click the Log In button.  Next, choose a 4-8 digit PIN, enter it twice in the fields provided, and click the Continue button.  There is a limited time to complete this step, with the remaining time shown on the screen.  On the next screen, type in the PIN you selected and the code shown on the RSA token.  This code cannot be the same as the one used on the prior screen.  If that code is still showing (because you have proceeded through these steps in less than 60 seconds), wait for the next code to appear.  Click the Continue button.

Once these steps are completed, each authorized bidder will log in by entering the bidder’s FCC-assigned Username, the password associated with the licensee’s FRN, the PIN selected in the step above, and the current code shown on the RSA token assigned to that bidder. Multiple bidders for a licensee can be logged into the system at the same time, but only one will be able to place bids at a time.

Overview of the System:  Once logged in, the broadcaster will see three options displayed on a navigation bar to the left of the screen: Make Commitment, Messages, and Station Info.  In addition, clocks showing the current date and time as well as the countdown to the opening of the Initial Commitment Window are displayed.

Make Commitment:  When clicking on this tab, the broadcaster will see its station or stations, if they have been deemed eligible to participate.  The Preferred Relinquishment option the broadcaster selected in its Form 177 (and the associated opening bid) will appear in a column to the right of the call sign.  To choose this Relinquishment Option as the station’s Initial Commitment, the broadcaster need only click the “Submit” button and will then see a green checkmark appear.  If the station has additional options available to it based on its frequency band and the selections the station made in its Form 177, these are available from a dropdown menu under the Preferred Relinquishment option.  As noted above, the FCC indicates that the choice the station makes from among these options can be changed until the end of the Initial Commitment Window.  Stations that no longer wish to participate in the auction will select the “Decline Commitments” option from the dropdown menu.

If the broadcaster chooses either the Move to a High VHF channel or Move to a Low VHF channel option as its Preferred Relinquishment choice, a window will open advising that the system will attempt to fulfill this choice, but that because of limited channels in the VHF band, this option is not guaranteed. These stations will be given fallback options, if available to them based on their Form 177 choices, and the option to decline fallback options.  It is important to understand the impact of selecting a VHF band option.  If the choice can be accommodated, it will be.  If the option cannot be accommodated, the station will be eliminated from the auction and repacked in its current band, unless one or more fallback options has been selected.

Messages:  In this section, FCC staff can communicate with the licensee and the licensee can communicate with FCC staff.  All authorized bidders for a station can see messages sent by that station’s other authorized bidders as long as they are logged into the system.

Station Info: This section lists all of the licensee’s stations that are eligible to participate in the auction, along with the Relinquishment Option(s) available to each station based on its frequency band and the station’s selections in its Form 177.  This is the only section that the broadcaster can see during the Preview Period.

The FCC has also announced an Initial Commitment Window Workshop to take place on March 11, 2016 from 10am – 1pm ET.  Participants can attend in person or watch online remotely, and the FCC’s staff highly recommends those interested in participating in the reverse auction also participate in the Workshop.  The FCC has said that additional tutorials and resources for participation in the next stages of the auction will be made available to licensees at a later date.  Those, however, will only be useful to broadcasters that successfully make their Initial Commitment, so time to open the Tutorial and start studying.

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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:

  • FCC Fines Radio Licensee $10,500 Despite Claims of Public File Sabotage
  • Unlocked Gate Costs AM Licensee $7,000
  • Class A Licensee Faces Hobson’s Choice: Pay $12,000 Fine or Revert to Low Power Status

Whodunit, Who Cares? FCC Fines Radio Licensee $10,500 for Missing Issues/Program Lists

The FCC’s Enforcement Bureau denied a licensee’s Petition for Reconsideration of a June 2015 Forfeiture Order, affirming the $10,500 fine against the licensee of two Michigan radio stations (one AM and one FM) for failing to place five Quarterly Issues/Programs Lists in the stations’ public inspection files, and for failing to immediately notify the FCC upon a change of tower ownership.

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. Under Subsection 73.3526(e)(12), a licensee must create a list of significant issues affecting its viewing area in the past quarter and the programs it aired during that quarter to address those issues. The list must then be placed in the station’s public inspection file by the tenth day of the month following that quarter. In addition, Section 17.57 of the Rules requires tower owners to immediately notify the FCC of any change in ownership information.

In February 2010, the licensee acquired the stations and accompanying tower from another company. In December 2010, the licensee filed a notification of change in tower ownership. However, the FCC promptly rejected the application as deficient and directed the licensee to refile its ownership change notification.

During a September 2011 inspection, an FCC agent found that the licensee’s public inspection files were missing five quarters of Issues/Programs Lists. The agent also determined that the ownership change notification had never been refiled. The FCC subsequently issued a Notice of Apparent Liability for these violations and proposed a $13,000 fine—$10,000 for the missing Issues/Programs Lists and $3,000 for the absent ownership change notification.

The licensee did not contest the violations, but asked for a cancellation or reduction of the fine, arguing that (1) it made good faith attempts to correct the violations, (2) the missing Issues/Programs Lists had been removed by a third party, (3) it was unable to pay the fine due to financial difficulties, and (4) it had a history of compliance with the FCC’s Rules. In its June 2015 Forfeiture Order, the FCC reduced the fine to $10,500 due to the licensee’s history of compliance. However, the FCC found no basis for any further reduction. It explained that, while it may reduce a proposed penalty when a violation arose “just prior” to an FCC inspection, the Issues/Programs Lists were allegedly removed more than two months before the inspection—leaving the licensee adequate time to identify and correct the deficiency. The FCC also stated that the licensee had not shown the “severe financial distress” necessary to warrant a reduction, and that good faith efforts to correct violations must be made prior to notification of the violation to be considered as a basis for a fine reduction.

The licensee subsequently filed a Petition for Reconsideration, arguing that the Issues/Program Lists were in the public inspection file until the general manager of its major competitor deliberately removed them. Because the Petition failed to demonstrate a material error in the Forfeiture Order or raise any new facts or arguments, the FCC chose not to address the merits of the licensee’s arguments. The FCC noted, however, that even had it considered the merits of the licensee’s Petition, it still would have found no basis for reconsideration, explaining that the alleged third-party removal of the lists did not diminish the licensee’s liability for failing to identify and correct the deficiency in the two months between the alleged removal and the inspection.

The Price of Convenience: AM Licensee Is Fined $7,000 for Leaving the Gate to Its Tower Unlocked for Contractors

The FCC’s Enforcement Bureau upheld a Forfeiture Order against a New York AM licensee for leaving the gate to its tower unlocked for several days so that contractors could have access. Section 73.49 of the FCC’s Rules requires towers having radio frequency potential at the base to be enclosed within effective locked fences or other enclosures. Continue reading →

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The FCC’s new Licensee-Conducted Contest Rule became effective this past Friday.  Under the new rule, a broadcast licensee conducting a contest still has the obligation to disclose the material terms of the contest “fully and accurately” and to conduct the contest substantially as announced.  However, as we wrote last September, the new rule allows broadcasters to meet these requirements by posting the contest terms on their websites rather than reading them on-air.  To take advantage of this new flexibility, broadcasters must:

  • Post the terms on the station’s or licensee’s website, or if neither the station nor the licensee has a website, on a free website that is available to the public 24/7, without registration;
  • Broadcast the website address with sufficient information for a consumer to find the terms easily, using simple instructions or natural language;
  • Broadcast the website address periodically throughout the term of the contest;
  • Establish a conspicuous link or tab on the home page of the website that takes consumers to the contest terms;
  • Maintain the terms on the website for at least 30 days after the contest has ended and conspicuously mark those that are expired, including the date a winner was selected;
  • On the rare occasions that a change in terms occurs during the contest, announce the changes on-air within 24 hours and periodically thereafter, and direct participants to the written terms on the website; and
  • Assure that the contest rules posted online conform to those announced on-air.

The effective date of the new rule has been eagerly anticipated by broadcasters as the change grants them more flexibility in announcing contest terms, avoids long and complicated contest announcements on-air, and permits participants to review the rules at their leisure.  However, in making the change, the FCC noted that “[a]s with all elements of contest-related announcements, the burden is on the broadcaster to inform the public, not on the public to discern the message.”

Indeed, the law views the rules of a contest or sweepstakes to be a contract between the sponsor (station) and anyone who enters the contest, or even anyone who tries to enter and fails to do so successfully.  If the sum total of your on-air contest rules are “be the 103rd caller after X song is played” and a vague “station policy” somewhere on the website that says you can only win once every 30 days, you have left a lot out of your “contract.”  For example, when a station ran a contest on-air like the one above and did not get many callers, the DJ simply awarded the prize to the last person to call in after hours of trying to attract more callers.  The station was fined by the FCC because it did not run the contest substantially as advertised.  Properly written contest rules should account for such situations, as well as other foreseeable developments, such as the phone lines going down after the trigger song has been played.  A station with contest rules that don’t address likely (or even unlikely) contest developments is inviting challenges from both contestants and regulators.

In that regard, as we noted in FCC Proposes to Clear Airwaves of Boring Contest Disclosures, But State Issues Remain, stations should remember that the FCC is not the only regulator watching out for contest and sweepstakes violations.  For example, some states’ contest laws require that all announced prizes be awarded in order to prevent “bait and switch” contests.  For stations giving away “time sensitive” prizes such as concert tickets that have to be used on a specific date, the rules should address the situation where a winner is chosen but then turns down the prize or simply does not claim it because they cannot attend on the date specified.  If the rules say that an alternate winner will be chosen after 10 days, there may not be enough time left before the concert to award the prize.  The station with poorly written contest rules must then choose between violating the law by failing to award a prize, or violating the law by failing to conduct the contest in accordance with the announced rules.  Badly-drafted contest rules are a liability for any business, but are worse for broadcasters, as in addition to all of the state and federal laws governing contests, broadcasters are uniquely subject to the FCC’s contest oversight as well.

Finally, while you might imagine that contest complaints come from those who lost the contest (and indeed they often do), many come from contest winners.  While professional contestants who enter every contest will complain about the valuation placed on a prize for tax purposes, first-time winners are more likely to complain about having to sign a release to claim the prize, or where the prize is large, having to provide the station with their Social Security Number, appear in person, or attend a further event, such as the day when all the winners of keys must try them out in the grand prize car.  These obligations need to be clear in the contest rules, not just to avoid liability, but to ensure the station is able to get the promotional value it anticipated from the contest.  Contestants who demand anonymity and refuse to sign releases greatly undercut the promotional value of a big contest.

The bottom line is, now that the FCC will let you post your rules online for contestants and regulators to scrutinize, you need to ensure you have rules that can withstand scrutiny.

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January 2016

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:

  • TV Licensee Agrees to Pay $18,000 for Public Inspection File Violations
  • FM Translator Licensee Faces $9,000 Fine for False Certification and Unauthorized Operation Violations
  • AM Station Licensee Pays $10,000 to End Investigation into Alleged Ownership Violations

Mistakes Over Off-Air Time in Public Inspection File Cost TV Licensee $18,000

The FCC’s Media Bureau entered into a Consent Decree with a Las Vegas Class A television licensee to resolve an investigation into whether the licensee violated the FCC’s Rules by improperly indicating  on four Children’s Television Programming Reports and TV Issues/Programs Lists that it was off-air, and failing to prepare mandatory certifications of Class A eligibility for over five years.

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 TV licensees to prepare and place in their public 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, Subsection 73.3526(e)(11)(i) requires TV licensees to place in their public file, on a quarterly basis, an Issues/Programs List that details programs that have provided the station’s most significant treatment of community issues during the preceding quarter.  Also, Subsection 73.3526(e)(17) requires each Class A television station to include in its public file documentation sufficient to demonstrate that it continues to meet the Class A eligibility requirements as set forth in Section 73.6001.

On May 28, 2014, the licensee filed its station’s license renewal application. In the process of evaluating the application, FCC staff found that the licensee indicated the station was off-air in its Children’s Television Reports and Issues/Programs Lists for two quarters during which it was on the air for a portion of the quarter, and for two quarters during which the station did not have Special Temporary Authorization (“STA”) to go off-air.  In addition, the station failed to prepare any Class A certifications during its license term, which began in the third quarter of 2009.

The licensee explained that it had mistakenly indicated that the station was off-air in the Children’s Television Reports and Issues/Programs Lists filed for the last three quarters of 2010 because its compliance official mistook the station’s engineering STA for an STA to go off-air. With regard to the first quarter 2012 reports, the licensee explained that the compliance official mistook another station’s STA to go off-air for this station’s STA.

To resolve the investigation, the licensee admitted to the violations and agreed to pay an $18,000 fine. The licensee also agreed to a two-year compliance plan, which directs the licensee to institute management checks, training, and other measures designed to prevent a re-occurrence of the violations.   Despite the imposition of a fine and compliance plan, the FCC renewed the station’s license, finding that the licensee met the minimum qualifications to hold an FCC license, and that grant of the license renewal application was in the public interest.

FCC Proposes $9,000 Fine for FM Translator Licensee Based on False Certification and Unauthorized Operation Violations

The FCC’s Media Bureau proposed to fine a Texas FM translator licensee $9,000 for falsely certifying in a license application that its translator was constructed as specified in its construction permit, and for operating the translator at variance from its license. The FCC also admonished the licensee for including incorrect information in a related application.

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Despite a three-hour delayed opening of the federal government courtesy of the aftermath of Winter Storm Jonas, the FCC, in today’s Open Meeting, adopted rules requiring that radio broadcast stations, as well as satellite radio (i.e., Sirius/XM), direct broadcast satellite providers (i.e., DirecTV and DISH), and most cable television systems, migrate their public inspection files to an FCC-hosted online database.

The FCC has only published a brief Public Notice describing its action, but there will be more details available when the full Report and Order is released, perhaps as soon as tomorrow.  The Public Notice does however clarify that important exemptions that appeared to have gone missing when the Chairman wrote about the proposed requirement in a blog post a few weeks ago (which we discussed here) have since been added, due in  large part to the efforts of the NAB and state broadcasters associations pushing for such exemptions.  Importantly:

  • Only commercial broadcast radio stations that are in Top 50 radio markets and that have at least five full-time employees will need to comply with the new rules when they first become effective.
  • All other radio stations will have two years to commence complying with the new rules, although they are permitted to move online earlier if they wish to do so voluntarily.

The biggest news in the FCC’s Public Notice appeared to be the statement that the FCC would “permit entities that have fully transitioned to the online public file to cease maintaining a local public file, as long as they provide online access to back-up political file material via the entity’s own website if the FCC’s online file database becomes temporarily unavailable.”  For radio stations that have had to remain on constant alert to escort random station visitors inside their facilities to review the “paper” public file (with all the attendant security risks that represents for a media outlet), this regulatory relief was welcome, and had been championed in the proceeding by all 50 state broadcasters associations.

However, the celebration turned out to be potentially premature, as later in the day, the FCC released the commissioners’ individual statements, and Commissioner O’Rielly’s separate statement lamented that:

Unlike cable and satellite operators, commercial broadcast licensees will not have the immediate option of transitioning to an online-only public file, due to the Commission’s rule pertaining to the correspondence file that arguably cannot be made available online for privacy reasons. I very much appreciate the Chairman’s attention to this important issue and commitment to move forward on a proposal to eliminate correspondence file requirements so that broadcasters, too, can have an online-only option for public file requirements.

So it will take a bit longer before radio stations can say goodbye to their paper public files, but it looks those local files’ days may be numbered.

Another spot of relief is that political file material will need to be uploaded only on a going forward basis.  Historical political information can be retained in paper format until the expiration of the two-year retention period applicable to such documents.  However, stations must have a back-up political file, either in paper or on their websites, in case the FCC’s public file database goes down and the information becomes unavailable from the FCC.

As is the case for television stations, which began moving their public inspection files online in 2012, those covered by today’s order will only need to upload items that are not already electronically filed and available on the FCC’s website.  As a result, documents like ownership reports and most facility modification applications should be automatically loaded into a station’s online public file by the FCC.

The order will apparently include some accommodations for small cable systems as well.  Systems with fewer than 1,000 subscribers will be completely exempt from the online public file requirement, and systems with 1,000-5,000 subscribers will have a two-year phase-in period for their political file material.

Unfortunately, the Public Notice does not indicate exactly when the rules will take effect—an important detail for licensees operating commercial radio stations in the Top 50 markets with five or more full-time employees.  When TV station public files went online, the FCC set the deadline at 30 days following publication of a notice in the Federal Register that the Office of Management and Budget had approved the information collection aspects of the rule.  If this order follows a similar timeline, the new rules wouldn’t likely become effective until sometime in the second quarter of this year.

Over the years, many have criticized the public file as being of little interest to the viewers and listeners it was originally meant to inform, noting that it has instead become merely a source of federal revenue due to the stiff fines imposed by the FCC for violations of the public file rule.  The FCC’s view, however, is that more members of the public will review the file if it can be accessed online, following the motto “upload it, and they will come.”  Whether that is true, the FCC commissioners clearly see the online public file requirement as an effort to move the FCC’s rules into the 21st century.  Broadcasters in particular are hoping that it is the beginning of a much broader effort to bring the FCC’s rules into the 21st century, and many would like to suggest that the FCC next move on to its multiple ownership rules.

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In a Report and Order that has been in the making since at least 1998, the FCC yesterday adopted new ownership reporting forms for both commercial and noncommercial broadcast stations. The FCC’s goal in adopting these new forms is to enhance the completeness and accuracy of its broadcast ownership data by (i) again imposing a unique identifier for each attributable interest holder—one that is tied to that individual’s Social Security Number (SSN); (ii) collecting race, gender and ethnicity data from noncommercial licensees as it has for some time now from commercial licensees; and (iii) consolidating the noncommercial biennial ownership report filing deadline with that of biennial ownership reports for commercial broadcast stations, which will now be December 1 of odd-numbered years for both commercial and noncommercial stations. In the process, the FCC has modified the reports to incorporate a number of reforms requested by broadcasters and their counsel to eliminate redundant and burdensome idiosyncrasies, glitches, and design flaws in the current commercial ownership reporting form.  This will hopefully alleviate at least some of the pain involved in filing what has been one of the FCC’s most duplicative and burdensome forms.

For the past several years, the FCC has required commercial broadcast licensees to include in their ownership reports a unique identifier, called a Federal Registration Number (FRN), for each attributable interest holder.  When first imposed, stations objected to the FRN mandate because the FCC requires individuals seeking an FRN to supply their full SSN to the Commission. In an attempt to quell that outcry, the FCC created a temporary solution called a Special Use FRN (SUFRN), that broadcasters could utilize when attributable interest holders balked at providing their SSNs.

The FCC has now introduced another alternative to obtaining a full FRN, called the Restricted Use FRN (RUFRN), available only for use in filing ownership reports. The FCC considers the RUFRN to be a superior solution to the SUFRN (had enough acronyms yet?) because the SUFRN collected no information whatsoever about the person to which it was assigned and therefore did not further the FCC’s goal of increased accuracy in the ownership data being collected. The basis for the FCC’s belief in the superiority of the RUFRN is that in order to apply for a RUFRN, an individual must supply the FCC with their full name, date of birth, home address, the last four digits of their SSN, and all of that individual’s previously used FRNs and SUFRNs. This information will not be made publicly available, but will enable the FCC to uniquely identify each attributable interest holder in a broadcast station.

Noncommercial broadcasters in particular still oppose the FCC’s efforts to collect such personal data, since the Commission’s multiple ownership rules do not even apply to them, and they worry that the data breaches and hacks that have afflicted other federal agencies will eventually affect the FCC as well.  Commissioner Pai’s separate statement is particularly worth reading in that regard.  While the FCC will allow continued use of a SUFRN, it will permit such use only where an interest holder has refused to apply for a RUFRN or to provide the broadcaster in which it holds an interest with the information needed to obtain a RUFRN for that investor.  The FCC has indicated that stations are at risk of significant enforcement actions should the SUFRN option be abused. With the new RUFRN in place, the FCC will fix its search engine so that the “search by FRN/RUFRN” function will actually return a list of the broadcast stations in which the holder of the searched FRN/RUFRN has an attributable interest.

The FCC also consolidated the ownership report filing deadline for noncommercial stations with that of commercial stations, and extended that date an extra month, from November 1 to December 1 of odd-numbered years, to allow more time for all U.S. broadcast stations to draft their reports, hit the file button, and crash the Commission’s filing system.  Here’s hoping that the FCC will make the biennial filing system available well in advance of October 1, 2017 to allow more time for the increased number of filers to draft and file their reports by the December 1 deadline.

As expected, the FCC revised the ownership report form for noncommercial licensees to collect race, gender and ethnicity information for all interest holders, just as it now does for commercial licensees. In addition, for both commercial and noncommercial filers, it will now be possible to select more than one ethnicity from the list to better report those who identify as being multiracial, a change required by OMB.

In a welcome expression of candor, the Commission conceded that the current version of the commercial station ownership report form has led to widespread errors in those reports, undermining the integrity of all ownership data reported. In light of that big admission, the FCC adopted a number of simplifications suggested by broadcasters that will hopefully ease the filing burden and increase the accuracy of the information submitted. Here are the highlights:

  • A parent company will be able to report its ownership interest in multiple licensees on the same form. Previously, each ownership report could only contain data about a single licensee. As a result, companies that held their broadcast licenses in separate licensee subsidiaries had to file multiple parent company reports, most of which were identical to one another except for the substitution of one licensee name and call sign(s) for another.  The multiple duplicative reports clogged the filing system, causing it to grind to a halt for all filers, even those with simpler reporting structures.
  • There will be no more spreadsheets.  Because the FRN search function never worked and only one licensee could be reported per ownership report, it was nearly impossible to determine whether an interest holder reported on one station’s report also had an interest in stations reported in another report.  The FCC’s fix to this was to have broadcasters prepare spreadsheets, some of which were thousands of lines long, and upload them to the ownership reports.  This again slowed the system for all filers and the spreadsheets were difficult to read, undermining the transparency the FCC was seeking.  Now, if additional stations need to reported, they can be added directly in the form itself.
  • Additional options and questions will be added to make the form itself more useful to the FCC.  These include allowing filers to indicate whether they are organized as a Limited Liability Company, and whether an ownership interest is held jointly, such as a stock interest that is held by spouses as tenants by the entirety.  The new forms will also require filers to indicate whether they are a Tribal Entity, which furthers the Commission’s diversity goals, as well as to list those that are deemed to have an attributable interest in a station due to a Local Marketing or Joint Sales agreement.

Finally, the Report and Order indicates that the FCC is also making a number of common sense changes to the functionality of the ownership report filing system, including sub-form cloning, auto-fill mechanisms, data saving and validation routines, and enhanced checking for inconsistent data.  If these terms sound like Greek to you, then you clearly have not been involved in the filing of ownership reports at the FCC.  If that is indeed the case, count yourself fortunate, and rejoice that the FCC has taken steps to alleviate that mysterious pain broadcasters experience in odd-numbered years.

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In the summer of 2014, CommLawCenter broke the news that the FCC was considering moving radio public inspection files online, following in the footsteps of the FCC’s earlier creation of an online public file requirement for TV stations.  Television stations have been required to upload all newly created public file documents to their online public inspection files since August 2012, and to upload public file documents created before that time by February 2013.  In adopting the TV online public file requirement, the FCC said that it would serve as something of a “test run” for radio station public inspection files.

Four months later, I wrote here about the FCC’s release of a Notice of Proposed Rulemaking calling the TV online public file effort a success, and a “significant achievement in the Commission’s ongoing effort to modernize disclosure procedures to improve access to public file material.”  The NPRM proposed moving forward with an online public file for radio stations, as well as for cable, DBS and satellite radio.  The FCC acknowledged that the online public file might represent a burden for at least some radio stations and, as a result, proposed to phase in the requirement beginning with stations that are located in the top 50 markets having five or more full-time employees.  In addition, the NPRM proposed giving non-commercial educational stations and stations with fewer than five full-time employees two years to make the transition.  While the NPRM was not directed at revamping the content of the public file, the Commission did suggest that some types of documents might be exempted to lessen the burden both on stations and on the Commission’s servers.

The NPRM attracted numerous comments, many focused on ensuring that any online public file requirement would contain sufficiently broad exemptions for small radio stations and an adequately long phase-in period for other types of stations to ensure that the requirement would not be unduly burdensome.  As a filing on behalf of all 50 state broadcasters associations noted, radio stations tend to have smaller staffs than TV stations, and the norm is to have multiple local radio stations operated jointly, meaning that those smaller staffs need to maintain multiple public inspection files.

After the comments were filed, the proceeding went silent, and many wondered if the FCC had begun to have second thoughts as to whether its servers could handle the substantial increase in traffic that a radio public inspection file requirement would generate.  In the past few weeks, however, the FCC let it be known that an order was circulating among the five commissioners for a vote on the online public file NPRM.  If there was any doubt where it was headed, that ended today when FCC Chairman Wheeler announced in a blog post that the order being circulated will implement online public inspection files for radio stations.  He did not, however, give any hints as to what exemptions or phase-in periods the order might contain.

Broadcasters won’t, however, have to wait long to find out.  The FCC also announced today the agenda for its January 28, 2016 Open Meeting, and the radio online public file order is right at the top.  As a result, radio stations will soon know what changes 2016 will be bringing to their public files.