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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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Earlier this week, FTC Chairman Jon Leibowitz began the FTC’s final workshop concerning the future of media “How Will Journalism Survive the Internet Age?” by dismissing as a ” non-starter” any chance that his agency would recommend new taxes to support or “save” journalism. In advance of this workshop, the FTC staff had prepared and released a discussion document entitled “Potential Policy Recommendations to Support the Reinvention of Journalism.” One of the goals of the document is to try and save the current newspaper business model by, in part, imposing substantial new taxes on other media, including broadcasters. While the FTC says that the term “journalism” used throughout the document does not mean that that the FTC favors newspapers over broadcasters or other media, a close reading of the draft indicates that newspapers would be the primary beneficiary of the FTC proposals should they be adopted.
Shortly after the release of the document, the FTC issued a statement to the effect that the draft did not reflect a formal intention on the part of the FTC to seek new taxes and that the paper was for discussion purposes only. However, in order to fund the proposals, including those to provide potentially billions of dollars in subsidies and various tax breaks and credits to newspapers, the document proposes that the government institute:

• A 7 percent tax on broadcast spectrum to raise $3 to $6 billion while at the same time relieving broadcasters of their obligation to air “public-interest programming.”

• A 5 percent tax on consumer electronics that “would generate approximately $4 billion annually.”

• A spectrum auction tax “on the auction sales prices for commercial communication spectrum, with the proceeds going to the public-media fund.”

• A 2 percent sales tax on advertising to generate approximately $5 to $6 billion annually” and to change “the tax write-off of all advertising as a business expense in a single year to a write-off over a 5-year period [to] generate an additional $2 billion per year.”

• A 3 percent Internet Service Provider-cell phone tax requiring consumers to pay a tax on their “monthly ISP-cell phone bills to fund content they access on their digital services” to raise $6 billion annually for the FTC’s proposals.

While the FTC’s look to the future of news gathering might be noble, the proposals to raise taxes on broadcasters, consumer electronics, Internet Service Provider customers, and others would undoubtedly increase costs for consumers and businesses alike, not to mention they raise a host of First Amendment and Constitutional questions regarding politicization and governmental interference with a supposedly impartial press.
In the real world, most newspaper publishers recognize that innovation and new business models are the best ways to survive and thrive going forward as opposed to having the government impose harsh taxes on other media in the “robbing Peter to pay Paul” manner envisioned by much of the FTC report. According to press reports, John Sturm, President and CEO of the Newspaper Association of America commented on the FTC report by stating that “We’ve never sought or asked for anything like a bailout” and Rupert Murdoch is on record warning against the FTC proposals and the “heavy hand” of governmental regulation.

Chairman Leibowitz stated that the FTC’s workshops “have always been more about the future of journalism than saving the past.” While the Chairman might be right, the staff report circulating at the FTC would suggest otherwise as many of its proposals are clearly backward looking. Given the stakes and dollar amounts involved, broadcasters, consumer electronics manufacturers, Internet Service Providers as well as consumers should pay close attention to this proceeding as it continues to unfold at the FTC. The FTC plans to issue its final report on the future of media sometime this Fall.

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Not only broadcast stations, but churches, schools, concert venues, live theater, film productions, business presenters, sporting events, and motivational speakers will have to change the way they operate, starting this weekend. As we wrote in a Client Advisory back in January, the FCC set June 12th, 2010–the anniversary of the DTV transition–as the date by which wireless microphones and other devices must cease using the spectrum that was formerly TV channels 52-59. While popularly referred to as the “700 MHz Band”, the spectrum being cleared actually runs from 698 MHz to 806 MHz.

Although the elimination of wireless microphones from this band has drawn the most attention, many other devices commonly use this spectrum and must also cease operating in this band on June 12th, 2010. These include wireless intercoms, wireless in-ear monitors, wireless audio instrument links, and wireless cuing equipment. The impact is not limited to audio devices, as even devices that synchronize TV camera signals using the 700 MHz Band must vacate the band starting this weekend.

The reason for the FCC’s band-clearing effort is to make it available (and interference free) for public safety operations, as well as for providers of wireless service that have acquired the right to use portions of the band. Those failing to cease operating their 700 MHz devices are subject to fines ($10,000 is the FCC’s base fine for illegal operation), arrest, and criminal sanctions, including imprisonment, as the FCC notes that “interference from wireless microphones can affect the ability of public safety groups to receive information over the air and respond to emergencies,” putting “public safety personnel in grave danger.” While it may be tempting to continue using 700 MHz equipment in hopes that you won’t get caught, your community theater production does not want the liability of causing interference to a rescue operation by public safety personnel.

To avoid this result, users of affected 700 MHz equipment must either modify their equipment to operate in other permitted portions of the spectrum, or cease using the equipment entirely if it cannot be modified to operate in other bands. To assist users in determining whether they have a 700 MHz microphone, the FCC has created a webpage listing many makes and models of wireless microphones, as well as the frequencies on which they operate. The site also includes contact information for many of the manufacturers of wireless microphones to obtain further information about particular microphones.

So inspect your equipment and do the research necessary to determine whether it operates in the 700 MHz Band. If so, see if it can be modified to prevent operation in that band. If not, then it looks like this weekend would be an excellent time to go shopping for that new microphone you’ve always wanted.

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May 2010
The staggered deadlines for filing Biennial Ownership Reports by noncommercial educational radio and television stations remain in effect and are tied to their respective anniversary renewal filing deadlines.

Noncommercial educational radio stations licensed to communities in Michigan and Ohio, and noncommercial educational television stations licensed to communities in Arizona, the District of Columbia, Idaho, Maryland, Nevada, New Mexico, Utah, Virginia, West Virginia, and Wyoming, must file their Biennial Ownership Reports by June 1, 2010.

Last year, the FCC issued a Further Notice of Proposed Rulemaking seeking comments on, among other things, whether the Commission should adopt a single national filing deadline for all noncommercial educational radio and television broadcast stations like the one that the FCC has established for all commercial radio and television stations. That proceeding remains pending without decision. As a result, noncommercial educational 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 filing.

A PDF version of this article can be found at Biennial Ownership Reports Are Due by June 1, 2010 for Noncommercial Educational Radio Stations in Michigan and Ohio, and for Noncommercial Educational Television Stations in Arizona, the District of Columbia, Idaho, Maryland, Nevada, New Mexico, Utah, Virginia, West Virginia and Wyoming.

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Call it just a recessionary recess, but radio stations strapped by the tough (but finally improving) advertising market breathed a sigh of relief today. In a continuing battle between the Radio Music License Committee (RMLC) and ASCAP over the music license fees paid by radio stations to the composers represented by ASCAP, US District Court Judge Denise Cote ruled that while the dispute is being resolved, the interim payments due ASCAP will be reduced by some $40 million dollars compared to the 2009 ASCAP fees.

The seeds of the dispute were first planted years ago, in economic boom days, when ASCAP fees were based upon a percentage of a radio station’s revenues. The radio industry sought to slow the rapid rise in ASCAP fees resulting from economic growth in the radio industry. To accomplish this, the RMLC and ASCAP ultimately agreed on a flat rate fee structure not directly connected to station revenues.

You can guess what happened next. The economy plummeted, radio revenues plummeted, but the ASCAP flat rate fees did not. Suddenly those fees represented an ever larger percentage of station revenue, with the result that playing music was becoming a very pricey part of station operations. There are also additional complications in a digital world. Does your ASCAP license cover your station’s audio stream on the Internet and elsewhere? How about those new HD multicast streams you’re now transmitting?

With the hope of addressing the growing impact of ASCAP fees, as well as these related issues, the RMLC and ASCAP entered negotiations over the fees to be paid by radio stations in 2010 and beyond. When no agreement could be reached, the RMLC commenced a rate proceeding in the US District Court. While it may be years before that proceeding is concluded, the interim rate set by Judge Cote represents the rate that will apply going forward. It supersedes the temporary 7% rate reduction agreed to by the RMLC and ASCAP earlier, but is not retroactive to January 1, 2010. It will continue to apply until the rate proceeding is concluded and a new rate is established, at which point the new rate will be applied retroactive to January 1, 2010, and any upward or downward adjustment for fees already paid will be made.

In the meantime, radio stations should begin seeing reductions in their ASCAP bills in the coming months, which will provide a welcome bit of relief to cash-strapped stations.

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Posted in: Radio
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The staggered deadlines for filing Biennial Ownership Reports by noncommercial educational radio and television stations remain in effect and are tied to their respective anniversary renewal filing deadlines.

Noncommercial educational radio stations licensed to communities in Michigan and Ohio, and noncommercial educational television stations licensed to communities in Arizona, the District of Columbia, Idaho, Maryland, Nevada, New Mexico, Utah, Virginia, West Virginia, and Wyoming, must file their Biennial Ownership Reports by June 1, 2010.
Last year, the FCC issued a Further Notice of Proposed Rulemaking seeking comments on, among other things, whether the Commission should adopt a single national filing deadline for all noncommercial educational radio and television broadcast stations like the one that the FCC has established for all commercial radio and television stations. That proceeding remains pending without decision. As a result, noncommercial educational 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 filing.

Should there be any questions concerning this matter, please contact any of the attorneys in the Communications Practice.

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When the U.S. Supreme Court overturned various restrictions on political spending by corporations in the Citizens United decision, it set off a flurry of activity in Washington. Many, including famously the President in his State of the Union address, derided the decision as opening the political process to the corrupting influence of corporate cash. Many in Congress promised a swift legislative response to minimize the impact of the Court’s ruling. Regardless of where you stand on the Court’s decision, I have to say I was disturbed by a number of statements coming out of Capitol Hill afterwards which made clear that the speakers had no understanding of the laws already on the books relating to political advertising on electronic media. Some promised to change the law to what it actually already is (although they apparently didn’t know it), and others pointed out “problems” that would result from the Citizens United ruling that current law already prohibits from occurring.

Grandstanding without basis is, however, a well-established Washington tradition, and I presumed that when legislative staffers got together to draft the legislation, they would quickly figure out that these criticisms and unneeded solutions had been off-base. I apparently was too optimistic. Today, Senator Schumer of New York unveiled the Senate version of the legislation (Senate link not yet available) at a news conference on the steps of the Supreme Court. The President publicly applauded the legislation, and the House has promised hearings within a week on its version of the bill in hopes of enacting it quickly enough to govern this Fall’s elections. The DISCLOSE Act (the acronym for “Democracy Is Strengthened by Casting Light On Spending in Elections”), as its name indicates, requires ample disclosure when corporations or unions spend money on ads relating to a federal political campaign. Unfortunately, it does not stop there, and attempts to then rewrite political advertising laws contained in the Communications Act of 1934 that were not impacted by the Citizens United ruling. These changes appear to be an effort to require broadcasters, as well as cable and satellite operators, to subsidize the ads of not just candidates, but of their national political parties as well, in an effort to make their ad dollars go farther than those of a corporation exercising its rights under Citizens United.

Setting aside the wisdom or constitutionality of that approach, the rub is that the legislation was apparently drafted in such a rush that aspects of it quite literally make no sense. For example, the relevant section of the bill is entitled “TELEVISION MEDIA RATES”, but it then amends the political advertising provisions of the Communications Act that affect both television and radio. Even if the impact on radio was unintended, the matter is further confused by a requirement that the FCC perform random political audits during elections of at least 15 DMAs of various sizes, and that each DMA audit include “each of the 3 largest television broadcast networks, 1 independent television network, 1 cable network, 1 provider of satellite services, and 1 radio network.”

Similarly, the statutory exceptions to the requirement for providing equal time to a candidate’s opponents when the candidate appears on-air would be amended to exclude certain appearances by a candidate’s representative as a triggering event. However, since only the appearance of a candidate can trigger equal time in the first place, creating an exception for appearances by a candidate’s representative serves no purpose.

Further indicating that the bill is premised on a misunderstanding of the current law, the Reasonable Access provisions of the Communications Act would be amended so that instead of FCC licensees being required to provide federal candidates with “reasonable amounts of time,” they would be required to provide “reasonable amounts of time, including reasonable amounts of time purchased at the lowest unit charge ….” The premise of this change appears to be a lack of understanding that all time sold to a candidate in the 45 days before a primary and the 60 days before a general election must be sold at the lowest unit charge for that class of time. The broadcaster has no discretion to charge anything but the lowest unit charge during that time, making this change pointless as well.

A number of other odd provisions in the Senate version of the bill that would significantly impact media companies (and not just broadcasters) is discussed in an Advisory we issued to our clients earlier today. Two of particularly great concern would drastically reduce the lowest unit charge for political advertising while significantly expanding the pool of entities eligible to receive lowest unit charge. It is worth noting that none of these media-oriented provisions appear to be in the House version of the bill, so hopefully they will be excised from the Senate bill before any harm is done. Regardless, broadcasters, as well as cable and satellite providers, need to be vigilant to ensure that these provisions, if not eliminated outright, are at least heavily modified before any final bill emerges.

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4/29/2010
Several members of Congress led by Senator Schumer and Congressman Van Hollen introduced today the “Democracy Is Strengthened by Casting Light On Spending in Elections” Act–the DISCLOSE Act. The House and Senate versions differ, with the Senate version vastly expanding eligibility for Lowest Unit Charge, reducing the Lowest Unit Charge, prohibiting preemption of political ads, and requiring the FCC to perform political audits of broadcasters, cable, and satellite operators.

The DISCLOSE Act is primarily aimed at reversing, to a large degree, the recent 5-4 decision of the Supreme Court in Citizens United v. Federal Election Commission, in which the Court held that corporations, and by implication unions, have a constitutional right to make independent expenditures for advertising supporting or opposing the election of political candidates. As we reported in a Client Alert in January of this year, the decision opened the way for increased political advertising by invalidating limits on corporate political ad spending. The decision allows, among other things, corporations (and unions) to purchase airtime at any time to directly advocate for or against candidates for federal elective office. While the decision invalidated limits on corporate spending on political advertisements, it did retain certain disclosure and disclaimer requirements found in the Bipartisan Campaign Reform Act.

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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.