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Whenever we report on FCC indecency decisions, it is always an interesting test of our subscribers’ spam filters. I am betting today’s FCC enforcement action will trigger more than its share of spam alerts.

In recent years, the FCC has been less active in issuing indecency fines as it struggles to draw a line between permissible and impermissible broadcast content that the courts will support. As a result, it has been relying more heavily on consent decrees, in which the alleged violator agrees to make a payment to the government and institute a compliance program in return for the FCC agreeing to terminate its investigation. By pursuing this path, the FCC avoids having to defend its indecency rules in court, and the alleged violator can sidestep a costly and uncertain appeal process.

Sometimes, however, the FCC channels Justice Potter Stewart in his famous view of obscenity: “I know it when I see it.” Today was just such an occasion, where the FCC proposed the maximum statutory fine of $325,000 for a station that appears to have unintentionally crossed the FCC’s indecency line.

WDBJ(TV), Roanoke, Virginia, aired a story in its newscast about “a former adult film star who had joined a local volunteer rescue squad.” To illustrate the story, the photojournalist preparing the report included a video screen grab of an adult website showing the subject of the report (who was neither nude nor engaged in sexual activity).

In the analog small-screen world of a prior generation, that would have been the end of it. However, living in a big-screen, high definition world, viewers noticed something that the station had missed. According to the FCC, “[t]he website, which was partially displayed along with the video image, is bordered on the right side by boxes showing video clips from other films that do not appear to show the woman who is the subject of the news report.”

Unfortunately for the station, one of those boxes showed “a video image of a hand stroking an erect penis.” As an aside, the decision is worth reading purely to see the variety of ways the FCC finds to describe this content.

The licensee of the station noted that “the smaller boxes, including the image of the penis, were not visible on the monitors in the Station’s editing bay, and therefore, the Station’s News Director and other management personnel who had reviewed the story did not see the indecent material prior to the broadcast.” It also noted that the video appeared for less than three seconds of the three minute and twenty second story.

The FCC apparently had no trouble seeing it, however, finding that the video met the definition of “indecency” in that it was “material that, in context, depicts or describes sexual or excretory organs or activities in terms patently offensive as measured by contemporary community standards for the broadcast medium.” Because the content aired in the newscast at approximately 6pm, the FCC found that it did not fall within the 10pm-6am safe harbor in which indecent material may normally be aired, and therefore merited enforcement action. While the base fine for indecency is $7,000, the FCC found that “the patently offensive depiction of graphic and explicit sexual material obtained by the Station from an adult film website–is extreme and grave enough to warrant a significant increase from the $7,000 base forfeiture amount.” Building up steam, the FCC proceeded to throw more adjectives at it, finding that the content was “extremely graphic, lewd and offensive, and this action heightens the gravity of the violation and justifies a higher forfeiture.”

In proposing, for the first time ever, the maximum statutory fine of $325,000, the FCC added insult to injury, accusing the station of having a small monitor:

We also consider WDBJ to be sufficiently culpable to support a forfeiture. As discussed above, WDBJ broadcast material obtained from an online video distributor of adult films but failed to take adequate precautions to prevent the broadcast of indecent material when it knew, or should have known, that its editing equipment at the time of the apparent violation did not permit full screen review of material intended for broadcast. In addition, the indecent material was plainly visible to the Station employee who downloaded it; he simply didn’t notice it and transmitted it to Station editors who reviewed the story before it was broadcast.

While it’s clear the FCC didn’t have any qualms in pursuing this particular case, it does raise practical questions for broadcasters in less unusual circumstances. For example, might the FCC find a station airing crowd shots at a live sporting event guilty of willful indecency because its monitoring equipment was not large enough to detect that a few members of the crowd were being over-enthusiastic in trying to draw the attention of the kiss-cam? Stations in an analog world could usually rely on the low resolution of the medium to solve “background problems” like adult magazines in the background of a bookstore interview. Similarly, small images in a panning shot of the bookstore would be off the screen so quickly that viewers wouldn’t notice them or couldn’t be sure of what they had seen. In a hi-def world where DVRs make it possible for viewers to replay and analyze video frame by frame, stations must be conscious of every corner of every frame. It’s admittedly not an intuitive response at a time when broadcast stations are increasingly focusing on reaching the mobile audience watching tiny screens rather than on big-screen home viewers.

So what should broadcasters take away from this? Well, as station engineers head to the NAB Show in Vegas in a few weeks, they have a great story to tell their General Managers as to why they need to buy newer and bigger 16:9 studio monitors. As for me, media lawyers are often called upon to assess broadcast content for indecency, so I’m polishing my “guess we need a bigger TV” pitch for my wife. She’s a communications lawyer; she’ll understand.

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By Lauren Lynch Flick and Scott R. Flick

March 2015
The staggered deadlines for noncommercial radio and television stations to file Biennial Ownership Reports remain in effect and are tied to each station’s respective license renewal filing deadline.

Noncommercial radio stations licensed to communities in Texas and noncommercial television stations licensed to communities in Delaware, Indiana, Kentucky, Pennsylvania, and Tennessee must electronically file their Biennial Ownership Reports by April 1, 2015. Licensees must file using FCC Form 323-E and must also place the form as filed in their stations’ public inspection files. Television stations must assure that a copy of the form is posted to their online public inspection file at https://stations.fcc.gov.

In 2009, the FCC issued a Further Notice of Proposed Rulemaking seeking comments on whether the Commission should adopt a single national filing deadline for all noncommercial radio and television broadcast stations like the one that the FCC has established for all commercial radio and television stations. In January 2013, the FCC renewed that inquiry. Until a decision is reached, noncommercial radio and television stations continue to be required to file their biennial ownership reports every two years by the anniversary date of the station’s license renewal application filing deadline.

A PDF version of this article can be found at Biennial Ownership Reports are due by April 1, 2015 for Noncommercial Radio Stations in Texas and Noncommercial Television Stations in Delaware, Indiana, Kentucky, Pennsylvania, and Tennessee.

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March 2015
This Broadcast Station Advisory is directed to radio and television stations in Delaware, Indiana, Kentucky, Pennsylvania, Tennessee, and Texas, and highlights the upcoming deadlines for compliance with the FCC’s EEO Rule.

April 1, 2015 is the deadline for broadcast stations licensed to communities in Delaware, Indiana, Kentucky, Pennsylvania, Tennessee, and Texas to place their Annual EEO Public File Report in their public inspection file and post the report on their station website.

Under the FCC’s EEO Rule, all radio and television station employment units (“SEUs”), regardless of staff size, must afford equal opportunity to all qualified persons and practice nondiscrimination in employment.

In addition, those SEUs with five or more full-time employees (“Nonexempt SEUs”) must also comply with the FCC’s three-prong outreach requirements. Specifically, Nonexempt SEUs must (i) broadly and inclusively disseminate information about every full-time job opening, except in exigent circumstances, (ii) send notifications of full-time job vacancies to referral organizations that have requested such notification, and (iii) earn a certain minimum number of EEO credits, based on participation in various non-vacancy-specific outreach initiatives (“Menu Options”) suggested by the FCC, during each of the two-year segments (four segments total) that comprise a station’s eight-year license term. These Menu Option initiatives include, for example, sponsoring job fairs, participating in job fairs, and having an internship program.
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March 2015
The next Quarterly Issues/Programs List (“Quarterly List”) must be placed in stations’ public inspection files by April 10, 2015, reflecting information for the months of January, February and March 2015.

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.
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March 2015
The next Children’s Television Programming Report must be filed with the FCC and placed in stations’ public inspection files by April 10, 2015, reflecting programming aired during the months of January, February and March 2015.

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.
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For a company that could always punch well above its weight in drawing press coverage, Aereo’s sale of its assets in bankruptcy last week drew surprisingly little coverage.

Less than a month before last year’s Supreme Court decision finding that Aereo’s retransmission of broadcast TV signals over the Internet constituted copyright infringement, a Forbes article discussing Aereo’s prospects in court noted the company had “a putative valuation of $800 million or so (that could vault up if Aereo wins).” The article went on to note that “It’s a tidy business, too, bringing in an estimated $40 million while reaping 77% gross margins ….”

Aereo made its case before a variety of judges and in the court of public opinion that it was an innovative tech company, with a growing patent portfolio and cutting edge technology. When broadcasters argued that Aereo was merely retransmitting broadcast programming to subscribers for a fee without paying copyright holders, Aereo doubled down, arguing before the Supreme Court that it was at the vanguard of cloud computing, and that a decision adverse to Aereo would devastate the world of cloud computing. In a blog post published the day Aereo filed its response brief at the Court, Aereo CEO Chet Kanojia wrote:

If the broadcasters succeed, the consequences to American consumers and the cloud industry are chilling.

The long-standing landmark Second Circuit decision in Cablevision has served as a crucial underpinning to the cloud computing and cloud storage industry. The broadcasters have made clear they are using Aereo as a proxy to attack Cablevision itself. A decision against Aereo would upend and cripple the entire cloud industry.

So Aereo’s narrative heading into the Supreme Court was clear: Aereo is a cutting edge technology company that is not in the content business, and a prototypical representative of the cloud computing industry in that industry’s first encounter with the Supreme Court.

As CommLawCenter readers know, the Supreme Court rejected that narrative, finding that a principal feature of Aereo’s business model was copyright infringement, and the Court saw little difficultly in separating Aereo’s activities from that of members of the public storing their own content in the cloud.

The results of Aereo’s asset sale reveal much about the accuracy of the Supreme Court’s conclusions, and about the true nature of Aereo itself. The value of Aereo’s cutting edge technology, patent portfolio, trademark rights, and equipment when sold at auction fell a bit short of last year’s $800 million valuation. How much was Aereo worth without broadcast content? As it turns out, a little over $1.5 million. But even that number apparently overstates the value of Aereo’s technology as represented by its patent portfolio.

Tivo bought the Aereo trademark, domain names, and customer lists for $1 million, apparently as part of its return to selling broadcast DVRs. Another buyer paid approximately $300,000 for 8,200 slightly-used hard drives.

And the value of the Aereo patent portfolio? $225,000.

To add insult to injury, the patent portfolio was not purchased by a technology company looking to utilize the patents for any Internet video venture. The buyer was RPX, a “patent risk solutions” company. The World Intellectual Property Review quoted an RPX spokesman regarding the purchase, who stated that “RPX is constantly evaluating ways to clear risk on behalf of its more than 200 members. The Aereo bankruptcy afforded RPX a unique opportunity to quickly and decisively remove risk in the media and technology sectors, thus providing another example of the clearinghouse approach at work.”

In other words, the Aereo patent portfolio was purchased for its nuisance value, which, having lost the ability to resell broadcast programming, turned out to be all the value Aereo had.

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The FCC voted on net neutrality rules in an open meeting today (that was delayed an hour due to yet more snow in DC), and the highly anticipated vote ran into a few last minute snags. First, Commissioner Mignon Clyburn, one of the three Democrats on the FCC’s five-member Commission and an essential vote given the party-line split at the FCC on net neutrality, asked Chairman Wheeler to scale back some of the proposed provisions in the Order prior to today’s vote.

Second, the tension between the Chairman and Republican commissioners Pai and O’Rielly continued, with Pai and O’Rielly not merely voting against the item, but vocally making their case for minimizing rather than expanding the FCC’s dominion over Internet business practices. This followed their spirited opposition in the weeks leading up to the meeting, where commissioners Pai and O’Rielly very publicly urged Chairman Wheeler to release the FCC’s proposed rules to the public for review and to postpone the vote to allow the public 30 days to comment on those rules, a request which the Chairman rejected.

As anticipated, the final vote today was a 3-2 split in favor of reclassifying broadband Internet access under Title II of the Communications Act, thereby making it subject to significant regulation by the FCC. Each of the commissioners released a statement in support of their respective position, with statements in favor from Democratic commissioners Wheeler, Clyburn, and Rosenworcel, and statements in opposition from Republican commissioners Pai and O’Rielly.

The FCC released a Public Notice summarizing the rule changes adopted by the Commission in the Order. According to the Public Notice, the FCC adopted the following bright line rules:

  • No Blocking: broadband providers may not block access to legal content, applications, services, or non-harmful devices.
  • No Throttling: broadband providers may not impair or degrade lawful Internet traffic on the basis of content, applications, services, or the use of non-harmful devices.
  • No Paid Prioritization: broadband providers may not favor some lawful Internet traffic over other lawful traffic in exchange for consideration of any kind–in other words, no “fast lanes” and no prioritizing the content and services of an Internet Service Provider’s (ISP) affiliates.

The FCC also adopted a “standard for future conduct” whereby ISPs cannot “unreasonably interfere with or unreasonably disadvantage” the ability of consumers to select, access, and use the lawful content, applications, services, or devices of their choosing; or of edge providers to make lawful content, applications, services, or devices available to consumers.” Finally, the FCC added additional ISP disclosure provisions to its existing transparency rule.

Let the litigation begin.

So how did we reach this regulatory crescendo? The core issue that launched the “network neutrality” debate is whether an Internet Service Provider can deliver selected Internet sites and services to customers faster than others in exchange for compensation from the website receiving the benefit. In line with the FCC’s previous approach of treating the Internet as something completely new and different from the telecommunications services it had traditionally regulated, the FCC resisted involving itself in anything that could be described as regulation of the Internet. However, as the Internet grew and it became clear that it (a) was no longer a fledgling service that might be accidentally extinguished by government regulation; and (b) had moved from being a convenience to being as essential to the public as gas or electric, regulatory attitudes began to change.

The result was the FCC’s 2005 Open Internet Policy Statement, in which the FCC concluded that ISPs were not subject to mandatory common-carrier regulation like telephone services (referred to as “Title II” regulation because it is governed by Title II of the Communications Act of 1934). The FCC did conclude, however, that it had authority to regulate ISPs under its ancillary authority to impose “light touch” regulatory obligations under the less restrictive Title I of the Communications Act.
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February 2015

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 Issues $3.36 Million Fine to Company and Its CEO for Selling Toll Free Numbers
  • Antenna Fencing and Public Inspection File Violations Result in $17,000 Fine
  • FCC Reiterates That “Willful Violation” Does Not Require “Intent to Violate the Law”

Hold the Phone: FCC Finds Company and CEO Jointly and Severally Liable for Brokering Toll Free Numbers

The FCC handed down a $3,360,000 fine to a custom connectivity solutions company (the “Company”) and its CEO for violations of the FCC’s rules regarding toll free number administration. Section 251(e)(1) of the Communications Act mandates that telephone numbers, including toll free numbers, be made “available on an equitable basis.” As a general rule, toll free numbers, including “vanity” numbers (e.g., 1-800-BUY-THIS), cannot be transferred, and must be returned to the numbering pool so that they can be made available to others interested in applying for them when the current holder no longer needs them. Section 52.107 of the FCC’s Rules specifically prohibits brokering, which is “the selling of a toll free number by a private entity for a fee.”

In 2007, the Enforcement Bureau issued a citation to the Company and CEO for warehousing, hoarding, and brokering toll free numbers. The Bureau warned that if the Company or CEO subsequently violated the Act or Rules in any manner described in the 2007 citation, the FCC would impose monetary forfeitures. A few years later, the Bureau received a complaint alleging that in June and July of 2011, the Company and CEO brokered 15 toll free numbers to a pharmaceutical company for fees ranging from $10,000 to $17,000 per number. In 2013, the FCC found the Company and CEO jointly and severally liable for those violations and issued a $240,000 fine.

Despite the 2007 citation and 2013 fine, the Bureau found evidence that the CEO continued to broker toll free numbers. In early 2013, the Bureau received tips that the CEO sold several toll free numbers to a law firm for substantial fees. An investigation revealed that the CEO, who was the law firm’s main point of contact with the Company, had sold 32 toll free numbers to the firm for fees ranging from $375 to $10,000 per number. On other occasions, the CEO solicited the firm to buy 178 toll free numbers for fees ranging from $575 to $60,000 per number. This, along with his correspondence with the firm–including requests that payments be made to his or his wife’s personal bank accounts–were cited in support of a 2014 Notice of Apparent Liability (“NAL”) finding that the CEO, in his personal capacity and on behalf of the Company, had “yet again, apparently violated the prohibition against brokering.”

As neither the Company nor the CEO timely filed a response to the 2014 NAL, the FCC affirmed the proposed fines: $16,000 for each of the 32 toll free numbers that were sold, combined with a penalty of $16,000 for each of the 178 toll free numbers that the Company and CEO offered to sell, resulting in a total fine of $3.36 million.

FCC Rejects AM Licensee’s “Not My Tower, Not My Problem” Defense

The FCC imposed a penalty of $17,000 against a Michigan radio licensee for failing to make available its issues/program lists in the station’s public file and for failing to enclose the station’s antenna structure within an effective locked fence.
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January 2015

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:

  • Individual fined $25,000 for Unauthorized “Chanting and Heavy Breathing” on Public Safety Station
  • Failure to Timely Request STA Results in $5,000 Fine
  • FCC Imposes $11,500 Fine for Intentional Interference and Station ID Violation

FCC Fired up by a New Yorker’s Deliberate Disregard for Public Safety

Earlier this month, the FCC imposed a $25,000 fine against a New York man for operating a radio transmitter without a license and interfering with the licensed radio communications system of the local fire department. Section 301 of the Communications Act provides that “[n]o person shall use or operate any apparatus for the transmission of energy or communications or signals by radio . . . except under and in accordance with [the Act] and with a license.” Section 333 of the Act prohibits a person from willfully or maliciously interfering with any radio communications of any station licensed or authorized under the Act or operated by the United States government.

On October 31, 2013, the local fire department complained to the FCC that unauthorized transmissions of chanting and heavy breathing were interfering with its radio communications system. When the transmissions occurred during fire emergencies, the firefighters were forced to switch to an alternate frequency to communicate with each other and with the dispatchers. FCC agents traced the source of the interfering transmissions to an individual’s residence–a location for which no authorization had been issued to operate a Private Land Mobile Station. County police officers interviewed the individual and confirmed that one of his portable radios transmitted with the unique identifying code that the fire department observed when the unauthorized transmissions interfered with its communications. The officers subsequently arrested the individual for obstruction of governmental administration.

The FCC found the individual’s conduct was particularly egregious because his unlicensed operations hampered firefighting operations and demonstrated a deliberate disregard for public safety and the Commission’s authority and rules. Thus, while the FCC’s base fines are $10,000 for operation without authorization and $7,000 for interference, the FCC found that an upward adjustment of $8,000 was warranted, leading to the $25,000 fine.
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In a just released Public Notice, the Media Bureau has designated May 29, 2015, as the Pre-Auction Licensing Deadline. That is the date by which certain full-power and Class A TV stations must have a license application on file with the FCC in order for their modified facilities to be protected in the repacking process following the spectrum incentive auction.

While the FCC earlier concluded that full-power and Class A TV facilities licensed by February 22, 2012 would be protected in the repacking, it envisioned protection of TV facilities licensed after that date in a few specific situations. It is to this latter group that the May 29, 2015 deadline applies. These include:

  • Full-power television facilities authorized by an outstanding channel substitution construction permit for a licensed station, including stations seeking to relocate from Channel 51 pursuant to voluntary relocation agreements with Lower 700 MHz A Block licensees;
  • Modified facilities of full-power and Class A television stations that were authorized by construction permits granted on or before April 5, 2013, the date of the FCC’s announcement of a freeze on most television modification applications, or that have been authorized by construction permits that were granted after April 5, 2013, but which fit into one of the announced exceptions to the application freeze; and
  • Class A TV stations’ initial digital facilities that were not licensed until after February 22, 2012, including those that were not authorized until after announcement of the modification application freeze.

Today’s announcement means that, with the exception of stations affected by the destruction of the World Trade Center, stations in the categories above must complete construction and have a license application on file with the FCC by the May 29, 2015 deadline if they wish to have those facilities protected in the repacking process. According to the Public Notice, licensees affected by the destruction of the World Trade Center may elect to protect either their licensed Empire State Building facilities or a proposed new facility at One World Trade Center as long as that new facility has been applied for and authorized in a construction permit granted by the May 29 deadline.

The Public Notice will inevitably cause some confusion, as it refers in a number of places to having a facility “licensed” by the May 29 deadline (e.g., “We also emphasize that, in order for a Class A digital facility to be afforded protection in the repacking process, it must be licensed by the Pre-Auction Licensing Deadline.”). Fortunately for those of us that read footnotes carefully (that’s what lawyers do!), the FCC stated in the small print that “[t]he term ‘licensed’ encompasses both licensed facilities and those subject to a pending license to cover application….”

For those holding TV licenses that are more interested in the spectrum auction than in the repacking of stations afterwards, the Pre-Auction Licensing Deadline is also relevant, as the FCC indicates that “[t]he Pre-Auction Licensing Deadline will also determine which facilities are eligible for voluntary relinquishment of spectrum usage rights in the incentive auction.” In other words, to the extent the FCC bases auction payments in part on a selling station’s coverage area, the facilities constructed by the Pre-Auction Licensing Deadline (with a license application on file) will be used in making that determination.

Finally, the Public Notice indicates that this is a “last opportunity” for full power and Class A TV stations to modify their licenses to correct errors in their stated operating parameters if they want the FCC to use the correct operating parameters in determining post-auction protection.

So, whether a television station owner is planning on being a seller or a wallflower in the spectrum auction, today’s announcement is an important one, and represents one of the FCC’s more concrete steps towards holding the world’s most complicated auction.