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No, the FCC has not instituted an early-filing program so licensees can get that pesky license renewal out of the way. Instead, in 2010 it cleaned up television license renewal applications that had been hanging around since the last renewal cycle, issuing nearly $350,000.00 in children’s television fines to some 20 licensees. So, like the year-end EEO self-assessment we recently reminded stations to undertake here, today we tee up a kidvid requirement that stations often overlook, but which the FCC does not.

The FCC’s rules require that television stations “publicize in an appropriate manner the existence and location of” their quarterly Children’s Television Programming Reports on FCC Form 398. While the FCC’s rules do not actually say that stations must publicize the existence of the reports on-air, the FCC’s staff has advised since the rule was adopted that some on-air announcements must be made to fulfill this “publicizing” obligation. The FCC’s enforcement actions bear out this admonition.

When confronted by the FCC, some broadcasters have argued that they fulfilled the “publicizing” obligation by placing the reports themselves on their website. Others have argued that they aired announcements publicizing the existence of their public inspection file (which contained the reports). None of these broadcasters liked the outcome of their encounters with the FCC. The FCC rejected the suggestion that posting the reports is an adequate substitute for publicizing their existence in the first instance or that advertising the location of the public inspection file is adequate to inform viewers that the Children’s Television Programming Reports will be found there. It is only where the broadcaster changed its practice and began airing announcements publicizing both the existence and location of the public file and noting that the Children’s Television Programming Reports are located in it that the FCC was satisfied.

So why is now a particularly good time to think about this? Many television broadcasters schedule a year-long contract in their traffic system as a mechanism for ensuring that announcements about the existence and location of the Children’s Television Programming Reports are regularly aired. However, as reflected in the FCC’s enforcement actions, many stations forget to “renew” those contracts at the beginning of a new year, or fail to reinstate the contracts after installing new traffic equipment. Also, stations sometimes overlook educating new employees about the requirement, which increases the likelihood that reinstatement of the spot schedule for the next year will be missed.

The problem is then compounded when stations continue to certify in their quarterly Children’s Television Programming Reports that they are airing the announcements when they are not. The result is that at license renewal time, stations discover too late that they failed to air the announcements for a considerable period of time, and falsely certified to the FCC that they had complied with the requirement.

Fines of $10,000.00 and even $20,000.00 have been levied for this violation. To avoid a similar fate, stations should take the time now to verify that they have renewed the spot schedule in their traffic systems, and are running the required announcements, with the required content, on a regular schedule. Renew that annual contract. You’ll be glad you did at license renewal time.

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The next Quarterly Issues/Programs List (“Quarterly List”) must be placed in stations’ local public inspection files by January 10, 2011, reflecting information for the months of October, November and December, 2010.

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 a 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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Given the many distractions during the holiday season, I thought it would be a good idea to remind readers that January 10 represents a busy quarterly deadline for all radio and television stations. Below is a brief summary of the deadlines, as well as links to our Client Alerts describing the requirements in more detail.

Children’s Television Programming Documentation

All commercial full-power television stations and Class A LPTV stations must prepare and file with the FCC an FCC Form 398 Children’s Programming Report for the fourth quarter of 2010, reflecting children’s programming aired during the months of October, November, and December, 2010. The Form 398 must be filed with the FCC and placed in stations’ public inspection files by January 10, 2011.

In addition to requiring stations to air programming responsive to the educational and informational needs of children, the FCC’s rules limit the amount of commercial material that can be aired during programming aimed at children. Proof of compliance with the children’s television commercial limitations for the fourth quarter of 2010 must be placed in stations’ public inspection files by January 10, 2011.

For a detailed discussion of the children’s programming documentation and filing requirements, please see our Client Alert here.

Quarterly Issues Programs Lists

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. All radio and television broadcast stations, whether commercial or noncommercial, must prepare and place in their public inspection files by January 10, 2011, a list of important issues facing their communities, and the programs which aired during the months of October, November, and December, 2010, dealing with those issues. For a detailed discussion of these requirements, please see our Client Alert here.

DTV Quarterly Activity Station Reports

Those television stations that have not yet completed construction or commenced operation of their final post-transition DTV facilities must continue the required general DTV Consumer Education Initiatives until they commence operation on their post-transition DTV facilities. Such stations will be required to file FCC Form 388 by January 10, 2011, providing the Commission with the details of the DTV Consumer initiatives that they performed between October 1 and December 31, 2010. For a detailed discussion of this filing requirement, please see our Client Alert here.

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Below is the text of our 2011 Broadcasters’ Calendar, which lists deadlines that broadcasters should be aware of for 2011. If you would prefer to read the PDF version of the calendar, it can be found here.

Items of Note in 2011

1. Applications for Renewal of License: June 1, 2011 is the first filing date of the three-year period during which the licensees of all commercial and noncommercial AM, FM and FM Translator stations throughout the United States and its territories will be required to file their applications for renewal of broadcast station license. Licensees in the television services will commence this process in 2012. The date on which a station’s application is due depends on the state or territory of its community of license. All licensees should familiarize themselves now with the dates associated with this important filing, including the dates on which public notice announcements must air in advance of the renewal filing; the filing date itself, which is approximately four months before the date of license expiration; and the dates on which post-filing announcements must air.
2. Biennial Ownership Report Filing Requirements for Commercial Radio and Television Stations: Licensees of commercial, full-power radio and television stations as well as Class A television and low power television stations should be ready to file their biennial ownership reports on FCC Form 323 by the new, uniform filing date of November 1, 2011. While these licensees may have filed a biennial report as recently as the summer of 2010, that report fulfilled the reporting obligation for the period that ended on November 1, 2009. Only because of difficulties with the FCC’s electronic filing system was the November 1, 2009 deadline ultimately extended to July 8, 2010.

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In the heat of the battle raging over carriage of various Fox networks on Cablevision’s systems, Randy May, the founder and chief intellect of the Free State Foundation, has weighed in on the retransmission consent debate (available here). I read his comments with interest, because Randy often provides insightful observations on important telecommunications policy issues, and I care about retransmission consent.

I was disappointed. The paper only rehashes the cable television party line.

Surprisingly, Randy suggests that broadcasters’ exercise of retransmission consent rights should be scrutinized and possibly regulated even more. One would have to dig pretty deep to find the last time Randy advocated solving a problem by throwing more government at it.

The party line Randy endorses goes something like this: broadcasters get special privileges from the government with respect to signal carriage, which give them a retrans “negotiating advantage.” Retransmission consent negotiations don’t happen in a free market goes the argument. The solution? Broadcasters’ retransmission rights should be even more regulated than they are already.
Randy cites two “advantages” broadcasters supposedly enjoy in retrans negotiations: (1) must-carry and (2) program exclusivity. The cable industry party line is a little tortured, coming, as it does, from interests subject to a small fraction of the regulatory umbrella that shadows broadcasters. These are the same companies, after all, that argue government should stand back and let broadband carriers treat Internet traffic as they will.

The party line is also completely wrong about the carriage rules.
First, the existence of must-carry sometimes harms, but never helps, broadcasters that elect retransmission consent. Broadcasters must claim their retrans rights once every three years through a technical and exacting election process. If they make a mistake, they risk having to give away their signals for free. Cable companies routinely use this against broadcasters in retrans negotiations.

By definition, any broadcaster engaged in retransmission consent negotiations has forfeited its must-carry rights. It’s either-or. Each broadcaster makes its election once every three years — same election for all overlapping cable operators, no cherry-picking. If you elect retrans, you have no guarantee of being carried at all and no option to revert to must-carry if negotiations break down.

Must-carry benefits some broadcasters, no doubt. But it doesn’t confer any advantage on a broadcaster that elects retransmission consent. The cable/DBS/telco party line suggests that must-carry gives broadcasters a retrans advantage, but it never identifies what that supposed advantage is. Randy doesn’t explain the advantage either. There is none.
Second, the program exclusivity rules impose huge burdens on broadcasters. Start with the unregulated baseline: producers and distributors are free under the law to agree to exclusive distribution territories. The broadcast networks and affiliates, if they wanted to, could agree that each affiliate has unfettered nonduplication protection throughout its DMA. That would be a free market.

But this is anything but a free market: even if broadcasters purchase exclusivity rights, they may not enforce those rights except within limited, FCC-defined areas. If you doubt me, just read the notes to the network nonduplication and the syndicated exclusivity rules. And this is a bargaining advantage? A reason to pile more rules on broadcasters?
Having read hundreds of Randy’s usually insightful postings over the years, I’m disappointed to see him republish boilerplate cable industry advocacy. His comments run counter to the Free State Foundation’s guiding principles and lack Randy’s trademark sharpness and passion. More to the point, they bizarrely suggest that the government somehow does broadcasters a favor by limiting their free market rights.

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Last week, Congress passed the Twenty-First Century Communications and Video Accessibility Act of 2010 (the “Act”) which, among other things, reinstates the FCC’s former Video Description rules for television broadcasters, extends closed captioning of video programming to the Internet, and requires the FCC to examine methods of increasing the accessibility of emergency information. The President signed the bill today, October 8, 2010.

The Act is designed to update the Communications Act to account for the many new technologies available in today’s marketplace and to assure that they are accessible to persons with hearing or vision impairment. The Act outlines a decade-long timetable for the submission of various reports by a new advisory committee to the FCC, and then by the FCC to Congress, and the implementation of further regulations based on the findings of those reports. When fully implemented, the Act will require that specific amounts of digital television programming contain video descriptions, that certain video programming distributed via the Internet contain closed captions, and that consumer electronics devices contain features to promote accessibility and be hearing aid compatible. We have summarized the Act’s requirements in three phases below.

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September 2010
The next Quarterly Issues/Programs List (“Quarterly List”) must be placed in stations’ local public inspection files by October 10, 2010, reflecting information for the months of July, August and September, 2010.

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

Given the fact that program logs are no longer mandated by the FCC, the Quarterly Lists may be the most important evidence of a station’s compliance with its public service obligations. The lists also provide important support for the certification of Class A station compliance discussed below.

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In light of today’s decision by the US Court of Appeals for the Second Circuit invalidating the FCC’s indecency policy, it would be hard to justify writing about anything else. From my first days as a young lawyer screening programs before they were aired (I still remember assessing the legalities of airing a live satellite feed of “Carnaval” from Rio) to defending stations accused of airing indecent programming in FCC enforcement actions, the FCC’s indecency policy has been an ever-present, ever-broadening part of the practice. While the definition of indecency has remained largely constant (“language or material that, in context, depicts or describes, in terms patently offensive as measured by contemporary community standards for the broadcast medium, sexual or excretory organs or activities”), its interpretation has always been a moving target.

When the Supreme Court originally found that requiring indecent content to be channeled into late-night hours was constitutional, it did so based upon a narrow view of what qualified as indecent content (basically George Carlin’s “Seven Dirty Words” routine) and the assurance of the FCC that restrained enforcement would protect First Amendment concerns. Over the next twenty years or so, broadcasters programmed accordingly, and with a few exceptions, broadcasters and the FCC learned to coexist on the issue of indecency.

However, the rise of cable television placed immense pressure on both television and radio broadcasters to more precisely map the boundary between “decent” and “indecent” content. While most broadcasters remained determined to stay on the “decent” side of that line, they could no longer afford to remain at such a safe distance from that line as to be deemed “fogey programming” by a generation of consumers that did not distinguish between broadcast programming and cable programming. To these viewers, all channels are equal, and whether programming arrives by cable, satellite, or antenna is beside the point. To reach this audience, many programmers struggled mightily to make their programming more edgy and relevant to young adults. This programming stayed clear of Carlin’s seven dirty words, and focused more on situation and entendre to engage its audience.

In response, the FCC stepped onto a slippery slope, seeking to broaden its interpretation of indecency by expanding its view of what constitutes “patently offensive” material. The FCC was not prepared for the mission it undertook. What at first appeared to be a slippery slope of line drawing quickly became a well-greased plunge into the abyss of eternal peril. Those filing complaints at the FCC often urged the agency, as a practical matter, to forget that indecency must be patently offensive and instead sought action against content that was merely offensive to the complainant. The result has been a gut-wrenching high speed slalom down the slippery slope, resulting in the FCC’s headfirst encounter today with the large oak doors of the Second Circuit’s courtroom.

Although the court based today’s ruling on a finding that the FCC’s interpretation of indecency is impermissibly vague, and therefore chilling of protected speech, the problem actually goes far deeper than that. Some of the greatest damage to free speech has resulted from complaints where just about everyone, including the FCC, would agree that indecency is not present. While baseless complaints were once met with a prompt and pleasant FCC letter notifying the complainant that the subject of their complaint was categorically not indecent, the FCC in later years treated every complaint even mentioning the word “indecency” as a reason to put a hold on that station’s license renewal or sale application for literally years until the FCC could investigate the complaint. In the meantime, these stations struggled, as a delayed license renewal made obtaining financing difficult, and a delayed sale often meant that the contract to sell the station expired before the FCC could resolve the indecency complaint and approve the sale. Under these circumstances, it is pretty easy to see how a station would be hesitant to say anything offensive to anyone, even without the potential for a $325,000 indecency fine.

Among the “indecency” complaints I have encountered that were holding up a station’s applications at the FCC was a complaint from a politician who didn’t like what a station said about him (apparently using the word “indecent” in his complaint got it put into the indecency pile), and a complaint that a Spanish word yelled at soccer matches when a goal is scored sounds too much like a bad word in English. When such complaints are allowed to languish or become the basis of a pointless inquiry, they interfere with the operations of a station, serve to chill future speech, and create a “bunker mentality” among broadcasters that anything they say will be held against them.

So where does this leave us? Well, as a pragmatic matter, the court’s ruling will not become effective until it issues its mandate, and the FCC may ask that the court delay taking that action while the FCC seeks a rehearing en banc or review by the Supreme Court. If the court’s ruling does become effective, it will apply only within the jurisdiction of the Second Circuit (which includes Connecticut, New York and Vermont). Both legally and politically, the FCC will feel compelled to pursue an appeal, and the result of that effort will determine the future of its indecency enforcement efforts across the US.

That places the FCC in a very high stakes game of poker. Does it place an ever larger bet on trying to defend its existing policy? If it does, it runs the risk that the Supreme Court will rule that the very notion of indecency enforcement is unconstitutional in light of a changing media landscape and the FCC’s seeming inability to apply a narrow and restrained enforcement policy. Or, does it fold this hand and return to the table later with a “back to basics” indecency policy similar to what was once found constitutional by the Supreme Court? One thing’s for certain–for the first time in a long time, broadcasters are holding all the right cards in this game.

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If you are a Fox affiliate, your fax machine (if you still have one) probably has a message on it from the FCC waiting for you, courtesy of the latest struggle between Fox and the FCC over indecency enforcement. In a Notice of Apparent Liability released today, the FCC states it received over 100,000 complaints about a January 3, 2010 episode of American Dad aired on the Fox Television Network. Although the NAL doesn’t discuss the allegedly indecent content, it appears all of the complaints relate to a single segment of the episode which brings to mind that old college query, “if Jack helped you off the horse…” (if you missed that part of college, don’t worry, you didn’t miss much).

While the FCC’s enthusiasm for enforcing its indecency restrictions has waxed and waned over the years, what has usually been constant is the relatively slow path from complaint, to investigation, to resolution. It has not been uncommon for years to pass between these steps, which makes the sequence of events leading up to this NAL all the more interesting. In this case, the FCC sent a letter of inquiry to Fox just 18 days after the episode aired. The letter attached a single redacted complaint that the FCC indicates was “representative of the complaints received by the Commission,” and asked Fox, among other things, whether the description in the complaint of the allegedly indecent content was accurate, which Fox-owned stations aired it, and which Fox Television Network affiliates had the contractual right to air it.

According to the NAL, when the response to the letter arrived at the FCC, it was not from Fox, but from the single Fox affiliate named in the “representative” complaint. As a result, the response didn’t address a number of the FCC’s questions, including the request for a list of Fox affiliates that likely aired the program. To no one’s surprise, the FCC was not pleased. The NAL indicates that the FCC followed up with another letter on March 19, 2010 (note once again the lightning pace, with the FCC’s follow-up letter going out just 18 days after the affiliate’s response was filed). The FCC summarizes that letter as “describing [Fox’s] failure to respond to the LOI and requiring a full and complete response to all the Bureau’s inquiries no later than March 23, 2010,” just four days after the FCC letter was issued.

The NAL indicates that Fox didn’t respond to that letter, which also obviously did not please the FCC. In response, the FCC issued the NAL, which proposes a $25,000 fine against Fox for failure to respond to an FCC inquiry. The NAL notes that the base fine for such an infraction is $4,000, but that a “significant increase” in the fine is appropriate because “misconduct of this type exhibits contempt for the Commission’s authority and threatens to compromise the Commission’s ability to adequately investigate violations of its rules.”

Suspecting, perhaps, that a $25,000 fine would not overly concern an operation the size of Fox, the FCC proceeded to the nuclear option: “Given the continued absence of a response from Fox and the incomplete response received from [the affiliate], contemporaneously with the release of this NAL, the Bureau is sending letters of inquiry to all licensees that air Fox Television Network programming.” The NAL later notes that letters of inquiry are being sent to 235 Fox owned or affiliated stations. The FCC is obviously counting on Fox receiving a firestorm of protests from its affiliates, who now have 30 days to respond to the individual letters of inquiry, which include a request for copies of any complaints about the episode received by the stations themselves. The letters of inquiry are going out today by certified mail, but it appears that the FCC has already faxed the letters to many Fox-affiliated stations.

Both the speed and severity of the FCC’s response indicate a desire to send a very clear message to licensees that there is a new sheriff in town, and not a very patient one at that. This NAL adds an exclamation point to my missive last week about the FCC stepping up its enforcement sanctions to ensure that licensees don’t view them merely as a cost of doing business. Fox affiliates are about to be caught in the crossfire of the next skirmish in the indecency battle between the FCC and Fox, and they are doubtless not too pleased about it.

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While the FCC has traditionally steered clear of copyright issues, that has grown more difficult as the preferred method of content protection shifts from court actions to copyright protection built into the hardware. The FCC therefore found itself in the middle when Hollywood insisted that cable and satellite set-top boxes be designed so that programming could be embedded with code preventing the box from outputting the programming through any output unsecured against copying (principally analog outputs). Consumers and consumer electronics manufacturers fought back, noting that early generation DTV sets only had analog inputs, and that allowing programming to be restricted to the digital outputs of set-top boxes would deprive those early adopters of programming unless they bought new DTV sets.

In balancing the desire of Hollywood for an ironclad grip over its programming, and the adverse impact upon consumers just as the FCC was trying to persuade them to transition to digital television, the FCC prohibited the use of Selectable Output Control (SOC), but did not prohibit set-top boxes from being manufactured with SOC capability. The idea was that the FCC might later be presented with a business model requiring the use of SOC, and the FCC did not rule out the possibility of granting a waiver if the applicant could demonstrate that consumers would not be harmed by the use of SOC.

The FCC today released a decision partially granting a waiver request from the MPAA that would allow cable and satellite companies, at the request of the program provider, to use SOC to prevent set-top boxes from outputting recent theatrical HD movies over “unsecured” outputs. The business model proposed in the waiver request is the release of movies through Video on Demand services while those movies are potentially still in theaters, and long before they become available on DVD or Blu-Ray disc. The MPAA persuaded the FCC that studios would never release their content to home viewing this early in a film’s marketing life unless assured that it wouldn’t result in the content immediately being pirated over the analog outputs of set-top boxes.

In addition to the traditional opposition from consumer electronics manufacturers, who will face the wrath of consumers unable to get their components to work with the restricted outputs, the National Association of Theatre Owners (NATO) also objected. They argued that such an early release model would undercut their business, and that “instant availability of films will reduce choice and limit the ability to develop ‘sleeper’ hits in movie theaters.” Similarly, the Independent Film and Television Association (IFTA) asserted that SOC would reduce access to independently produced films.

The FCC chose, however, to grant a waiver, stating its belief that “home viewing will complement the services that NATO and IFTA members offer and provide access to motion pictures to those consumers who cannot or do not want to visit movie theaters.” While the FCC has long claimed not to be in the business of picking winners and losers in its technology decisions, that loud groan you hear is theater owners concerned that they are about to be “complemented” out of business by an ever-improving (and now speedier) home viewing experience.

In an effort to prevent SOC from being abused, however, the FCC did not grant the open-ended waiver sought by the MPAA. For example, the FCC limited the time during which SOC restrictions can be applied to 90 days, or whenever the movie becomes available on prerecorded media, whichever comes first. It also prohibited SOC from being used to promote proprietary connections (by blocking output to acknowledged copyright-secure connections on retail devices in favor of a Hollywood-preferred connection). The FCC also made clear that if “companies taking advantage of this waiver market their offering in a deceptive or unpredictable manner that does not allow consumers to ‘truly understand when, how, and why SOC is employed in a particular case’,” the FCC “will not hesitate to revoke this waiver.”

Finally, to prevent MPAA members from gaining an unfair advantage over other movie producers, the FCC is making the waiver available to any provider of first-run theatrical content that files an “Election to Participate” with the FCC. Such providers will be required to submit a detailed report to the FCC on their use of SOC two years from commencing use of SOC under the waiver so that the FCC can later assess whether the waiver needs to be modified or terminated. Whether the FCC will actually revisit the decision remains to be seen, but keeping its options open is likely a wise idea, as this is a decision that could well have cascading unintended consequences for all involved.