Articles Posted in Low Power & Class A Television

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July 2010
FCC Eliminates Earlier Proposed Fee Reductions for Radio and Sets Hefty Increases for UHF Television Stations
Last week, just as broadcasters were finishing up with their new Biennial Ownership Report filings, the FCC released its final order setting the annual regulatory fee amounts stations must pay for Fiscal Year 2010. In so doing, the FCC erased promised reductions in annual regulatory fees for radio broadcasters and reallocated the television fee burden from VHF broadcasters to UHF broadcasters, resulting in considerable increases in the fees paid by UHF broadcasters over last year and even over the Commission’s prior proposals for FY 2010.

Background
Each year, the FCC reports to the Office of Management and Budget the amount of money that the FCC estimates it will need to run its operations in the coming year. Congress generally accepts this estimate and sets it as the amount that the FCC is statutorily obligated to raise from its licensees through annual regulatory fees. Between 2008 and 2009, fee amounts increased by about 10%, prompting outcries from broadcasters that the fee increases have historically been too high year to year, and that they were simply intolerable in a year in which the industry was so adversely affected by the economic downturn.

Perhaps because of this, for 2010, the Commission requested, and Congress required, that it raise 1.8% less revenue than it had in 2009. Based on that reduction, in April the FCC released a Notice of Proposed Rulemaking proposing modest, across the board cuts in the amounts paid by radio licensees. Only AM construction permits were to increase–by $20. In contrast to the broad increases in television fees experienced in 2009, the FCC’s proposals were for modest increases in some, but not all, television categories. In most television categories where an increase was proposed, it only amounted to a few hundred dollars over the 2009 level. Even the three categories that were hardest hit (VHF stations in Markets 26-50, and UHF stations in Markets 1-10 and Markets 11-25) only saw increases of a few thousand dollars. Article continues — the full article can be found at FCC Releases Final Regulatory Fee Amount
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One of many questions persisting since the release of the FCC’s National Broadband Plan has been “what is the impact on low power television stations?” Officially, the NBP’s call for repurposing television broadcast spectrum was not to affect LPTV stations, as the NBP indicated that LPTV stations would not be required to participate in the spectrum repacking and reallocation proposed for full power television stations.

As we noted at the time, however, it was unclear how the NBP’s spectrum reallotment proposals could not have a substantial impact upon the LPTV service. When full power stations are repacked into fewer channels to make room for wireless broadband, the secondary status of LPTV stations seems to ensure that they will be squeezed out of existence by the repacking. The NBP’s sunny language regarding the future of LPTV service therefore appeared more about selling the plan politically than about actually addressing the reality of spectrum repacking.

Today, President Obama issued a Presidential Memorandum directing the heads of all Executive Departments and Agencies to cooperate in “unleashing” the wireless broadband revolution by working with the NTIA and FCC to free up the 500 MHz of additional spectrum envisioned by the NBP. Immediately after the President’s action, the FCC’s Media Bureau released a Public Notice slamming the door on a much-anticipated opportunity to file digital LPTV and Translator applications that was scheduled to begin on July 26, 2010.

The Media Bureau had announced this filing opportunity on June 29, 2009, almost a year ago to the day of today’s announcement rescinding it. The filing opportunity was to have been for those seeking authorizations to build new digital LPTV stations. It was announced just after the conclusion of the nationwide DTV transition and the channel-shifting by full power stations (and displacement of LPTV stations) that process entailed. Applicants that had been prevented from filing before could now examine this vastly changed spectrum landscape with an eye toward providing LPTV service in places and on channels not previously available. Applications were to be considered on a first come, first served basis. To prevent a potential deluge of applications, the Media Bureau broke the process into two steps. In the first step, the FCC began permitting the filing of digital LPTV applications in rural areas in August 2009. The second step was to permit such applications in all areas of the country beginning in January 2010. As mentioned above, that date was first delayed until July 2010, and now, indefinitely.

Today’s announcement that new LPTV applications will not be permitted in urban areas, at least until the spectrum rulemakings surrounding the National Broadband Plan are resolved, officially confirms that the LPTV service is indeed going to be affected by the NBP’s thirst for broadcast spectrum. In a nod to that future reality, the Media Bureau also announced that the FCC will allow existing analog LPTV stations to apply for companion digital channels. While that may at first seem contrary to the goal of clearing broadcast spectrum, the purpose is to encourage the transition of the LPTV service to digital, which will ultimately allow it to be packed into less spectrum. However, even the transition of LPTV service into digital format is not likely to clear the amount of television spectrum envisioned by the NBP. As a result, if today’s action dropped the proverbial shoe on applicants for new LPTV stations, there likely will be one more shoe to drop… on existing LPTV stations.

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The FCC announced in April 2009 its intent to implement a new version of its biennial Ownership Report form, and to require that all commercial broadcast stations file a new Ownership Report with the FCC by November 1 of odd-numbered years. Since that time, the FCC has had to delay the original November 2009 filing deadline a number of times, for reasons ranging from its electronic filing system grinding to a halt and being unable to handle the sheer mass of the new reports, to technical glitches with the form itself, delays in Office of Management and Budget approval, and fierce opposition from broadcasters at the FCC, OMB and now in court based upon the paperwork burden and privacy concerns the new form raises. As we discussed in an earlier Client Alert, the FCC’s revised deadline requires parties to report their November 1, 2009 ownership data on the new form by July 8, 2010.

As that deadline draws near, however, it looks like there are still a few obstacles that the FCC must navigate. As we reported in a recent Client Alert, the FCC yesterday responded to a petition filed with the U.S. Court of Appeals for the DC Circuit by a group of broadcasters. Those broadcasters have asked the court to stop the FCC from implementing the revised Form 323, arguing that the requirement that all “attributable” principals provide their Social Security Number (SSN) to obtain a Federal Registration Number (FRN) for the new ownership report violates the Administrative Procedure Act and the Privacy Act. In its court-ordered response to these allegations, the FCC claims it has complied with the law, and that the broadcasters’ claims are moot in any event because filers are no longer actually required to provide their SSNs and can instead apply for a “Special Use FRN” (SUFRN) (love that acronym!) to complete the new ownership report form.

That response is not, however, entirely accurate. The FCC initially refused to create a Special Use FRN for purposes of reporting ownership interests. It feared that broadcast investors would choose to use that option rather than supplying their SSN, thereby undercutting the FCC’s ability to determine precisely which “Ted Jones” was the owner of a particular radio station. The FCC relented only when it became clear that many broadcasters would be unable to file their Ownership Reports at all since they had no ability to force their investors to reveal SSNs, and the FCC’s electronic filing system would not accept an ownership report if all attributable investors listed did not have an SSN-obtained FRN.

Even when the FCC later relented and created the SUFRN, it limited its use to the filing of biennial ownership reports (as opposed to post-sale ownership reports or other FCC applications). The FCC also made clear that the use of a SUFRN, while technically allowing broadcasters to file their ownership reports through the electronic filing system, did not comply with its rules and that it expected broadcasters to have obtained SSN-obtained FRNs before the next biennial ownership report is due in November 2011.

Since that time, and under continuing pressure from communications lawyers and privacy advocates (who are often one and the same), the FCC appears to be growing more flexible about the use of SUFRNs in completing ownership reports. Action by the court in the short time remaining until the July 8, 2010 filing deadline may determine just how flexible the FCC will need to be in that regard, and whether the filing deadline might have to be extended yet one more time.

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I wrote a while back about the Downside of Downsizing, in which I noted an increasing number of calls from broadcasters who had trimmed their staffs to the bare minimum, only to belatedly discover that the remaining employees lacked either the experience or the time to ensure the station’s compliance with FCC and other regulations. This afternoon, the FCC released seven Notices of Apparent Liability announcing the financial damage that taking your eye off the regulatory ball can have.

The seven NALs (1, 2, 3, 4, 5, 6, 7) all involved Children’s Television violations, with the proposed fines ranging from $25,000 to $70,000. The FCC’s grand total for the afternoon was $270,000 in proposed Children’s Television fines. While the simultaneous release of the forfeiture orders may be meant to send a message about the seriousness with which the FCC views violations of the Children’s Television rules, the FCC has been working hard on Chairman Genachowski’s watch to clear out backlogs of enforcement proceedings of all types, and it may be that these particular cases are merely the latest result of that effort.

What is certainly not a coincidence, however, is the hefty size of these fines. These NALs appear to confirm a recent FCC trend of imposing heavier fines for a variety of regulatory offenses. While cynics might argue that the government just needs the money at the moment, there does seem to be a concerted effort at the FCC to “update” its fine amounts to make violations sufficiently painful that licensees will not view them as merely a cost of doing business. It is also worth noting that while the seven NALs involve a variety of kidvid violations (exceeding commercial limits, program length commercials, failure to notify program guide publishers of the targeted age range of educational programs, failure to place the appropriate commercial certifications in the public inspection file, failure to publicize the existence and location of the station’s Children’s Television reports), they all have one other feature in common: each of the stations confessed its transgressions in its license renewal application.

In addition to giving no quarter for the licensees having confessed their own sins, the NALs are quite stern in assessing the severity of the violations. Noting that human error, inadvertence, and subsequent efforts to prevent the recurrence of such violations are not grounds for reducing the punishment imposed, the NALs apply a strict liability standard, cutting stations no slack even where the violation was based upon a misapplication of the rule (e.g., assessing compliance with children’s commercial time limits based upon a programming hour (4:30-5:30pm) rather than a clock hour (5:00-6:00pm)), where a program-length commercial was caused by a fleeting and tiny/partial glimpse of a program character during a commercial, or where the program-length commercial was caused by network content.

To be clear, the FCC staked out no new legal ground in these decisions, which for the most part apply existing precedent, and the NALs do indicate that some of the stations involved had over 100 kidvid violations. What catches the eye, however, is not just the size of the fines, but the terse manner in which the violations are listed, the defenses rejected, and the fine imposed, with each NAL noting that the base fine for a kidvid offense is $8,000, but that an upward adjustment is merited in this particular case, with the ultimate amount often appearing to have been plucked out of the air. The impression licensees are left with is that the FCC has lost patience in plowing through the backlog of enforcement cases, and there will be little or no room for error in FCC compliance going forward.

It’s good that the broadcast advertising market has begun to resuscitate, as now would be a good time to rehire those FCC compliance personnel, particularly the ones that prescreen children’s television content.

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Given that low power television (LPTV) stations have been trying unsuccessfully for many years to obtain must-carry rights comparable to those enjoyed by full-power stations, it is often overlooked that some LPTVs do, in fact, have carriage rights. However, these must-carry rights are available only to a select few LPTV stations.

Specifically, an LPTV station is “qualified” for mandatory carriage only if: 1) it broadcasts at least the minimum number of hours required of full-power stations by the FCC’s rules; 2) it meets all the obligations applicable to full-power television stations including, among other things, with respect to non-entertainment programming, and provides local news, informational and children’s programming that addresses local needs that are not being met by full-power stations; 3) it complies with interference restrictions consistent with its secondary status; 4) it is located no more than 35 miles from the cable system’s principal headend and delivers a good quality signal to that headend; 5) the community of license of the station and the franchise area of the cable system were both located outside the largest 160 markets on June 30, 1990 and the population of the community of license was not larger than 35,000 as of that date; and 6) there is no full power television station licensed to any community within the county served by the cable system.

The last two criteria are typically the most difficult obstacles for LPTV licensees to overcome, as cable systems are only required to carry LPTVs in the smallest of markets and, even in those areas, only when there is a dearth of full-power stations in the area. While the restrictions are difficult for most LPTV stations to meet, a recent FCC decision shows that it is not impossible. In that case (found here), digital LPTV station WRTN-LD, located just outside of Nashville, Tennessee, was able to convince the FCC, over the objections of Comcast, that the station is a “qualified” LPTV station entitled to must-carry rights on Comcast’s cable system. While Comcast argued that the station is part of the Nashville market and therefore ineligible for must-carry rights, the station was able to demonstrate that its service area was outside the Nashville market and that it met the other qualifying criteria.

This case serves as a reminder to all licensees to investigate options and not merely presume that no help is available at the FCC or elsewhere. For LPTV licensees in particular, a quick review of the LPTV carriage criteria above with respect to their own situation is well worth the effort involved.

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Death, taxes … and FCC annual regulatory fees. Its that time of year again and the FCC has issued its latest annual Notice of Proposed Rulemaking containing regulatory fee proposals for Fiscal Year 2010. Those who wish to file comments on the FCC’s proposed fees must do so by May 4, 2010 with reply comments due by May 11, 2010.
For one of the few times in recent history, the annual fee amount the FCC is proposing to collect is actually less than the amount from a previous year. Consistent with this, and with a few exceptions, most of this year’s fees are the same or less than last year’s fees for all AM, FM, and television stations, as are the fee amounts for LPTV, Class A, translator, booster, and broadcast auxiliary licenses.

One big change in this year’s fee proposals is the elimination of the exemption for digital stations to pay fees now that the DTV transition has ended. Going forward, all digital full-service television stations will be required to pay a full license fee, including those stations that were operating pursuant to digital Special Temporary Authority as of October 1, 2009. It is also important to point out that the Commission is proposing to charge only a single fee for each low power or Class A facility simulcasting in both digital and analog.

The Communications Section will shortly be publishing a full Advisory on the proposed Reg Fees, including fee tables and charts for you to use to calculate your payments that will be due later this year.

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Death, taxes, and ownership reports: all three are unavoidable, but broadcasters had a brief respite from the last one. That respite has now come to an end.

One of the joys of being a broadcast licensee is filing biennial ownership reports detailing the extended ownership structure of each station. These reports used to be called Annual Ownership Reports and were filed, appropriately enough, annually. In an effort to reduce the amount of paperwork flowing between licensees and the FCC, the requirement changed in 1999 from an annual to a biennial one. That created endless confusion, as any particular station’s filing deadline was generally dictated by where it was located. Radio stations in one state would file by April 1 of odd-numbered years, while radio stations in a different state would be required to file by June 1 of even-numbered years. In fact, even TV and radio stations in the same state were required to file in different years.

Because of exceptions to the general rule on filing deadlines (too boring to discuss here), even the FCC had difficulty determining whether a station had been properly filing its ownership reports on time. As a result, the FCC adopted new filing rules in May 2009 establishing November 1 of odd-numbered years as the national ownership report filing date for all commercial broadcast stations. It also introduced a new form requiring more detailed information than in the past, required formerly exempt entities to file reports, and required that the information be entered electronically and repeatedly into the FCC’s filing system for each attributable owner in the ownership chain.

Previously, licensees with complex ownership structures would create a single exhibit describing the complete ownership structure and other media ownership interests, which was then attached to the ownership report for every entity in the chain of ownership. Because the new electronic ownership report form would not allow such attachments, stations (well, let’s be honest; station’s lawyers) were required to reenter the data for each and every ownership report. The reports for even midsize station groups could take months to complete. Initially, the FCC postponed the filing deadline (twice!) to give licensees time to fill out the voluminous reports, but as the FCC’s electronic filing system started to whimper from the volume of data being entered, the FCC postponed the deadline until the form could be reworked to solve the worst of the problems. For those interested, you can read our advisories and alerts from the time here, here, here, here, here, and here (you begin to appreciate the scope of the problem!).

A few hours ago, the FCC announced that a revamped ownership report form is now available which resolves the repetitive data entry issue by incorporating a spreadsheet that, once filled out, can be copied into multiple ownership reports. With the availability of the new form, the FCC also announced that all commercial broadcast stations, including Class A and LPTV stations, must file their reports on the new form by July 8, 2010. For those interested in the details of the new Form 323 and spreadsheet, you can read our Client Alert on the new form, and ponder whether a similar eight month postponement of death or taxes might also be possible.

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4/8/2010
The FCC’s Media Bureau has announced that a new version of the Biennial Ownership Report Form for commercial broadcast stations, FCC Form 323, will be available on its website as of April 9, 2010. All commercial broadcast station owners must file their biennial ownership reports using the new form by July 8, 2010. However, the data used to complete the form must be accurate as of November 1, 2009.

The FCC originally announced its intent to implement a new version of the Form 323 in an Order released in May 2009 as part of its Promoting Diversification in the Broadcasting Services proceeding. The revision required, among other things, that each holder of a direct or indirect attributable interest in a licensee secure an FCC-issued Federal Registration Number (“FRN”). The revision also mandated that information regarding attributable interest holders and their other broadcast interests be reported repeatedly and in a precisely structured manner. As a result, the number of reports and the time to complete each report increased dramatically for many broadcasters with the ultimate result that the FCC’s electronic filing system ground to a near halt and did not reliably save information entered into it. Based on these technical difficulties, the FCC stayed the filing obligation until it could improve the functioning of the form to account for these difficulties.

The FCC sent its revisions to the form to the Office of Management and Budget (“OMB”) for approval on March 25, and OMB approved the modified form on March 26. The revised form uses a new XML Spreadsheet template that will allow information to be entered into the spreadsheet and then uploaded to the form, thereby reducing the time and effort needed to enter the data. The spreadsheet must be downloaded from the FCC form and comes with detailed instructions regarding the proper use of the XML Spreadsheet. Of particular note are the following:

  • The XML Spreadsheet comes with 25 empty rows for data entry that contain embedded validation codes necessary for the proper functioning of the form. Any licensee needing more than 25 lines must copy and paste the original 25 lines as many times as necessary and not create new lines.
  • The XML Spreadsheet must be saved with an .xml extension, not the .xls or .xlsx extensions that the Excel program will assign by default.
  • Licensees must not change or delete any data in Cell B1.
  • Information must be entered in all capital letters.

The new version of the form also retains the requirement that each attributable interest holder secure an FRN. The instructions state that where, after a good faith effort, a licensee is unable to secure an interest holder’s social security number, which is needed to complete the FRN registration process, a button on the form will allow the licensee to secure a Special Use FRN. The instructions to the form state that the Special Use FRN can only be used for the Biennial Ownership Report filing, and not for any other filing, such as a post-consummation Ownership Report filing.

The Commission’s May 2009 Order also adopted November 1 as a new uniform reporting date for all commercial stations nationwide, regardless of the station’s license renewal filing anniversary (the deadline previously used by the FCC). Because the original November 1, 2009 filing requirement was stayed while the form was revised, the reports filed by the new July 8, 2010 deadline must still reflect the ownership data as it existed November 1, 2009.

The substantial difference in time between the new filing deadline and the time for which ownership information is being reported leads to some interesting questions. For example, where a station has been sold since November 2009, should the report be filed under the name of the new licensee or the prior licensee. If it is to be filed by the new licensee, how will the FCC deal with the fact that the new licensee may not have any personal knowledge of the prior licensee’s November 2009 ownership structure? These questions may be answered by a follow up public notice from the FCC, but if not, we will be pursuing them with the FCC’s staff.

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3/25/2010
Amendments must be filed by May 24, 2010. A $705 filing fee is required.

The FCC released a Public Notice today identifying several hundred pending applications for new analog LPTV or TV Translator stations that must be amended to specify digital operation. A copy of the FCC public notice is available at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-10-496A1.pdf. The Public Notice indicates that applications that are not amended will not be processed. The amendments must be filed electronically, along with a filing fee of $705.00 per application. Most of the listed applications were filed in a window held in 2000 and were filed in paper. The deadline to amend these applications is May 24, 2010.

The Public Notice states that this action is being taken in furtherance of the nationwide transition to digital television. However, the staff’s National Broadband Plan released last week urged the FCC to set a dead¬line by which all analog LPTV and TV Translator stations must convert to digital operation. This action appears to be a first step in that process. Accordingly, LPTV and TV Translator stations should be alert to the possibility of a further Public Notice establishing a similar transition requirement for existing stations.

A PDF version of this article can be found at Pending Applications for New Analog Low Power Television and TV Translator Stations Must Be Amended to Specify Digital Operation.