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For many television stations, network non-duplication and syndicated exclusivity protection are a distant memory. With the ever-increasing number of non-broadcast programming services available to cable operators, the number of distant station signals imported by cable and satellite into local markets has fallen dramatically. As a result, many local television stations are no longer vigilant in sending out network non-duplication or syndicated exclusivity notices. Recent developments arising in retransmission consent negotiations, however, make clear that television stations need to be more diligent than ever in making sure that they send out timely notices, and that the notices conform to all FCC requirements.

Recently, Smith Media (Smith) was unable to reach agreement with Time Warner Cable (TWC) regarding retransmission consent for the signals of several network-affiliated stations owned by Smith, so TWC dropped a number of Smith stations from its channel line-ups. Then TWC began to import distant network-affiliated station signals into the markets where it lost access to the Smith network-affiliated stations. It appears that Smith had not kept its network non-duplication notices up to date, opening a window in which TWC could avoid the exclusivity which Smith would normally have been able to enforce through its network contracts.

TWC threatened to do the same thing during its dispute with Sinclair Broadcast Group (Sinclair). While the Sinclair dispute appears to have been settled without its stations being dropped by TWC, an impasse in negotiations would have tested its non-duplication protection rights.

As noted in a recent trade periodical, not all broadcasters have been diligent in perfecting their non-duplication rights in recent years. Television station licensees facing retransmission consent negotiations should carefully review their non-duplication protection notices to ensure that they conform to FCC requirements. The notice rules are complex, and it may be advisable to review them with your counsel.

Because non-duplication notices must be sent to multichannel video program distributors within 60 days of execution of a network affiliation agreement, it may already be too late to cure a failure to give timely notice. In such a case, the station operator should consider contacting their network to amend or enter into a new network affiliation agreement in order to obtain updated network affiliation rights, thereby triggering a new 60-day notice period.

The Smith and Sinclair disputes raise two other important issues for television broadcasters. First, it appears that the reason that TWC could import distant network signals into Smith’s markets is that the standard TWC retransmission consent agreement permits the carriage of the station being retransmitted by any TWC system anywhere, not just within the station’s home market. It is advisable that all stations review the content of their retransmission consent agreements carefully, and, at least in the future, be sure to limit carriage rights to their own market, and perhaps to areas in which they are significantly viewed or have historically been carried.

Second, the other issue which came to light is that TWC has entered into an agreement with the FOX Network which allows TWC to carry a direct feed of FOX Network programming for a period of up to one year when a local FOX affiliate refuses to grant TWC consent to retransmit its signal. This could substantially reduce the local broadcaster’s leverage in retransmission consent negotiations, and is certain to be a major topic of discussion between network affiliate organizations and their networks.

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Late today, the FCC released an Order laying the groundwork for the first national test of the Emergency Alert System. As we noted in an earlier post, the FCC began this process nearly a year ago, when it released a Notice of Proposed Rulemaking seeking public comment on the implementation of regular national EAS tests. Today’s order modifies the FCC’s Rules to authorize such tests as well as to establish the ground rules for conducting them.

Specifically, the Order:

  • Requires all EAS participants to participate in national EAS tests scheduled by the FCC in consultation with the Federal Emergency Management Agency;
  • Requires that the first national test use the Emergency Alert Notification code, the live event code used for nationwide Presidential alerts;
  • Provides that the national test replaces the monthly and weekly EAS tests in the month and week it is held;
  • Requires the Public Safety and Homeland Security Bureau of the FCC provide at least two months’ public notice prior to a national test;
  • Requires EAS participants to submit test-related data within 45 days of the test;
  • Requires that test data received from EAS participants be treated as presumptively confidential, but allows it to be shared on a confidential basis with other federal agencies and state emergency management agencies that have confidentiality protection at least equal to that provided by the Freedom of Information Act; and
  • Delegates authority to the Public Safety and Homeland Security Bureau, in consultation with FEMA and other EAS stakeholders, to establish various administrative procedures for national tests, including the location codes to be used in the alerts and the pre-test outreach to be conducted.

While many following this proceeding had anticipated that the FCC might hold off on a national test until it had modified its rules to incorporate Common Alerting Protocol and the deadline for EAS participants to install CAP-compliant equipment had passed, it appears the first national test could occur as early as this Fall. The order specifically notes that the first “national EAS test is strictly of the legacy EAS system and is independent of the transition to CAP.”

The Order notes the need for significant public outreach prior to the test (to avoid public panic), and acknowledges that, at least for the first test, EAS participants will likely get more than the minimum two months’ warning to accomplish that public education objective.

Of particular note to EAS participants is the requirement that they record and submit to the FCC within 45 days of the test a fair amount of detail regarding that participant’s performance during the test (e.g., was the alert received and passed on successfully, what equipment was used, what was the cause of any problems that occurred, etc.). In order to facilitate the submission of that data, the FCC also announced that it will be creating an electronic filing system that EAS participants may elect to use to comply with the reporting requirement.

Because the FCC wishes to encourage EAS participants to be honest in reporting failures that occur during national tests, it did note that it would treat the required submissions as a “voluntary disclosure”. In the past, the FCC has considered a licensee’s voluntary disclosure of a rule violation to be a mitigating factor that can merit a reduction in the fine or other sanction imposed. Notably, however, the FCC did not foreclose itself from issuing fines or taking other action against an EAS participant reporting a failure of its equipment/performance in the national test, particularly where the violation is “repeated, egregious, or not promptly remedied.”

As a result of today’s Order, and the wheels it puts in motion, broadcasters, cable providers, and other EAS participants will need to make sure they and their EAS equipment are ready to participate in a national EAS test as early as this Fall. The FCC, FEMA and other governmental agencies also have much to do before a national test can occur. However, today’s action clears the initial obstacles away, and will allow the FCC to achieve its goal of assessing “for the first time, the readiness and effectiveness of the EAS from top-to-bottom, i.e., from origination of an alert by the President and transmission through the entire EAS daisy chain, to reception by the American public.” That assessment has been a long time coming, and while it does present some regulatory risks for EAS participants, most will be pleased to have confirmation that the EAS equipment they have maintained day in and day out, year after year, will serve its intended purpose should a national emergency require it.

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The Office of Management and Budget is currently considering whether to approve a revised version of FCC Form 303-S, the “Application For Renewal of Broadcast Station License” that all commercial and noncommercial full-power radio and television stations will be required to use when they file for their next renewal of license. The FCC has made several modifications to the prior version of the form.

One of the modifications is a new renewal certification which will constitute a material representation to a government agency. For that reason, every renewal applicant will want to be doubly sure that it has a reasonable, good faith basis for responding to the certification with an unqualified “Yes” and adequate documentation to support such response. Specifically, the revised renewal form seeks a “Yes” or “No” response to the new certification that the licensee’s “advertising sales agreements do not discriminate on the basis of race or ethnicity and that all such agreements held by the licensee contain nondiscrimination clauses.” According to the FCC, this new certification is needed to combat “no urban/no Spanish dictates” that have turned up in some broadcast advertising arrangements. The FCC believes that those “dictates” discriminate against broadcast stations which target African American and Hispanic audiences and the businesses they support.

When it adopted the “nondiscrimination clause” requirement, the FCC chose not to provide specific, or even illustrative, language to be included in advertising contracts. Such language would have given applicants a better idea of what the FCC actually believes qualifies as an adequate “nondiscrimination clause.” As a result, licensees have been left to rely upon their own interpretations of what constitutes compliance.

One question of interpretation relates to the scope of the nondiscrimination clause: is it adequate if only two types of prohibited discrimination are identified, namely race and ethnicity, or must the clause include all other types of discrimination prohibited under federal, state and local law? We know that the rule making from which the nondiscrimination clause arose focused only on “no urban/no Spanish dictates,” and that the FCC’s later issued “Erratum” substituted “ethnicity” for “gender” without retaining “gender.” From this it can be argued that the FCC did not intend to require stations to include in their nondiscrimination clauses other forms of discrimination prohibited by federal, state and local authorities, although stations are free to include them.

Additional interpretation is required to answer this question: is the nondiscrimination clause sufficient if each sales contract in effect proclaims (i) that no advertiser may use the station to discriminate on the basis of race or ethnicity and (ii) that any contract entered into with an advertiser whose intent is to use the station to unlawfully discriminate shall be null and void? Or must the nondiscrimination clause also include from the advertiser some type of certification or representation to the station disclaiming any intent to discriminate on the grounds of race or ethnicity? It is my experience that the approaches used by stations vary considerably. That fact may suggest that there are a number of interpretations that may be regarded as reasonable.

The third instance requiring interpretation relates to those stations that do not use formal sales contracts: how are they expected to comply with the nondiscrimination clause requirement? The answer to this question will turn on how flexible the FCC intends to be. We know that noncommercial educational stations filing their license renewal applications will not be asked to respond to this particular certification because such stations do not “sell” time, although they do enter into on-air and production relationships with their underwriters. Certainly a starting point for commercial stations that do not use formal sales contracts is to ensure they can adequately demonstrate to the FCC that their advertising sales arrangements with third parties in fact alert such parties to the station’s nondiscrimination policy and do not discriminate on the basis of race or ethnicity, e.g., website postings, standard email disclaimers, invoice/statement disclaimers.

The three questions posed above are not intended to deal with all of the issues raised by the new renewal certification. My observation is that if the FCC had been more clear when it adopted the nondiscrimination clause requirement, licensees would be able to make a more informed judgment in deciding whether they may responsibly respond to the new certification requirement with an unqualified “Yes,” or whether they will be required to answer “No” with an explanation, understanding that a “No” answer will likely result in the licensee’s application being pulled out of line and deferred for further scrutiny. Stations should consult with communications counsel now to assess whether, based on current practices, they will have a reasonable basis to respond “Yes” to the new renewal certification when it comes time to file their application for renewal of license.

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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 Children’s Television Programming Report must be filed with the FCC and placed in stations’ local Public Inspection Files by January 10, 2011, reflecting programming aired during the months of October, November and December, 2010.

Statutory and Regulatory Requirements

As a result of the Children’s Television Act of 1990 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 younger; and (2) air programming responsive to the educational and informational needs of children 16 years of age and younger.

To demonstrate their compliance with these requirements, stations must: (1) place in their public inspection file one of four prescribed types of documentation demonstrating compliance with the commercial limits in children’s television; and (2) complete FCC Form 398, which requests information regarding the educational and informational programming aired for children 16 years of age and under. The Form 398 must be filed electronically with the FCC and placed in the public inspection file. The base forfeiture for noncompliance with the requirements of the FCC’s Children Television Programming Rule is $10,000.

In a recent series of decisions, the FCC issued fines of between $25,000 and $70,000 to stations that had failed to comply with one or more of the FCC’s children’s television requirements, with $270,000 in fines being issued in a single day.

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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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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 another 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.

By January 10, 2011, those television stations that completed construction and commenced operation with their post-transition final DTV facilities after September 30, 2010, or have not yet completed construction and commenced operation of their post-transition digital facilities, are required to report on the DTV Consumer Education Initiatives undertaken in the months of October, November and December by electronically filing the FCC Form 388. The FCC Form 388 is also required to be placed in the station’s public inspection file by January 10, 2011 and posted by that date to the station’s website, if it has one.

Stations which completed construction of their fully-authorized, post-transition digital facilities prior to September 30, 2010 were not required to continue with the general DTV Consumer Education announcements and are not required to submit any additional FCC Forms 388 filings.

For assistance in preparing and completing any of this documentation, please contact the lawyers in the Communications Practice Section.

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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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A trend we see in FCC enforcement actions is the FCC attributing multiple rule violations to a single act or omission, and then peppering stations with multiple fines. This trend is confirmed in two EEO enforcement actions released in the waning hours of 2010. These cases demonstrate, among other things, why it is a good time for broadcasters to undertake the EEO self-assessment activities required by the FCC’s Rules.

The first of these recent cases resulted from a 2008 random audit of a six-station radio group in Joplin, Missouri. The second case arose from the 2005 license renewal applications of a four-station radio group located in and around Medford and Grant’s Pass, Oregon. Since the license renewal applications remain pending due to an unrelated complaint, the FCC was able to examine these stations’ EEO data from 2003 until 2009.

In each case, the stations relied solely on walk-ins, word-of-mouth, and employee and business referrals as the sources of interviewees for about 25% of their job openings. Based on this, the FCC found that the stations had failed to conduct any recruitment at all for these positions, as they had only used non-public recruitment sources which do not further the FCC’s goal of assuring that stations achieve broad outreach in recruiting. The Joplin stations had also aired generic on-air announcements about broadcast employment and working for the licensee company, but the FCC did not give them any credit for these announcements because they were not specific to a particular job opening. The FCC also found that the Oregon stations did not recruit broadly enough for nearly all of their remaining hires because they relied exclusively on either Internet-based referral sources or on advertisements on their own stations.

Each group of stations also had EEO paperwork and reporting problems. The Joplin stations listed the job title for seven hires as “Other” in an annual EEO public file report. The FCC said that since the EEO public file report was missing the required job title information, the stations’ public inspection files (where the reports are placed) were missing it as well.

Similarly, the FCC found the Oregon stations failed to retain records on the number and referral sources of interviewees for their job openings. As a result of this recordkeeping violation, the FCC said that the stations’ EEO public file report, and by extension, their public inspection files, were incomplete.

To top it all off, the FCC found that “[t]hese failures reveal a continuing lack of self-assessment” of the stations’ recruitment programs, creating yet another rule violation. In all, the Joplin stations were fined $8,000.00, of which $5,000.00 was for the failure to recruit for 25% of their openings, and three fines of $1,000 each were for the stations’ incomplete annual EEO public file report, their incomplete public files, and their failure to self-assess their EEO program. The Oregon stations were fined a total of $20,000, of which $16,000.00 was attributable to their failure to recruit for 25% of their vacancies and their failure to recruit broadly enough for nearly all other vacancies, and four fines of $1,000.00 each were for the stations’ failure to retain required records, failure to have a complete annual EEO public file report, failure to have complete public inspection files, and failure to self-assess their EEO program. All of the stations must, for the next three years, submit to the FCC for scrutiny copies of their annual EEO reports and copies of all job vacancies announcements, advertisements and other evidence of recruitment outreach for the year.

While the stations in these two cases were fined for not undertaking the required self-assessment of the recruitment portion of their EEO programs, broadcasters should remember that the FCC’s Rules also require licensees to regularly examine all of their employment policies to assure that they are not discriminatory. This means examining the processes by which stations recruit, hire, promote, fire, and compensate employees to be sure that they do not have a discriminatory impact.

So while you have the employment files out, and other employment issues like raises and promotions are fresh in your mind, take some extra time to review how you are making those decisions and their impact on your staff. While you’re at it, check the public file and station website to be sure your annual EEO public file reports are up to snuff as well.

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Earlier this month we posted our 2011 Broadcasters Calendar on CommLawCenter as well as on our Pillsbury web page. We have been annually publishing the Broadcasters Calendar, which contains much information regarding broadcast station deadlines and legal requirements, for as long as I can recall. It has always been one of our most popular publications, and I usually get calls beginning in early November asking when next year’s calendar will be available. The “easy to read” pdf version of the Calendar can be found here, and a text-searchable version is available here.

Even a brief review of the 2011 Broadcasters Calendar reminds us that 2011 will be a busy year for not just broadcasters, but for cable and satellite operators as well. October 1, 2011 is the deadline by which broadcasters qualifying for must-carry need to notify cable and satellite operators of their election between must-carry status and retransmission consent. Recent retransmission disputes once again remind us that retransmission negotiations and their associated revenue are critical to the future of broadcast television. However, the sheer volume of negotiations and carriage disputes likely to occur following the October 1 election deadline will almost certainly make this holiday season look tranquil by comparison.

Adding to the action will be continued efforts by the cable and satellite industries to draw Congress and the FCC into the fray, introducing legislative and regulatory uncertainties into an already complex negotiation process. Their chances for success will depend greatly upon how much disruption in carriage of broadcast programming occurs in 2011, and the public’s perception of who is at fault for that disruption. Regardless of the outcome of this particular Washington confrontation, look for 2011 to be the year where economics force cable and satellite providers to more tightly link the number of viewers a program service attracts with the amount they agree to pay for that service. Overpaying for niche cable networks that don’t pull in large numbers of viewers is so “last decade”.

2011 also marks the beginning of the FCC’s next eight-year license renewal cycle, with radio stations in DC, Maryland, Virginia, and West Virginia starting pre-filing announcements in April for their upcoming license renewal applications. The filing cycle will continue state by state until it concludes with television stations in Delaware and Pennsylvania running their last post-filing announcements on June 16, 2015.

However, many stations haven’t had their last license renewal application granted because of indecency complaints still pending against them. The FCC has pretty much ceased processing indecency complaints while it awaits guidance from the courts as to whether it can legally enforce the prohibition on broadcast indecency, and if so, how it will be allowed to do that. I have been told that there are literally hundreds of thousands of indecency complaints now pending at the FCC, so unless the courts do the FCC the favor of finding the prohibition on indecency completely unconstitutional, it will take the FCC years to sift through these complaints in an effort to apply any refined indecency standard announced by the Supreme Court.

It is therefore reasonable to predict that indecency complaints will continue to play a large role in the processing of upcoming license renewal applications. 2011 will hopefully be the year when the courts tell us exactly how large (or small) that role will be. If the prohibition on indecency survives this latest round of judicial scrutiny, broadcasters and the FCC can expect a lot of complaint investigations and litigation as both struggle with where the line on content is being drawn.

Of course there are numerous other events that will contribute to 2011 being one of the busiest years in memory for broadcasters. A rebounding economy is slowly lifting most boats in the broadcast industry, with the obvious exception being those that burned their critical assets for fuel during the lean times, and don’t have much boat left.

With a growing amount of money to fight over, the fights will begin in earnest (see “Retrans” above). Negotiations between the NAB and the recording industry over performance royalties will continue, and “performance tax” legislation will again rise in Congress with the same certainty that the slasher in a horror film returns for unending sequels.

Broadcasters and the FCC will also be implementing the latest generation of the Emergency Alert System in 2011, and the FCC will continue its efforts to repurpose broadcast spectrum for mobile broadband use, leading to new rules permitting multiple broadcasters to share a single channel, and potentially to legislation allowing participating broadcasters to share in the proceeds of broadband spectrum auctions. As with most of the items discussed above, there is both opportunity and peril for broadcasters here, and those that are inattentive risk missing the former and being battered by the latter.

Yes, 2011 will be a very busy year.